SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549E COMMISSION
FORM 10-QSB
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended March 31, 2000
Commission file number 000-22611
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MyTurn.com, Inc.
- --------------------------------------------------------------------------------
(Exact name of Small Business Issuer as Specified in Its Charter)
Delaware 11-3344575
- -------------------------------------- -------------
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
1080 Marina Village Parkway, Alameda, California 94501
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(Address of principal executive offices)
Issuer's telephone number, including area code (510) 263-4800
960 Atlantic Avenue, Suite 200, Alameda, California 94501
- --------------------------------------------------------------------------------
(Former Name, Former Address and Formal Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
------ -------
The number of shares outstanding of each of the issuer's classes of common
equity, as of April 30, 2000: 9,995,420
---------
Transitional Small Business Disclosure Format (check one): Yes No X
------ ----
<PAGE>
MyTurn.com, Inc. and Subsidiaries
- INDEX -
PART I: Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet - March 31, 2000 3
Consolidated Condensed Statements of Operations -
Three Months Ended March 31, 2000 and 1999 (unaudited) 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 2000 and 1999 (unaudited) 5
Notes to Interim Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 12
Condition and Results of Operations
PART II: Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 21
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MyTurn.com, Inc. and Subsidiaries
Consolidated Condensed Balance Sheet
March 31,
2000
(Unaudited)
-------------
ASSETS
Current Assets:
Cash $ 3,257,387
Interest receivable 12,839
Inventory 466,417
Prepaid expenses and other assets 110,623
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Total Current Assets 3,847,266
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Fixed assets, net 349,367
Goodwill, net 9,849,131
Software development costs, net 2,915,791
Licenses, net 1,806,885
Web-site development costs, net 530,253
Deposits and other assets 58,824
---------
Total Assets $ 19,357,517
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,377,604
Net liabilities of discontinued operations 363,202
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Total Current Liabilities 1,740,806
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Commitments and Contingencies (Note 4)
Preferred stock, $.01 par value; 1,000,000 shares authorized
Series A Convertible Preferred -
Series B Convertible Preferred -
Common stock, par value $.01, 60,000,000 shares authorized;
9,917,392 shares issued and outstanding 99,175
Additional paid-in-capital 142,977,353
Deferred stock based compensation (38,000,000)
Accumulated deficit (86,870,122)
Shareholder loan (84,313)
Less: Treasury stock, 75,544 shares at cost (505,382)
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Total Shareholders' Equity 17,616,711
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Total Liabilities and Shareholders' Equity $ 19,357,517
============
See accompanying notes to consolidated condensed financial statements.
3
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<TABLE>
<CAPTION>
MyTurn.com, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
For the Three Months Ended March 31,
---------------------------------------------
2000 1999
--------------------- ---------------------
Revenue:
<S> <C> <C>
Internet subscription fees in excess of cost $ - $ 106,380
Interest and other income 43,746 126,558
--------------------- ---------------------
Total Revenue 43,746 232,938
Costs and Expenses:
Cost in excess of internet subscription fees 29,726 -
General and administrative 2,588,487 350,745
General and administrative stock
based compensation (Note 2) 62,012,309 -
Research and development 158,490 -
Depreciation and amortization 1,107,333 -
Interest expense 270 6,816
Loss on abandonment of fixed assets 13,047 -
--------------------- ---------------------
Total Costs and Expenses 65,909,662 357,561
--------------------- ---------------------
Loss From Continuing Operations (65,865,916) (124,623)
Discontinued Operations:
Loss from discontinued operations - (3,568,022)
--------------------- ---------------------
Net Loss $ (65,865,916) $ (3,692,645)
===================== =====================
Basic and Diluted Loss Per Common Share:
Continuing operations $ (7.43) $ (0.04)
Discontinued operations 0.00 (1.12)
--------------------- ---------------------
Basic and Diluted Loss Per Common Share: $ (7.43) $ (1.16)
===================== =====================
Weighted Average Number of Basic and Diluted
Common Shares Outstanding 8,862,003 3,192,646
===================== =====================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
MyTurn.com, Inc. and Subsidiaries
COnsolidated Condensed Statement of Cash Flows
For the Three Months Ended March 31,
---------------------------------------------
2000 1999
---------------------- --------------------
Cash Flows Used In Operating Activities:
<S> <C> <C>
Net loss $ (65,865,916) $ (3,692,645)
Adjustments to reconcile net loss to net cash used in
operating activities:
Loss from discontinued operations - 3,568,022
Depreciation and amortization 1,107,333 -
Stock options granted to employees below market 52,088,215 -
Stock options granted for consulting services 3,934,571 -
Warrants issued to directors below market 5,412,500 -
Warrants issued for consulting services 577,023 -
Changes in assets and liabilities: -
Increase in interest receivable (3,950) -
Increase in inventory (244,023) -
Increase in prepaid expenses and other assets (98,627) -
Increase in deposits (20,505) -
Decrease in accounts payable and accrued expenses (308,611) -
Decrease in liabilities of discontinued operations (148,995) -
---------------------- --------------------
Net cash used in continuing operations (3,570,985) (124,623)
---------------------- --------------------
Net cash used in discontinued operations - (1,467,613)
---------------------- --------------------
Net cash used in operating activities (3,570,985) (1,592,236)
---------------------- --------------------
Cash Flows Used In Investing Activities:
Capital expenditures of discontinued operations - (90,589)
Loans and advances of discontinued operations - (16,222)
Capital expenditures (165,826) -
Software development costs (524,453) -
---------------------- --------------------
Net cash used in investing activities (690,279) (106,811)
---------------------- --------------------
Cash Flows Provided by (Used In) Financing Activities:
Loan repayment of discontinued operations - (25,000)
Capital lease payments of discontinued operations - (2,966)
Payments of note payable (22,408) -
Shareholder loan (84,313) -
Proceeds from exercise of warrants 2,539,511 -
Proceeds from exercise of stock options 3,631,440 -
---------------------- --------------------
Net cash provided by (used in) financing activities 6,064,230 (27,966)
---------------------- --------------------
Net increase (decrease) in cash and cash equivalents 1,802,966 (1,727,013)
Cash and cash equivalents, beginning of period 1,454,421 4,378,400
---------------------- --------------------
Cash and cash equivalents, end of period $ 3,257,387 $ 2,651,387
---------------------- --------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE>
Consolidated Condensed Statements of Cash Flows
MyTurn.com, Inc. and Subsidiaries
Notes to Interim Consolidated Condensed Financial Statements
(Unaudited)
NOTE 1 - DESCRIPTION OF COMPANY AND SIGNIFICANT ACCOUNTING POLICIES:
Introduction:
MyTurn.com is a provider of Internet related computing products and services.
Through its wholly owned operating Subsidiaries, MyTurn.com is planning to
introduce a low cost, easy-to- use personal computer system, known as the
GlobalPC, targeting the first-time user market. The GlobalPC is based on the
time-tested GEOS operating system which MyTurn.com licenses from Geoworks
Corporation. MyTurn.com has made or acquired significant improvements to this
operating system. The fully integrated software application suite includes word
processing, spreadsheet, desktop publishing, presentation, database, a web
browser, e-mail, games and chat capability, all comparable in functionality to
the most popular Microsoft Windows-based programs. The GlobalPC will be sold
primarily through mass merchant retailers. MyTurn.com has scheduled an initial
five-market rollout to commence during the summer of 2000.
History:
Coastal Computer Systems, Inc., a New York company, was formed on March 31,1983.
On October 18, 1996 Coastal Computer Systems, Inc. was reincorporated in
Delaware under the name Compu-DAWN, Inc. On January 20, 2000 Compu-DAWN, Inc.
changed its name to MyTurn.com, Inc. From 1983, until January 1999, MyTurn.com
was primarily engaged in the business of designing, developing, licensing,
installing and servicing computer software products and systems predominantly
for public safety and law enforcement agencies.
On January 8, 1999, MyTurn.com's wholly-owned Subsidiaries, e.TV Commerce, Inc.
("e.TV") acquired certain assets of LocalNet Communications, Inc. ("LocalNet")
pursuant to a surrender of collateral to satisfy secured loans made by
MyTurn.com to LocalNet. From January 8, 1999 through June 1999, MyTurn.com,
through e.TV, operated in the Internet, e-commerce and telecommunications
business, marketing products and services primarily using a person to person
sales approach with the services of commissioned sales representatives in a
relationship-based referral marketing organization.
In June 1999, MyTurn.com adopted a plan to dispose of the assets which made up
the public safety software division and ceased selling products and services
through network marketing (e.TV) activities. In July 1999, MyTurn.com sold
primarily all of the assets which made up its public safety software division to
an unrelated third party.
6
<PAGE>
From July 1999 through December 1999, MyTurn.com's focus was on fund raising
efforts and on finalizing the asset purchase transaction with Global PC, Inc.
("Global PC"). On December 22, 1999, MyTurn.com acquired substantially all the
tangible and intangible assets of Global PC.
From December 1999 through March 31, 2000, MyTurn.com has focused on developing
strategic business relationships and infrastructure essential to the business as
well as on manufacturing a limited number of GlobalPCs for its Beta test phase
which commenced during the second quarter of 2000. The purpose of this test
phase was to ensure that both Internet connectivity and MyTurn.com's customer
care operations are operating at maximum effectiveness prior to the planned
retail launch . MyTurn.com also obtained valuable feedback with respect to basic
system integrity and functionality.
Significant Accounting Policies:
The accounting policies followed by MyTurn.com are set forth in Note 2 to
MyTurn.com's annual report filed on Form 10-KSB for the year ended December 31,
1999. Specific reference is made to this report for a description of
MyTurn.com's securities and the notes to the financial statements included
therein.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, "Revenue Recognition," which outlines the basic criteria
that must be met to recognize revenue and provide guidance for presentation of
revenue and for disclosure related to revenue recognition policies in financial
statements filed with the Securities and Exchange Commission. The effective date
of this pronouncement is the second quarter of the fiscal year beginning after
December 15, 1999. The company is in the process of determining the impact that
adoption will have on the consolidated financial statements.
Certain reclassifications have been made to the March 31, 1999 unaudited interim
consolidated condensed financial statements to reflect operations discontinued
during 1999. These reclassifications had no effect on net income or retained
earnings.
In the opinion of management, the accompanying unaudited interim consolidated
condensed financial statements of MyTurn.com, Inc., contain all adjustments,
consisting of normal and recurring adjustments, considered necessary to present
fairly MyTurn.com's financial position as of March 31, 2000 and the results of
its operations and cash flows for the three month periods ended March 31, 2000
and 1999.
The results of operations for such interim periods are not necessarily
indicative of the results to be expected for the full year.
NOTE 2 - CAPITAL STOCK AND EQUIVALENTS:
During 1999, MyTurn.com granted options to purchase 4,058,083 Common Shares in
excess of the 2,000,000 Common Shares authorized for issuance upon the exercise
of options grantable
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<PAGE>
under MyTurn.com's 1996 Stock Option Plan. These options, 193,500 of which were
granted to non-employees, had exercise prices ranging from $1.00 per share to
$6.38 per share. Options to purchase 3,508,083 Common Shares were granted at the
then market price, and the remainder were non-qualified options granted at below
market price. Substantially all of these options vested on April 4, 2000.
On January 1, 2000, the Company granted options to purchase 2,072,500 Common
Shares at an exercise price of $2.50 per share, to certain employees who were
retained in connection with the acquisition of assets of Global PC which closed
on December 22, 1999. These options were also for shares in excess of the
2,000,000 shares originally authorized for issuance under MyTurn.com's 1996
Stock Option Plan. These employees were former employees of Global PC who
MyTurn.com determined were integral to MyTurn.com's development, enhancement and
sale of the Global PC and related products and services. These options vest in
one-third increments in July 2000, January 2001 and January 2002.
On January 20, 2000, the shareholders approved an amendment to the 1996 Stock
Option Plan which increased the number of options available to be granted to
10,000,000. In accordance with generally accepted accounting principles,
MyTurn.com is required to recognize a non-cash compensation charge over the
vesting period of the options granted in excess of MyTurn.com's pre-amended 1996
Stock Option Plan, measured by the difference between the exercise price of the
options granted and the market price of the Company's Common Shares on January
20, 2000. As a result, in the first quarter of 2000, MyTurn.com recognized a
non-cash stock compensation charge of $52,088,215 for 5,937,083 options granted
to employees and $2,903,034 for 193,500 options granted to non-employees, in
excess of the pre-amended 1996 Stock Option Plan. Non-cash stock compensation
charges of approximately $ 31,000,000 will be recognized in future periods over
the vesting period of those options. This non-cash earnings charge will not
impact MyTurn.com's cash flows or net stockholders' equity.
On January 20, 2000, the shareholders approved an amendment to MyTurn.com's
Certificate of Incorporation to increase the number of authorized common stock
to 60,000,000 shares.
On January 4, 2000, MyTurn.com issued to nine designees of Joseph Charles &
Associates, Inc. warrants to purchase an aggregate of 90,000 Common Shares at an
exercise price of $6.375 per share, vesting upon the date of issuance and
exercisable for five years. These warrants valued at $115,454 were issued
pursuant to an agreement terminating an investment banking agreement.
On January 21, 2000, MyTurn.com issued warrants to purchase 1,000,000 Common
Shares to a Director who subsequently became MyTurn.com's Interim Chief
Executive Officer and Chairman of the Board. Warrants to purchase 500,000 Common
Shares vested immediately and warrants for the remaining 500,000 Common Shares
originally vested based on certain performance goals and were amended to vest on
April 4, 2000 (see Note 6). Of these warrants, 500,000 were issued below market
with an exercise price of $5.00 per share and 500,000 were issued below market
at various prices ranging from $5.00 to $15.00. MyTurn.com recognized a stock
compensation charge of $5,343,750 in the first quarter of 2000 related to the
500,000 warrants which vested on January 21, 2000 and will recognize a stock
compensation charge of $ 4,625,000 in the second quarter related to the warrants
which vest on April 4, 2000. All
8
<PAGE>
1,000,000 warrants described above are exercisable for a period expiring 5 years
from the date of issuance.
On January 3, 2000, MyTurn.com issued warrants to purchase 90,000 Common Shares,
at a price of $6.375 per share, pursuant to the termination of an investment
banking agreement, valued at $461,569. These warrants vested immediately and
expire on January 3, 2005.
On January 21, 2000, MyTurn.com issued warrants to purchase 125,000 Common
Shares, below market, at a price of $5.00 per share, to a new Class III director
of MyTurn.com. Warrants to purchase 50,000 shares vested immediately and are
valued at $68,750 which was recognized in the first quarter. The remaining
warrants to purchase 75,000 shares vest based on certain performance goals and
will be recognized in future periods over the vesting period of those warrants .
These warrants are exercisable for period expiring 5 years from the date of
issuance.
On January 21, 2000, MyTurn.com granted options to purchase 90,000 Common Shares
with exercise prices of $2.50 and $6.375 per share to a non-employee, valued at
$666,267. These options vest at a rate of one-third of the unvested options
every three months and expire on January 2, 2005.
On January 21, 2000, MyTurn.com granted options to purchase 10,000 Common Shares
with an exercise price of $16.625 per share to a non-employee, valued at
$133,823. These options vested immediately and are exercisable for a period
expiring 5 years from the date of grant.
In January 2000, holders of 1,370 Series B Preferred Shares converted such
shares into 256,075 Common Shares.
In January 2000, MyTurn.com issued 277,000 shares of common stock out of
Company's treasury in payment of the 1999 stock bonus, valued at $1,761,550,
which was accrued in 1999.
In the first quarter of 2000, MyTurn.com issued 1,188,502 and 453,907 shares of
common stock to option and warrant holders, respectively, for which MyTurn.com
received $6,170,951 in cash proceeds.
NOTE 3 - SHAREHOLDER LOAN
On January 4, 2000, pursuant to an indemnification obligation, MyTurn.com paid
$232,000 on an officer's behalf in settlement of a legal action. Additionally,
MyTurn.com loaned the officer approximately $84,000 in connection with the
settlement. This loan bears interest at 10% per annum with interest and
principal payable in one balloon payment due on February 3, 2002.
NOTE 4 - CONTINGENCIES AND COMMITMENTS
Effective February 1, 2000, MyTurn.com entered into an amended agreement with
Suissa Miller Advertising Agency to develop and execute advertising on behalf of
MyTurn.com. The initial term of the agreement will be for a period from the
effective date through December 31, 2000
9
<PAGE>
with provision for automatic annual extensions if neither party provides notice
of intent to terminate. Pursuant to the conditions of this agreement, MyTurn.com
is obligated to pay a monthly retainer of $40,909 per month. Additional amounts
will be paid if gross media spending exceeds certain limits. The agreement also
provides for performance based bonuses for each contract year during which the
Agency's senior management is entitled to a performance based bonus. Warrants to
purchase 100,000 shares of Common Stock will also be issued if MyTurn.com
reaches a certain level of retail shipments prior to December 31, 2000.
On March 8, 2000, MyTurn.com entered into a license agreement with CNN
Interactive, Inc. that will establish links between MyTurn.com's Internet portal
site and a CNN Internet site currently known as CNN Interactive. The term of the
agreement will be for the earlier of 1 year from the launch of MyTurn.com's
Global PC device or June 15, 2001. Pursuant to the conditions of the licensing
agreement, MyTurn.com is obligated to pay an aggregate of $875,000 consisting of
a $87,500 deposit and four quarterly payments of $196,875 commencing on April
15, 2000.
The offering memorandum in connection with MyTurn.com's private placements
through Hornblower and Weeks in October and November 1999, provided that
investors would be granted certain registration rights. A form of registration
rights agreement which was an exhibit to the offering memorandum, which
agreement was not executed or delivered by MyTurn.com or any investor, provides
that if the registration statement is not filed 40 days after the closing,
and/or that registration statement is not declared effective within 180 days
after the closing, MyTurn.com is obligated to pay liquidated damages of five
percent of the amounts invested for each 30 days that the default continues.
MyTurn raised aggregate gross proceeds of $2,367,000 in these offerings. A
registration statement has not been filed. MyTurn.com is currently in
discussions with the investors to resolve issues relating to that non-filing.
MyTurn.com has accrued $406,000 and will continue to make monthly accruals until
this matter is resolved. One investor has commenced a lawsuit claiming monetary
damages of at least $540,625 based on the registration statement not being
declared effective, plus $1,250 for each 30 days that the registration statement
is not declared effective after March 6, 2000. MyTurn.com hopes to resolve this
lawsuit with the investor. Because of uncertainties inherent in litigation,
MyTurn.com cannot predict the outcome of this lawsuit at this time.
Effective March, 2000 MyTurn.com entered into a lease agreement for office space
in California, with an initial term of 4.5 years, which provides for base annual
rental of $664,668 and annual increases to the base rent of 3% per annum.
At March 31, 2000, future minimum rentals for office space are as follows:
Fiscal Year
Ending
----------
2000 $ 528,022
2001 679,623
2002 700,012
2003 721,012
2004 555,620
-----------
$ 3,184,289
===========
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NOTE 5 - INCOME (LOSS):
For the three months ended March 31, 2000, MyTurn.com reflected a net loss of
$65,865,916 or a $7.43 loss per basic share as compared to a net loss of
$3,692,645 or a $1.16 loss per basic share for the same period in 1999. Net loss
per diluted share was the same as net loss per basic share for each of the the
respective years as the effect of including potentially dilutive securities in
the computation of earnings per share is anti-dilutive. This increase in loss is
primarily the result of the increase in costs and expenses of $65,552,101 from
1999 to 2000, resulting from the non-cash earnings charges as discussed above.
NOTE 6 - SUBSEQUENT EVENTS
On April 4, 2000, MyTurn.com issued warrants to purchase 500,000 Common Shares
at market, with an exercise price of $20.25 per share, to a Director, at the
time he became MyTurn.com's Interim Chief Executive Officer and Chairman of the
Board. The 500,000 warrants, which vested immediately, were granted in
connection with the individual's acceptance of the positions of Interim Chief
Executive Officer and Chairman of the Board and to commit his time and resources
to MyTurn.com, his personal commitment to provide MyTurn.com up to $6,000,000,
to support ongoing capital requirements of MyTurn.com, if necessary, and his
posting of $3,500,000 as security for the Company's line of credit with a
manufacturer. All 500,000 warrants described above are exercisable for a period
expiring 5 years from the date of issuance.
On April 4, 2000, MyTurn.com granted warrants to purchase 25,000 shares of
common stock at a price of $20.25 per share for public relations consulting
services, valued at $407,370. These warrants vested immediately and are
exercisable for a period expiring 5 years from the date of issuance.
On April 4, 2000, the Board approved the acceleration of the vesting period, to
April 4, 2000, on warrants to purchase 500,000 common shares, previously granted
to MyTurn.com's Interim Chief Executive Officer and Chairman of the Board with
original vesting periods based on performance. Compensation charge associated
with these warrants in the amount of $4,625,000 will be fully recognized in the
second quarter of 2000.
On April 4, 2000, the Board approved the acceleration of the vesting period of
stock options for certain members of management to be fully vested on April 4,
2000. Compensation charge associated with these options that was being
recognized over the vesting period of these options, will be fully recognized in
the second quarter of 2000.
On April 4, 2000 MyTurn.com granted options to purchase 10,000 common shares
with an exercise price of $20.25 per share to a non-employee. This grant is
subject to MyTurn.com reaching a settlement, with the non-employee, of a dispute
between the non-employee and a Subsidiaries of MyTurn.com. Upon reaching a
settlement, these options will vest immediately and be exercisable for a period
expiring 5 years from the date of grant.
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<PAGE>
On April 4, 2000, MyTurn.com issued 30,000 shares of unregistered common stock,
valued at $607,500, to an unaffiliated party in consideration for his
involvement in finding a placement agent for MyTurn.com's private offerings in
1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction:
Coastal Computer Systems, Inc., a New York company, was formed on March 31,1983.
On October 18, 1996 Coastal Computer Systems, Inc. was reincorporated in
Delaware under the name Compu-DAWN, Inc. On January 20, 2000 Compu-DAWN, Inc.
changed its name to MyTurn.com, Inc. From 1983, until January 1999, MyTurn.com
was primarily engaged in the business of designing, developing, licensing,
installing and servicing computer software products and systems predominantly
for public safety and law enforcement agencies.
On January 8, 1999, MyTurn.com's wholly-owned Subsidiaries, e.TV Commerce, Inc.
("e.TV") acquired certain assets of LocalNet Communications, Inc. ("LocalNet")
pursuant to a surrender of collateral to satisfy secured loans made by
MyTurn.com to LocalNet. From January 8, 1999 through June 1999, MyTurn.com,
through e.TV, operated in the Internet, e-commerce and telecommunications
business, marketing products and services primarily using a person to person
sales approach with the services of commissioned sales representatives in a
relationship-based referral marketing organization.
In May 1999, MyTurn.com adopted a plan to dispose of the assets which made up
the public safety software division and ceased selling products and services
through network marketing activities. In July 1999, MyTurn.com sold primarily
all of the assets which made up its public safety software division to an
unrelated third party.
From July 1999 through December 1999, MyTurn.com's focus was on fund raising
efforts and on finalizing the asset purchase transaction with Global PC, Inc.
("Global PC"). On December 22, 1999, MyTurn.com acquired substantially all the
tangible and intangible assets of Global PC.
From December 1999 through March 31, 2000, MyTurn.com has focused on developing
strategic business relationships and infrastructure essential to the business as
well as on manufacturing a limited number of GlobalPCs for its Beta test phase
which is scheduled to commence during the second quarter of 2000. The purpose of
this test phase is to ensure that both Internet connectivity and MyTurn.com's
customer care operations are operating at maximum effectiveness prior to the
planned retail launch . MyTurn.com also expects to obtain valuable feedback with
respect to basic system integrity and functionality.
12
<PAGE>
Results of Operations:
Revenues:
Revenues from continuing operations, for the three months ended March 31, 2000
were $43,746 which consisted primarily of interest income in the amount of
$41,524. This compares to revenues of $232,938, for the three months ended March
31, 1999 which consisted primarily of interest income of $108,753 and internet
subscription fees in excess of cost of $106,380.
Costs and Expenses:
Costs and expenses increased $65,552,101 for the three months ended March 31,
2000 from the same period in 1999. The increase was primarily attributable to
the following:
- - Non-cash compensation charge of $44,493,323 resulting from the grant of
options to employees, during 1999, in excess of the options available under
MyTurn.com's Stock Option Plan. These options were valued using a
measurement date of January 20, 2000, which was the day the Shareholders
approved an amendment to increase the number of options available for grant
under MyTurn.com's Stock Option Plan. This non-cash earnings charge will
not impact MyTurn.com's cash flows or net stockholders' equity.
- - Non-cash compensation charge of $7,594,892 resulting from the grant of
options to employees in January of 2000, having an exercise price below the
market value. These options were also in excess of the options available
under MyTurn.com's Stock Option Plan. The value of these options was also
measured on January 20, 2000, which was the Shareholder approval date. This
non-cash earnings charge will not impact MyTurn.com's cash flows or net
stockholders' equity.
- - Non-cash compensation charge of $5,412,500 resulting from the issue of
warrants to directors during the first quarter of 2000, with exercise
prices below the market value. This non-cash earnings charge will not
impact MyTurn.com's cash flows or net stockholders' equity.
- - Non-cash compensation charges of $4,511,593 resulting from the grant of
options and the issuance of warrants to non-employees which are valued
using the Black-Scholes option pricing model. This non-cash earnings charge
will not impact MyTurn.com's cash flows or net stockholders' equity.
- - An increase in depreciation and amortization of $1,107,333 resulting
primarily from amortization of goodwill related to the GlobalPC acquisition
of $902,069, amortization of licensing fees of $95,099 and amortization of
web-site development costs of $72,565.
- - No costs and expenses were included in loss fro discontinued operations for
the three months ended March 31, 2000, compared to $3,568,022 of costs and
expenses that were included in loss from discontinued operations for the
same period in 1999.
The consolidated loss from continuing operations, for the three months ended
March 31, 2000 was $65,865,916, compared to loss from continuing operations of
$124,623 for the same period in 1999. This is primarily attributable to the
increase in costs and expenses from 1999 to 2000, resulting from the non-cash
earnings charges as discussed above.
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Income (Loss):
For the three months ended March 31, 2000, MyTurn.com incurred a net loss of
$65,865,916 or a $7.43 loss per basic share as compared to a net loss of
$3,692,645 or a $1.16 loss per basic share for the same period in 1999. Net loss
per diluted share was the same as net loss per basic share for each of the the
respective years as the effect of including potentially dilutive securities in
the computation of earnings per share is anti-dilutive. This increase in loss is
primarily the result of the increase in costs and expenses of $65,552,101 from
1999 to 2000, resulting from the non-cash earnings charges as discussed above.
Cash Flows:
Cash used in operating activities was $3,570,985 for the three months ended
March 31, 2000, as compared to $1,592,236 for the same period in 1999. This
increase is primarily attributable to costs associated with developing strategic
business relationships and infrastructure essential to the business as well as
costs associated with the manufacture of a limited number of GlobalPCs for its
Beta test phase.
Cash used in investing activities was $690,279 for the three months ended March
31, 2000, as compared to $106,811 for the same period in 1999. This increase was
primarily the result of software development costs of $524,453 during the three
months ended March 31, 2000.
Cash provided by financing activities was $6,064,230 for the three months ended
March 31, 2000 as compared to cash used in financing activities of $27,966 for
the same period in 1999. The increase in cash provided by financing activities
is primarily the result of proceeds from the exercise of warrants and options
which aggregated $6,170,951.
Liquidity and Capital Resources:
At March 31, 2000, MyTurn.com had working capital of $2,106,460, a current ratio
of 2.2:1 and a debt to net worth ratio of 0:1. At its year ended December 31,
1999, MyTurn.com had a working capital deficit of $504,199, a current ratio of
(.77):1 and a debt to net worth ratio of .001:1. The increase of MyTurn.com's
working capital is primarily attributable to proceeds of $6,170,951 received as
a result of the exercise of 3,631,465 options and 2,539,511 warrants during the
three month period ended March 31, 2000.
MyTurn.com anticipates it will need additional capital in approximately 90 days
to continue to develop and sustain its business at current levels. MyTurn.com
believes obtaining additional funding is essential to the successful
implementation of both its short-term and long- range business plans, and this
is one of the focuses of management. MyTurn.com is continuing to explore sources
of capital, including debt and equity investments. There can be no assurance
that any investor will make a debt or equity investment in MyTurn.com. If future
investments are made, MyTurn.com cannot assure that they will be made on terms
as favorable as MyTurn.com would like nor can MyTurn.com predict at this time
the size of such an investment. If MyTurn.com is unable to secure additional
financing within 90 days, it will not be able to
14
<PAGE>
continue to develop its current business plan. Consequently, MyTurn.com will
have to scale back its operations.
In March 2000, MyTurn.com received a financial commitment from Michael Fuchs,
its recently appointed Chairman of the Board and Interim Chief Executive Officer
to fund working capital deficits of up to $500,000 per month for the 12 months
beginning April, 2000 if proceeds from operations or other fund raising efforts
are not sufficient to meet MyTurn.com's working capital needs. Fund raising
opportunities are being explored but no assurance can be given that any
offerings will be undertaken or any agreements to raise capital will be reached.
Additionally, MyTurn.com received a commitment from certain members of
management who hold options to purchase up to 3,159,405 Common Shares that they
will exercise these options on or prior to June 30, 2000. That exercise would
generate proceeds of up to approximately $8,100,000.
See Note 2 "Capital Stock and Equivalents" to the Consolidated Condensed
Financial Statements for discussion of non-cash stock compensation charges that
MyTurn.com recognized during the three month period ended March 31, 2000.
MyTurn.com will recognize non-cash stock compensation charges of approximately
$38,000,000 in future periods, over the vesting period of the options. These
non-cash earnings charges will not impact MyTurn.com's cash flow or net
stockholders' equity.
Year 2000 Issues
The Year 2000 ("Y2K") problem is the result of computer programs being written
using two digits (rather than four) to define the applicable year. Any of
MyTurn.com's programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system failures. MyTurn.com instituted a Y2K compliance
program, the objective of which was to determine and assess the risks of the Y2K
issue, and plan and institute mitigating actions to minimize those risks.
MyTurn.com's standard for compliance requires that, for a computer system or
business process to be Y2K compliant, it must be designed to operate without
error in date and date-related data. MyTurn.com believes it is fully Y2K
compliant with respect to all significant business systems.
MyTurn.com's Y2K plan consisted of four phases:
o assessment and analysis of "mission critical" systems and equipment;
o remediation of systems and equipment, through strategies that include the
enhancement of new and existing systems, upgrades to operating systems
already covered by maintenance agreements and modifications to existing
systems;
o testing of systems and equipment; and
o contingency planning which will address possible advers scenarios and the
potential financial impact to MyTurn.com's results of operations, liquidity
or financial position.
15
<PAGE>
All four phases of MyTurn.com's Y2K plan have been implemented, and, to date,
MyTurn.com has not experienced any Y2K problems. However, management believes it
is prudent to maintain its contingency plans in the event any problems should
arise in the future.
Contingency Plans
MyTurn.com's management developed a "worst-case scenario" with respect to Y2K
non- compliance and to develop contingency plans designed to minimize the
effects of such scenario. Although MyTurn.com believes that it is very unlikely
that any of these worst-case scenarios will occur, contingency plans have been
developed and address both IT system and non-IT system failure.
If suppliers of services that are critical to MyTurn.com's operations were to
experience business disruptions as a result of their lack of Y2K readiness,
their problems could have a material adverse effect on the financial position
and results of operations of MyTurn.com. Although MyTurn.com has not experienced
any Y2K problems of any suppliers. However, due to the change in focus of its
business at the end of 1999, MyTurn.com's suppliers are changing and no
assurance can be given that MyTurn.com's suppliers will not have any Y2K
problems. The impact of a failure of readiness by critical suppliers cannot be
estimated with confidence, and the effectiveness of contingency plans to
mitigate the effect of any such failure is largely untested. Management cannot
provide an assurance that there will be no material adverse effects to the
financial condition or results of operations of MyTurn.com as a result of Y2K
issues. The statement contained under the "Year 2000 issues" heading is subject
to protection under the Year 2000 Information and Readiness Disclosure Act.
Forward Looking Statements
Certain information contained in the matters set forth above are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and is subject to the safe harbor created by that
act. MyTurn.com cautions readers that certain important factors may affect the
MyTurn.com's actual results and could cause such results to differ materially
from any forward-looking statements which may be deemed to have been made above
and elsewhere in this Quarterly Report or which are otherwise made by or on
behalf of MyTurn.com. For this purpose, any statements contained above and
elsewhere in this Quarterly Report that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting the generality
of the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "intend," "could," "estimate," "plan," or "continue" or the
negative variations of those words or comparable terminology are intended to
identify forward-looking statements. Factors which may affect MyTurn.com's
results include, but are not limited to the risks and uncertainties associated
with the Internet and Internet-related technology and products, new technology
developments, developments and regulation in the telecommunications industry,
the competitive environment within the Internet and telecommunications
industries, the ability to enter into agreements with mass merchandise retailers
and develop other sales outlets for its products, the ability of MyTurn.com to
partner with a hardware manufacturer to produce the GlobalPC personal computing
device, the ability of MyTurn.com to secure licenses for all software
applications it plans to embed, bundle or otherwise include in its products, the
ability of MyTurn.com to expand its
16
<PAGE>
operations, the level of costs incurred in connection with MyTurn.com's planned
expansion efforts, unascertainable risks related to possible acquisitions, the
competence required and experience of management, the risk of loss of management
and personnel, economic conditions, the ability of MyTurn.com to raise
additional capital which will be required within the next 90 days to continue to
develop and sustain its business at current levels and to implement MyTurn.com's
business plan and generate revenue, uncertainties inherent in litigation.
MyTurn.com is also subject to other risks detailed herein or detailed from time
to time in MyTurn.com's Securities and Exchange Commission ("SEC") filings
PART II OTHER INFORMATION
Item 1. Legal Proceedings
On or around April 12, 2000, Christopher Leng Smith commenced an action
against MyTurn.com, Inc. in the United States District Court for the Southern
District of New York (the "Action"). Mr. Smith was one of the investors in a
private placement undertaken by MyTurn.com through its placement agent
Hornblower & Weeks, which closed in November 1999. In the Action, Mr. Smith
alleges that MyTurn.com failed to file a registration statement covering the
Common Shares which he purchased in the private placement within thirty (30)
days after the date funds in that private placement were released from escrow
and that the registration statement was not declared effective within 120 days
of the escrow break. Mr. Smith is claiming damages of at least $540,625 based
upon the registration statement not being declared effective within 120 days
after the break of escrow, plus $1,250 for each thirty (30) days that the
registration statement is not declared effective after March 6, 2000.
MyTurn.com, Inc. plans to vigorously defend the Action but is also taking steps
to settle the Action. Because of uncertainties inherent in litigation,
MyTurn.com cannot predict the outcome of this Action.
ITEM 2. Changes in Securities
In January 2000, MyTurn.com issued an aggregate of 675,000 Common Shares to 24
persons in connection with MyTurn.com's private placement of units, each
consisting of 25,000 Common Shares and warrants to purchase 12,500 Common Shares
at a price of $50,000 per unit.
This transaction was a private transaction not including a public offering and
was exempt from the registration provisions of the Securities Act. MyTurn.com
determined that the investors in this offering were accredited. This offering
was undertaken through MyTurn.com's placement agent Hornblower & Weeks, Inc.
("Hornblower"). The certificates representing the Common Shares issued in this
private placement bear restrictive legends permitting the transfer thereof only
upon registration of such securities or pursuant to an exemption under the
Securities Act.
In March 2000, MyTurn.com issued 400,000 Common Shares to Hornblower pursuant to
the terms of an investment banking agreement between Hornblower and MyTurn.com.
In January 2000, MyTurn.com issued to nine designees of Joseph Charles &
Associates, Inc. warrants to purchase an aggregate of 90,000 Common Shares at an
exercise price of $6.375 per
17
<PAGE>
share, vesting upon the date of issuance and exercisable for five years. These
warrants were issued pursuant to an agreement terminating an investment banking
agreement.
In January 2000, MyTurn.com issued to Michael Fuchs warrants to purchase an
aggregate of 1,000,000 Common Shares. The warrants have exercise prices of $5.00
for 500,000 Common Shares, and $7.00, $9.00, $11.00, $13.00 and $15.00 for
100,000 Common Shares each, respectively. The warrants became exercisable to
purchase 500,000 Common Shares on January 21, 2000 and 500,000 Common Shares on
April 4, 2000.
In January 2000, MyTurn.com issued to Joseph Antonini warrants to purchase
125,000 Common Shares. The warrants are exercisable to purchase 50,000 Common
Shares on January 21, 2000, 25,000 Common Shares at the time MyTurn.com receives
private placement equity funding of at least $5,000,000, 50,000 Common Shares at
the time MyTurn.com secures firm orders from at least two national mass merchant
retailers to participate in the roll-out of MyTurn.com's GlobalPC, and 25,000
Common Shares when MyTurn.com closes a public offering of equity securities. The
warrants are exercisable for a period of five years from the issuance date. The
warrants have exercise prices of $5.00 for 50,000 Common Shares and $9.00,
$12.00 and $15.00 per share for the remaining tranches in the chronological
order that those tranches become exercisable.
In February 2000, MyTurn.com issued to two persons an aggregate of 99,050 Common
Shares as a finder's fee for introducing MyTurn.com, Inc. to Hornblower,
pursuant to an agreement dated September 17, 1999.
The above transactions were private transactions not involving a public offering
and were exempt from the registration provisions of the securities act pursuant
to Section 4(2) thereof. MyTurn.com determined that the persons who were issued
the above securities were sophisticated investors. Such issuances of securities
were without the use of an underwriter, and the certificates evidencing such
securities bear restrictive legends permitting the transfer thereof only upon
registration of such securities or pursuant to an exemption under the Securities
Act.
In March 2,000, MyTurn.com issued an aggregate of 303,051 Common Shares to 18
persons and Class A, Class B or Class C warrants to purchase an aggregate of
1,083,805 Common Shares to 13 persons. The Common Shares and warrants were
issued in a private offering undertaken in connection with the MyTurn.com's
acquisition of assets from Global PC, Inc. which closed on December 22, 1999.
The warrants are exercisable at $2.50 per share, in cash or pursuant to a net
issue exercise.
This transaction was a private transaction not including the public offering and
was exempt from the registration provisions of the Securities Act. MyTurn.com
determined that the investors in the offering were the accredited or
sophisticated. Such issuances of securities were without the use of an
underwriter, and the certificates evidencing such securities bear restrictive
legends permitting the transfer thereof only upon the registration of such
securities or pursuant to an exemption under the Securities Act.
During the first quarter 2000, MyTurn.com issued 225,700 Common Shares to 15
holders of Bridge Warrants, 138,000 Common Shares to the holder of Underwriter's
Warrants and 90,207
18
<PAGE>
Common Shares to the holder of Private Placement Warrants. The resale of the
Common Shares issued upon the exercise of the Bridge Warrants is covered by
MyTurn.com's post-effective Amendment No. 1 to Registration Statement on Form
SB-2 on Form S-3, which was declared effective by the SEC on June 21, 1999. The
resale of the Common Shares issued upon the exercise of the Private Placement
Warrants is covered by MyTurn.com's registration statement on Form S-3, which
was declared effective by the SEC on December 15, 1998.
ITEM 5. Other Information
On May 1, 2000, MyTurn.com entered into a one-year agreement with Genuity, a
subsidiary of GTE Corporation, for Internet dial access services. Under ths
agreement, Genuity will provide nationwide 56K Internet dial access, RADIUS
security authentication, credit card and debit card verification and billing,
and news server access to all MyTurn.com=s customers where Genuity has local
points of presence (or PoPs). These services will be marketed under MyTurn.com=s
GlobalPC brand name. MyTurn.com will be responsible for registering the users,
providing e-mail service and providing help desk services, as well as
incorporating Genuity as the default Internet service provider (or ISP) in its
GlobalPC products and services.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits Description of Exhibit
2 Agreement of Merger between MyTurn.com and Coastal Computer Systems, Inc.,
a New York corporation.*
3.1 Articles of Incorporation of MyTurn.com.*
3.2 Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock, filed with the Secretary of State of the State of Delaware
on June 5, 1998.**
3.3 Certificate of Designations, Preferences and Rights of Series B Convertible
Preferred Stock, filed with the Secretary of State of the State of Delaware
on September 2, 1998. ***
3.4 Amended and Restated By-Laws of MyTurn.com.****
4.1 Specimen Common Share Certificate.*
10.21 Portal Services Agreement dated as of February 2, 2000 between Inktomi
Corporation and GPC Acquisition Corp.****
10.2 Agreement dated January 19, 2000 between MyTurn.com and Digex, Inc.
10.23License Agreement dated March 8, 2000 between CNN Interactive, a division
of Cable News Network LP, LLLP and MyTurn.com, Inc.
19
<PAGE>
10.24Technical Support Service Agreement dated March 6, 2000 between National
Support Center L.L.C. and MyTurn.com.
10.5 Cross License and Distribution Agreement dated as of February 12, 2000
between New Deal, Inc. and MyTurn.com.****
27 Financial Data Schedule.
* Previously filed as an exhibit to MyTurn.com's Registration Statement on Form
SB-2, Registration No. 333-18667.
** Previously filed as an exhibit to the Company's Quarterly Report on Form
10-QSB for the period ended June 30, 1998.
*** Previously filed as an exhibit to MyTurn.com's Quarterly Report on Form
10-QSB for the period ended September 30, 1998.
**** Previously filed as an exhibit to MyTurn.com's Annual Report on Form 10-KSB
for the period ended December 31, 1999.
(b) Current Report on Form 8-K
Current Reports on Form 8-K were filed by the Company during the three month
period ended March 31, 2000 as follows:
Date of Event: December 22, 1999
Item Reported: 2 and 7
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused the Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 15, 2000 MyTurn.com, Inc.
By: /s/ Michael Fuchs
------------------------
Chairman of the Board
/s/ David Greenspan
------------------------
Chief Financial Officer
21
<PAGE>
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Compu-DAWN, Inc., dba MyTurn.com TERMS AND CONDITIONS
The following terms and conditions (these "Terms") govern the provision by
DIGEX, Inc. ("Company") of the services and/or products (referred collectively
herein as "Services and Products") described on the Server Order Form and
Contract attached hereto ("Order Form") and defined in Company's product support
listing, to the customer ("Customer") identified on the Order Form. The Order
Form, these Terms and the attachments hereto, which are identified on the Order
Form, executed with respect to the Services and Products are referred to herein,
collectively, as this "Agreement."
1. Obligations of Company. Company shall install within ten business days
after execution by Company of the Order Form, unless otherwise specified in
the Order Form, and maintain the Services and Products which are designated
in the Order Form (as such may be supplemented pursuant to Section 5,
below). Company will use its best efforts to assure that Customer's
Internet server will be available 24 hours a day, seven days a week. If the
Customer's Internet server is unavailable for more than a total of 4 hours
in any week, other than as a result of the maintenance activities described
in Section 4, below, fees for that week will be waived and the applicable
monthly invoice will be adjusted accordingly. For the purposes of this
Agreement, a week shall be considered to run from Sunday to Saturday.
Customer's Internet server shall be deemed to be not available for purposes
of this Section 1 if Company's standard hardware, software, or operating
system is functioning in a manner that prevents http, ftp, or mail access
to the Internet server ("Unavailability"). For purposes of this Section 1,
Unavailability shall not be deemed to occur hereunder as a result of
Customer action or inaction, including, but not limited to, Customer
utilization of Customer owned, non-standard, or unsupported hardware and/or
software installed by the Customer or Company at the Customer's request.
2. Obligations of Customer. Customer shall comply with all of the terms of
this Agreement, including, but not limited to, the Acceptable Use Policy
attached hereto as Attachment A (the "Use Policy"), as the use Policy may
be modified from time to time. Upon notice from Company, Customer promptly
shall eliminate any hazard, interference or service obstruction that any
hardware or software used by Customer, whether or not provided by Company
("Customer Materials"), is causing, or is likely to cause. If Customer
requests Company to assist it in removing any hazards, interference or
service obstruction that Customer Materials are causing or are likely to
cause, Company may, but is not required to, assist in such removal. The
charges for Company's services in connection with such assistance shall be
at rates determined by Company at the time such services are requested and
payment with respect thereto shall be made in accordance with Section 3,
below. In the event that the primary function(s) of Customer's web site is
impaired during non-business hours or holidays, and Company has been unable
to successfully locate and/or contact an authorized representative of
Customer, Company may take reasonably steps to restore the functionality of
Customer's web site without prior Customer approval. Any necessary work
that is performed by Company to restore functionality that was impaired by
Customer design flaws or errors are billable to Customer. Customer
understands that Customer shall pay to
<PAGE>
Company a billable rate for time and materials, as indicated on the Order
Form under Time and Expense Order. These charges are in excess of the
monthly recurring charges.
3. Payment.
3.1 Generally. Charges for the Services and Products (including the
charges described in the balance of this Section 3.1, the "Charges")
are set forth on the Order Form. Charges shall commence to accrue on
the date that Company provides access codes to Customer ("Operational
Date"). All payments for Charges shall be made in U.S. Dollars.
Customer may pre-pay the Charges for the entire term of this Agreement
or may pay the Charges on a monthly basis. Charges shall be invoiced
to Customer in advance at the beginning of the month. Any additional
charges, including, but not limited to, any early cancellation
charges, accrued interest, late fees and any usage- based charge,
including, but not limited to, charges for network access to the
Internet, shall be invoiced in arrears and shall appear on the monthly
invoices for Services and Products or separate invoices. In all cases,
payments for Charges are due upon receipt by Customer of the invoices
for such Charges. In addition to any other remedies that may be
available to Company under this Agreement (including, but not limited
to, in connection with the termination of this Agreement pursuant to
Section 6 below) or applicable law, Charges that are not paid in full
thirty (30) days after receipt by Customer of the invoice therefore (a
"Payment Default") will be subject to interests charges of the lesser
of one and one-half (1.5%) per month or portion thereof and the
highest amount permitted by law, which interest shall accrue daily.
Customer shall be liable for all amounts owed to Company pursuant to
this Agreement, irrespective of the termination of this Agreement.
Customer also shall pay to Company all expenses incurred by Company in
exercising any of its rights under this Agreement or applicable law
with respect to the collection of a Payment Default, including, but
not limited to, reasonable attorneys' fees and the fees of any
collection agency retained by Company.
3.2 Taxes. Customer shall be liable for, and shall reimburse Company and
indemnify and hold Company harmless from all local, state, federal and
non-United States taxes or similar assessments or charges (including
any interest and penalties imposed thereon), other than taxes based on
the net income of Company, arising out of, or relating to this
Agreement of the sale of the Services and Products hereunder.
3.3 Pass Through Items and Other Expenses. Company will have the right at
any time during any term of this Agreement to pass through and invoice
to Customer any new or increased fees, assessments, taxes or other
charges imposed on or required to be collected by Company by any
governmental agency or any new or increased charges by any carrier
that affect Company's costs in providing Services and Products to
Customer. Customer also will be responsible for paying any sales,
license and use taxes, fees, or assessments levied by any local, state
or federal government or governmental agency with respect to the
provision of Services and Products under this Agreement. Customer will
pay and be solely responsible for all taxes, fees and charges levied
directly upon it.
<PAGE>
4. Maintenance. Company designates time period ("Scheduled Maintenance
Windows") during which it may limit or suspend the availability of the
hardware and/or software involved in providing its Services and Products
(an "Outage") to perform necessary maintenance or upgrades. Scheduled
Maintenance Windows currently are each Tuesday and Friday between the hours
of 4 am and 8 am and the third Saturday of each month between the hours of
4 am and 12 noon, Eastern Standard Time and Pacific Standard Time. If
planned maintenance has the possibility of making the server or servers, as
the case may be, utilized by Customer inaccessible to the Internet during a
Scheduled Maintenance Window, Company will provide not less than
twenty-four (24) hours prior electronic mail or other notice to Customer of
the Scheduled Maintenance Window during which the Outage is planned. In
addition, Company reserves the right to perform any required maintenance
work outside of the Scheduled Maintenance Window with prior notice to
Customer. Notwithstanding the foregoing, and provided that Customer
maintains a Platinum or Strategic Account, Customer shall be entitled to
defer any scheduled or unscheduled maintenance to a subsequent Scheduled
Maintenance Window provided that any adverse effects to Customer's Service
and Products relating to such deferral shall be the sole responsibility of
Customer and, provided further, that Customer shall not be entitled to
defer maintenance which is required to be immediately applied to all
customers in order to maintain the security and/integrity of the applicable
Company Data Center.
5. Additional Products or Services. With Company's concurrence, Customer may
orally request service or products ("Additional Item") then offered by
Company in addition to the Services and Products (an "Oral Request"). An
Oral Request may only be made by the individual(s) listed as the authorized
customer upgrade contact on the Order Form. Customer will have five (5)
business days after making the Oral Request to cancel the Additional Item
in writing. As soon as practicable after receiving the Oral Request,
Company will begin the installation process with respect to the Additional
Item. Customer will be charged Company's then current list price for the
Additional Item. If Customer cancels the Oral Request, Customer shall pay
all applicable charges of Company with respect to the installation of the
Additional Item. An Additional Item shall be subject to this Agreement.
6. Term and Termination. The initial term of this Agreement shall commence on
the Operational Date and upon expiration shall automatically renew for
successive ninety (90) day terms at the Charges in effect at the
commencement of such terms (which Charges shall have been communicated to
Customer in writing forty-five (45) days prior to the end of the preceding
term) or until written notice of non-renewal by either party is delivered
to the other party at least thirty (30) days prior to the end of the then
current term.
6.1 Termination by Company. In addition to any other rights it may have
under this Agreement or applicable law, Company may, at its option,
terminate this Agreement, upon (i) a Payment Default which breach is
not cured by Customer within ten (10) business days of Customer's
receipt of such breach, (ii) Customer's failure to comply with any
other obligation of Customer under this Agreement which Breach is not
cured by Customer within ten (10) business days of Customer's receipt
of such breach (iii) Customer's failure to comply with any of the
terms of the Use Policy
<PAGE>
which breach is not cured by Customer with two (2) business days of
Customer's receipt of such breach, (iv) Customer ceasing to do
business in the normal course, becoming or being declared insolvent or
bankrupt, being the subject of any proceeding relating to liquidation
or insolvency which is not dismissed within 120 calendar days or
making an assignment for the benefit of its creditors or (v) any
attempt by Customer to derive any source code from the Services or
Products.
6.2 Termination by Customer. Customer may terminate this Agreement with
respect to all, and not less than all of the Services and Products in
the event of (a) a material breach by Company of its obligations under
this Agreement which breach is not cured within ten (10) business days
after written notice thereof is received by Company, or (b) otherwise
in the first sixty (60) days of the initial term hereof (collectively,
a "Permissible Termination"). In the vent of a Permissible
Termination, Customer shall pay (i) installation Charges, (ii) a
pro-rated Charge based on the number of days Company provided Service
and Products prior to the date of termination of this Agreement by
Customer under this Section 6.2, and (iii) if the Services and
Products include software for which Company does not then provide
general customer support, Customer shall pay to Company an amount
equal to Company's cost of such software for the entire term. If
Customer terminates this Agreement other than in a Permissible
Termination, Customer shall pay to Company an amount equal to all
unpaid Charges for the remainder of the then current term of this
Agreement.
6.3 Rights and Obligations on Termination. Upon termination of this
Agreement, Company and Customer shall have no obligations to each
other except as provided in this Agreement. Upon termination of this
Agreement, Customer shall (i) pay all amounts due and owing to
Company, (ii) remove from Company's premises all property owned by
Customer and (iii) return to Company all software, access keys and any
other property provided to Customer by Company under this Agreement.
Any property of Customer not removed from Company's premises within
ten (10) days after such termination shall become the property of
Company, which may, among other things, dispose of such property
without the payment of any compensation to Customer. The rights and
obligations of both parties, which by their nature would continue
beyond the termination of this Agreement (including, without
limitation, those relating to confidentiality, payment of Charges,
limitations of liability and indemnification), shall survive such
termination.
7. Proprietary Rights. Company hereby grants Customer a non-exclusive,
non-transferable license to use the Services and Products provided
hereunder during the term of this Agreement. All rights with respect to the
Services and Products, including, but not limited to, intellectual property
or similar rights with respect therefore belong exclusively to Company,
whether or not they are embedded in any Service or Product. Notwithstanding
the foregoing, Customer shall not be obligated to make any royalty or other
payments with respect to the Services and Products other than as provided
in this Agreement.
<PAGE>
8. Proprietary Rights Indemnification.
----------------------------------
8.1 By Customer. Customer agrees to indemnify and hold harmless Company,
all individuals or entities controlling, controlled by or under common
control with Company (each, a "Company Affiliate"), and the officers,
directors, attorneys and employees of Company and each Company
Affiliate (a "Section 8.1 Indemnified Party") against any losses,
claims, damages, liabilities, penalties, actions, proceedings or
judgments (collectively, "Losses") to which a Section 8.1 Indemnified
Party may become subject related to or arising out of any infringement
or misappropriation or alleged infringement or misappropriation of any
United States copyright, trade secret or other proprietary right
related to any hardware or software utilized by Customer in connection
with any of the Services or Products and will reimburse a Section 8.1
Indemnified Party for all legal and other expenses, including
reasonable attorneys' fees incurred by such Section 8.1 Indemnified
Party in connection with Investigating, defending or settling any Loss
whether or not in connection with pending or threatened litigation in
which such Indemnified Party is a party.
8.2 By Company. Company agrees to indemnify and hold harmless the
Customer, all individuals or entities controlling, controlled by or
under common control with Customer (each, a "Customer Affiliate"), and
the officers, directors, attorneys and employees of Customer and each
Customer Affiliate ) (a "Section 8.2 Indemnified Party") against any
Losses to which the Section 8.2 Indemnified Party may become subject
related to or arising out of infringement or misappropriation or
alleged infringement or misappropriation of any United States
copyright, trade secret or other proprietary right related to the
equipment and software provided by the Company to the Customer, and
will reimburse the Section 8.2 Indemnified Party for all legal and
other expenses, including reasonable attorney's fees incurred in
connection with investigating, defending, or settling any such loss,
claim, damage, liability, action or proceeding whether or not in
connection with pending or threatened litigation in which the Customer
is a party. This indemnification does not relate to the Customer's
content or matters that arise from Customer's content or conduct. The
provisions of this Agreement relating to indemnification shall survive
termination of Customer's account. If any such Products and Services,
or any part thereof, is an infringement or a misappropriation, then
Company will, at no additional charge to the Customer, use
commercially reasonable efforts to either: (i) procure for Customer
the right to continue using such Products and Services or part
thereof; or (ii) replace such Products and Services with
non-infringing Products and Services; or (iii) modify the same so as
to make it non-infringing; or (iv) the Agreement as to the infringing
Products and Services will terminate, and Company shall refund to
Customer any and all of the unused portion of the fees paid for such
Products and Services.
9. Indemnification. In addition to other indemnification provided herein,
Customer agrees to indemnify and hold harmless Company, each Company
Affiliate and the officers, directors, employees and agents of Company and
each Company Affiliate (each an "Indemnified
<PAGE>
Party") against any losses, claims, damages, liabilities, penalties,
actions, proceedings or judgments (collectively, "Losses") to which an
Indemnified Party may become subject and which Losses arise out of, or
relate to (1) Customer's illegal, fraudulent, willful or reckless
misconduct, except that Customer shall not Indemnify Company with respect
to any Loss arising our of or related to Company's illegal, fraudulent,
willful or reckless misconduct, (2) any web site content provided by
Customer, or (3) any Customer business model and any business transacted
over or through Customer's web site. Customer will reimburse an Indemnified
Party for all legal and other expenses, including reasonable attorneys'
fees incurred by such Indemnified Party in connection with investigating,
defending or settling any Loss whether or not in connection with pending or
threatened litigation in which such Indemnified Party is a party.
10. Limitation on Company Liability. The parties acknowledge that the
limitations set forth in this Section 10 are integral to the amount of fees
levied in connection with this Agreement, and that, were Company to assume
any further liability other than as set forth herein, such fees would of
necessity be set substantially higher. Company does not monitor or exercise
control over the content of the information transmitted through its
facilities. Use of the Services and Products or any information that may be
obtained therefrom is at Customer's own risk. Company shall have no
responsibility or liability for the accuracy or quality of information
obtained through its Services and Products. Company shall not be deemed to
be in default of any provision of this Agreement or be liable for any
delay, failure of performance or interruption of the provision of Services
and Products to Customer resulting, directly or indirectly, from any (i)
weather conditions, natural disasters or other acts of God, (ii) action of
any governmental or military authority, (iii) failure caused by
telecommunications or other Internet provider, or (iv) other force or
occurrence beyond its control. The exclusive remedy against Company for any
damages whatsoever to Customer arising our of or related to this Agreement
shall be the refund of the fees paid by Customer to Company with respect to
the then current term of this Agreement. COMPANY SHALL NOT BE LIABLE FOR
(I) ANY INDIRECT, INCIDENTAL SPECIAL OR CONSEQUENTIAL DAMAGES, OR FOR ANY
LOSS OF PROFITS OR LOSS OF REVENUE RESULTING FROM THE USE OF THE COMPANY'S
SERVICES AND PRODUCTS BY CUSTOMER OR ANY THIRD PARTIES EVEN IF COMPANY HAS
BEEN ADVISED OF THE POSSIBILITY THEREOF, OR (II) ANY LOSS OF DATA RESULTING
FROM DELAYS, NONDELIVERIES, MISDELIVERIES OR SERVICE INTERRUPTIONS. COMPANY
PROVIDES THE SERVICES AND PRODUCTS AS IS, WITHOUT WARRANTY OF ANY KIND,
WHETHER EXPRESS OR IMPLIED. COMPANY DISCLAIMS ALL IMPLIED WARRANTIES,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER SHALL BE SOLELY RESPONSIBLE FOR
THE SELECTION, USE AND SUITABILITY OF THE SERVICES AND PRODUCTS AND COMPANY
SHALL HAVE NO LIABILITY THEREFORE. The limitations of liability provided in
Section 10 of this Agreement shall inure to the benefit of Company and all
Company Affiliates and to all of the respective officers, directors,
attorneys, employees and agents of Company and such other entities
("Limited Liability Parties"). The limitations of liability afforded
Company in this Agreement shall apply
<PAGE>
whether (i) the action in which recovery is sought is based in contract,
tort (including, but not limited to, negligence or strict liability),
statute or otherwise or (ii) a Limited Liability Party is alleged to be
liable jointly with one or more parties or otherwise.
11. Other Customer Assurances. During any time period when Customer is provided
access to any facilities, hardware or other property owned or leased by, or
otherwise under the control of Company (collectively "Company Property")
pursuant to this Agreement, Customer shall (i) maintain insurance with
Company as named payee, covering any damage or destruction to Company
property (collectively "Damage") and (ii) reimburse Company for all
expenses incurred by Company in replacing or repairing, as the case may be,
any Damage caused by Customer.
11.1 Limited Company Liability. Neither Company nor any of its officers,
directors, employees, and agents shall be liable for any damage or
destruction of equipment or other materials belonging to, leased by,
or otherwise under the control of Customer, whether or not any such
equipment or materials are at any time located in facilities owned or
operated by Company, except where such damage or destruction is a
direct result of the gross negligence, recklessness or willful
misconduct of Company or any of its officers, directors, employees,
and agents.
12. Confidentiality.
---------------
12.1 Confidentiality. The parties recognize that they will have access to
confidential proprietary information and/or trade secrets of the other
party. Customer specifically acknowledges that the Services and
Products constitute valuable trade secrets of Company. Accordingly,
the parties agree that (i) the provisions of this Agreement (ii) any
information whatsoever with respect to the Services and Products,
(iii) the course of dealing between Company and Customer hereunder and
(iv) all other non- public information relating to the foregoing,
including but not limited to user information submitted through
Customer's web forms, and the number of such web forms submitted
(collectively, the "Confidential Information") shall be treated by
parties on a confidential basis and shall not be reproduced, reduced
to writing, or disclosed to any employees of the parties (except on a
need to know basis and then only if the employee is subject to an
obligation of confidentiality) or any other person or entity without
the prior written consent of the disclosing party. Upon termination of
this Agreement, any documentation or data reflecting any Confidential
Information shall be promptly returned to the disclosing party.
Confidential Information shall not include any information that the
recipient can demonstrate was publicly available through no act of the
recipient. Disclosure of information pursuant to applicable statutes,
Court Order, subpoena or regulations (collectively, "Laws") shall be
excepted from this provision; provided, however, that prior to any
disclosure pursuant to any Laws, the recipient will assert the
confidential nature of the Confidential Information and will cooperate
fully with the disclosing party, at disclosing party's expense, in
protecting against any such disclosure including, but not limited to,
obtaining a protective order or similar order narrowing the scope of
<PAGE>
such disclosure of the Confidential Information. In the event such
protection is not obtained, the recipient shall disclose the
Confidential Information only to the extent necessary to comply with
the Laws.
12.2 Tampering. The parties agree that they will not attempt to copy or in
any way, alter, re-engineer or otherwise tamper with any of the
Confidential Information.
12.3 Injunctive Relief. The parties acknowledge that violation of the
provisions of Sections 12.1 or 12.2 above, could cause irreparable
harm to the disclosing party not adequately compensable by monetary
damages. In addition to other relief, it is agreed that injunctive
relief shall be available to the disclosing party in the event of such
violations without necessity of posting bond to prevent any actual or
threatened violations of such sections.
13. Transfer and Assignment. Neither party may sell, assign or transfer any of
its rights or obligations under this Agreement without the prior written
consent of the other party, provided however, that either party may assign
this Agreement without such consent in connection with any merger,
consolidation, or sale of substantially all of such party's assets or any
other transaction in which more than 50% of such party's securities are
transferable and/or such party transfers its rights or obligations to a
subsidiary or parent entity, provided further that the acquiring party in
any such sale, merger, consolidation or transfer is creditworthy.
14. Use of Customer's or Company's Name. Company shall be permitted to use
Customer's name in connection with proposals to prospective customers and
otherwise in print or electronic form for marketing or other purposes,
including, but not limited to, use in connection with (i) compliance with
applicable laws or regulations; and (ii) the protection of any rights
relating to Company or its business. Customer may use the name "DIGEX" in
connection with the Services and Products or otherwise only with Company's
prior written consent.
15. No Third Party Beneficiaries. Except as otherwise specifically provided
herein, this Agreement inures to the benefit of Company and Customer only
and no third party shall enjoy the benefits of this Agreement or shall have
any rights hereunder.
16. Notices. Unless otherwise specified herein, any notices or other
communications required or permitted hereunder shall be sufficiently given
if in writing and delivered personally or sent by facsimile transmission,
internationally recognized overnight courier, registered or certified mail
(postage prepaid with return receipt requested), to the address or
facsimile number of Customer as set forth in the Order Form or Company as
set forth below. Such notices or other communications shall be deemed
received (i) on the date delivered, if delivered personally, (ii) on the
date that return confirmation is received, if sent by facsimile, (iii) on
the business day (or, if international, on the second business day) after
being sent by an internationally recognized overnight air courier or (iv)
five days after being sent, if sent by first class registered mail, return
receipt requested.
<PAGE>
Compu-DAWN, Inc., dba MyTurn.com, 333 North First Street, Suite
200, Jacksonville, FL 32250, Attention: David Greenspan, CFO,
Facsimile: (904) 249-0359
DIGEX, Inc. One DIGEX Plaza, Beltsville, Maryland 20705,
Attention: Legal Department, Facsimile Number: (301) 847-4909
17. Survival of Claims. Any claims arising out of or related to this Agreement
must be brought no later than one year after it has accrued.
18. Independent Contractor Status. Nothing in this Agreement or in the course
of dealing between Company and Customer pursuant hereto shall be deemed to
create between Company and Customer (including their respective directors,
officers, employees and agents) a partnership, joint venture, association,
employment relationship or any other relationship other than that of
independent contractors with respect to each other.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland, without regard to choice
of law provisions that would cause the application of the law of another
jurisdiction.
20 Dispute Resolution.
------------------
20.1 Mutual Discussions; Mediation. If a dispute or difference of any kind
whatsoever (a "Dispute") shall arise between Company and Customer in
connection with, relating to or arising out of this Agreement,
including the interpretation, performance, non- performance, or
termination hereof, the parties shall attempt to settle such Dispute
in the first instance by mutual discussions. If such Dispute has not
been resolved within thirty (30) days by mutual discussions, the
parties shall endeavor to settle the Dispute by mediation under the
Mediation Rules of the American Arbitration Association prior to any
recourse to arbitration pursuant to Section 20.2, below.
20.2 Arbitration. If such Dispute cannot be settled within thirty (30) days
after submission to mediation pursuant to Section 20.1, above, such
Dispute shall be settled by an arbitral tribunal (the "Tribunal")
under the Arbitration Rules of the American Arbitration Association
(The "Arbitration Rules"). Each party shall appoint an arbitrator
within thirty (30) days after the expiration of the aforementioned
thirty-day period, which arbitrators shall then jointly appoint a
third arbitrator within thirty (30) days after the appointment of the
second arbitrator, to act as president of the Tribunal. Arbitrators
not so appointed shall be appointed pursuant to the Arbitration Rules.
The costs of the arbitration shall be borne by the parties as
determined by the Tribunal. The award rendered in any arbitration
commenced hereunder shall be final and conclusive and judgment thereon
may be entered in any court having jurisdiction for its enforcement.
Neither party shall (i) appeal to any court from the decision of the
Tribunal or (ii) have any right to commence or maintain any suit or
legal proceeding concerning a Dispute until such Dispute has been
determined in accordance with the arbitration procedure provided for
herein,
<PAGE>
and then only for enforcement of the award rendered in such
arbitration. All mediation and arbitration proceeding pursuant to this
Agreement shall take place in Prince George's County, Maryland.
21. Headings. The section and subsection headings have been used in this
Agreement as a matter of convenience only and shall not be used in the
interpretation of any provision of this Agreement.
22. Non-Waiver, Waiver and Amendment. Failure by either Company or Customer to
enforce any of the provisions of this Agreement or any rights with respect
hereto or the failure to exercise any option provided hereunder shall in no
way be considered to be waiver of such provisions, rights or options, or to
in any way affect the validity of this Agreement. No waiver of any rights
under this Agreement, nor any modification or amendment of this Agreement
shall be effective or enforceable unless in writing and signed by both
parties, except as provided by Section 5, above.
23. Severability. If one or more of the provisions contained in this Agreement
are found to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not
be affected.
24. Entire Agreement. This Agreement constitutes the entire agreement of the
parties and supersedes all oral negotiations and prior writings with
respect thereto. When used in this Agreement, the terms "hereof", "herein"
and "hereunder" refer to this Agreement in its entirety, including any
attachments to this Agreement and not to any particular provisions of this
Agreement, unless otherwise indicated.
25. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same Instrument.
USE OF COMPANY SERVICES AND PRODUCTS CONSTITUTES ACCEPTANCE OF
THESE TERMS AND CONDITIONS
AGREED BY CUSTOMER: AGREEMENT BY COMPANY
Compu-DAWN, Inc., dba MyTurn.com DIGEX, Inc.
BY: /s/ Paul Danner BY: /s/ Gregg F. Furst
------------------------------------------------ ----------------------
NAME: Paul Danner NAME: Gregg F. Furst
------------------------------------------- --------------------
TITLE: CEO TITLE: VP
----------------------------------------------- ------------------
DATE: 1-19-00 DATE: 1-20-00
----------------------------------------------- -------------------
Approved by Legal
/s/ illegible
-------------------------
Date 1/19/00
----------------
<PAGE>
ACCEPTABLE USE POLICY
Sections 3.6, 3.7 and 3.8 apply only to Web Site Management Group.
1. Introduction.
This document sets forth the principles, guidelines and requirements of the
Acceptable Use Policy of Intermedia Communications Inc. and its direct and
indirect wholly-owned subsidiaries, including, but to limited to, Digex,
Incorporated and Shared Technologies Fairchild Telecom, Inc. (collectively and
individually, the "Company") governing the use by the customer ("Customer") of
the Company's services and products ("Services and Products"). The Acceptable
Use Policy has been created to promote the integrity, security, reliability and
privacy of Company's Web Site Management Facility, network, and Customer data
contained within. Company retains the right to modify the Acceptable Use Policy
at any time and any such modification shall be automatically effective as to all
customers when adopted by the Company.
Questions or comments regarding the Acceptable Use Policy should be
forwarded to the Company via:
E-mail: [email protected]
---------------
Telephone: 301-847-6200, 1-800-581-8711
2. Compliance With Law.
Customer shall not post, transmit, re-transmit or store material on or
through any of Services or Products which, in the sole judgment of the Company
(i) is in violation of any local, state, federal or non-United States law or
regulation, (ii) threatening, obscene, indecent, defamatory or that otherwise
could adversely affect any individual, group or entity (collectively, "Persons")
or (iii) violates the rights of any person, including rights protected by
copyright, trade secret, patent or other intellectual property or similar laws
or regulations including, but not limited to, the installation or distribution
of "pirated" or other software products that are not appropriately licensed for
use by Customer. Customer shall be responsible for determining what laws or
regulations are applicable to its use of the Services and Products.
3. Prohibited Uses of Services and Products.
In addition to the other requirements of this Acceptable Use Policy, the
Customer may only use the Services and Products in a manner that, in the
Company's sole judgment, is consistent with the purposes of such Services and
Products. If the Customer is unsure of whether any contemplated use or action is
permitted, please contact the Company as provided above. By way of example, and
not limitation, uses described below of the Services and Products are expressly
prohibited.
<PAGE>
3.1. General.
3.1.1. Resale of Services and Products, without the prior written
consent of the Company.
3.1.2. Deceptive on-line marketing practices.
3.1.3. Violations of the rights of any Person protected by copyright,
trade secret, patent or other intellectual property or similar
laws or regulations, including, but not limited to, the
installation or distribution of "pirated" or other software
products that are not appropriately licensed for use by Customer.
3.1.4. Actions that restrict or inhibit any Person, whether a customer
of the Company or otherwise, in its use or enjoyment of any of
the Company's Services or Products.
3.2. System and Network.
3.2.1. Introduction of malicious programs into the network or server
(e.g., viruses and worms).
3.2.2. Effecting security breaches or disruptions of Internet
communication. Security breaches include, but are not limited to,
accessing data of which the Customer is not an intended recipient
or logging into a server or account that the Customer is not
expressly authorized to access. For purposes of this Section
3.2.2., "disruption" includes, but is not limited to, port scans,
flood pings, packet spoofing and forged routing information.
3.2.3. Executing any form of network monitoring which will intercept
data not intended for the Customer's server.
3.2.4. Circumventing user authentication or security of any host,
network or account.
3.2.5. Interfering with or denying service to any user other than the
Customer's host (for example, denial of service attack).
3.2.6. Using any program/script/command, or sending messages of any
kind, designed to interfere with, or to disable, a user's
terminal session, via any means, locally or via the Internet.
3.2.7. Creating an "active" full time connection on a Company-provided
dial-up account for Internet access by using artificial means
involving software, programming or any other method.
3.2.8. Utilizing a Company-provided dial-up account for purposes for
Internet access other than facilitating connectivity to the
Services and Products provided by the Company. This includes
copying or creating files utilizing more than 5MB of disk space
on the dial-up account servers.
3.2.9. Failing to comply with the Company's procedure relating to the
activities of customers on the Company's premises.
<PAGE>
3.3. Billing.
3.3.1. Furnishing false or incorrect data on the order form, contract
or online application, including fraudulent use of credit card
numbers.
3.3.2. Attempting to circumvent or alter the processes or procedures
to measure time, bandwidth utilization, or other methods to
document "use" of the Company's Services and Products.
3.4. Mail.
3.4.1. Sending unsolicited mail messages, including sending of "junk
mail" or other advertising material to individuals who did not
specifically request such material, who were not previous
customers of the Customer or with whom the Customer does not have
an existing business relationship ("E-mail spam").
3.4.2. Harassment, whether through language, frequency of size of
messages.
3.4.3. Unauthorized use, or forging, of mail header information.
3.4.4. Solicitations of mail for any other E-mail address other than
that of the poster's account or service with the intent to harass
or to collect replies.
3.4.5. Creating or forwarding "chain letters" or other "pyramid
schemes" of any type.
3.4.6. Use of unsolicited E-mail originating from within the Company's
network or networks of other Internet Service Providers on behalf
of, or to advertise, any service hosted by the Company, or
connected via the Company's network.
3.5. Usenet Newsgroups.
3.5.1Posting the same or similar messages to large numbers of Usenet
newsgroup ("Newsgroup spams").
3.5.2. Posting chain letters of any type.
3.5.3. Posting encoded binary files to newsgroups not specifically
named for that purpose.
3.5.4. Cancellation or superseding of posts other than your own.
3.5.5. Forging of header information.
3.5.6. Solicitations of mail for any other E-mail address other than
that of the poster's account or service, with intent to harass or
to collect replies.
3.5.7. Use of unsolicited E-mail originating from within the Company's
network or networks of other Internet Service Providers on behalf
of, or to advertise, any service hosted by the Company, or
connected via the Company's network.
Please note that the following only apply if the Customer uses the relevant
platform and has purchased web site hosting services and/or products.
<PAGE>
3.6. Roles Regarding UNIX Managed Server.
3.6.1. Customer may not create/update/delete accounts created and
maintained by the Company. Specifically, the Company account may
not be altered in any manner nor may any account with a UID of
less than 1000 be altered.
3.6.2. Customer may not change the partitioning or mount points of any
drive.
3.6.3. Customer may not create/update/delete any file in the /usr
directory tree.
3.6.4. Customer may not install Micrsoft(C)FrontPage Extensions unless
updated on the /usr directory tree.
3.6.5. Customer may not create .rhosts or /etc/.host.equiv files.
3.6.6. Customer may not implement any procedure or process that would
allow one to login as root without using the root password.
Customer may not create suid scripts or programs.
3.6.7. Customer may not alter the system kernel.
3.6.8. Customer may not alter the /sys or /etc/system directory trees
or any files contained therein.
3.6.9. Customer may not apply operating system and application patches
to software not installed and solely maintained by the Customer,
unless notification is given to the Company.
3.6.10. Customer may not change the root shell.
3.6.11. Customer may not alter the contents of /.k5login.
3.6.12. Customer may not alter /etc/fstab or /etc/vfstab.
3.6.13. Customer may not share or export file systems. This includes
modifying /etc/exportfs, /etc/dfs/sharetab, and /etc/netgroup.
3.6.14. Customer may not modify the decode or root alias in the
/etc/aliases file.
3.6.15. Customer may not change the "identity" of the system. This
includes modifying/etc/hosts, /etc/hostname.*,
/etc/defaultrouter, /etc/networks and /etc/ethers.
3.6.16. Customer may not modify the system in any manner that
restricts or alters access to the system by the Company's
employees.
3.6.17. Customer may acquire root privileges after successful login of
a valid non- root userid and using su to gain access as root.
3.6.18. Customer may create/update/delete all aspects of Customer
created user accounts. This may include modifying home directory
permissions, user passwords, etc.
3.6.19. Customer may use FTP to create/update/delete files and
directories.
3.6.20. Customer may add to, but may not modify, existing data in the
following configuration files: /etc/aliases, /etc/group,
/etc/rc.local, /etc/sendmail.cf file and root crontab.
3.6.21. Customer may install software on the server provided the
installation meets all of the criteria detailed above, and the
Company is notified of such installation.
<PAGE>
3.7. Roles Regarding Windows NT Managed Server.
3.7.1. Customer may not create/update/delete accounts created and
maintained by the Company. Specifically, Company account may not
be altered in any manner.
3.7.2. Customer may not install software that does not execute as a
service.
3.7.3. Customer may not install software that does not have a remote
administration capability.
3.7.4. Customer may not install applications that do not run within a
logon account different from that of the installing user.
3.7.5. Customer may not install applications which must be restarted
when one user logs off and another user logs on.
3.7.6. Customer may not install applications that do not execute when
an individual is not logged on to the server.
3.7.7. Customer may not modify the network and system settings of the
server.
3.7.8. Customer may not apply operating system and application patches
to software not installed and solely maintained by the Customer,
unless notification is given to the Company.
3.7.9. Customer may use FTP to create/update/delete files and
directories.
3.7.10. Customer may create/update/delete all aspects of Customer
created user accounts. This includes modifying home directory
permissions, user passwords, etc.
3.7.11. Customer may start and stop all Windows NT 4.0 Services,
including the WWW and FTPservices.
3.7.12. Customer may install software on the server provided the
installation meets all of the criteria detailed above, and the
Company is notified of such installation.
3.8. Abuse of bandwidth during a Web Site Management Beta Period will
result in termination of applicable network discounts and commencement
of billing based upon normal network recurring charges.
4. Enforcement.
Company may immediately suspend and/or terminate the Customer's service for
violation of any provision of the Acceptable Use Policy upon verbal or written
notice, which notice may be provided by voicemail or E-mail. However, the
Company attempts to work with the Customer to cure violations of the Acceptable
Use Policy and to ensure that there is no re-occurrence of violations prior to
suspension and/or termination.
<PAGE>
GLOSSARY
o Acceptable Use Policy: Guidelines for services and products for Web Housing
and Internet Connectivity.
o Address/IP Spoofing: Inserting forged routing information into network
packet(s) such that the origin of the packet is misreported, which causes
return packets to be misrouted.
o Binary Files: A file containing bits or bytes that do not necessarily
represent printable text. The term binary file usually denotes any file
that is not a text file, such as executable machine language code. Special
software is required to print a binary file or view it on the screen.
o Bulk E-mail: Any group of messages sent via E-mail, with substantially
identical content, to a large number of addresses at once. Many ISPs
specify a threshold for bulk E-mail (e.g., 25 or more recipients within a
24-hour period). Taken by itself, bulk E-mail is not necessarily abuse of
the electronic mail system. For example, there are legitimate mailing
lists, some with hundreds or thousands of willing recipients.
o Commercial E-mail: Any E-mail message sent for the purposes of distributing
information about a for-profit institution, soliciting purchase of products
or services, or soliciting any transfer of funds. It also includes
commercial activities by not-for-profit institutions.
o Cracks: Distribution of registration codes for software in violation of the
software license, or distribution of any software intended to defeat copy
protection.
o Deceptive On-Line Marketing Practices: Marketing practices that present a
false image of the advertised product (or of the advertiser). One example
of a deceptive on-line marketing practice would be an E-mail that purports
to originate from the recipient's ISP or from a well-known company. Other
examples include fraud, multi-level marketing, or any commercial or
non-commercial activity that is conducted for the purpose of confusing,
misleading or misinforming the E-mail and/or Internet users.
o Electronic mail (E-mail) Spam: Unsolicited E-mail from which a recipient
cannot unsubscribe, or unsolicited E-mail to a recipient who does not have
a previous business or other relationship with the sender.
o Forged Routing Information: Routing information which is misleading or
incorrect or which would tend to disguise the origin of the routed
material. Usually refers to information that is not generated by any
routing device (such as a mail server), but is inserted by a party using
software which is designed to produce false routing information (headers in
the case of E-mail).
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o FTP: File Transfer Protocol. A standard way of transferring files from one
computer to another on the Internet and on other TCP/IP networks. FTP is
also the name of any of various computer programs that implement the file
transfer protocol. Customers can also retrieve files by FTP using a web
browser.
o MMF: Make Money Fast Schemes: Messages that "guarantee immediate,
incredible profits!," including such schemes as chain letters.
o Mailbomb: Delivery of enough E-mail to an electronic mailbox to overload
the mailbox or potentially overload the system that the mailbox is hosted
on.
o Newsgroup Spams: A public forum or discussion area on a computer network.
All users of the network can post messages, and every user can read all
messages distributed worldwide by the Usenet system, covering thousands of
topics.
o Packet Spoofing: Emitting a network packet with a source address you do not
have permission from the owner to use.
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License Agreement
This License Agreement is made and entered into as of the 8th day of March, 2000
(the "Effective Date") by and between MyTurn.com, Inc. ("Company"), a Delaware
corporation located at 12735 Gran Bay Parkway North, Building 200, Jacksonville,
FL, 32253 and CNN Interactive, a division of Cable News Network LP, LLP ("CNN"),
a Delaware limited partnership, located at One CNN Center, Atlanta, GA, 30303.
1. Overview
During the Term (as defined below), the parties will establish links
between Company's Internet portal site located at http://www.myturn.com (the
"Company Internet Site") and a CNN Internet site currently known as "CNN
Interactive" (the "CNN Site"). In connection with such links, CNN will provide
data, resident on the Company servers, that will be sponsored exclusively by
Company and will contain CNN Logos (as defined below). Such data will contain
CNN news headlines news summaries, full stories and links to the CNN Site. The
co-branded news content provided under this Agreement will be promoted to buyers
of Company's GEOS-based sub-$500 computer (including 56K modem and limited
applications software) known as "GlobalPC" and distributed via mass-market
general retail outlets (the "Device"). CNN will allow Company to use the CNN
name as further provided in this Agreement and branding to conduct such
promotion subject to prior approval of CNN.
2. Term
The term of the Agreement will commence from the Effective Date and, unless
earlier terminated pursuant to the terms of this Agreement, will continue for a
period the earlier of one year from the launch of the Device or until June 15,
2001 (the "Term"). CNN will commence providing CNN content by no later than
April 17, 2000.
3. Creation and Display of CNN Content
3.1 CNN will create and/or otherwise provide the content set forth on
Exhibit A attached hereto and regularly update all content and other materials
provided by CNN to Company ("CNN Content"). CNN hereby grants Company a limited
non-exclusive license to use the CNN Content in accordance with the terms set
forth herein. The Company's news pages will be designed by Company with CNN's
design input, and will display the CNN Logo. Company also will provide one (1)
unit of the Device and/or emulation software for CNN's use in connection with
the development and testing of the CNN Content. Company covenants to maintain
the most updated CNN Content on the Company Internet Site at all times.
3.2 The CNN Content will correspond to the sections of the CNN Site
identified on Exhibit A hereto and incorporated herein. Each full story on the
Company Internet Site will include a link to CNN.
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3.3 Company must secure, maintain and pay for all Company's equipment
tariffs, telecommunications service and any related or other charges necessary
for its reception and distribution of the CNN Content. Company shall be solely
responsible for maintaining all equipment and access necessary to access and/or
receive the CNN Content. In addition, Company shall also be responsible for
obtaining and complying with any necessary authorizations, licenses or other
permissions, if any, that may be required of Company by any appropriate
authority.
3.4 CNN shall publish the CNN Content in a mutually agreed upon technical
format and updated in a manner designed to provide timely news and information
on a consistent basis to reflect breaking news. CNN Content will be displayed
and hosted by the Company servers except where technically infeasible (e.g.,
stock quotes), and CNN will maintain and exercise absolute editorial control and
discretion over the substance and selection of all CNN Content and all other
content of any type provided by CNN as part of this Agreement. CNN shall have
the right in its good faith sole discretion, to withdraw any CNN Content for any
legal or business reason it deems reasonably necessary. At CNN's request Company
shall immediately take action to remove the withdrawn CNN Content. Company shall
have no right, nor authorize any entity, to transmit, modify, alter, edit,
sublicense or otherwise use the CNN Content, provided to it hereunder. Company
shall only have the right to archive any CNN Content for nor more than fourteen
(14) days. Company shall restrict access to any CNN Content on the Company
Internet Site to users who access the CNN Content via the Device. Company may
allow users who are not accessing the Company's Site via the Device to view CNN
news and information of the type included in the CNN Content with links directly
to the CNN Site.
3.5 Company acknowledges that the license to use the CNN Content is
non-exclusive and may appear on third-party sites. Company further acknowledges
that CNN will be the exclusive business, sports and general news provider for
Company, and Company accordingly will not display or promote any content
created, distributed or provided by any of the entities listed on Exhibit B
attached hereto and made part hereof except that Company may provide almanac
content from any other provider to supplement the CNN Content as long as such
content does not reside on the same pages as CNN Content.
3.6 Subject to the foregoing, the CNN Content will not contain advertising
placements, and neither party will sell any advertising for placement on any of
the CNN Content. Company will not (i) sell any advertising or other placements
targeted for display against any of the CNN Content, or the CNN Site, and (ii)
place or permit placement of any material of any kind on, in, surrounding or
adjacent the CNN Content except that Company can display advertising and other
content on pages that contain links to the CNN Content and on search pages that
return CNN Content.
4. Logo Licenses
4.1 CNN hereby grants Company a limited non-exclusive license to use the
name of CNN and the CNN Interactive service mark (collectively, the "CNN Logo")
during and in accordance with the terms hereof. Such license is granted solely
for the purpose of permitting Company to use the CNN Logo (i) on the Company
Internet Site as a hypertext link/navigational button to the CNN site from the
home pages of the Company Internet Site (the "CNN Internet Link")
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as further described in Section 4.1(a) below and (ii) in connection with
approved promotional uses as further described in Sections 4.1(b) and (c) below.
Company must obtain the prior approval of CNN for each and every Company use and
reproduction of the CNN Logo, except that Company need not obtain prior approval
to reprint, rebroadcast or retransmit during the Term any material that is
identical to previously-approved material and further except as set forth
herein. Company will not use or reproduce the CNN Logo for any purposes not
expressly set forth herein, and Company expressly acknowledges that it may not
use the CNN Logo to promote the Company Internet Site or any Company products or
services other than the Device, except as set forth herein.
(a) The CNN Internet Link may not be used in any manner
to provide viewers access to the CNN Site via any
caching (except for performance reasons), framing,
layering or other techniques that cause intermediate
copying of the CNN Site (or elements thereof) or
display of the CNN Site or portions thereof in any
manner unintended by CNN, including, without
limitation, display of the CNN Site with any
materials posted by Company or any party other than
CNN.
(b) Solely to promote the availability of the news
content provided by CNN under this Agreement, Company
may use the CNN Logo on and in Company product
packaging and instruction manuals and materials which
shall be submitted to CNN for approval prior to use;
television, radio and print advertising; in-store
display material; and promotional literature for the
Device.
4.2 Company hereby grants CNN a limited non-exclusive license to use the
Company service mark (the "Company Logo") during and in accordance with the
terms hereof. Such license is granted solely (i) for the purpose of displaying
the Company Logo on the CNN Content along with the CNN Logo, and (ii) placing
the Company Logo on the CNN Content (at CNN's discretion) as a Company Internet
Link. CNN will not be allowed to use or reproduce the Company Logo for any other
purpose, including the promotion of CNN's on-line services or the CNN Site,
without the prior written approval of Company.
4.3 Each party's use of the other's Logo will be limited to the style and
format of such Logos as provided by such party. Each party hereby grants the
other the right to download the other's Logo from its Internet Site for use as
set forth herein.
4.4 Company represents, warrants, and agrees that the context in which the
CNN Logo is used will not be derogatory to or critical of the news or
entertainment industries or of CNN, its parent, subsidiary or affiliated
companies, or any of their respective officers, directors, agents, or employees,
or of any program produced or distributed by CNN or its parent, subsidiary or
affiliated companies, or any of their respective officers, directors, agents, or
employees.
4.5 Each party hereto warrants that it will maintain no less than the level
of editorial and technical standards shown in the representative samples of such
party's Internet Site provided to the
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other in connection with this Agreement. Each party hereto agrees to use such
Logos only in the form provided by the other party and subject to the conditions
provided herein.
4.6 Neither party will in any way suggest or imply through use of the other
party's Logo or otherwise that its Internet Site or on-line service is directly
affiliated with, endorsed by or created in association with the other party.
4.7 Each party has paid and/or will pay any and all costs which it has
incurred or will incur as a result of its usage or downloading of the other
party's Logo and any other costs of performance hereunder and will not hold the
other party responsible for any portion thereof.
4.8 CNN acknowledges that the Company Logo is owned by Company and Company
acknowledges that the CNN Logo is owned by CNN. Neither party will do anything
inconsistent with such ownership and all uses of the Logos will inure to the
benefit of and are on behalf of the respective owner of the Logo. Nothing in
this Agreement grants either party any right, title or interest in the other
party's Logo other than the limited license set forth herein. Each party further
agrees that it will not attack or assist others in attacking the title of the
Logo of the other party.
4.9 Other than as expressly authorized herein, each party agrees not to use
any other trademark or service mark in combination with the other party's Logo
without the prior written approval of such party.
4.10 Each party agrees to notify the other party of any unauthorized use of
such party's Logo promptly as it comes to the notifying party's attention. Each
party will have the sole right and discretion to bring infringement or other
proceedings involving its own Logo.
5. Fees
Company will pay to CNN a total fee of Eight Hundred Seventy-Five Thousand
Dollars ($875,000.00) for the Term (the "Fee"), payable as follows: Eighty Seven
Thousand Five Hundred Dollars ($87,500.00) upon execution of this Agreement
(which has been paid as of the date hereof) and the balance in quarterly
payments of One Hundred Ninety Six Thousand Eight Hundred Seventy Five Dollars
($196,875.00) beginning on April 15, 2000 and each payment thereafter shall be
due and payable ten (10) days following the end of the following three month
period. In the event the Agreement is terminated prior to the end of the Term,
the fee shall be reduced on a pro-rata basis for the number of days from the
date of discontinuation by the Company of the use of the CNN Logo and CNN
Content to the expiration of the Term.
6. General Terms
6.1 Limitation of Liability. EXCEPT FOR THIRD PARTY CLAIMS FOR WHICH A
PARTY HERETO IS INDEMNIFIED UNDER SECTION 6.13, UNDER NO CIRCUMSTANCES WILL
EITHER PARTY BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES) SUCH AS, BUT NOT LIMITED TO, LOSS OF
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REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY CLAIM ARISING OUT OF ANY DOWNLOADING OR OTHER USE OF ANY OF THE
CONTENT BY USERS OF EITHER THE SPONSOR INTERNET SITE OR THE CNN INTERNET SITE.
6.2 Disclaimer. NEITHER PARTY HERETO MAKES, AND EACH PARTY HERETO
SPECIFICALLY DISCLAIMS AND AGREES THAT THE OTHER HAS NOT MADE ANY,
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE OPERATION OF
SUCH PARTY'S INTERNET SITE, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE WITHOUT LIMITING THE FOREGOING, EACH PARTY
ACKNOWLEDGES THAT THE OTHER'S SITE IS OPERATED ON AN "AS IS" BASIS, AND NEITHER
PARTY MAKES ANY WARRANTY THAT ITS SITE WILL BE ERROR-FREE OR THAT ACCESS THERETO
WILL BE UNITERUPTED.
6.3 Termination of Agreement. This Agreement will expire on the date set
forth in Section 1 hereof. In addition, the non-breaching party may terminate
this Agreement with written notice to the breaching party in the event that a
material breach of a material term of this Agreement has not been cured by the
breaching party within thirty (30) days of written notice thereof. In addition,
CNN may terminate this Agreement (i) on thirty (30) days' notice in the event
that any third-party content provider to CNN objects to any activity of CNN
arising out of or related to this Agreement or (ii) upon twenty-four (24) hours
notice in the event that CNN determines in its sole discretion exercised in good
faith that any pages CNN Content, as viewed in connection with the Device, do
not meet the reasonable standards of CNN; provided, that, CNN shall give Company
notice (via fax, e-mail or phone) of the concerns surrounding the CNN Content on
the Device and Company shall have a period of three (3) business days to cure
such concerns.
Within sixty (60) days following any termination or expiration of this
Agreement, except for termination pursuant to Section 6.3(i) or (ii), in which
case upon termination of this Agreement, the Company will discontinue
immediately all use of the CNN Logo and delete or destroy all CNN materials in
any medium or format that are within Company's possession, custody or control.
Upon any termination or expiration of this Agreement, CNN will discontinue
immediately all use of the Company Logo and delete or destroy Company materials
in any medium or format that are within CNN's possession, custody or control
except for packing or instruction materials which are in the Company's inventory
at the time of such termination.
6.4 Amendments to this Agreement. No amendment to or modification of this
Agreement will be binding upon any party unless such amendment or modification
is reduced to writing, dated and executed by both parties to this Agreement.
6.5 Assignment. Neither this Agreement, any right or license granted
hereunder or any portion thereof will be assigned or transferred to any third
party, by operation of law or otherwise, without the prior written consent of
the other party; provided however, either party may assign this
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Agreement without the prior written consent of the other to any person, firm or
entity controlled by, controlling or under common control with such party or in
connection with the sale of substantially all of the assigning party's assets or
a merger, consolidation or the like (a "Transaction") where the assigning party
is not the surviving entity; provided, that, if Company enters into a
Transaction with an entity CNN reasonably deems a competitor CNN shall have the
right to terminate the Agreement upon thirty (30) days prior notice.
6.6 Confidentiality. Each party agrees that this Agreement, its terms and
all information and items shared hereunder, tangible and intangible, will remain
confidential and will not be disclosed to any third party for any reason without
the prior written consent of the other party, unless such disclosure is required
by or made pursuant to the order of a court of competent jurisdiction or a
government agency or otherwise pursuant to law, rule or regulation and except
further as provided in this Agreement.
6.7 Waiver and Remedies. The failure of either party at any time to require
performance by the other party will in no way affect the right of either party
thereafter to enforce the same provision, nor will the waiver of either party of
any breach of any provision herein be held or taken to be a waiver of succeeding
breach or as a waiver of the provision itself. No waiver will be effective
unless it is in writing and is signed by both of the parties hereto. All
remedies, rights, undertakings, obligations and agreements contained in this
Agreement will be cumulative and none of them will be in limitation of any other
remedy, right, undertaking, obligation or agreement of either party.
6.8 Notices. All notices and statements required or permitted by this
Agreement will be deemed to have been given when delivered in person or five (5)
days after having been deposited with the United States Post Office, Certified
Mail, return receipt requested, postage prepaid and properly addressed. Any
notices sent to Company will be addressed to Company at the address first set
forth above, and any notices sent to CNN will be sent to CNN interactive, One
CNN Center, P.O. Box 105366, Atlanta, Georgia 30348-5366, attention: Vice
President, Business Development with a simultaneous copy to CNN, One CNN Center,
P.O. Box 105573, Atlanta, Georgia 30348-5773, attention: General Counsel.
6.9 Severability. If any provision in this Agreement is declared invalid or
unenforceable in any respect, the parties agree that such invalidity or
unenforceability will not affect the validity of the remaining provisions of
this Agreement, and further agree to substitute for the invalid provision a
valid provision which approximates the intent and economic effect of the invalid
provision as closely as possible.
6.10 Descriptive Headings. The descriptive headings of the several sections
of this Agreement are used for convenience only and will not control or affect
the meaning or construction of any of the provisions hereof.
6.11 Governing Law, Venue and Jurisdiction. This Agreement will be governed
by and construed in accordance with the laws of the State of Georgia. The
parties agree that the exclusive
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jurisdiction and venue for any action relating to this Agreement will be a
federal or state court in Atlanta, Georgia and the parties hereby consent to
such jurisdiction and venue.
6.12 Force Majeure; Delay. Neither party hereto will be responsible for
delays in performance caused by acts of God or governmental authority, strikes
or labor disputes, satellite failure or malfunction, electrical outage,
equipment failure, fires or other loss of facilities, or any other cause,
whether similar or dissimilar, beyond the reasonable control of that party;
provided, however, that in the event of such delay for ten (10) or more
consecutive days or thirty (30) or more days within a single sixty (60) day
period, then the other party hereto will be entitled to terminate this Agreement
without further liability or obligation.
6.13 Indemnification. Each of the parties hereto will indemnify, defend and
hold the other party hereto, its parent, subsidiaries, affiliates, predecessors,
successors and assigns and their respective agents, officers, directors and
employees harmless from and against any and all losses, costs, claims, damages
(including attorney's fees and expenses and allocable fees of in-house counsel),
liability, demands or expenses, which may arise out of or derive in any way from
(i) any failure of such party to maintain all rights and licenses necessary in
connection with the license of such party's Logo hereunder, (ii) any
infringement of any copyright, trademark, patent, music synchronization rights,
music performing rights, master music recording rights, still photography, film
and videotape footage rights, or (iii) any claim or defamation, invasion of the
right or privacy or publicity or infringement of any other right of any kind of
any third party.
6.14 Reservation of Rights. Each of the parties hereby reserves all rights
in and to its respective Logos not specifically granted herein. Each party will,
with respect to its respective Logo, at all times, anywhere in the world, and
whether or not in competition with the other party, have the right to use and/or
authorize the use of their respective Logo, or any portion thereof, in any way
such party may desire which is not inconsistent with the terms hereof. Except
for Company's rights in the Company Logo, any and all rights in and to the CNN
Site, and/or the CNN Content, not expressly granted to Company herein are hereby
expressly reserved by CNN and may be exercised and exploited freely by CNN in
any manner it deems appropriate in any medium now known or hereafter known. All
copyrights and other rights in and to the CNN Site, and/or CNN Content, and all
derivative works thereof will remain with CNN and Company will not acquire,
obtain or claim any copyright or other proprietary interest in or to any such
materials by reason of this Agreement or any license granted herein;
accordingly, Company agrees to and hereby does assign and/or transfer to CNN
without payment any rights in or to any such materials or any derivative works
thereof it may inadvertently or otherwise acquire in connection herewith. Except
for the CNN Logo as displayed thereon, the Company Internet Site and all rights
therein are proprietary to Company and CNN will not be deemed to have acquired
any copyright or other ownership interest in the Company Internet Site.
6.15 Publicity. CNN will work with Company on a press release to announce
the relationship established by this Agreement. The timing and content of such
release will be as mutually agreed upon by the parties. Except as otherwise
provided in this Agreement, neither party will undertake any marketing or
promotional effort or make any public statement, press release or
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other announcement relating or referring to their relationship or the terms of
this Agreement without the prior written approval of the other, which shall not
unreasonably be withheld.
6.16 No Joint Venture. Nothing contained herein will create or suggest any
affiliation, association, partnership, agency or joint venture between the
parties. Neither party hereto will represent itself as the associate, partner,
agent or joint venturer of the other in any way whatsoever.
6.17 No Other Agreements. This Agreement, including the Exhibits hereto,
contains the entire understanding and agreement of the parties with respect to
the subject matter hereof, and supercedes any prior written or oral agreements
between them with respect thereto. Except as so set forth, there are no
representations, agreements, arrangements or understandings, written or oral
between the parties, with respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal effective as of the day and year above written.
MyTurn.com, Inc. CNN Interactive, a division of
Cable News Network LP, LLP
Signature: /s/ Rudy Theale Signature: /s/ Donna K. Lewis
---------------------- ------------------
Printed Printed
Name: Rudy Theale Name: Donna K. Lewis
--------------------------- ------------------
Title: President Title: SVP
-------------------------- ------------------
Date: 3/9/00 Date: 3/8/00
--------------------------- ------------------
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Exhibit A
CNN Content/Sections and Features
CNN will deliver content substantially in the form set forth below. Such content
will be updated every twenty minutes (with the exception of weather which will
be updated every hour).
o US News: CNN will deliver 3-5 headlines, summaries, full stories/link
and photos (where available).
o World News: CNN will deliver 3-5 headlines, summaries, full
stories/link and photos (where available).
o Business from CNNfn: CNN will deliver 3-5 headlines, summaries, full
stories/link and photos (where available); delayed market indices for
NYSE AMEX and NASDAQ; CNN shall make the CNN stock quote database
(resident on CNN servers) accessible upon electronic query by Company.
o Politics from AllPolitics: CNN will deliver 3-5 headlines, summaries,
full stories/link and photos (where available).
o Science and Technology: CNN will deliver 3-5 headlines, summaries, full
stories/link and photos (where available).
o Sports from CNN/SI: CNN will deliver 3-5 headlines, summaries, full
stories/link and photos (where available); scoreboards to include all
major U.S. sports and major worldwide sporting events.
o Entertainment: CNN will deliver 3-5 headlines, summaries, full
stories/link and photos (where available); time zone links to local
television programming schedules; and a zip code entry field that
likewise links to local television programming schedules.
In addition, CNN will provide:
o Weather: Thumbnail images of national (North America) weather maps,
each of which will link to the corresponding full-size map; and a zip
code entry field that links to local weather forecast data.
o Almanac: Features known as Quote of the Day, Birthdays and News
Related Links of the Day.
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TECHNICAL SUPPORT SERVICE AGREEMENT
This Technical Support Service Agreement ("Agreement") is made effective as
of March 6, 2000 (the "Effective Date") and is between NATIONAL SUPPORT CENTER,
L.L.C., a Delaware limited liability corporation having its address at 1300
Ferry Road, Naperville, Illinois 60563 ("NSC") and MyTurn.com, Inc., a Delaware
corporation having its address at 960 Atlantic Avenue, Suite 200, Alameda,
California 94501 ("MyTurn.com") (sometimes NSC and MyTurn.com are individually
referred to as a "Party" or collectively referred to as the "Parties").
RECITALS
A. MyTurn.com presently sells certain Internet related computing products,
after- market applications and services including, without limitation, the
computing device commonly known as "GlobalPC", (the "Products") to its consumer
customers.
B. MyTurn.com desires to establish a relationship with NSC to provide
technical support services for the Products and screening services for MyTurn's
Internet Service Provider to its consumer customers.
C. MyTurn.com desires to engage the services of NSC to provide such
services in North America in accordance with the provisions and conditions
contained in this Agreement.
WITNESSETH
NOW THEREFORE, in consideration of the above described recitals and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:
1. Incorporation And Acceptance.
1.1 The Parties agree that the above paragraphs which identify them, recite
the purposes and intent of this Agreement and acknowledge consideration are
accurate; and, it is specifically agreed that the above paragraphs are
incorporated into and made an integral part of this Agreement.
1.2 The Parties further agree that the foregoing incorporation of those
paragraphs has specific legal effect and is not intended to be merely precatory;
and it is specifically acknowledged that the statement of consideration is
intended and shall be deemed contractual.
1.3 The Parties further acknowledge and agree that the terms of this
Agreement are fair and equitable and each respectively agree to comply with all
of its terms.
2. NSC's Consumer Customer Support Services.
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2.1 The technical support services to be provided hereunder by NSC to
MyTurn.com shall be those as generally described herein and more specifically
set forth on Exhibit A hereto.
2.2 NSC shall be the exclusive first line support provider to MyTurn.com of
said technical support services for the Products during the Term of this
Agreement.
3. Effective Date Of Agreement. This Agreement shall be and become effective as
of the date identified above as the "Effective Date", which shall be the
effective date even though it may be a date other or different than the actual
date of execution of this document by the last party whose signature is
required.
4. Term and Termination.
4.1 Term. The initial term of this Agreement shall commence on the
Effective Date of this Agreement, shall expire on the first anniversary thereof
(the "Term"), and shall thereafter automatically continue for one (1) successive
one-year term unless either party provides notice of non-renewal at least sixty
(60) days before the expiration of the then-current term (which may be the Term
or a successor term). Following the Term, NSC may terminate this Agreement,
without cause, with thirty (30) days' prior written notice to MyTurn.com. If
either party notifies the other of non-renewal before expiration of any term,
both parties shall continue to be bound by all the terms of this Agreement, and
NSC shall continue to provide technical support services for the Products to
MyTurn.com's consumer customers in accordance with the terms of this Agreement
for a transition period of sixty (60) days (the "Transition Period") after the
expiration of the then-current term. This Agreement shall automatically expire
on the final day of the Transition Period, unless renewed before that date.
4.2 Termination for Breach. Each party shall have the right to terminate
this Agreement in the event MyTurn.com materially breaches any term of this
Agreement and fails to cure such breach in the course of the dispute resolution
procedures set forth below at Section 9 ("Dispute Resolution").
4.3 Effect of Termination - Survival. Sections 4 ("Term and Termination"),
5 ("Payment"), 6 ("Covenants and Warranties"), 7 ("Confidential Information"), 8
("Limitation of Liability; Indemnity"), 9 ("Dispute Resolution"), and 10
("General Provisions") shall survive termination of this Agreement.
5. Payment. NSC will invoice MyTurn.com for the technical support services
described herein and provided hereunder, each calendar week for NSC's Consumer
Customer Technical Support Services (as described herein and on Exhibit A)
rendered in the previous calendar month, which shall be calculated in accordance
with NSC's Consumer Customer Technical Support Service Activity-Based Pricing
(as described herein and on Exhibit B) and which shall contain a schedule of the
services rendered and the related pricing, and MyTurn.com shall pay each such
invoice in good and collected funds net 30 days from the date of each invoice.
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5.1 Cooperation MyTurn.com shall provide, or cause to be provided, to NSC,
the assistance of officers, employees, representatives and affiliates, or such
assistance as may reasonably be requested.
5.2 Late Payment. MyTurn.com will pay interest on late payments at the rate
of one and one-half percent (1.5%) per month or the highest interest rate
allowed, whichever is lower.
5.3 Non-Compliance. If MyTurn.com fails to comply substantially with any of
the payment provisions set forth in this Section 5, nothing in this Agreement to
the contrary withstanding, NSC shall be relieved of any further obligation to
provide technical support services for the Products under this Agreement.
6. Covenants and Warranties.
6.1 Each Party agrees that the covenants and warranties given each to the
other in this paragraph are in addition to any other covenant and warranty
contained in this Agreement, and that the existence of this paragraph is not
intended to nor shall it be construed as a limitation of the covenants and
warranties given herein to each other.
6.2 Each Party acknowledges that the entry by the other into this Agreement
is in reliance upon the truth and accuracy of the covenants and warranties of
the other in this paragraph and those covenants and warranties found elsewhere
in the Agreement.
6.3 Each party hereto covenants, warrants and represents as follows:
6.3(a) That each has full power and authority and legal right to enter into
this Agreement and the transactions contemplated herein, and acknowledge the
specific covenant and warranty above.
6.3(b) That each party is presently capable, legally and economically, to
comply with all the obligations, terms and conditions required to be done by
each respective party to this Agreement.
6.3(c) That the consummation of the transaction as contemplated by this
Agreement and the performance or observance of each party's obligations under
this Agreement will not conflict with or result in any breach of any condition
or provision of the terms of any contract, agreement, instrument, judicial
order, writ, injunction or decree to which either is a party or by which either
of them is bound.
6.3(d) Disclaimer of Warranties. EXCEPT AS SET FORTH HEREIN, EACH PARTY
EXPRESSLY DISCLAIMS ALL WARRANTIES OR CONDITIONS OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF TITLE,
NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Further,
in the absence of gross negligence on the part of
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NSC, MyTurn.com agrees that NSC shall not be liable to MyTurn.com for loss of
profit or other financial loss (including without limitation loss resulting from
the loss of business) which may be caused, directly or indirectly, by the
inadequacy of the technical support service for any purpose or any use thereof
or by any deficiency or defect therein.
6.3(e) Non-Solicitation of Employees. During the Term (or any successor
term) of this Agreement and for a period of one hundred eighty (180) days
following the Term (or any successor term), neither Party will solicit nor hire
personnel from the other without express written consent from the other Party.
7. Confidential Information.
7.1 Confidential Information. Each party (the "Disclosing party") may from
time to time during the term of this Agreement disclose to the other party (the
"Receiving Party") certain information regarding the Disclosing Party's
business, including technical, marketing, financial, employees, planning, and
other confidential or proprietary information ("Confidential Information"). The
Disclosing Party will mark all Confidential Information in tangible form as
"confidential" or "proprietary" or with a similar legend. The disclosing Party
will identify all Confidential Information disclosed orally as confidential at
the time of disclosure and provide a written summary of such Confidential
Information to the Receiving Party with thirty (30) days after such oral
disclosure. Regardless of whether so marked or identified, however, any
information that the Receiving Party knew or should have known, under the
circumstances, was considered confidential or proprietary by the Disclosing
Party, will be considered Confidential Information of the Disclosing Party.
7.2 Protection of Confidential Information. The Receiving Party will not
use any Confidential Information of the Disclosing Party for any purpose not
expressly permitted by this Agreement, and will disclose the Confidential
Information of the Disclosing Party only to those employees or contractors of
the Receiving Party who have a need to know such confidential Information for
purposes of this Agreement and who are under a duty of confidentiality no less
restrictive than the Receiving Party's duty hereunder. The Receiving Party will
protect the Disclosing Party's Confidential Information from unauthorized use,
access, or disclosure in the same manner as the Receiving Party protects its own
confidential or proprietary information of a similar nature and with no less
than reasonable care.
7.3 Exceptions. The Receiving Party's obligations under Section 7.2
("Protection of Confidential Information") with respect to any Confidential
Information of the Disclosing Party will terminate if and when the Receiving
Party can document that such information: (a) was already known to the Receiving
Party at the time of disclosure by the Disclosing Party; (b) was disclosed to
the Receiving Party by a third party who had the right to make such disclosure
without any confidentiality restrictions; (c) is or through no fault of the
Receiving Party has become, generally available to the public; or (d) is
independently developed by the Receiving Party without access to, or use of, the
Disclosing Party's Confidential Information. In addition,
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the Receiving Party will be allowed to disclose Confidential Information of the
Disclosing Party to the extent that such disclosure is (i) approved in writing
by the Disclosing Party, (ii) necessary for the Receiving Party to enforce its
rights under this Agreement in connection with a legal proceeding; or (iii)
required by law, rule or regulation or by the order of a court or similar
judicial or administrative body, provided that the Receiving Party notifies the
Disclosing Party of such required disclosure promptly and in writing and
cooperates with the Disclosing Party, at the Disclosing Party's reasonable
request and expense, in any lawful action to contest or limit the scope of such
required disclosure.
7.4 Return of Confidential Information. The Receiving Party will return to
the Disclosing Party or destroy all Confidential Information of the Disclosing
Party in the Receiving Party's possession or control promptly upon the written
request of the Disclosing Party on the expiration or termination of this
Agreement, whichever comes first. At the Disclosing Party's request, the
Receiving Party will certify in writing that it has fully complied with its
obligations under this Section.
7.5 Confidentiality of Agreement. Neither party will disclose any financial
and/or costing or payment terms of the Agreement to anyone other than its
attorneys, accountants and other professional advisors under a duty of
confidentiality except (a) as required by law; (b) pursuant to a mutually
agreeable press release; (c) in connection with a proposed merger, financing or
sale of such party's business, provided that any third party to whom the terms
of this Agreement are to be disclosed signs a confidentiality agreement
reasonably satisfactory to the other party to this Agreement.
8. Limitation of Liability; Indemnity
8.1 Limitation of Liability. Neither party shall be liable to the other for
any indirect, incidental, special or consequential damages, or for any loss of
profits or loss of revenue, or failure to realize expected savings for any
services performed by such party pursuant to this Agreement. Except for each
party's obligations pursuant to Section 8.2 ("Indemnity"), each party's maximum
liability for any damages whatsoever to the other party arising out of this
Agreement shall be the amount paid or owed by MyTurn.com to NSC hereunder (in
the case of MyTurn.com's liability shall be such amount paid or owed). This
agreed limitation of liability shall not apply to the extent the claims,
demands, liabilities or expenses result solely from the gross negligence or
willful misconduct of a party.
8.2 Indemnity. Each Party agrees to indemnify the other for damage(s)
resulting from (i) violation of any applicable law or regulation; and (ii)
injury to or violation of the rights of a third party.
8.3. Mechanics. Each party's (the "Indemnify Party") obligation to
indemnify under this Section 8.3 is conditioned on the party seeking indemnity
(the "Indemnified Party") (i) giving the Indemnifying Party written notice of
the relevant claim, (ii) cooperating with the
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Indemnifying party, at the Indemnifying Party's expense, in the defense of such
claim, and (iii) giving the Indemnifying Party the right to control the defense
and settlement of any such claim, except that the Indemnifying Party shall not
enter into any settlement that affects the Indemnified Party's rights or
interest without the Indemnified Party's prior written approval. The Indemnified
Party shall have the right to participate in the defense at its expense.
9. Dispute Resolution.
9.1 NSC and MyTurn.com are implementing this Agreement in good faith.
However, should either party believe that the other party is in breach of this
Agreement, the parties shall attempt in good faith to resolve any dispute
arising out of or relating thereto promptly by negotiations. All negotiations at
all levels pursuant to this Section 9 are confidential and shall be treated as
compromise and settlement negotiations for purposes of the Federal Rules of
Evidence and state rules of evidence.
9.2 Notice and Cure. Either party (the "Non-Breaching Party") may give the
other party (the "Breaching Party") written notice of any material breach. The
Breaching Party shall then have thirty (30) days to cure the material breach, or
if the breach cannot be cured within thirty (30) days, to institute meaningful
steps to cure such breach within thirty (30) days. Nothing herein to the
contrary, if the Breaching Party does not effect a cure to the Non-Breaching
party's satisfaction within 90 days from the first date of notice of default,
the chief executive officers of the parties shall, within the following fifteen
(15) days, confer in good faith for the purpose of satisfactorily resolving the
material breach."
9.3 Arbitration. If a resolution satisfactory to the Non-Breaching Party is
not achieved within the fifteen-day period set forth in Section 9.2, the parties
agree promptly to submit the dispute to binding arbitration to be held in
Chicago, Illinois under the then-existing rules for commercial disputes of the
American Arbitration Association. Each party irrevocably submits to the
jurisdiction and venue set forth in this Section 9.3(a).
10. General Provisions.
10.1 Governing Law and Venue. This Agreement and each transaction
contemplated hereunder shall be deemed to be made under the laws of the State of
Illinois and shall at all times be both construed and interpreted in accordance
with the laws of the State of Illinois. It is specifically agreed that it is
both the intent and the desire of the Parties that whenever possible that each
and every provision of this Agreement shall be given a judicial construction and
interpretation so as to be effective and valid under applicable law. But, if any
provision shall be construed or prohibited by or determined invalid only that
provision shall be ineffective to the extent so determined, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
10.2 Force Majeure. Any party's delay in the performance of any duties or
obligations
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under this Agreement (except the payment of money owed) will not be considered a
breach of this Agreement is such delay is caused by a labor dispute, shortage of
materials, fire, earthquake, flood or any other event beyond the control of the
party, provided that the party uses reasonable efforts, under the circumstances,
(a) to notify the other party of the circumstances causing the delay and (b) to
resume performance as soon as possible.
10.3 Rights and Remedies Cumulative and Not Exclusive. The failure of
either party to this Agreement to insist upon strict performance of any of the
terms, covenants or conditions hereof shall not be deemed a waiver of any rights
or remedies that party may have and shall not be deemed a waiver of any
subsequent breach or default in any such terms, covenants or conditions.
Further, no delay or omission to exercise any right or power accruing upon any
default, omission or failure of performance hereunder shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In the event any provision contained in this Agreement should be
breached by any party and thereafter duly waived by the other party so empowered
to do it, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder.
10.4 Attorneys Fees. Should either Party be required to retain counsel in
order to enforce or prevent the breach of any provision of this Agreement, that
party shall be entitled to reasonable attorneys' fees and costs for services
rendered if such party prevails.
10.5 Notices. Whenever it is provided herein that notice, demand, request,
consent, approval or other communication ("notice") shall or may be given to
either Party by the other, it shall be in writing and, any law or statute to the
contrary notwithstanding, shall not be effective for any purpose unless same
shall be given or served by registered or certified mail, postage prepaid,
return receipt requested, directed to the address set forth below the signatures
of the parties, or at such other address as either party may from time to time
designate by notice to the other as herein provided. Notices shall be deemed
effectively given: (a) upon five (5) days after being sent by certified or
registered mail, postage prepaid, return receipt requested; (b) upon the next
business day after being sent overnight by U.S. Express Mail or by a major U.S.
express document carrier; or (c) upon receipt of confirmation following
transmission by a facsimile machine if sent on a business day during business
hours (otherwise, deemed received six hours after the beginning of the next
business day).
10.6 No Assignment. Neither Party may assign its rights or delegate its
duties without the other party's prior written consent, except to an entity
controlled by, controlling or under common control with the assigning party, or
in connection with the sale of substantially all of the assigning party's
assets, or a merger or consolidation or the like involving the assigning party.
Any assignment or delegation in violation of this Section shall be void and of
no effect. Subject to the prohibitions against assignment contained herein, this
Agreement shall inure to the benefit of and shall be binding on the parties
hereto and their respective successors and permitted assigns.
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10.7 Severability ; Waiver. If any provision of this Agreement is held to
be invalid or unenforceable for any reason, the remaining provisions will
continue in full force and effect without being impaired or invalidated in any
way. The parties agree to replace any invalid provision with a valid provision
which most closely approximates the intent and economic effect of the invalid
provision. The waiver by any party of a breach of any provision of this
Agreement will not operate or be interpreted as a waiver of any other or
subsequent breach.
10.8 Scope and Binding Effect of Agreement. The terms, provisions and
conditions of this Agreement shall be binding upon and inure to the benefit of
each respective party and their respective legal representatives, successors,
heirs, legatees, Executors, administrators and assigns (except as otherwise
prohibited by this Agreement). Upon the Effective Date set forth above, this is
an agreement between the Parties for their mutual benefit and no third persons
or entities shall have any right, claim or interest against any party by virtue
of any terms, provision or condition hereof. Each Party agrees that nothing
contained in this Agreement shall be construed to create the relationship of
principal or agent or representative of the other, and this Agreement shall not
be construed to make any party liable to any person or entity except as set
forth herein.
10.9 Headings Descriptive Only. The Parties acknowledge that this Agreement
consists of multiple sections and sub-paragraphs, many of which are preceded by
a heading. The Parties understand that the characterizations of such headings
are for convenience, are not definitive in nature and that such headings are not
intended to consist of words of limitation, but rather words of general
description of explanation. The Parties further acknowledge each to the other
that no party is relying upon any implication from any such heading in their
execution of this Agreement.
10.10 Independent Contractors; No Agency. The parties to this Agreement are
independent contractors, and no agency, partnership, joint venture, or
employee-employer is intended or created by this Agreement. Neither party is the
agent of the other, and neither party shall have the power to obligate or bind
the other party. Personnel supplied by each party shall work exclusively for
that party, and shall not, for any purpose, be considered employees or agents of
the other party, and each party assumes full responsibility for the acts of
personnel supplied by it while performing service hereunder and, with regard to
any personnel supplied by it, each party shall be solely responsible for their
supervision, direction and control, compensation, benefits, and taxes.
10.11 Exhibits Incorporated. The following have been agreed to by the
Parties prior to the execution hereof to be attached hereto as exhibits:
EXHIBIT A NSC's Consumer Customer Technical Support Services
EXHIBIT B NSC's Consumer Customer Technical Support Service Activity-
Based Pricing
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It is the intention of the parties that each exhibit and the contents thereof
shall be incorporated into the become a binding part of this Agreement as if
fully set forth herein.
10.12 Entire Agreement. Each Party acknowledges by their execution of this
Agreement that it is intended that this Agreement, including the Exhibits
attached hereto, constitutes a complete and exclusive statement, expression and
embodiment of the terms, conditions and agreements of the Parties. Each Party
acknowledges that no prior course of dealing shall be relevant or admissible to
supplement, explain or vary any term of this Agreement; and it is agreed that no
prior communication, whether written or oral, shall be deemed or construed to
constitute a part of this Agreement. Each Party acknowledges that there are no
promises, terms, conditions or obligations to or under this Agreement other than
those contained herein; and that they shall not be bound by any employee's or
attorney's interpretation, representations, promises or inducements not
expressly set forth in this Agreement. The parties specifically acknowledge and
agree that this Agreement has resulted from specific negotiations and is the
mutual product of both parties hereto. Therefore, it is agreed that under no
circumstances shall any or all of the terms of this Agreement be interpreted by
a court more strongly against either party. Neither this Agreement nor any
provision hereof may be amended, waived, discharged or terminated orally, unless
such is deemed unenforceable, invalid or contrary to law as provided above.
10.13 Duplicate Originals. This Agreement may be executed simultaneously or
otherwise in one or more identical counterparts, each of which shall be deemed
and construed as an original and all of which shall be construed together to
constitute one and the same document.
IN WITNESS WHEREOF, the Parties have executed this Agreement as effective
on the date set forth above.
NATIONAL SUPPORT CENTER, L.L.C
By: /s/ R.R. Janusz
-----------------------------------------
R.R. Janusz, President
MYTURN.COM, INC.
By: /s/ P.K. Danner, Chief Executive Officer
-----------------------------------------
P.K. Danner, Chief Executive Officer
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EXHIBIT A
NSC's Consumer Customer Technical Support Services
Conditions Precedent:
(a) MyTurn.com shall provide NSC with all required software licenses (if
necessary) to adequately process its business responsibilities.
(b) MyTurn.com shall maintain an adequate and functional voice connection
to NSC and will pay to deliver voice to NSC.
(c) MyTurn.com shall provide NSC with master copies of all relevant
technical materials needed for NSC to administer the MyTurn.com support
business.
(d) MyTurn.com shall provide NSC with two (2) of each MyTurn.com product
NSC will support. (NSC shall be entitled to purchase any additional products at
MyTurn.com's cost.)
Scope of Work:
(a) NSC will provide all network connection hardware and software inside
the NSC facility, PC's to required configuration, ACD, call reporting, and event
tracking software necessary to administer the technical support.
(b) NSC will provide necessary phone system or service to successfully
process MyTurn.com technical support.
(c) NSC will provide necessary technical and network engineering resources
to ensure successful connection of required voice and data activity.
(d) NSC will provide technical support via telephone and e-mail to MyTurn.
com customers who request assistance with product information, technical
support, or customer service.
(e) NSC will also provide warranty registration and portal support services
to MyTurn.com.
(f) NSC technicians will have high levels of base technical skills and will
have passed applicable tests on MyTurn.com products and procedures prior to
providing support to MyTurn.com customers.
(g) NSC technicians will be trained by NSC's in house technical training
group, who is an approved MyTurn.com training center. MyTurn.com will not charge
for their training resources applied to this function. NSC is responsible for
any of the non-MyTurn.com expenses
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they incur in obtaining this training.
(h) NSC technicians will maintain high levels of communication skills (in
both English and Spanish), professionalism and customer handling skills.
(i) NSC will regularly monitor the performance of their technicians to
measure their performance on technical, communications and customer quality.
(j) NSC will administer MyTurn.com support procedures and policies.
MyTurn.com has the right to inspect and observe NSC support facilities and
activity.
Hours of Coverage:
Primary Period: 7am - 9pm Monday thru Friday
Extended Period: 9pm - 7am Monday thru Friday
All day Saturday and Sunday
Telephone Time to Answer:
Primary Period: 95th Percentile 60 seconds
99th Percentile 300 seconds
Extended Period: 95th Percentile 60 seconds
99th Percentile 300 seconds
E-Mail 95th Percentile 30 minutes
Location of Service:
All service will be provided from NSC in Naperville, IL. NSC may elect to
transfer some call volume to another NSC owned site contingent upon MyTurn's
approval which shall not unreasonably be withheld.
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EXHIBIT B
NSC's Consumer Customer Technical Support Service Activity-Based Pricing
Pricing for the technical support service shall be as follows:
(a) Telephone calls - $.68 per minute.
(b) E-Mail - $3.50 per technical e-mail response.
(c) Portal Support - $25.00 per hour.
(d) Warranty Registration - $12.50 per hour.
(e) Inbound Toll Free Telephone - billed at cost.
(f) Outbound Telemarketing - $.62 per minute.
Both Parties agree that the pricing will be reviewed 6 months after date of this
Agreement with the intention of decreasing the rates stated above based upon,
subject to sufficient call volume to warrant such.
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