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As Filed With the Securities and Exchange Commission on January 29, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INTERNATIONAL BARTER CORP.
(Name of Small Business Issuer in its Charter)
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NEVADA 7389 91-1739746
<S> <C> <C>
(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer Identification
of Incorporation or Classification Code Number) Number)
Organization)
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INTERNATIONAL BARTER CORP.
21400 INTERNATIONAL BLVD., SUITE 207
SEATTLE, WASHINGTON 98198
(206) 870-9290
(Address and Telephone Number of Principal Executive Offices and Principal
Place of Business)
Steven M. White With Copies to:
Chief Executive Officer Stephen Tollefsen, Esq.
International Barter Corp. Tollefsen Business Law P.C.
21400 International Blvd., Suite 207 2707 Colby Ave., Ste. 901
Seattle, Washington 98198 Everett, WA 98201
(206) 870-9290 (425) 353-8883
(Name, Address and Telephone (Name, Address and Telephone
Number of Agent for Service) Number of Agent for Service)
Approximate Date of Proposed Sale to the Public: From time to time after the
effective date of this Registration Statement.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class Proposed Maximum Proposed Maximum
of Securities to Be Amount to Be Offering Price Aggregate Offering Amount of
Registered Registered per Share (2) Price (2) Registration Fee
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Common Stock,
.001 par value (1) 2,603,800 $ 1.875 $4,880,625 $ 1,479
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Common Stock issuable
upon exercise of warrants 800,000 $ 1.50 $1,200,000 $ 364
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Total registration fee $ 1,843
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(1) These securities have been registered for resale by the Selling Shareholders
and their assigns and transferees on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, as amended.
(2) With respect to the 2,603,800 shares, estimated solely for the purpose of
computing the amount of the registration fee in accordance with Rule 457(c),
based upon the last reported sales price as quoted on the OTC Bulletin Board on
January 26, 1999.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to section 8(a), may
determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities in and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION JANUARY 29, 1999
INTERNATIONAL BARTER CORP.
2,603,800 SHARES
COMMON STOCK
This prospectus covers 2,603,800 shares of common stock of International Barter
Corp. ("Company"), which may be offered and sold from time to time by one or all
of the selling shareholders named in this prospectus ("Selling Shareholders").
All of the common stock offered by this prospectus consists of shares either:
- issued in private placements by the Company upon the exercise of
outstanding warrants;
- issued by the Company to three Selling Shareholders in a private
placement completed in July 1998; or
- to be issued by the Company to three Selling Shareholders upon the
exercise of 800,000 warrants previously issued by the Company in a
private placement. Each warrant entitles the holder to purchase one
share of common stock at a price of $1.50 per share until June 20, 2000.
The shares eligible for sale by Selling Shareholders represent approximately 40%
of the Company's issued and outstanding shares of Common Stock, assuming
exercise of the 800,000 warrants. The Company will not receive any of the
proceeds from the sale of the common stock by the Selling Shareholders, although
the Company will receive $1,200,000 upon exercise of all of the warrants.
The Company's common stock trades on the OTC Bulletin Board under the symbol
"IBCX." On January 26, 1999, the reported last sale price of the common stock on
the OTC Bulletin Board was $1.875 per share.
THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JANUARY 29, 1999
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TABLE OF CONTENTS
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Page No.
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Prospectus Summary 3
Risk Factors 5
Certain Defined Terms 12
Use of Proceeds 12
Market for Common Stock and Other Shareholder Matters 12
Management's Discussion and Analysis 13
Business 20
Management 28
Security Ownership of Certain Beneficial Owners and Management 35
Certain Relationships and Related Transactions 36
Description of Securities 37
Plan of Distribution 38
Selling Shareholders 39
Shares Eligible for Future Sale 40
Legal Proceedings 41
Experts 41
Changes in Certifying Accountants 41
Additional Information 41
Index to Financial Statements 43
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PROSPECTUS SUMMARY
The following summary highlights information contained elsewhere in this
prospectus. The summary is not complete and may not contain all of the
information you may need to consider before investing in the common stock. You
should read this entire prospectus carefully. For the definitions of certain
capitalized terms used in this prospectus, See "Certain Defined Terms."
The Company effected a 2 for 1 stock split on July 24, 1998. Except for
audited financial statements relating to periods ended prior to the date of this
stock split, all references in this prospectus take this stock split into effect
when referring to the number of shares of common stock, or the per share data.
THE COMPANY'S BUSINESS
The principal executive offices of International Barter Corp.
("Company") are located at 21400 International Blvd., Suite 207, Seattle,
Washington 98198, (206) 870-9290. International Barter Corp. is a trade exchange
offering barter services for retail, professional, media and corporate clients.
The Company provides a centralized barter currency, centralized data processing,
standardized marketing and support materials, advertising, and ongoing training
and support to expand its client base.
Trade exchanges provide a marketplace offering a range of products and
services which may be purchased with trade credits, such as media, travel,
hotels, printing, and business equipment. The Company, as other commercial
barter exchanges, depends on an index of valuation for establishing barter
credits and debits. This index of valuation is a U.S. dollar-denominated "trade
dollar," a ledger entry by which goods and services can be bought and sold.
It has been estimated that the total value of products and services
bartered by corporate trade companies and trade exchanges is over $7.5 billion
per year. Of this amount, trade exchanges accounted for barter sales of $1.4
billion in 1996, compared with $1.2 billion in 1995 and $1.1 billion in 1994. It
is estimated that trade exchange networks currently serve over 400,000 business
trade clients. Currently only a small percentage of the companies in the United
States use the services of a barter trade exchange. The Company believes the
market presents significant growth opportunities for the barter industry.*
There are approximately 400 independent trade exchanges in the United
States. At least two have attempted national expansion. The profile of the
"average" independent trade exchange would reveal a local or regional
organization with approximately 500 clients, five employees, and gross revenue
in the range of $100,000 to $400,000. Significant time and energy is devoted to
accounting and bookkeeping, marketing and sales, and customer service. Most
independent barter exchanges have not expanded beyond the regional level.
The Company operates a regional trade exchange office in Seattle through
which clients' products and services are marketed to other clients through
directories, newsletters, trade brokers and other means. Generally, sales are at
prevailing retail prices, and clients receive monthly statements
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* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
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showing activity. The Company generates revenues from barter transactional fees
and monthly account fees.
In July 1998, the Company launched its Internet website, Ubarter.com, to
the general public. The website is intended to provide an electronic barter
forum, enabling businesses and individuals to connect and trade products and
services without geographical limitation. The parties are responsible for
posting their items for trade, setting and assessing the value of traded items,
and shipping or delivering the products or services. The Company intends to
generate revenues from trades transacted by on-line clients, based on a
percentage of the value of the items traded.* However, the full development and
implementation of the website is not completed and will require additional
capital.
The Company's objectives are to:*
- Develop and expand the client base of Company-owned offices
- Create a strong national presence and capture market share by
expanding beyond local operations
- Develop Ubarter.com into a premier Internet website where
individuals and businesses throughout the world can trade
- Create strategic alliances with established companies to attract
trading customers to the Company and the Ubarter.com site
- Seek to acquire other strategically located barter exchanges to
facilitate its growth;
- Service a more diverse and dispersed clientele
- Provide the broadest availability of goods and services in the
barter industry
THE OFFERING
COMMON STOCK Up to 2,603,800 shares of common stock of the Company,
OFFERED which may be offered and sold from time to time by one
or all of the Selling Shareholders. Included are 800,000
shares of Common Stock to be issued by the Company to
three Selling Stockholders upon the exercise of Warrants
issued by the Company in a July 1998 private placement.
USE OF PROCEEDS No proceeds are to be paid to the Company
from the sale of the Common Stock offered by this
Prospectus. However, the Company will receive the
proceeds from exercise of the Warrants. See "Use of
Proceeds."
RISK FACTORS There are significant risks associated with an
investment in the common stock, including among others,
the risks associated with expansion and new product
development, and possible under-capitalization. See
"Risk Factors."
DIVIDEND POLICY The Company currently intends to retain any
future earnings to finance the operations and growth of
its business. Accordingly, the Company does not
anticipate paying any cash dividends on common stock in
the foreseeable future. See "Market for Common
Stock--Dividend Policy."
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* These statements and objectives are forward-looking statements reflecting
current expectations and intentions. There can be no assurance that the
Company's actual future performance will meet the Company's current expectations
or intentions, due to factors described in this section, in the "Risk Factors"
and other sections of this prospectus.
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SUMMARY FINANCIAL DATA
The following table sets forth for the periods indicated and
at the dates indicated, historical summary financial information of the Company.
The historical information contained in the table as of March 31, 1998 and for
the years ended March 31, 1998 and 1997 has been derived from audited financial
statements, and is qualified in its entirety by, and should be read in
connection with, "Management's Discussion And Analysis," the audited financial
statements (and notes thereto) and other financial and statistical information
of the Company appearing elsewhere in this prospectus. The statements of
operations and balance sheet data as of September 30, 1998 and for the six
months ended September 30, 1998 and 1997, have been derived from unaudited
condensed financial statements; however in the opinion of management all
adjustments (consisting solely of normal recurring adjustments) necessary for a
fair presentation of the financial results and condition for interim periods
have been made. The results of interim periods are not necessarily indicative of
the results to be obtained in a full fiscal year.
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SIX MONTHS ENDED
SEPTEMBER 30 YEARS ENDED
(UNAUDITED) MARCH 31
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STATEMENT OF OPERATIONS DATA: 1998 1997 1998 1997
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Revenues $ 273,256 $ 327,485 $ 684,062 $ 452,673
Cost of Sales 34,168 66,836 143,425 108,847
Operating Expenses 396,831 272,779 510,828 404,386
Income (Loss) from Operations (157,743) (12,130) 29,808 (60,560)
Net Income (Loss) (140,783) (11,102) 32,509 (62,672)
Basic Income (Loss) per share(1) (.03) (.00) .01 (.07)
Weighted average common shares
outstanding (1) 3,100,000 3,100,000 2,632,424 875,000
</TABLE>
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(1) Adjusted to give effect to the 2 for 1 stock split on July 24, 1998. See
Note 11 to audited financial statements and Note 3 to condensed financial
statements.
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SEPTEMBER 30 MARCH 31 MARCH 31
BALANCE SHEET DATA: 1998 1998 1997
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(UNAUDITED)
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Cash, cash equivalent $1,716,690 $ 382,564 $ 162,327
Working Capital 1,615,083 413,330 107,093
Total Assets 2,006,169 525,050 290,307
Total Liabilities 169,519 54,567 151,183
Shareholders' Equity 1,836,650 470,483 139,124
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RISK FACTORS
There are significant risks associated with an investment in the common
stock. Before making a decision concerning the purchase of the common stock, the
following factors, among others, should be
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<PAGE> 7
considered carefully in evaluating the Company, its business and the
forward-looking statements made by the Company in this prospectus.
This prospectus contains, in addition to historical information,
forward-looking statements (identified with an asterisk "*") that involve risks
and uncertainties. You are urged to note the description of the Company's plans
and objectives for future operations, assumptions underlying these plans and
objectives and other forward-looking statements included in "Prospectus
Summary," "Use Of Proceeds," "Management's Discussion And Analysis" and
"Business" in this prospectus. These descriptions and statements are based on
management's current expectations. The Company's actual results may differ
significantly from the results discussed in these forward-looking statements as
a result of certain factors, including those set forth in this "Risk Factors"
section and elsewhere in this prospectus.
EFFECTS OF COMPETITION ON COMPANY'S PERFORMANCE AND EXPANSION
The Company will continue to attempt, without assurance of success, to
expand its presence in the barter industry and to create a strong national
presence. There are hundreds of independent trade exchanges in the United
States, some of which may have similar plans for national expansion. For
example, ITEX Corporation, a public barter company, is attempting national
expansion. Some of the established entities in the barter industry can be
expected to be larger or have greater financial resources than the Company.
Consequently, the Company will encounter competition in its efforts to expand
its barter business or to acquire desirable independent trade exchanges. In
addition, there can be no assurance that a group of independent barter exchanges
will not join forces to create another national barter company.
Similarly, the efforts of the Company to develop Ubarter.com into a
premier Internet website can be expected to be met with competition. The market
for Internet-based services and products is relatively new, intensely
competitive, rapidly evolving and subject to rapid technological change. There
are no substantial barriers to initial entry, and the Company expects
competition to intensify and increase in the future. The Company believes that
the more market penetration it achieves, the higher the barrier to entry will
become for anyone contemplating a similar system. However, there can be no
assurance that competitors will not develop technologies or services that render
the Company's services less marketable, that the Company will be able to compete
successfully, or that the Company will be able to successfully enhance its
services, or develop new services or lower costs, when and as needed.
FUNDS MAY BE INSUFFICIENT TO SATISFY PLANS FOR GROWTH; ADDITIONAL
FINANCING
The Company believes its existing working capital and anticipated cash
from financing activities will be sufficient to allow it to achieve its expected
expansion goals and demands for its services during 1999. However, there is no
guarantee that its resources will be sufficient. The Company anticipates that a
significant portion of its anticipated capital resources, up to $1,200,000, will
be provided through the exercise of outstanding warrants issued in prior
securities offerings, which are exercisable at the price of $1.50. The perceived
value of these warrants at any given time is related to the market price of the
Company's common shares, which trade over the counter through the OTC Bulletin
Board. If the Company is unable to obtain anticipated financing through the
exercise of warrants, there can be no assurance that the Company will be able to
successfully implement its short-term plans for expansion or meet its working
capital requirements.
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The full development and implementation of the Company's Ubarter.com
Internet website will require additional capital. There can be no assurance that
working capital will be available or will be adequate to develop the website.
Furthermore, if developed, it is uncertain whether Ubarter.com will produce
material revenue for the Company or whether it even can be run profitably. With
respect to the Company's intentions to acquire other regional barter exchanges,
there is no assurance that the Company will be able to expand as intended. One
of the Company's assumptions in making acquisitions is that it will be able to
utilize its common stock as the primary medium of exchange, rather than cash.
This assumption may prove to be incorrect. Even if successful in its plans, the
Company may experience rapid growth and may require additional funds to expand
its operations or enlarge its organization. The Company's working capital
requirements in the foreseeable future will depend on a variety of factors
including the Company's ability to implement its business plan.
While the Company intends to explore a number of options in order to
secure alternative financing if its working capital reserves are deficient, or
if anticipated financing is not obtained or is insufficient, there can be no
assurance that the Company will be able to successfully negotiate or obtain
additional financing, or that financing will be available when needed or on
terms acceptable to the Company. The Company does not have any commitments for
additional financing. The Company's ability to obtain additional capital may be
dependent on market conditions, the national economy and others factors outside
the Company's control. If adequate funds are not available or are not available
at acceptable terms, the Company's ability to finance its expansion, develop or
enhance services or respond to competitive pressures would be significantly
limited. The failure to secure necessary financing could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations.
CHALLENGES TO THE COMPANY'S ABILITY TO MANAGE GROWTH
The Company intends to expand its current level of operations. Expansion
of the Company's operations will be dependent upon, among other things, its
ability to:
- achieve significant market acceptance for its services;
- hire and retain skilled management, marketing, technical and other
personnel;
- successfully manage growth, if any (including monitoring operations,
controlling costs, and maintaining effective quality controls); and
- obtain adequate financing when needed.
The Company's prospects for future growth will be largely dependent upon
its ability to achieve significant penetration of its services in targeted
business markets, to successfully market its concepts, to develop and
commercialize applications of its technologies for the barter market and to
enter into strategic alliances with third-parties in connection with the
exploitation of its technologies.
The Company's proposed expansion may result in new and increased
responsibilities for management personnel and may place a increased strain upon
the Company's management, operating software, financial systems, and resources.
To compete effectively and to accommodate growth, if any, the Company may be
required to continue to implement and to improve its management, operating and
financial systems, procedures and controls on a timely basis and to expand,
train, motivate and manage its employees. There can be no assurance that the
Company's personnel, systems, procedures and controls will be adequate to
support the Company's existing and future operations.
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NO ASSURANCE OF CONTINUED GROWTH IN BARTER INDUSTRY
Industry sources indicate that for the last several years the commercial
barter industry has grown at an estimated rate of 8 percent per year. The
growing appeal of the barter industry among business owners has been attributed
to the existence of surplus inventory, unproductive assets, excess capacity, and
the ability to generate new sales and reach new customers while conserving cash.
While there are no clear threats that would cause one to conclude today that the
barter industry will not continue to thrive, there can be no assurance that the
retail barter industry will continue to grow at the rates of the last several
years. The Company believes there has been little penetration by the barter
industry into the market of potential business customers. However, if the growth
of the barter industry were to lessen or decline, the Company would expect to
face heightened competition with weakened profitability, and a reduced share of
the barter market, which could materially adversely affect the Company's
business.
HISTORICAL LOSSES; ANTICIPATED LOSSES; NO ASSURANCE OF PROFITABILITY
The Company is incurring losses from its operating activities. As of
September 30, 1998, the Company had an accumulated deficit of $252,251. The
Company expects to increase its operating expenses to expand its marketing
operations, and increase its level of expenditures to further develop its
Ubarter.com Internet website. These anticipated increases in operating expense
levels and developmental costs will adversely effect operating results and the
Company believes that it will continue to incur losses during the 1999 calendar
year. Further, if the Company successfully accomplishes its plan of acquiring
existing barter trade exchanges, the Company believes that the acquisitions
could result in additional negative cash flows and operating losses until the
acquisitions are successfully integrated into the Company's operations. If
acquisitions of other exchanges are consummated, period-to-period comparisons of
the Company's financial results may not be necessarily meaningful and should not
be relied upon as an indication of future performance. See "Management's
Discussion And Analysis."
The Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in new and rapidly
evolving markets. To address these risks, the Company must, among other things,
respond to competitive developments, continue to attract, retain and motivate
qualified persons, successfully manage expansion and growth, and continue to
upgrade its systems and technologies and commercialize services incorporating
these systems and technologies. There can be no assurance that the Company will
be successful in addressing these risks or that the Company can be operated
profitably, which depends on many factors, including the success of the
Company's marketing program, the control of expense levels and the success of
the Company's business activities. There can be also be no assurance that the
Company will generate positive cash flow from operations in the future.
DEPENDENCE ON MANAGEMENT
Implementation of the business plan and success of the business depends
on the skills and efforts of management and, to a large extent, on the active
participation of Steven White, the Company's CEO and President, as well as the
Company's other executive officers and key employees. The Company has written
employment agreements in place with certain key employees and management. The
Company does not have key-man insurance covering the life of Mr. White or other
executives. The Company provides stock options, which further serve to retain
and motivate key employees. However, the inability to attract, retain and
motivate qualified employees could adversely affect Company business.
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NO ASSURANCE OF ESTABLISHED PUBLIC TRADING MARKET
Although the common stock of the Company trades on the OTC Bulletin
Board, there can be no assurance that a regular trading market for the
securities will be sustained. The OTC Bulletin Board is an inter-dealer,
over-the-counter market which provides significantly less liquidity than the
Nasdaq Stock Market. Quotes for stocks included on the OTC Bulletin Board are
not listed in the financial sections of newspapers as are those for the Nasdaq
Stock Market. Therefore, prices for securities traded solely on the OTC Bulletin
Board may be difficult to obtain and holders of common stock may be unable to
resell their securities at or near their original offering price or at any
price. Furthermore, the NASD has enacted recent changes that limit quotations on
the OTC Bulletin Board to securities of issuers that are current in their
reports filed with the SEC. The intent of the change is to make reliable and
current financial and other information about issuers available to the investing
public. Additional changes to the OTC Bulletin Board have been proposed, which
if and when implemented will require broker-dealers and market makers to review
current information about an issuer before making recommendations to a customer
in the security, and to provide certain disclosure information on the trade
confirmation for all customer transactions. The effect on the Bulletin Board of
these rule changes can not be determined at this time. In the event the
Company's securities are not included on the OTC Bulletin Board and do not
qualify for Nasdaq, quotes for the securities may be included in the "pink
sheets" for the over-the-counter market.
"PENNY STOCK" REGULATIONS IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY
OF SECURITIES
The Securities and Exchange Commission ("SEC") has adopted regulations
which generally define "penny stock" to be any equity security that is not
traded on a national securities exchange or Nasdaq and that has a market price
of less than $5.00 per share or an exercise price of less than $5.00 per share,
subject to certain exceptions. A security of an issuer that meets certain
minimum financial requirements would also be excluded from the definition of
"penny stock" (generally, with net tangible assets in excess of $2 million or $5
million, respectively, depending upon whether the issuer has been continuously
operating for less or more than three years, or "average revenue" of at least $6
million for the last three years.)
As long as the Company does not meet the financial requirements, and its
common stock is trading at less than $5.00 per share on the OTC Bulletin Board,
the Company's securities are subject to rules that impose additional sales
practice requirements on broker-dealers who sell these securities to persons
other than established customers and accredited investors (generally, investors
with a net worth in excess of $1,000,000 or an individual annual income
exceeding $200,000, or, together with the investor's spouse, a joint income of
$300,000). For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require, among other things, the delivery, prior to the
transaction, of a risk disclosure document mandated by the SEC relating to the
penny stock market and the risks associated therewith. The broker-dealer must
also disclose the commission payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Finally, monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Consequently, the penny stock rules may restrict the ability of broker-dealers
to sell the Company's securities and may affect the ability of shareholders of
the Company to sell their securities in the secondary market.
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<PAGE> 11
VOLUME OF SHARES ELIGIBLE FOR SALE MAY DEPRESS THE MARKET PRICE
Of the 5,776,400 shares of common stock outstanding as of the date of
this prospectus, 1,439,400 were issued under an exemption from the registration
provisions of the Securities Act under Rule 504 of Regulation D without
limitations on resale, and are eligible for resale in the open market. The
remaining 4,337,000 shares held by existing shareholders were issued and sold by
the Company in private transactions in reliance on exemptions from the
registration provisions of the Securities Act and are restricted securities
within the meaning of Rule 144 under the Securities Act. Of these restricted
shares, 1,837,000 shares are being offered for sale by Selling Shareholders.
Assuming exercise of the 800,000 Warrants, Selling Shareholders may sell up to
2,603,000 shares, which will represent approximately 40% of the Company's issued
and outstanding shares of Common Stock. All of the remaining restricted shares,
including shares held by affiliates, will be eligible in March 1999 for resale
in the open market, if any, in compliance with Rule 144. There are no
contractual restrictions on the resale of the outstanding common stock. The sale
in the public market of the Selling Shareholder shares as well as the restricted
shares, or the perception that these sales may occur, may depress prevailing
market prices of the common stock. These factors may also make it more difficult
for the Company to raise funds through future offerings of common stock.
QUALITY AND DEVELOPMENT OF UBARTER.COM INTERNET SITE
The Company intends to develop Ubarter.com into a premier Internet
website where individuals and business can trade goods and services. In order
for the Ubarter.com website to be perceived as a viable marketplace and a
replacement for or supplement to current barter exchanges, the website must
provide accurate and timely information on a consistent basis. Other measures of
quality include representative merchant participation and a sufficient range and
availability of goods and services offered, the ability to service high response
rates from customers, and the timely posting of changes and modifications to the
inventory of merchants and products and services offered. These services need to
be maintained at high levels for maximum market acceptance.
The Company expects to derive future revenues in the near term from the
Ubarter.com website. The Company's success will depend on continued end-user
acceptance of the Company's services, as well as the Company's ability to
design, develop, test and support new services and enhancements on a timely
basis that meet changing customer needs and respond to technological
developments and emerging industry standards. There can be no assurance that the
Company will maintain adequate quality control procedures, develop and market
new services and enhancements that meet changing customer needs, or respond to
technological developments and emerging industry standards.
DEPENDENCE ON THE INTERNET; RISK OF TECHNOLOGICAL CHANGE
The performance of the Ubarter.com website is dependent on the Internet
and third-parties for access to client products and services, such as Internet
service providers, Internet backbone providers and Web browsers. Users may
experience difficulties due to system failures unrelated to the Company's
systems and services. If the Internet were to become regularly unavailable for
many hours at a time, or its ability to handle traffic loads deteriorate enough
to cause frequent unavailability or very slow response times, there would be
less traffic to the Company's website and the perception of the quality of the
Company's services could suffer. To date, the Internet has proven highly
resilient and responsive to rapid growth in its use, and many of the world's
telecommunications, software and hardware companies are continually investing in
capacity and improvements.
-10-
<PAGE> 12
Furthermore, the Company's current services are designed around certain
standards, including, for example, security standards, and current and future
sales of the Company's services may be dependent on some industry standards.
There may be additional costs of unknown proportions in meeting and complying
with software standards. In addition, there can be no assurance that the Company
will not experience difficulties that could delay or prevent the successful
development, introduction and marketing of new services and enhancements, or
that its new services and enhancements will adequately meet the requirements of
the marketplace and achieve market acceptance. As the Internet develops, it is
possible that incompatibility or lack of appropriate features could impact the
Company's business.
Sales of the Company's services are expected to depend in large part
upon a robust industry and infrastructure for providing Internet access and
carrying the rapidly increasing Internet traffic. Certain critical issues
concerning the commercial use of the Internet (including capacity to handle
projected increases in traffic, security, reliability, cost, ease of use,
access, and quality of service) remain unresolved and may impact the growth of
Internet use. The Internet may not prove to be a viable commercial marketplace
because of inadequate development of the necessary infrastructure, such as a
reliable network backbone or timely development of complementary products, such
as high speed modems. Because global commerce and on-line exchange of
information on the Internet and other similar open wide area networks are new
and evolving, it is difficult to predict with any assurance whether the
infrastructure or complementary products necessary to make the Internet a viable
commercial marketplace will continue to be developed, or if developed, that the
Internet will remain a viable commercial marketplace. In addition, the
widespread adoption of new Internet or telecommuting technologies or standards,
could require substantial expenditures by the Company to modify or adapt its
services. In this case, the new Internet or telecommuting services or
enhancements offered by the Company could contain design flaws or other defects.
Although the Company expects to be responsive to changes in the Internet or
technology, there can be no assurance that the Company will be successful in
achieving widespread acceptance of its services before competitors offer
services with speed and performance equal or greater than the Company's. The
growth or change of the Internet, or adoption of new technologies could
potentially harm the Company's business, operating results and financial
condition.
IMPACT OF GOVERNMENT REGULATIONS ON COMPANY OPERATIONS
The barter industry is not currently subject to direct regulation by any
government agency, other than regulations applicable to businesses. For tax
purposes, U.S. barter exchanges are required to file on an annual basis totals
of the barter sales of their clients. Similarly, there are currently few laws or
regulations directly applicable to access to or commerce on the Internet. It is
possible that a number of laws and regulations may be adopted with respect to
the Internet, covering issues such as user privacy, pricing and characteristics
and quality of products and services. The adoption of laws or regulations
applicable to the Company's business could decrease the growth of the barter
industry or the Internet, which in turn, could decrease the demand for the
Company's services and increase the Company's cost of doing business or
otherwise have an material adverse effect on the Company's business, prospects,
financial condition and results of operations. Furthermore, the applicability to
the Internet of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes, libel and personal privacy is
uncertain and may take years to resolve.
-11-
<PAGE> 13
CERTAIN DEFINED TERMS
When used in this prospectus, unless the context requires otherwise:
- "Company" or "IBC" means the issuer, International Barter Corp., a
Nevada corporation
- "Exchange Act" means the Securities Exchange Act of 1934, as amended
- "Securities Act" means the Securities Act of 1933, as amended
- "Selling Shareholders" means those persons selling the 2,603,800 shares
offered by this prospectus listed in the section entitled "Selling
Shareholders"
- "Warrants" means the 800,000 warrants issued by the Company in July 1998
in a private placement
USE OF PROCEEDS
The Company will receive the proceeds from the exercise of the Warrants,
if any Warrants are exercised. The Company expects to use these proceeds, if
any, for working capital. The Company will not receive any proceeds from the
sale by the Selling Shareholders of the common stock. See "Plan of
Distribution."
MARKET FOR COMMON STOCK
The Company's common stock trades on the OTC Bulletin Board under the
symbol "IBCX." The OTC Bulletin Board has a limited and sporadic trading market
and does not constitute an "established trading market." See "Risk Factors--No
Assurance of Established Public Trading Market." The range of high and low bid
prices for the Company's common stock for each quarter during the period from
February 12, 1998 through December 31, 1998, is set forth below. The trading
prices have been adjusted to give effect to the 2:1 stock split effective July
24, 1998.
QUARTERLY COMMON STOCK PRICE RANGES(1)
<TABLE>
<CAPTION>
QUARTER 1998
HIGH LOW
----- -----
<S> <C> <C>
1ST 0.875 0.688
2ND 4.00 0.688
3RD 6.75 0.875
4TH 3.56 0.875
</TABLE>
(1) This table reflects the range of high and low bid prices for the Company's
common stock during the indicated periods, as published by the OTC Bulletin
Board. The quotations merely reflect the prices at which transactions were
proposed, and do not necessarily represent actual transactions. Prices do not
include retail markup, markdown or commissions.
There were 65 record holders of the Company's common stock as of January
9, 1999. The Company estimates there are approximately 875 beneficial owners of
its common stock.
-12-
<PAGE> 14
DIVIDENDS POLICY
The Company has not paid dividends on its common stock since its
inception. Dividends on common stock are within the discretion of the Board of
Directors and are payable from profits or capital legally available for that
purpose. It is the current policy of the Company to retain any future earnings
to finance the operations and growth of its business. Accordingly, the Company
does not anticipate paying any dividends on common stock in the foreseeable
future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements involving
risks and uncertainties based on management's current expectations, estimates
and projections about the barter industry and the evolution of on-line Internet
commerce. All statements in this prospectus related to the Company's changing
financial operations and expected future growth or profitability constitute
forward-looking statements. The actual results may differ significantly from
those anticipated or expressed in these statements. The following discussion and
analysis should be read in conjunction with the Company's audited financial
statements (and notes thereto) and other financial information of the Company
appearing elsewhere in this prospectus for the years ended March 31, 1998 and
1997, and in conjunction with the unaudited condensed financial statements as of
September 30, 1998 and for the six months ended September 30, 1998 and 1997. The
results of interim periods are not necessarily indicative of the results to be
obtained in a full fiscal year.
Incorporated in September 1996, the Company issued no shares and
conducted no business until merging with Cascade Trade Association, a Washington
corporation ("Cascade Trade") in November 1996. Cascade Trade was in the barter
business at the time of the merger, which became the continuing business of the
Company. The Company issued shares of its common stock to the former
shareholders of Cascade Trade. For accounting purposes, the merger has been
treated as a reverse acquisition, as the acquisition of the Company by Cascade
Trade, and as a recapitalization of Cascade Trade. The historical financial
statements prior to November 15, 1996 reflect the operations of Cascade Trade.
Barter Industry. The barter business creates unique financial reporting
because of transactions being effected in trade dollars. The Company uses the
ratio of one trade dollar to one US Dollar in measuring and recording purchases
and sales. This one-to-one ratio is the standard within the barter industry. The
Company occasionally engages in barter trading for its own account, for example,
to pay for certain operating costs. The contractual relationship between the
Company and clients of its barter exchange permits the Company to "borrow" trade
dollars through the issuance of trade dollars in excess of the amount
specifically earned by the Company, within certain specified limitations. From
time to time, the Company will have expended trade dollars in excess of the
amount of trade dollars earned. This situation is commonly referred to in the
commercial barter industry as a "negative trade balance."
The Company is obligated to provide goods and services to clients to
offset any excess amounts of trade dollars issued, and any negative trade
balance of the Company is shown as a liability in the balance sheet. At each
balance sheet date, in accordance with generally accepted accounting principles,
any positive trade balance of the Company is evaluated for net realizable value.
The Company adjusts the carrying value of the trade dollars if the fair market
value of the trade dollars is less than the carrying value or if it is probable
that not all trade dollars will be used.
-13-
<PAGE> 15
RESULTS OF OPERATIONS
COMPARISON OF SIX-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997
Revenue
Revenues are generally derived from transaction fees charged (cash and
trade) based upon a percentage of the dollar amount of client trades, in
addition to monthly dues by each member. Revenue is recognized for monthly dues
after fees have been earned and collected. One-time set-up fees are recognized
as they are collected, but they are not a significant component of net income.
Revenue decreased 17% to $273,256 in the first two fiscal 1999 quarters
ended September 30, 1998, from $327,486 in the first two quarters of fiscal
1998. The Company had a net loss from operations of $140,783, or $(0.03) per
share, for the first two quarters of fiscal 1999 compared to a net loss of
$11,102, or $(0.00) per share, in the first two quarters of 1998. The Company's
gross margin decreased to a gross profit of $239,088 for the six months ended
September 30, 1998, compared to $260,649 for the six months ended September 30,
1997.
As a percentage of revenue, the gross margin for the first six months of
fiscal 1999 was slightly higher than the gross margin for the comparable period
for the preceding fiscal year. From time to time, the Company arranges sales of
inventory acquired in corporate transactions. During the first six months of
fiscal 1998, the Company sold all of its available inventory for trade dollars.
There were no corresponding inventory sales during fiscal 1999. Since the gross
profit on inventory sales is lower than from other types of revenues, the fiscal
1998 period reflects a lower gross margin.
Total Revenue. Total revenue decreased 17% to $273,256 in the first two
quarters of fiscal 1999 from $327,485 in the first two quarters of fiscal 1998.
Following is a summary of the components of revenue for the first six months of
fiscal 1999 and 1998:
<TABLE>
<CAPTION>
Six Months Ended
September 30
----------------------------
1998 1997
-------- --------
<S> <C> <C>
Trade $134,546 $148,597
Cash 138,710 178,888
-------- --------
$273,256 $327,485
======== ========
</TABLE>
Cash revenues for the six months ended September 30, 1998 decreased
22.5% over cash revenues for the six months ended September 30, 1997. During the
first two quarters of fiscal 1998, the Company's trade revenue was $134,546,
down 9.5% from trade revenue in the first two quarters of fiscal 1997. The
reductions in both cash and trade revenues for the 1998 six-month period
reflects the absence of special inventory sales during 1998, compared to
significant special inventory sales during the 1997 six-month period.
Costs, Expenses and Gross Margins
Cost of Sales. For the six months ended September 30, 1998, the costs of
trade exchange revenue were $34,168, or 13% of revenue, compared to $66,836, 20%
of revenue, during the first two quarters of fiscal 1997. The gross margin from
trade exchange operations was $239,088 for the 1998
-14-
<PAGE> 16
six-month period, compared to $260,649 for the first two quarters of fiscal
1997. As a percentage of revenue however, the 1998 gross margin was greater than
for the 1997 six-month period. This is attributable to 1997 inventory sales, as
discussed above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses (including depreciation) increased from $272,779 in the
first two quarters of fiscal 1997 to $396,831 for the first two quarters of
fiscal 1998. The increase was primarily attributable to the following factors:
- Significant resources were devoted in the second quarter to the
development of the "Ubarter.com" Internet website. The Company plans
to invest much of its available resources into the future
development of Ubarter.com with the objective of attracting a
significant share of the Internet barter commerce market.*
- Salaries increased due to the addition of several key personnel. Two
full-time employees were hired to work on the future development of
Ubarter. A Chief Financial Officer was hired to fill a new position
in the Company. Two new trade brokers and an Executive Assistant
were also hired.
- Additional costs were incurred in the first two quarters of 1998
which were not incurred in the first two quarters of 1997, including
such items as legal and other professional fees for assistance with
regulatory filings, strategic development costs, and increased
investor relations and telephone costs.
The accumulated deficit at September 30, 1998 was $252,251, compared to
$111,468 at March 31, 1998.
COMPARISON OF YEARS ENDED MARCH 31, 1998 AND 1997
Revenue
During the fiscal year ended March 31, 1998, gross revenues increased to
$684,062, compared to $452,673 for the fiscal year ended March 31, 1997. This
increase in revenue reflects increased trade fees, an increase in the number and
quality of clients, and increased activity by corporate trade clients. During
the fiscal year ended March 31, 1998, cash revenues were $345,831. The remaining
revenue consisted of trade dollars. During the fiscal year ended March 31, 1997,
there were cash revenues of $379,302.
Costs, Expenses and Gross Margins
Gross profit for the fiscal year ended March 31, 1998 totaled $540,637,
or 79% of revenue, contrasted to $343,826, or 73% of revenue, for the comparable
period for the preceding year. The major cost components included in cost of
sales were industry specific items such as script and consignment costs.
Management attributes the higher gross profit margins to investments in new
technology, outsourcing data processing, and centralizing accounts receivable.
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-15-
<PAGE> 17
Selling, general and administrative expenses were $500,073 for the
fiscal year ended March 31, 1998, a 26% increase over $395,306 for the fiscal
year ended March 31, 1997. The increase reflects expanded broker staff,
professional fees related to the Company's Exchange Act filing, and additional
personnel for administrative staff. Payroll was the largest category consuming
$186,858. Taxes were $1,207 and broker trade commissions were $28,884.
The net income was $32,509 for the fiscal year ended March 31, 1998,
compared with a loss of $62,672 for the fiscal year ended 1997. Earnings per
share (post-stock split) were $0.01 compared with ($0.07). The weighted average
number of shares used in the calculation of Basic Earnings Per Share (post-stock
split) was 2,632,424.
Inflation
The Company's results of operations have not been affected by inflation
and management does not expect inflation to have a material impact on its
operations in the future.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the 1996 merger, Cascade Trade financed its activities through
internal cash flow. Since the merger, the Company has funded its activities
primarily through its equity financing activities, most recently in July 1998
through a $1.0 million private placement of units, consisting of common stock
and E Warrants.
At September 30, 1998, the Company's working capital was $1,615,083, a
ratio of 11.2 to 1, based on current assets of $1,772,757 and current
liabilities of $157,674. The Company's working capital was $413,330 at March 31,
1998, a ratio of 12.7 to 1, based on current assets of $448,800 and current
liabilities of $35,470. The increase in working capital resulted primarily from
the increase in the Company's cash to $1,716,690 at September 30, 1998, from
$382,564 at March 31, 1998. This primarily resulted from the Company's financing
activities during the period. Proceeds from sale of common stock were $1,506,950
during the 1998 six-month period. There were no comparable proceeds from common
stock sales during the 1997 six-month period.
The cash supplied by financing activities during the fiscal year ended
March 31, 1998 totaled $282,138, which primarily reflected the receipt of
$298,850 in net proceeds from the exercise of warrants. The cash generated by
financing activities during fiscal 1997 was $135,540, which is primarily
attributable to proceeds of $150,000 from the sale of common stock.
During the six-month period ended September 30, 1998, the Company used
net cash of $150,371 in its operations, compared to the use of $38,071 for
operations in the six-month period ended September 30, 1997. The increase in
cash used in operations was primarily attributable to increased personnel and
development costs during the 1998 six-month period over the comparable 1997
six-month period.
The net cash used for operating activities during the fiscal year ended
March 31, 1998 was $47,986. During that fiscal year there was $32,509 in net
income. The primary adjusting item was the deficit of $106,570 in net trade
revenue earned over trade costs. During fiscal 1998, there were increases in
accounts payable and other liabilities of $12,931, and $10,755 of depreciation.
By comparison, the net cash used for operating activities during fiscal 1997
totaled $21,768. The cash used in fiscal 1997
-16-
<PAGE> 18
reflected a $62,672 net loss, $125,000 of common stock issued for services, a
deficit of $39,549 in net trade revenue earned over trade costs, $9,080 in
depreciation, and a reduction of $10,221 in non-cash operating working capital.
During the six-month period ended September 30, 1998, the Company used
net cash of $13,514 for the acquisition of property and equipment, compared to
$20,358 during the 1997 six-month period. The total cash used for investing
activities during the fiscal year ended March 31, 1998 was $13,915. No net cash
was used during fiscal 1997 for investing activities.
Total stockholders' equity increased to $1,836,650 at September 30,
1998, from $470,483 at March 31, 1998. This increase was directly attributable
to cash provided by the financing activities of the Company during the
six-months ended September 30, 1998.
The Company maintains its major cash balances at one financial
institution located in Las Vegas, Nevada. Funds not required for the immediate
needs of the Company may be invested in certificates of deposit, short-term
government obligations, or money market funds.
The Company leases its office facility in Seattle, Washington. Future
minimum rental commitments pursuant to this lease are $22,200 for fiscal 1999.
Of the minimal rental commitment due in fiscal 1999, $15,600 is payable in cash
and $6,600 is payable in trade dollars.
The Company believes its existing working capital and anticipated cash
from financing activities will be sufficient to allow it to achieve its expected
expansion goals and demands for its services through the end of the 1999
calendar year.* Despite this belief, there is no assurance that the Company's
resources will be sufficient. The Company anticipates that a significant portion
of its anticipated near-term capital resources, up to $1,200,000, will be
provided through the exercise of outstanding E Warrants issued in a prior
offering, which are exercisable at the price of $1.50.* The perceived value of
these warrants at any given time is related to the market price of the Company's
common shares, which trade over the counter on the OTC Bulletin Board. If the
Company is unable to obtain anticipated financing through the exercise of
warrants, the Company may be unable to successfully implement its short-term
plans for expansion or meet its working capital requirements. See "Risk
Factors-- Funds May Be Insufficient to Satisfy Plans for Growth; Additional
Financing."
The Company anticipates having to raise additional capital by equity
issuance during the next several years, as the Company expects to grow at rates
that will require more funds than will be generated by its operations. The
Company does not have any commitments for additional financing at this time. The
Company's ability to obtain additional capital may be dependent on market
conditions, the national economy and others factors outside the Company's
control. If adequate funds are not available or are not available at acceptable
terms, the Company's long-term ability to finance its expansion, develop or
enhance services or respond to competitive pressures would be significantly
limited. See "Risk Factors--Funds May Be Insufficient to Satisfy Plans for
Growth; Additional Financing."
Insofar as funds may be required for operations, the Company
occasionally engages in barter trading for its own account, and may expend trade
dollars in excess of the amount of trade dollars earned.
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-17-
<PAGE> 19
This negative trade balance provides the Company with a certain measure of
additional liquidity and the opportunity to complete advantageous purchase
transactions that benefit the Company and barter exchange clients. At September
30, 1998, the Company had expended $98,765 trade dollars in excess of the amount
of trade dollars earned by the Company, compared to $5,439 at March 31, 1998.
The Company considers the current level manageable.
Development Activities
Ubarter.com. Ubarter.com is an Internet website for electronic barter
trading that was launched by the Company on July 20, 1998. The software, at that
time, had design flaws that made transacting trades somewhat cumbersome for the
user. As a result, customer participation was moderate and the project got off
to a slow start. In September 1998, an updated version was released with certain
improvements but which failed to provide full functionality. In December 1998,
the Company retained MindCorps Inc., a website developer based in Seattle,
Washington, to redesign and develop a new Ubarter.com site. The development of
Ubarter.com is not yet completed, and the Company intends to invest much of its
available resources into the future development of Ubarter.com in order to
attract a significant share of the related Internet barter commerce market.
The full development and implementation of the Company's Ubarter.com
Internet website will require additional capital. There can be no assurance that
working capital will be available or will be adequate to develop the website.
Furthermore, if developed, it is uncertain whether Ubarter.com will produce
material revenue for the Company or whether it even can be run profitably.
The Company expects to experience negative cash flow and operating
losses from its investment of working capital during the development period,
after which positive cash flow and profitable operations from the Ubarter.com
website are expected.* Two full-time personnel have been hired by the Company to
work on the future development of Ubarter.com. The market focus of Ubarter.com
is to draw customers who presently engage in traditional barter transactions and
to attract new customers who may be unfamiliar with the barter concept but
routinely engage in electronic commerce. The ultimate goal of Ubarter.com is to
provide a central, worldwide clearinghouse for electronic barter transactions.
However, there can be no assurance that adequate funds from operations or
investors will be available to successfully complete the project as planned.
Trade Exchange Acquisitions
The Company also intends to devote significant financial and human
resources to a strategic plan of acquiring existing profitable barter trade
exchanges in the United States and in other selected countries throughout the
world. Such acquisitions could result in negative cash flows and operating
losses initially but are expected in the long term to provide positive cash
flows and increase the overall profitability of the Company.* However, there can
be no assurance that adequate funds will be available to successfully acquire
additional barter trade exchanges as planned. One of the Company's assumptions
in making acquisitions is that it will be able to utilize its common stock as a
primary medium of exchange, rather than cash. This assumption may prove to be
incorrect.
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-18-
<PAGE> 20
In addition to increasing its level of expenditures to further develop
Ubarter.com and assimilate other barter exchanges, the Company expects to
increase its operating expenses to expand its operations and enlarge its
organization. These anticipated increases in operating expense levels and
developmental costs will adversely effect operating results for the near term.
Further, if the Company successfully accomplishes its plan of acquiring existing
barter trade exchanges, the Company believes that the acquisitions could result
in additional negative cash flows and operating losses until the acquisitions
can be successfully integrated into the Company's operations. If it is
successful in its plans, the Company may experience rapid growth and may require
additional funds to expand its operations. Consequently, the Company believes
that it will continue to incur losses during the 1999 fiscal year.* If
acquisitions of other exchanges are consummated, period-to-period comparisons of
the Company's financial results may not be necessarily meaningful and should not
be relied upon as an indication of future performance.
Real Estate Acquisitions
The Company may from time to time invest in real estate as part of its
barter activities for its own account. The Company has no policy regarding its
possible investment in real estate, including the percentage of assets which may
be invested in any one investment, the type of real estate, or whether assets
may be acquired primarily for potential capital gain or for income. Shareholder
approval is not required for real estate investment activities. The Company does
not expect that real estate investments will form a substantial portion of its
future business activities.
During July 1991, the Company acquired six 10-acre parcels located in
Spokane, Washington for $120,000. The property was sold during the period from
August 1991 to November 1994. Consideration for the sale included ten-year and
fifteen-year notes receivable totaling $37,700, with interest at rates from 10%
to 10.75%, respectively. These notes receivable are secured by the property and
totaled $29,303 at September 30, 1998. The Company's purpose of this investment
was primarily for possible capital gain.
Discussion of the Year 2000 Issue
Background. Many computer programs have been written using two digits
rather than four to identify the year. Any computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. Systems that do not properly recognize this information
could fail or generate miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. This situation
is commonly referred as the year 2000 or "Y2K" problem.
Scope and Impact of Y2K on the Company. The Company utilizes both
proprietary software and software provided by outside vendors which may be
impacted by the Y2K problem. The operation of the IBC Retail Trade Exchange is
dependent upon the proper functioning of its computer software. Management has
assessed the potential impact of the Y2K issue on the Company and does not
believe that the Company's business, operations or financial condition will be
materially impacted by the Y2K issue as it relates to the Company's proprietary
software. Furthermore, it is expected that potential
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-19-
<PAGE> 21
impact of third parties' failure would not have a material impact on the
Company's business, operations or financial condition.
Remediation plans. The Company's principal software vendor has begun
reprogramming of its proprietary software which is approximately 40% completed.
The remaining portion is mainly related to a small segment of data fields. The
Company anticipates that the project will be completed sometime during the first
quarter of 1999. The cost of this reprogramming is not significant and is not
expected to have a material effect on the Company's results of operations when
incurred. With respect to software supplied by third parties, the Company has
determined that such software is already Y2K compliant or will be compliant well
before the year 2000 or, alternatively, that any such software will be replaced
at a cost which is not material to the Company's results of operations.
Uncertainties and Contingencies. The Company presently believes that
with modifications to existing software and conversions to new software, the Y2K
issue can be mitigated. Management does not believe that the Company will incur
significant operating expenses or be required to invest heavily in computer
system improvements to be Y2K compliant. However, even if such modifications or
conversions are not made, or are not completed timely, the Company would be able
to continue operations manually. This would result in more cumbersome and less
efficient operations but is not currently expected to have a material adverse
effect on the Company's business, operations or financial condition.
However, there is no guarantee that the software of other companies on
which the Company's software relies will be timely converted, or that a failure
to convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company and
its operations. Significant uncertainty exists concerning the potential costs
and effects associated with any year 2000 compliance.
Recently Issued Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
which establishes standards for reporting and display of comprehensive income
and its components (revenue, expenses, gains and losses) in a full set of
general purpose financial statements. This statement requires that an enterprise
(a) classify items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a statement of financial position. The statement is effective for
fiscal years beginning after December 15, 1997. The Company believes the
adoption of SFAS No. 130 will have no significant impact on the Company's
consolidated financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosure About Segments of an
Enterprise and Related Information" (SFAS 131) which establishes standards for
the way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to report
selected information about operating segments in interim financial reports
issued to stockholders. It also establishes the related disclosures about
products and services, geographic areas, and major customers. Provisions of SFAS
131 are effective for fiscal years beginning after December 15, 1997. The
Company believes that adoption of SFAS 131 will have no significant impact on
the Company's consolidated financial statements.
-20-
<PAGE> 22
BUSINESS
OVERVIEW
International Barter Corp. ("Company") offers barter services for
retail, professional, media and corporate clients through regional trade
exchange offices which may be either owned by the Company, operated as divisions
of the Company, or licensed to and operated by independent third parties. The
Company currently has one exchange office located in Seattle. The Company
intends to expand its operations as practicable by acquiring other strategically
located barter exchanges in the United States or Canada, and to integrate these
exchanges into its operations.*
The Company utilizes a centralized barter currency, centralized data
processing, standardized marketing and support materials, advertising, ongoing
training, promotion and support to expand its client base. The Company markets
services of existing clients to other clients through directories, newsletters,
trade brokers and other means.
The Company's principal source of revenues are cash commissions of
10%-12% charged on client barter sales, in addition to monthly client fees of
$15 cash and $15 trade dollars. The Company is not in the retail business; its
focus and commitment is to build and maintain barter exchanges. That is, the
Company, as with most commercial barter exchanges, serves in an agent capacity
to clients. On the occasion when the Company may hold some merchandise in-house,
the merchandise is typically traded to clients for trade dollars. This may
happen, for example, in an instance in which the Company attempts to establish
or maintain client relationships. As a result, the Company's financial
statements seldom reflect an amount for "inventory."
The Company is developing an Internet website, Ubarter.com, from which
it intends to generate revenues from trades transacted by on-line clients.*
Currently however, revenues are derived from its activities as a regional trade
exchange. The Company estimates that about 90% of its barter transactions
reflect actions of small businesses, especially those companies broadly defined
as retail. The remaining transactions usually involve corporate barter
transactions with companies with gross revenues over $10 million. Corporate
barter transactions are considerably larger and more complex than retail barter
transactions and involve significantly more time and negotiation to complete.
The Company had 509 barter clients as of December 31, 1998.
HOW TRADES ARE TRACKED
The Company acts as a third-party record-keeper of client barter
transactions and account balances, which are denominated in "trade dollars."
When the clients make barter purchases, the Company debits trade dollars from
the buyer's account and credits the seller's account, similar to an ordinary
bank account or credit card account. Generally, sales are at prevailing retail
prices. Clients receive a monthly account statement showing all activity for
that period.
The Company, as other commercial barter exchanges, depends on a U.S.
dollar-denominated trade dollar as an index of valuation for establishing barter
credits and debits. A trade dollar is an
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-21-
<PAGE> 23
accounting unit used by the Company to record the value of barter trades as
established by the parties to the transactions. Trade dollars allow clients to
purchase goods and services from other exchange members. The Company does not
redeem trade dollars for cash.
Retail barter exchanges are classified as third-party record keepers of
the financial records of clients, having certain reporting obligations under the
Tax Equity and Fiscal Responsibility Act of 1982. For tax purposes, the Company
is required to report on an annual basis to the IRS on Forms 1099B totals of the
barter sales of its clients. Trade dollars received are taxable in the year
earned.
WHY BARTER TRANSACTIONS WORK
General factors serving to encourage commercial barter activity between
business clients include the desire to generate new sales and to reach new
customer outlets, conserve cash flow, avoid debt financing, finance larger
advertising campaigns, ensure against unsold or surplus inventory, or exchange
unproductive assets and excess capacity for useful products or services.
Barter is especially useful to those retail establishments where the
variable costs of products or services are low; for example, hotels, media, and
other travel-related businesses. The hotel which does not fill its rooms by the
end of the day has lost potential revenue but still has incurred the same
overhead associated with owning and maintaining its facility. The radio station
or newspaper which does not fill an available advertising space has lost the
opportunity to generate revenue but still experienced virtually the same costs.
Similarly, service providers who provide construction, maintenance services,
advertising services, or professional services have time to offer, and failure
to obtain customers to minimize unbillable time results in lower volume of
business.
A representative barter transaction might occur as follows. A dentist
needs to have her office remodeled and through the Company's barter exchange
hires a contractor who agrees to perform the remodeling work for $500 in trade
dollars. The dentist has these trade dollars in her account to spend because she
provided dental work to the owner of a vacation resort in exchange for $500 in
trade dollars. The resort owner originally acquired these trade dollars because
the contractor (or any other member of the barter exchange) stayed at his
vacation resort for $500 in trade dollars.
Each of these businesses (barter exchange clients) expanded its revenue
through the offering of services for trade dollars rather than only for cash.
Their businesses have benefited without the need for cash expenditures.
INDUSTRY INFORMATION AND COMPETITION
Conventional barter is the oldest form of commerce. Trade has
historically involved a direct exchange of goods and services between two or
more parties. The development of the modern commercial barter industry was
dependent on the development of an accepted index of valuation for establishing
barter credits and debits. This index of valuation is the industry-accepted
"trade dollar." Trade exchanges act as clearinghouses for the exchange of
products and services among their members. Trade dollars are credited and
debited to each business's trade account. Member clients can transact business
directly between themselves. Alternatively, they may utilize the services of a
trade broker who in matching buyers and sellers operates in a manner similar to
that of a stock broker.
Based on overall trade volume in North America, trade growth for the
period from 1984 to 1994 averaged 15.3 percent per year. It has been estimated
that the total value of products and services
-22-
<PAGE> 24
bartered by corporate trade companies and trade exchanges is over $7.5 billion
per year. Of this amount, trade exchanges accounted for barter sales of $1.4
billion in 1996, compared with $1.2 billion in 1995 and $1.1 billion in 1994. It
is estimated that trade exchange networks currently serve over 400,000 business
trade clients. Currently a relatively small percentage of the companies in the
United States use the services of a barter trade exchange. The Company believes
the market presents significant growth opportunities for the barter industry.*
The International Reciprocal Trade Association ("IRTA"), a trade group
that prepares annual estimates of commercial bartering in the United States and
Canada, estimates that the number of business engaged in barter in North
American will triple over the next decade. IRTA also expects that the number of
clients of barter companies will grow at 15% during the next decade. This still
would represent a less than 25% penetration rate of the estimated 6.3 million
small businesses which have employees. Consequently, expansion of existing
barter exchanges and strong growth in new start-up exchanges is anticipated. The
Company believes that independent barter companies account for about half of the
industry's growth.
There are approximately 400 independent trade exchanges in the United
States. The profile of the "average" independent trade exchange would reveal a
local or regional organization with approximately 500 clients, five employees,
and gross revenue in the range of $100,000 to $400,000. Revenues are typically
derived from commissions on purchases or sales and periodic or annual fees. The
exchange might have one to three offices. Significant time and energy is devoted
to accounting and bookkeeping, marketing and sales, and customer service. Most
independent barter exchanges have not expanded beyond the regional level. Major
cities often support several competitive barter exchanges.
At least two exchanges have attempted national expansion, ITEX
Corporation ("ITEX") and Business Exchange International Corp. ("BEI") through
its subsidiary BXI Trade Exchange, Inc. ("BXI"). ITEX reported revenues of $29.2
million for its fiscal year ended July 31, 1997, from approximately 120
affiliated domestic broker offices. The Company believes BXI also has in excess
of 100 barter offices. In July 1998, ITEX announced the completion of the
acquisition of BEI and BXI.
One hindrance to the greater expansion of barter exchanges has
historically been the limitation on the range and availability of products or
services offered in trade. However, responses to customer demands for wider
availability of products and services, for strong customer service, and for
better computer servicing technology have resulted in a more competitive
industry. The Company believes that the advent of a global barter marketplace on
the Internet will encourage new clients to incorporate barter into their
business plans. The Company anticipates that in order to capture greater market
share, barter companies will be required to expand beyond single office
operations into larger regional or national organizations with the ability to
offer a wider selection of products and services, service a more diverse and
dispersed clientele and have greater access to growth capital.
The Company will attempt, without assurance of success, to expand its
presence in the barter industry and to create a strong national presence. Some
of the existing competitors in the barter industry can be expected to be larger
or have greater financial resources than the Company. Consequently, the Company
will encounter competition in its efforts to expand its barter business or to
acquire desirable
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-23-
<PAGE> 25
independent trade exchanges. In addition, there can be no assurance that a group
of independent barter exchanges will not join forces to create another national
barter company.
Similarly, the efforts of the Company to develop Ubarter.com into a
premier Internet website can be expected to be met with competition. For
example, ITEX has a service which it has made available to its clients on the
Internet with "ITEX Online." The market for Internet-based services and products
is relatively new, intensely competitive, rapidly evolving and subject to rapid
technological change. There are no substantial barriers to initial entry, and
the Company expects competition to persist, intensify and increase in the
future. The Company believes that the more market penetration it achieves, the
higher the barrier to entry will become for anyone contemplating a similar
system. However, there can be no assurance that competitors will not develop
technologies or services that render the Company's services less marketable,
that the Company will be able to compete successfully, or that the Company will
be able to successfully enhance its services, or develop new services or lower
costs, when and as needed.
OPERATIONS
The Company intends as practicable to acquire other strategically
located barter exchanges.* These exchanges will then be integrated into the
greater operations of the Company. When a qualified exchange has been acquired,
it will be provided with the necessary materials and information to properly
maintain new and existing accounts. The Company intends to provide its
centralized barter currency, centralized data processing, standardized marketing
and support materials, advertising, and ongoing training, promotion and support.
This includes letterhead, envelopes, business cards, contracts, sales drafts,
press kits, and other business-related inventory. The Company will provide trade
broker training and guidance, as required, in order to maintain high quality
client relationships.
The Company relies on one software vendor to supply the software
necessary for the centralized processing of its trade transactions. The Company
uses TradeWorks(R) and TradeWorks Online(R), products and services of DWW
Software. This vendor also supplies its software as a stand-alone product to
other barter exchanges.
Profitability for the Company is associated with its ability to generate
transactional fees as a percentage of the aggregate volume of its barter trades,
together with monthly fees from each account, sufficient to exceed costs and
expenses. The Company is currently operating at a loss. See "Management's
Discussion and Analysis--Results of Operations."
The Company occasionally engages in barter trading for its own account,
for example, to pay for certain operating costs. From time to time, the Company
will have expended trade dollars in excess of the amount of trade dollars
earned, resulting in a negative trade balance. See "Management's Discussion and
Analysis--Barter Industry."
In July 1998, the Company opened its Internet website, Ubarter.com, to
the general public. The website is intended to provide an electronic barter
forum, enabling businesses and individuals to connect and trade products and
services without geographical limitation. The parties are responsible for
posting their items for trade, setting and assessing the value of traded items,
and shipping or delivering the
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-24-
<PAGE> 26
products or services. The Company intends to generate revenues from trades
transacted by on-line clients based on the value of the items traded, and hopes
to attract a significant share of the Internet commerce market.* The website
currently does provide the full user functionality intended by the Company. In
December 1998, the Company retained MindCorps Inc., a website developer based in
Seattle, to redesign and develop a new Ubarter.com site.
The Company's expansion goals will present a challenge to the resources
and working capital of the Company. The full development and implementation of
the Company's Ubarter.com Internet website will require additional capital.
There can be no assurance that the Company will be able to successfully
implement its plans for expansion, acquire and integrate additional barter
exchanges into its current structure, or that working capital will be available
or will be adequate. See "Risk Factors--Effects of Competition on Company's
Performance and Expansion; Funds May Be Insufficient to Satisfy Plans for
Growth; Additional Financing; Challenges to the Company's Ability to Manage
Growth."
The Company is a member of the National Association of Trade Exchanges
and Barter Association National Currency, a common currency trading system for
trade exchanges. These relationships allow the Company to gather information on
its industry, foster increased cooperation between the Company and other barter
exchanges, improve the Company's visibility within the barter industry, and
further enable the Company's ability to compete.
BUSINESS DEVELOPMENT AND MARKETING
The Company's business development and marketing strategy is in
furtherance of the following business objectives:*
- Develop and expand its client base
- Create a strong national presence and capture market share by expanding
beyond local operations
- Develop Ubarter.com into a premier Internet website where individuals
and businesses throughout the world can trade
- Create strategic alliances with established companies to attract trading
customers to the Company and the Ubarter.com site
- Seek to acquire other strategically located barter exchanges to
facilitate its growth
- Service a more diverse and dispersed clientele
- Provide the broadest availability of goods and services in the barter
industry
The Company's principal advertising and promotional strategy is to focus
on client base development. The Company utilizes the following media and methods
to convey its message to potential barter clients:
- industry publications
- local, regional and national print advertising
- direct mail
- the Internet
- ------------------------------
* These statements and objectives are forward-looking statements reflecting
current expectations and intentions. There can be no assurance that the
Company's actual future performance will meet the Company's current expectations
or intentions, due to factors described in this section, in the "Risk Factors"
and other sections of this prospectus.
-25-
<PAGE> 27
- radio talk shows
The Company budgets approximately 2.5% of its total revenues on its
advertising programs. It is anticipated that a portion of the amount spent on
advertising may be in Company trade dollars. For Ubarter.com, the Company plans
to utilize various methods of print, radio and Internet advertising.
The Company's corporate office is located in Seattle, Washington. During
1998 the Company unsuccessfully sought to develop operating relationships with
certain trade offices in eastern Washington and Texas. The Company now intends
to expand its operations as practicable by acquiring other strategically
located barter exchanges in the United States or Canada.*
The key benefits the Company can provide acquired exchanges are:
- data processing
- barter transaction authorizations
- centralized billing
- centralized currency
- expanded trade dollar purchasing power
- potential equity ownership in a public company
- standardized marketing and support materials
The Company hopes to acquire at least one regional trade exchange during
fiscal 1999.* From time to time in its marketing efforts, the Company identifies
barter exchanges that may be suitable for integration into the Company's system
and contacts the operators of these exchanges. The Company has recently entered
into negotiations to acquire one such exchange, which, if consummated, would be
a significant acquisition. However, the Company's obligations will be subject to
numerous contingencies and conditions. If these discussions result in a
definitive agreement, of which there is no assurance, it is anticipated that the
Company would utilize a combination of cash, trade dollars and common stock as
consideration for the acquisition.
GOVERNMENT REGULATIONS
The barter industry is not currently subject to direct regulation by any
government agency, other than regulations generally applicable to businesses.
For tax purposes, U.S. barter exchanges are required to file on an annual basis
totals of the barter sales of their clients. Similarly, there are currently few
laws or regulations directly applicable to access to or commerce on the
Internet. It is possible that a number of laws and regulations may be adopted
with respect to the Internet, covering issues such as user privacy, pricing and
characteristics and quality of products and services. The adoption of laws or
regulations applicable to the Company's business could decrease the growth of
the barter industry or the Internet, which in turn, could decrease the demand
for the Company's services and increase the Company's cost of doing business or
otherwise have an material adverse effect on the Company's business, prospects,
financial condition and results of operations. Furthermore, the applicability to
the Internet of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes, libel and personal privacy is
uncertain and may take years to resolve.
- ------------------------------
* This is a forward-looking statement reflecting current expectations and
intentions. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations or intentions, due to
factors described in this section, in the "Risk Factors" and other sections of
this prospectus.
-26-
<PAGE> 28
PROPRIETARY RIGHTS
The Company relies on a combination of copyright and trademark laws,
trade secrets, software security measures, license agreements and nondisclosure
agreements to protect its proprietary rights and software products. Much of the
Company's proprietary information may not be patentable, and the Company is not
the owner or assignee of any domestic or foreign patents. The Company has a U.S.
federal and international trademark registered for IBC International Barter
Corp.(R)
The Company has federal service mark applications pending for
"Ubarter.com." It has registered Internet domain names for Ubarter.com and
ibinc.com.
The Company cannot be certain that others will not develop substantially
equivalent or superseding proprietary technology, or that equivalent services
will not be marketed in competition with the Company's services, thereby
substantially reducing the value of the Company's proprietary rights.
Furthermore, there can be no assurance that any confidentiality agreements
between the Company and its employees or any license agreements with its
customers will provide meaningful protection for the Company's proprietary
information in the event of any unauthorized use or disclosure of such
proprietary information.
The Company also relies on certain technology which it licenses from
third parties, including software which is used in the Company's services to
perform key functions. There can be no assurance that these third party
technology licenses will continue to be available to the Company on commercially
reasonable terms. The loss of or inability to maintain any of these technology
licenses could result in delays or reductions in service development or delivery
until equivalent technology could be identified, licensed and integrated. Any
such delays or reduction in service development or delivery would adversely
affect the Company's business, operating results and financial condition.
RESEARCH AND DEVELOPMENT
During the years ended March 31, 1998 and 1997, the Company did not
incur costs related to research and development activities, other than as part
of general and administrative expenses.
SEASONALITY
The Company is not aware of any significant seasonal influences on its
business. The composition of certain products and services changes modestly with
shifts in weather with no material impact on total revenues. The barter industry
has observed a modest upturn in business during weaker economic times as clients
tend to utilize barter more when cash conservation is a priority.
EMPLOYEES
At December 31, 1998, the Company operated with the services of its
Directors, Executive Officers, and five additional full-time employees and
consultants. The Company's future success will depend, in part, on its ability
to attract, retain and motivate highly qualified technical and management
personnel. From time to time, the Company may employ independent consultants or
contractors to support its research and development, marketing, sales and
support and administrative organizations. The Company's employees are not
represented by any collective bargaining unit, and the Company has never
experienced a work stoppage. The Company believes its relations with its
employees are good.
-27-
<PAGE> 29
The Company estimates that successful implementation of its growth plan would
result in approximately 30 additional employees by the end of fiscal 2000. See
"Risk Factors--Ability to Manage Growth."
PROPERTY
The Company's executive offices are located in Seattle, Washington,
where the Company currently leases approximately 1,800 square feet. The Company
leases this space under an operating lease that expires in September 1999. The
Company believes that its current facilities are adequate and are suitable for
their current use, and that suitable additional facilities will be available,
when needed, upon commercially reasonable terms.
LEGAL MATTERS
To the best of the Company's knowledge, there are no legal actions
pending, threatened or contemplated against the Company.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Management of the Company is vested in its Board of Directors and
officers. There currently are four directors. The directors are elected by the
shareholders. The Board of Directors of the Company is comprised of only one
class. All of the directors serve until the next annual meeting of shareholders
and until their successors are elected and qualified, or until their earlier
death, retirement, resignation or removal. The officers of the Company hold
office at the discretion of the Board of Directors.
The Board of Directors and executive officers of the Company and their
respective ages as of December 31, 1998 are set forth in the table below. Also
provided is a brief description of the business experience of each director and
executive officer and the key personnel during the past five years and an
indication of directorships (if any) held by each director in other companies
subject to the reporting requirements under the Federal securities laws.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Steven M. White 40 Chief Executive Officer, President, Director,
Chairman of the Board
Alan Zimmelman 54 Vice President, Director
Richard Mayer 59 Vice President, Secretary, Director
Kevin R. Andersen 47 Chief Financial Officer and Treasurer
Glen T. White 44 Director
</TABLE>
Following is a discussion of the business background of each director
and executive officer. Steven White, Alan Zimmelman and Richard Mayer are
full-time employees of the Company. Glen White devotes only such time as may be
necessary to the Company's business and affairs.
-28-
<PAGE> 30
BUSINESS EXPERIENCE
Steven M. White has been a member of the Board of Directors, and has
served as President and Chief Executive Officer since September 1996. From July
1983 until its merger with the Company in 1996, Mr. White served as President of
Cascade Trade Association, a private company involved in the barter business. He
has over nineteen years experience in sales and management, including over
fifteen years affiliated with companies involved in the barter business. He has
served on the Board of Directors of the National Association of Trade Exchanges
since 1995, and is its President for the 1998-1999 term.
Alan Zimmelman has been a member of the Board of Directors since
November 1997. From November 1987 until August 1996, he was President of BXI
West Los Angeles, a private company involved in the barter business. Mr.
Zimmelman joined the Company in September 1996 and was appointed VP Operations
in September 1997. He has over twenty-six years experience in sales and
management, including over ten years affiliated with companies involved in the
barter business, twelve years affiliated with companies in the hotel industry
and five years affiliated with companies in hospital administration.
Richard Mayer has been a member of the Board of Directors since
September 1996. He has over thirty years experience in sales and management,
including over six years affiliated with companies involved in the barter
business. From November 1995 until its merger with the Company, he was Vice
President of Marketing for Cascade Trade Association, a private company involved
in the barter business. From April 1989 until November 1995, he was the owner of
Money Mailer of the Sound, a private company involved in direct mail. From 1960
until 1989, he was with General Electric Capital Corp.
Glen T. White has been a member of the Board of Directors since November
1997. Since June 1977, he has been in the US Navy and currently holds the rank
of Commander. Glen T. White is the brother of Steven M. White.
Kevin R. Andersen has served as Chief Financial Officer since joining
the Company in August 1998. Mr. Andersen has been a partner with the firm of
Andersen, Andersen & Strong L.C. since 1990. He was formerly with the national
accounting firm of Laventhol & Horwath where he served in the Las Vegas, Nevada
office and in the firm's national tax office in Washington D.C. Mr. Andersen was
on the Laventhol & Horwath Teaching Faculty and has been a Professor of Taxation
at the Washington College of Law. Mr. Andersen received a B.S. degree in
Accounting from the University of Utah in 1977, a Master of Accountancy
(Taxation) from UNLV in 1988, and has been a CPA since 1980.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended March 31, 1998, the Board of Directors held
six meetings. During this period, each of the directors attended or participated
in more than 75% of the aggregate of the total number of meetings of the Board
of Directors.
The Board of Directors has not yet established a Compensation Committee
or an Audit Committee. When established, the Compensation Committee will make
recommendations concerning the salaries and incentive compensation of employees
of, and consultants to, the Company, and will administer the Company's 1998
Stock Option Plan. When established, the Audit Committee will be responsible for
reviewing the results and scope of audits and other services provided by the
Company's independent auditors.
-29-
<PAGE> 31
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid or earned for
services rendered to the Company in all capacities during the year ended March
31, 1998 to the Company's President and Chief Executive Officer (the "Named
Officer"). No executive officer received total annual salary, bonus and other
compensation in excess of $100,000 in that fiscal year. No executive officer who
would have otherwise been includable in this table on the basis of salary and
bonus earned for the 1998 fiscal year has been excluded by reason of his or her
termination of employment or change in executive status during the fiscal year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- ------------------------
SECURITIES
UNDERLYING
STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY OTHER AWARDS WARRANTS
- --------------- ---- ------- ----- ----- ----------
<S> <C> <C> <C> <C> <C>
Steven M. White 1998 $75,000 - (1) -(2) -
President and CEO
</TABLE>
- -------------------------
(1) Perquisites and other personal benefits, securities and property in the
aggregate do not exceed the threshold reporting level of the lesser of $50,000
or 10% of total salary and bonus reported for the Named Officer.
(2) No stock awards were granted to Mr. White during the fiscal year ended March
31, 1998. The aggregate value of all shares held by Mr. White as of March 31,
1998 was approximately $2,444,743, based upon the OTC Bulletin Board closing
price for the shares on that date.
OPTION GRANTS IN LAST FISCAL YEAR
No stock options or stock appreciation rights were granted to the Named
Officer, or any other officers or directors of the Company, during the fiscal
year ended March 31, 1998.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to the Named
Officer regarding the exercise of options during the 1998 fiscal year and
unexercised options held as of the end of the 1998 fiscal year. No stock
appreciation rights were exercised during the 1998 fiscal year or were
outstanding at the end of the 1998 fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven M. White -- -- -- -- -- --
</TABLE>
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<PAGE> 32
SIGNIFICANT EMPLOYEES AND CONSULTANTS
The Company employs several administrative, technical, sales and support
personnel who perform various day-to-day tasks and conduct operations. In
addition, the Company from time to time utilizes consultants or consulting firms
to assist in the development of its business plan and operations. The following
individuals are significant employees or consultants of the Company.
Dan C. Schneider, 45, has served as Chief Technology Officer since
joining the Company in August 1998. From 1985 to 1998, he worked at Darigold,
Inc. as manager of its PC-related activities. He was responsible for the
deployment of UNIX-based, DOS-based, and Windows-based systems and networks, and
managed hardware and software support. In 1997, he developed the corporate
website for Darigold, and established a password-protected database allowing
milk producers to check daily quality control testing data. Mr. Schneider
received a B.A. degree in Business Administration from Central Washington
University in 1977.
Liad Y. Meidar, 24, is President of Astra Advisors LLC, a management
consulting firm from New York, New York. Mr. Meidar was retained by the Company
in October 1998 to advise management in strategic decisions related to corporate
planning and mergers and acquisitions. From July 1997 to September 1998, Mr.
Meidar was employed by BT Alex. Brown Incorporated, New York, as a Financial
Analyst in the Financial Sponsors Group. At BT Alex Brown, he served financial
sponsor clients in transactions involving high yield bond issuances, senior debt
underwriting and syndication, and international acquisitions. Mr. Meidar
received a B.A. in Economics from Princeton University in 1997.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
Steven White. Pursuant to an Employment Agreement effective as of
November 24, 1998, the Company employed Steven White as its President and Chief
Executive Officer. The term of employment commenced on December 1, 1998, and
continues for a period of three years. Mr. White's salary is $85,000 per annum,
which may be increased annually at the discretion of the Board of Directors of
the Company.
Alan Zimmelman. Pursuant to an Employment Agreement effective as of
November 24, 1998, the Company employed Alan Zimmelman as its Vice President of
Area Broker Relations. The term of employment commenced on December 1, 1998, and
continues for a period of three years. Mr. Zimmelman's initial salary is $50,000
per annum, which may be increased annually at the discretion of the Board of
Directors.
Richard Mayer. Pursuant to an Employment Agreement effective as of
November 24, 1998, the Company employed Richard Mayer as its Vice President of
Marketing and Operations. The term of employment commenced on December 1, 1998,
and continues for a period of three years. Mr. Mayer's initial salary is $50,000
per annum, which may be increased annually at the discretion of the Board of
Directors.
Kevin R. Andersen. Pursuant to an Employment Agreement effective as of
August 1, 1998, the Company employed Kevin Andersen on a part-time basis as its
Chief Financial Officer. The term of employment commenced on August 1, 1998, and
continues for a period of three years. Mr. Andersen's base salary is $50,000 per
annum, which may be increased on a temporary basis for additional
project-related accounting duties, or increased annually at the discretion of
the Board of Directors of the Company.
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<PAGE> 33
Each of the agreements for the executive officers named above entitle
them to options to purchase 40,000 shares of common stock for each year of
employment, which will vest at the rate of 20,000 options on each of the first
and second anniversary dates of employment with the Company. All agreements
contain a change of control provision which provides for the continuing
employment of the officer for the duration of the term of the agreement in the
event of a merger, acquisition of the Company or sale of substantially all of
its assets. Upon the change of control event the agreements provide that the
officers are entitled to, in addition to any payments made for continued
employment, payment from the Company of $50,000 for Kevin Andersen, $150,000
each for Alan Zimmelman and Richard Mayer, and $1,000,000 for Mr. Steven White.
DESCRIPTION OF 1998 STOCK OPTION PLAN
The 1998 Stock Option Plan ("1998 Plan") is intended to serve as an
equity incentive program for management, qualified employees, non-employee
members of the Board of Directors, and independent advisors or consultants. The
1998 Plan became effective on June 1, 1998 upon adoption by the Board of
Directors, and was ratified by shareholders at the annual meeting in November
1998. As of December 31, 1998, the Company had granted options to purchase an
aggregate of 327,000 shares of common stock under the 1998 Plan. The following
is a summary of the principal features of the 1998 Plan.
Under the 1998 Plan, the total number of shares of common stock
reserved for issuance at any time is that number equal to 20% of the outstanding
shares of Company common stock, which may be Incentive Stock Options ("ISOs")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, or nonqualified stock options. If any outstanding option expires or is
terminated for any reason, the shares of common stock allocable to the
unexercised portion of that option may again be subject to an option to the same
optionee or to a different person eligible under this Plan.
The 1998 Plan contains two separate components: (i) a discretionary
option grant program under which eligible individuals in the Company's employ or
service (including officers and other employees, non-employee Board members and
independent advisors or consultants) may, at the discretion of the plan
administrators, be granted options to purchase shares of common stock; and (ii)
an automatic option grant program under which option grants will automatically
be made at periodic intervals to eligible non-employee Board members to purchase
shares of common stock at an exercise price equal to their fair market value on
the grant date.
The discretionary option grant program is administered by the Board of
Directors or a committee of two or more members of the Board. Plan
administrators have sole authority to prescribe the form, content and status of
options to be granted, select the eligible recipients, determine the timing of
option grants, determine the number of shares subject to each grant, the
exercise price, vesting schedule, and term for which any option will remain
outstanding, provided, however, that the exercise price for any option granted
may not be less than the fair market value per share of the common stock at the
date of grant. The Board of Directors has the authority to determine the terms
and restrictions on all restricted option awards granted under the 1998 Plan,
and in general, to construe and interpret any provision of the 1998 Plan.
The exercise price for outstanding option grants under the 1998 Plan may
be paid in cash or, upon approval of the plan administrators, in shares of
common stock valued at fair market value on the exercise date, having shares
withheld from the amount of shares of common stock to be received by the
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<PAGE> 34
optionee, by delivery of an irrevocable subscription agreement obligating the
optionee to take and pay for the shares of common stock to be purchased within
one year of the date of such exercise, through a same-day cashless exercise
program or a reduction in the amount of any Company liability to the optionee,
or by such other consideration and method of payment for the issuance of shares
to the extent permitted by applicable laws.
The administration of the automatic option grant program is
self-executing in accordance with the provisions of the 1998 Plan. Under the
automatic option grant program, immediately after each annual meeting of
shareholders, each elected non-employee director of the Company is automatically
granted a nonqualified stock option to purchase 5,000 shares of common stock for
each year included in the term for which such he or she was elected.
Under the 1998 Plan, no stock option can be granted for a period longer
than ten years or for a period longer than five years for ISOs granted to
optionees possessing more than 10% of the total combined voting power of all
classes of stock of the Company. Unless extended by the Plan administrators
until a date not later than the expiration date of the option, the right to
exercise an option terminates ninety days after the termination of an optionee's
employment, contractual or director relationship with the Company. If the
optionee dies or is disabled, the option will remain exercisable for a period of
one year after the termination of employment or relationship with the Company.
OPTION GRANTS
For each of the Directors and executive officers named above and the
various indicated groups, the table below shows as of December 31, 1998 (i) the
number of shares of common stock subject to options which have been granted
under the 1998 Plan and (ii) the exercise price payable per share of the
options.
<TABLE>
<CAPTION>
NUMBER OF
OPTION EXERCISE PRICE OF
NAME AND POSITION SHARES(1) GRANTED OPTIONS(1)
- ----------------- --------- ------------------
<S> <C> <C>
Steven M. White 45,000 .8125
Alan Zimmelman 45,000 .8125
Richard Mayer 45,000 .8125
Kevin R. Andersen 40,000 .8125
Glen T. White 5,000 .8125
All current executive officers as a group
(4 persons) 175,000 .8125
All current directors (other than
executive officers) as a group (1 person) 5,000 .8125
All employees, including current officers
who are not executive officers, and
consultants, as a group (10 persons) 147,000 .8125 - .9375
</TABLE>
(1) The options expire five years from the date of grant. They are 50% vested
one year after the date of grant, and are fully vested after two years.
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<PAGE> 35
DIRECTOR COMPENSATION
Except for grants of stock options and reimbursement of expenses,
directors of the Company generally do not receive compensation for services
rendered as a director. The Company does not compensate its directors for
committee participation or for performing special assignments for the Board of
Directors. Under the Company's 1998 Stock Option Plan, non-employee directors of
the Company receive automatic grants of stock options each year upon their
re-election at the annual meeting of shareholders, exercisable at not less than
the fair market value of the Company's common stock on the day of grant.
LIMITATION OF LIABILITY
The Company's bylaws provide for the indemnification of officers and
directors to the fullest extent possible under Nevada Law, against expenses
(including attorney's fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the Company. The
Company is also granted the power, to the maximum extent and in the manner
permitted by the Nevada Revised Statutes, to indemnify each of its employees and
agents (other than directors and officers) against expenses (including
attorneys' fees), judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding, arising by reason of the
fact that such person is or was an agent of the Company.
The Articles of Incorporation of the Company limit or eliminate the
personal liability of officers directors for damages resulting from breaches of
their fiduciary duty for acts or omissions, except for damages resulting from
acts or omissions which involve intentional misconduct, fraud, knowing violation
of the law, or the payment of dividends in violation of the Nevada Revised
Statutes.
The four executive officers of the Company have entered into employment
agreements which provide that, in addition to all other rights of
indemnification they may have as officers of the Company, they shall be
indemnified by the Company for all reasonable expenses and liabilities of any
type or nature, including attorneys' fees, incurred in connection with any
action, suit or proceeding to which they may be a party by reason of, or in
connection with their positions as officers of the Company. The officers are
also indemnified by the Company against all amounts paid by them in settlement
of these legal proceedings, provided that the settlement is approved by
independent legal counsel selected by the Company, except to the extent that
expenses relate to matters for which it is adjudged that the officers are liable
for willful misconduct.
The Company maintains Director and Officer liability insurance with an
aggregate coverage amount of $1,000,000.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The directors, executive officers, and any persons holding more than
ten percent of the common stock of a company subject to the reporting
requirements of the Exchange Act, are required to report their initial ownership
of the Company's common stock and any subsequent changes in their ownership to
the Securities and Exchange Commission ("SEC"). In addition, they are required
to furnish
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<PAGE> 36
the Company with copies of all Section 16(a) forms they file. Specific due dates
have been established by the SEC, and the Company is required to disclose any
failure to file by those dates. However, the Company, together with its
directors, executive officers, and ten percent holders, became subject to the
Exchange Act in June 1998, after the close of the 1998 fiscal year.
Consequently, no reports were required to be filed during the 1998 fiscal year.
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of December 31, 1998 for
(a) each person known by the Company to be a beneficial owner of five percent or
more of the outstanding common stock of the Company, (b) each executive officer,
director and nominee for director of the Company, and (c) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Shares
Name and Address(1) Beneficially Percentage
of Beneficial Owner Owned of Shares(2)
- ------------------- ------------ ------------
<S> <C> <C>
Steven M. White 1,403,498(3) 24.1%
Allen Zimmelman 63,900(3) 1.1%
Richard Mayer 59,000(3) 1.0%
Kevin R. Andersen 40,000(4) *
Glen T. White 15,000(5) *
New Horizons LP 1,241,800(6) 20.1%
248 West Park Avenue
Long Beach, NY 11561
Astra Advisors LLC 670,000(7) 10.4%
61 West 62nd Street, #19D
New York, NY 10023
All executive officers and 1,581,398(8) 26.6%
directors as a group
(5 persons)
</TABLE>
- ------------
* Less than one percent.
(1) Except as noted below, the business address of Mr. White and all other
directors and executive officers is 21400 International Blvd., Suite 207,
Seattle, WA 98198.
(2) Percentage of beneficial ownership is based upon 5,776,400 shares of common
stock outstanding as of December 31, 1998.
(3) Includes 45,000 shares underlying stock options granted but not yet
exercised.
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<PAGE> 37
(4) Includes 40,000 shares underlying stock options granted but not yet
exercised.
(5) Includes 5,000 shares underlying stock options granted but not yet
exercised.
(6) Sors Inc. as general partner is also deemed the beneficial owner of the
shares of the common stock owned by New Horizons LP because of its power to vote
and dispose of those shares. Includes 400,000 shares underlying Warrants not yet
exercised.
(7) Includes 670,000 shares underlying stock options granted but not yet
exercised. Liad Y. Meidar is also deemed the beneficial owner of the options
owned by Astra Advisors LLC because of his power to vote and dispose of those
shares. See "Certain Relationships and Related Transactions."
(8) Includes 180,000 shares underlying stock options granted but not yet
exercised.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Company's merger in November 1996 with Cascade Trade
Association, Steven White and Richard Mayer were executive officers of Cascade
Trade Association. In September 1996, Mr. White and Mr. Mayer were appointed
directors of the Company and Mr. White was appointed an officer of the Company.
Steven White was the principal shareholder of Cascade Trade Association. In
connection with the merger, Mr. White was issued 1,800,000 shares of common
stock of the Company.
New Horizons LP is a significant shareholder of the Company. The
general partner of New Horizons LP is Sors Inc., which is managed by Joseph
MacDonald. The spouse of Mr. MacDonald, Ms. Mary Martin, entered into a one-year
consulting agreement with the Company commencing in August 1998. In exchange for
investor relations and consulting services rendered, and for reimbursement of
expenses, Ms. Martin is paid $2,000 per month and received a grant of 40,000
options exercisable at $.8125 per share.
In July 1998, New Horizons LP purchased 400,000 units, consisting of
one share of common stock and one Warrant, offered by the Company in a private
placement for $1.25 per unit. The Warrants entitle New Horizons LP to purchase
under this prospectus one share of common stock at a price of $1.50 per share.
New Horizons LP is a Selling Shareholder under this prospectus. See "Selling
Shareholders."
Liad Y. Meidar is President and the principal owner of Astra Advisors
LLC, a management consulting firm from New York, New York. The Company has
entered into a consulting agreement with Astra Advisors LLC and Liad Meidar. Mr.
Meidar has agreed to serve as an advisor to the Company through September 30,
2000, focusing on potential acquisitions, strategic planning and business
development. For his services, Mr. Meidar will receive cash compensation of
$80,000 per year and an aggregate total of 630,000 stock options. Of these
options, 10,000 are exercisable at the price of $4.00, 20,000 at $6.00, 40,000
at $8.00, 80,000 at $10.00, 160,000 at $12.00 and 320,000 at $14.00. If a merger
or acquisition transaction is consummated during the term of the agreement or
within one year thereafter, Mr. Meidar will receive a fee equal to 3% of the
consideration paid by the Company, payable in cash and common stock valued at
fair market value.
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<PAGE> 38
DESCRIPTION OF SECURITIES
The Company's articles of incorporation, as amended, authorize the
issuance of up to twenty-five million (25,000,000) shares of common stock, $.001
par value per share. No preferred stock has been authorized by the Company.
COMMON STOCK
Each share of common stock has the same rights, privileges and
preferences. Holders of the shares of common stock have no preemptive rights to
acquire additional shares or other subscription rights. They have no conversion
rights and are not subject to redemption provisions or future calls by the
Company.
The holders of shares of common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of shareholders. The
holders of common stock are not entitled to cumulate their votes for the purpose
of electing directors of the Company.
In the event of liquidation, dissolution, or winding-up of the Company,
either voluntarily or involuntarily, the holders of the outstanding shares of
Common Stock are entitled to receive a pro rata share of the net assets of the
Company as are distributable after payment of all liabilities which may then be
outstanding.
DIVIDENDS POLICY
Dividends on common stock are payable from profits or capital legally
available for that purpose. Common stock will participate equally in dividends
if declared by the Board of Directors. The Company has not paid dividends on its
common stock since its inception. It is the current policy of the Board of
Directors to retain any future earnings to finance operations and growth.
Accordingly, the Company does not anticipate paying any cash dividends in the
foreseeable future.
WARRANTS
The Warrants were issued to three investors in a private placement in
July 1998. As a result of the 2 for 1 stock split of the Company's common stock,
effective July 24, 1998, the Warrants were adjusted such that each Warrant is
exercisable at the price of $1.50 per share. Each Warrant entitles the holder to
purchase, at a price of $1.50 per share, subject to adjustment, one share of
common stock during the period commencing on the investment date and ending on
June 30, 2000. The Company has reserved an equivalent number of shares of common
stock for issuance on exercise of the Warrants. The Warrants are
nontransferable, and may be exercised in whole or in part. The Company has no
right to redeem the Warrants prior to the expiration of the exercise period.
Any Warrant holders who do not exercise their Warrants prior to the
conclusion of the exercise period will forfeit the right to purchase the shares
of common stock underlying the Warrants and, after the conclusion of the
exercise period, any outstanding Warrants will become void and be of no further
force or effect.
The exercise price of the Warrants and the number of shares to be
obtained upon the exercise of the Warrants are subject to adjustment in certain
circumstances including a stock split of, or stock dividend on, or a
recapitalization of the common stock. In the event of liquidation, dissolution
or winding up of the Company, holders of the Warrants, unless exercised, will
not be entitled to participate
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<PAGE> 39
in the assets of the Company. Holders of the Warrants have no voting,
preemptive, liquidation or other rights of a shareholder, and no dividends will
be declared on the Warrants.
The exercise price of the Warrants is adjustable downward if the Company
were to issue (other than by stock dividend or stock split) or sell shares of
its common stock for a consideration per share less than the Warrant purchase
price. The holders of the Warrants have certain piggy-back registration rights
with respect to the Warrants and the underlying common shares. The Company has
agreed to pay all registration expenses incurred in connection with the
registration of the common shares issuable upon exercise of the Warrants.
TRANSFER AGENT
Securities Transfer Corporation, 16910 Dallas Parkway, Suite 100,
Dallas, Texas 75248, serves as transfer agent for the Company's common stock,
and serves as transfer and warrant agent for the Warrants.
PLAN OF DISTRIBUTION
The sale or distribution of the common stock covered by this prospectus
may be effected directly to purchasers by the Selling Shareholders from time to
time in the over the counter market on the OTC Bulletin Board (or if the Company
should qualify and be listed, on the NASDAQ SmallCap Market) at prices and at
terms prevailing at the time of sale. The Shares may be sold by one or more of
the following methods: (a) a block trade in which the broker or dealer so
engaged will attempt to sell the shares of common stock as an agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resales by
that broker or dealer for its own account pursuant to this prospectus; (c) an
over-the-counter distribution in accordance with the rules of the OTC Bulletin
Board; (d) in ordinary brokerage transactions or transactions in which the
broker solicits purchasers; (e) in transactions otherwise than on any stock
exchange or in the over-the-counter market; and (f) pursuant to Rule 144. Any of
these transactions may be effected at market prices prevailing at the time of
sale, at prices related to the prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case as
determined by the Selling Shareholder or by agreement between the Selling
Shareholder and underwriters, brokers, dealers or agents, or purchasers. There
is no assurance that any of the Selling Shareholders will sell any or all of the
shares offered by them.
In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the Selling Shareholders in
amounts to be negotiated prior to the sale. The Selling Shareholders and any
brokers, dealers or agents that participate in the distribution of the shares
may be deemed to be underwriters, and any profit on the sale of the common stock
by them and any discounts, concessions or commissions received by any
underwriters, brokers, dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.
Under the securities laws of certain states, the shares may be sold in
such states only through registered or licensed brokers or dealers. In addition,
in certain states the shares may not be sold unless they have been registered or
qualified for sale in that state or an exemption from registration or
qualification is available and is complied with.
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<PAGE> 40
The Company will pay all the expenses incident to the registration,
offering and sale of the shares to the public under this prospectus, other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
The Company will not receive any proceeds from the sale of the shares by the
Selling Shareholders. The Company may at its discretion withdraw the
registration statement of which this prospectus constitutes a part at any time.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of common stock, including common stock underlying the Warrants, of
each Selling Shareholder and as adjusted to give effect to the sale of the
shares. Information concerning the Selling Shareholders may change from time to
time. Any changes of which the Company is advised will be set forth in a
Prospectus Supplement to the extent required. See "Plan of Distribution."
<TABLE>
<CAPTION>
PRIOR TO AFTER OFFERING
OFFERING ------------------------
NUMBER OF SHARES NUMBER OF
BENEFICIAL OWNER(1) SHARES OFFERED SHARES PERCENTAGE(1)
- ------------------- --------- ------- --------- -------------
<S> <C> <C> <C> <C>
Cathryn and Peter Adler 15,200 8,000 7,200 *
Allied Hansard Capital Ltd.(2) 400,000 400,000 0 *
Spencer Bickel 5,500 2,000 3,500 *
Scott Brennan 800 400 400 *
Rosanne Catalano 4,400 2,000 2,200 *
Charon Management(2) 620,000 568,000 52,000 *
Rand Coulson 276,000 184,000 92,000 1.6%
Carmen DeAstis 1,200 400 800 *
Inez Deaton 800 400 400 *
Fred Dempsey 8,000 4,000 4,000 *
Tony Faranda 800 400 400 *
Joanne and Kevin Flood 800 800 0 *
Irving Gartenberg 3,000 2,000 1,000 *
Global Investments 33,200 16,600 16,600 *
Peter Gordon 1,200 400 800 *
Michael Gruschow 800 400 400 *
Stephen Gruschow 800 400 400 *
Susan Harrison 5,000 2,000 3,000 *
Eugene Herman 1,800 1,200 600 *
Sherrill Holland III 22,000 8,000 14,000 *
Jane Holland 8,000 4,000 4,000 *
Irish Global Partners Ltd. 34,000 34,000 0 *
Kevin Krupke 8,000 4,000 4,000 *
Anthony Maragioglio 5,100 2,000 3,100 *
Maria Maragioglio 2,800 2,000 800 *
Michael Marcojohn 800 400 400 *
Mary Martin 164,000 40,000 124,000 *
Sinisa Milenkovich 2,400 1,200 1,200 *
New Horizons, L.P.(3) 1,241,800 1,100,000 141,000 2.4%
Harry Raffa 2,000 2,000 0 *
Joseph Raffa 8,000 4,000 4,000 *
</TABLE>
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<PAGE> 41
<TABLE>
<CAPTION>
PRIOR TO AFTER OFFERING
OFFERING ------------------------
NUMBER OF SHARES NUMBER OF
BENEFICIAL OWNER(1) SHARES OFFERED SHARES PERCENTAGE(1)
- ------------------- --------- ------- --------- -------------
<S> <C> <C> <C> <C>
Jeffrey Schlagenheim 1,200 400 800 *
Victor Shultz III 800 400 400 *
Ellen Teixeira 1,200 1,200 0 *
Andrew Titley 300,000 100,000 200,000 3.5%
John Titley 300,000 100,000 200,000 3.5%
Hillary Viders 4,000 2,000 2,000 *
Richard Viders 8,000 4,000 4,000 *
Kevin Wanamaker 1,600 800 800 *
--------
</TABLE>
Total Shares Offered
- ---------------------
* Less than one percent.
(1) Beneficial ownership assumes the exercise of all Warrants. Percentage of
beneficial ownership is based upon 5,776,400 shares of common stock outstanding
as of December 31, 1998.
(2) Includes 200,000 shares of common stock issued upon exercise of the
Warrants.
(3) Includes 400,000 shares of common stock issued upon exercise of the
Warrants.
SHARES ELIGIBLE FOR FUTURE SALE
Of the 5,776,400 shares of common stock outstanding as of December 31,
1998, 1,439,400 were issued under an exemption from the registration provisions
of the Securities Act under Rule 504 of Regulation D without limitations on
resale, and are eligible for resale in the open market. The remaining 4,337,000
shares held by existing shareholders were issued and sold by the Company in
private transactions in reliance on exemptions from the registration provisions
of the Securities Act and are restricted securities within the meaning of Rule
144 under the Securities Act. Of these restricted shares, 1,803,000 shares are
being offered for sale by Selling Shareholders. Assuming exercise of the 800,000
Warrants, Selling Shareholders may sell up to 2,603,000 shares, which will
represent approximately 40% of the Company's issued and outstanding shares of
Common Stock. All of the remaining restricted shares, including shares held by
affiliates, will be eligible in March 1999 for resale in the open market, if
any, in compliance with Rule 144. There are no contractual restrictions on the
resale of the outstanding common stock.
In general, Rule 144 under the Securities Act provides that securities
may be sold if there is current public information available regarding the
Company and the securities have been held at least one year. Rule 144 also
includes restrictions on the amount of securities sold, the manner of sale and
requires notice to be filed with the SEC. Under Rule 144 a minimum of one year
must elapse between the later of the date of the acquisition of the securities
from the issuer or from an affiliate of the issuer, and any resale under the
Rule. If a one-year period has elapsed since the date the securities were
acquired, the amount of restricted securities that may be sold for the account
of any person within any three-month period, including a person who is an
affiliate of the Company, may not exceed the greater of 1% of the then
outstanding shares of the common stock of the Company or the average weekly
trading
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<PAGE> 42
volume in the over-the-counter market during the four calendar weeks preceding
the date on which notice of sale is filed with the SEC. If a two-year period has
elapsed since the date the securities were acquired from the issuer or from an
affiliate of the issuer, a seller who is not an affiliate of the Company at any
time during the three months preceding a sale is entitled to sell the shares
without regard to volume limitations, manner of sale provisions or notice
requirements.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for the Company by Tollefsen Business Law P.C., Everett, Washington.
EXPERTS
The financial statements of the Company at March 31, 1998 and for the
years ended March 31, 1998 and 1997, included in this prospectus have been
audited by Andersen Andersen & Strong LC, independent auditors, as stated in
their report appearing herein, and are included in reliance upon the report of
this firm, given on the authority of that firm as experts in accounting and
auditing.
CHANGES IN CERTIFYING ACCOUNTANTS
Andersen Andersen & Strong L.C. has audited the Company's financial
statements annually since fiscal 1996. Subsequent to the completion of the 1998
fiscal year audit, the Company retained a partner of Andersen Andersen & Strong
L.C. to serve as its Chief Financial Officer. Because it could no longer serve
the Company as an independent accounting firm for the 1999 fiscal year, the
former accounting firm declined to stand for re-election at the 1998 Annual
Meeting of shareholders. During January 1999, the Company engaged the firm of
Moss Adams L.L.P. as its independent accountants for the fiscal year ended March
31, 1999.
The reports of Andersen Andersen & Strong L.C. for prior fiscal years
have not contained an adverse opinion or disclaimer of opinion, nor were they
modified as to uncertainty, audit scope or accounting principles. There were no
disagreements with the former accountant on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
ADDITIONAL INFORMATION
The Company files annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission
("SEC"). You may read and copy any reports, statements or other information on
file at the SEC's Public Reference Room at 450 5th Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet site that contains the reports, proxy statements and other
information which the Company files electronically with the SEC. The SEC's web
site is located at http://www.sec.gov.
The Company has filed with the SEC a registration statement under the
Securities Act with respect to the securities offered by this prospectus. This
prospectus, which constitutes a part of the registration statement, omits
certain of the information set forth in the registration statement in
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<PAGE> 43
accordance with the rules and regulations of the SEC. For further information
with respect to the Company and the securities offered by this prospectus,
reference is made to the registration statement and the exhibits filed as a part
thereof. Statements contained in this prospectus as to the content of any
contract or other document referred to are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by this reference. The registration statement and exhibits can
be inspected and copied at the public reference section at the SEC's Public
Reference Room in Washington D.C. noted above, and at the SEC's regional offices
in Chicago, Illinois and New York, New York. The registration statement and
exhibits can also be reviewed on the SEC's Internet site at http://www.sec.gov.
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<PAGE> 44
FINANCIAL STATEMENTS INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
1. Six Months Ended September 30, 1998 and 1997 (unaudited)
Consolidated Balance Sheets 44
Consolidated Statements of Operations 45
Consolidated Statements of Cash Flows 46
Notes to Consolidated Financial Statements 47
2. Fiscal Years Ended March 31, 1998 and 1997
Report of Independent Accountants 50
Consolidated Balance Sheets as of March 31, 1998 and 1997 51
Consolidated Statements of Operations 52
Consolidated Statement of Shareholders' Equity (Deficit) 53
Consolidated Statements of Cash Flows 54
Notes to Consolidated Financial Statements 55
</TABLE>
-43-
<PAGE> 45
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND MARCH 31, 1998
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1998 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,716,690 $ 382,564
Accounts receivable, net of allowance for
doubtful accounts of $3,102 and $1,956 for
September 30, 1998 and March 31, 1998, respectively 52,498 63,259
Notes receivable - current 2,406 2,406
Other current assets 1,163 571
----------- -----------
Total Current Assets 1,772,757 448,800
----------- -----------
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation 49,914 42,259
----------- -----------
OTHER ASSETS
Notes receivable - noncurrent 26,898 32,791
Prepaid advertising 147,900 --
Other assets 8,700 1,200
----------- -----------
Total Other Assets 183,498 33,991
----------- -----------
$ 2,006,169 $ 525,050
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 35,058 $ 9,274
Trade Dollars issued in excess of earned 98,765 5,439
Current portion of long-term debt 11,387 13,074
Other current liabilities 12,464 7,683
----------- -----------
Total Current Liabilities 157,674 35,470
----------- -----------
LONG-TERM DEBT 11,845 19,097
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value; authorized 25,000,000
shares; issued and outstanding 4,883,200 shares and
3,832,900 shares as of September 30, 1998 and March 31,
1998, respectively 4,883 3,833
Additional paid-in capital 1,084,018 540,618
Subscribed shares, 800,000 shares and 195,000 shares
(giving effect to stock split) as of September 30, 1998
and March 31, 1998, respectively 1,000,000 37,500
Accumulated deficit (252,251) (111,468)
----------- -----------
Total Stockholders' Equity 1,836,650 470,483
----------- -----------
$ 2,006,169 $ 525,050
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-44-
<PAGE> 46
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 AND
THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS
9-30-98 9-30-97 9-30-98 9-30-97
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE $ 124,745 $ 166,799 $ 273,256 $ 327,485
COST OF SALES 17,002 19,947 34,168 66,836
----------- ----------- ----------- -----------
Gross Profit 107,743 146,852 239,088 260,649
----------- ----------- ----------- -----------
OPERATING EXPENSES
Selling, general and administrative 267,656 128,589 390,972 268,239
Depreciation 3,201 2,270 5,859 4,540
----------- ----------- ----------- -----------
Total Operating Expenses 270,857 130,859 396,831 272,779
----------- ----------- ----------- -----------
Income (Loss) from Operations (163,114) 15,993 (157,743) (12,130)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income 14,091 1,779 18,330 3,555
Interest expense (525) (1,230) (1,961) (2,527)
----------- ----------- ----------- -----------
Total Other Income (Expense)-net 13,566 549 16,369 1,028
----------- ----------- ----------- -----------
Net Income (Loss) Before Income Taxes (149,548) 16,542 (141,374) (11,102)
Income Tax Expense (Benefit) -- -- (591) --
----------- ----------- ----------- -----------
Net Income (Loss) $ (149,548) $ 16,542 $ (140,783) $ (11,102)
=========== =========== =========== ===========
Average Common and Equivalent Shares:
Basic 5,683,200 1,550,000 5,227,367 1,550,000
=========== =========== =========== ===========
Diluted 5,683,200 1,550,000 5,227,367 1,550,000
=========== =========== =========== ===========
Net Income (Loss) Per Common Share:
Basic $ (.03) $ .01 $ (.03) $ (.01)
=========== =========== =========== ===========
Diluted $ (.03) $ .01 $ (.03) $ (.01)
=========== =========== =========== ===========
Giving Effect to Stock Split:
Average Common and Equivalent Shares:
Basic 3,100,000 3,100,000
=========== ===========
Diluted 3,100,000 3,100,000
=========== ===========
Net Income (Loss) Per Common Share:
Basic $ .00 $ (.00)
=========== ===========
Diluted $ .00 $ (.00)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-45-
<PAGE> 47
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH USED IN OPERATING ACTIVITIES:
Net loss $ (140,783) $ (11,102)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation 5,859 4,540
Bad debts 1,146 --
Deferred income taxes (591) (351)
Net trade revenue earned over (under) trade costs (42,074) (31,151)
Changes in operating assets and liabilities:
Accounts receivable 9,615 (1,802)
Contracts receivable 5,892 240
Prepaids and other assets (20,000) --
Accounts payable and other liabilities 30,565 1,555
----------- -----------
Net Cash Used by Operating Activities (150,371) (38,071)
----------- -----------
CASH USED IN INVESTING ACTIVITIES:
-----------
Acquisition of property and equipment (13,514) (20,358)
----------- -----------
Net Cash Used by Investing Activities (13,514) (20,358)
----------- -----------
CASH PROVIDED BY FINANCING
ACTIVITIES:
Proceeds from sale of common stock 1,506,950 --
Repayment of notes payable (8,939) (13,167)
----------- -----------
Net Cash Provided by Financing Activities 1,498,011 (13,167)
----------- -----------
Net Increase (Decrease) in Cash 1,334,126 (71,596)
Cash at Beginning of Period 382,564 162,327
----------- -----------
Cash at End of Period $ 1,716,690 $ 90,731
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 1,961 $ 2,452
Cash paid for income taxes -- --
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Prepaid advertising and scrip acquired for IBC Trade Dollars $ 135,400 $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-46-
<PAGE> 48
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three-month and six-month periods ended
September 30, 1998 and 1997 are not necessarily indicative of the results to be
expected for the full year. The Notes to Consolidated Financial Statements
included in the Company's March 31, 1998 registration statement on Form 10-SB
should be read in conjunction with these consolidated financial statements.
2 - TRADE DOLLARS
At September 30, 1998, the Company had expended 98,765 IBC Trade Dollars in
excess of the amount of Trade Dollars earned by the Company. At March 31, 1998,
the Company had expended 5,439 IBC Trade Dollars in excess of the amount of
Trade Dollars earned by the Company. This situation is commonly referred to in
the commercial barter industry as a "negative trade balance". Trade Dollars
expended in excess of earned by the Company is provided for in the IBC Trading
Rules that govern the Exchange. Such provisions allow the Company to expend
Trade Dollars in excess of earned within certain guideline amounts. The Company
would be ultimately obligated to provide goods and services for sale to Exchange
members to offset any amounts of Trade Dollars expended in excess of earned.
3 - CAPITAL STOCK
In July of 1998, the Company received cash for common stock and warrants through
a private placement whereby, 800,000 units were sold at $1.25 per unit. Each
unit consists of one share of common stock and one warrant exercisable at $1.50
per share. The warrants expire June 20, 2000. As of September 30, 1998, the
shares were unissued and thereby classified as subscribed stock. During the
quarter ended September 30, 1998, 195,000 shares of previously unissued
(subscribed) shares were issued. Additionally, warrants were exercised for
649,200 common shares for which the Company received proceeds of $356,300.
On July 9, 1998, the Board of Directors passed a resolution for a 2-for-1 stock
split (split) of the Company's common stock to be distributed to shareholders of
record after the close of market on July 24, 1998. As a result of the split,
$2,020 was reclassified from the "additional paid-in capital" account to the
"common stock" account.
4 - INCOME (LOSS) PER SHARE
During the current fiscal year, the Company adopted FASB Statement No. 128,
Earnings Per Share. Statement 128 requires presentation of basic earnings per
share and diluted earnings per share. Basic earnings per share excludes
potential dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. Diluted earnings per share is
computed similarly to fully diluted earnings per share under previous generally
accepted accounting principles in the United States. All prior year earnings per
share data are restated to conform with Statement 128 for consistent
presentation of all years.
-47-
<PAGE> 49
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4 - INCOME (LOSS) PER SHARE (CONTINUED)
As explained above, on July 9, 1998, the Board of Directors passed a resolution
for a 2-for-1 stock split of the Company's common stock to be distributed to
shareholders of record after the close of market on July 24, 1998. In order to
properly reflect earnings per share on a prospective basis, the Company has
provided earnings per share disclosures assuming the stock split had occurred
retroactively, along with the earnings per share disclosures based upon actual
shares outstanding as of September 30, 1997 and for the three and six months
ended September 30, 1997.
Following, is a reconciliation of the numerators of the basic and diluted income
(loss) per share for the three months ended September 30, 1998 and 1997 and the
six months ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS
9-30-98 9-30-97 9-30-98 9-30-97
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) available to
common shareholders $ (149,548) $ 16,542 $ (140,783) $ (11,102)
============= ============= ============= =============
Weighted average shares 5,683,200 1,550,000 5,227,367 1,550,000
Effect of dilutive securities
Warrants and options -- -- -- --
------------- ------------- ------------- -------------
1,550,000 5,227,367 1,550,000 5,683,200
============= ============= ============= =============
Basic income (loss) per share (based on
weighted average shares) $ (.03) $ .01 $ (.03) $ (.01)
============= ============= ============= =============
Diluted income (loss) per share $ (.03) $ .01 $ (.03) $ (.01)
============= ============= ============= =============
Giving Effect to Stock Split:
Weighted average shares 1,550,000 1,550,000
Effect of dilutive securities
Warrants and options -- --
------------- -------------
1,550,000 1,550,000
============= =============
Basic income (loss) per share (based on
weighted average shares and giving
effect to stock split) $ .00 $ (.00)
============= =============
Diluted income (loss) per share (giving
effect to stock split) $ .00 $ (.00)
============= =============
</TABLE>
5 - REVENUE
The following table summarizes the cash and trade (consisting of IBC Trade
Dollars) components of revenue for the three months ended September 30, 1998 and
1997 and the six months ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS
9-30-98 9-30-97 9-30-98 9-30-97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Trade $ 62,149 $ 79,208 $134,546 $148,597
Cash 62,596 87,591 138,710 178,888
-------- -------- -------- --------
$124,745 $166,799 $273,256 $327,485
======== ======== ======== ========
</TABLE>
-48-
<PAGE> 50
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6 - STOCK OPTION PLAN
The Company adopted a Stock Option Plan (Plan) effective June 1, 1998 whereby,
stock options for up to 20% of the shares of common stock outstanding may be
granted at the fair market price at the date of grant to Directors, Officers,
Employees and Consultants. Pursuant to the Plan, effective June 1, 1998, the
Company granted 148,500 stock options to eleven individuals and entities;
exercisable at $1.625 per share for up to 5 years.
Additional shares were granted to one employee based upon the following
schedule:
<TABLE>
<CAPTION>
LIMIT ON PERCENTAGE OF SHARES
OUTSTANDING BASED UPON
OPTION NUMBER 6,050,000 SHARES OF
PRICE OF OPTIONS COMMON STOCK OUTSTANDING
----- ---------- ------------------------
<S> <C> <C>
$ 4.00 10,000 0.17%
$ 6.00 20,000 0.33%
$ 8.00 40,000 0.66%
$ 10.00 80,000 1.32%
$ 12.00 160,000 2.64%
$ 14.00 320,000 5.29%
</TABLE>
7 - SUBSEQUENT EVENTS
A brokerage account was opened and funded for the sole purpose of repurchasing
up to 250,000 shares of the Company's common stock in the open market. In
October of 1998, 10,900 shares were repurchased for $13,011.
-49-
<PAGE> 51
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
of International Barter Corp. and Subsidiary
Seattle, Washington
We have audited the consolidated financial statements of International Barter
Corp. and subsidiary for the years ended March 31, 1998 and 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of International
Barter Corp. and subsidiary as of March 31, 1998 and 1997, and the results of
their operations and their cash flows for the years then ended, in accordance
with generally accepted accounting principles.
ANDERSEN ANDERSEN & STRONG L.C.
June 19, 1998
Salt Lake City, Utah
-50-
<PAGE> 52
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 2) $ 382,564 $ 162,327
Accounts receivable, net of allowance for
doubtful accounts of $1,956 and $5,860
for 1998 and 1997, respectively (Note 2) 63,259 58,936
Notes receivable - current (Note 3) 2,406 2,052
Other current assets 571 2,056
--------- ---------
Total Current Assets 448,800 225,371
--------- ---------
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation (Notes 2 and 5) 42,259 25,364
--------- ---------
OTHER ASSETS
Notes receivable - noncurrent (Note 3) 32,791 35,072
Deposits 1,200 4,500
--------- ---------
Total Other Assets 33,991 39,572
--------- ---------
$ 525,050 $ 290,307
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 9,274 $ 444
Trade Dollars issued in excess of earned (Notes 2 and 6) 5,439 98,274
Current portion of long-term debt (Note 7) 13,074 15,978
Other current liabilities 7,683 3,582
--------- ---------
Total Current Liabilities 35,470 118,278
--------- ---------
LONG-TERM DEBT (Note 7) 19,097 32,905
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value; authorized 25,000,000 shares; issued and
outstanding 1,916,450 shares in 1998
and 1,250,000 shares in 1997 (Notes 1 and 8) 1,916 1,250
Additional paid-in capital (Note 8) 542,535 131,851
Subscribed shares, 50,000 shares in 1998 and 300,000
shares in 1997 (Note 8) 37,500 150,000
Accumulated deficit (111,468) (143,977)
--------- ---------
Total Stockholders' Equity 470,483 139,124
--------- ---------
$ 525,050 $ 290,307
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-51-
<PAGE> 53
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUE $ 684,062 $ 452,673
COST OF SALES 143,425 108,847
----------- -----------
Gross Profit 540,637 343,826
----------- -----------
OPERATING EXPENSES
Selling, general and administrative 500,073 395,306
Depreciation 10,755 9,080
----------- -----------
Total Operating Expenses 510,828 404,386
----------- -----------
Income (Loss) from Operations 29,809 (60,560)
----------- -----------
OTHER INCOME (EXPENSE)
Interest income 8,826 4,028
Interest expense (4,919) (6,010)
----------- -----------
Total Other Income (Expense)-net 3,907 (1,982)
----------- -----------
Net Income (Loss) Before Income Taxes 33,716 (62,542)
Income Tax Expense (Notes 2 and 9) 1,207 130
----------- -----------
Net Income (Loss) $ 32,509 $ (62,672)
=========== ===========
Average Common and Equivalent Shares (Note 11):
Basic 1,316,212 437,500
=========== ===========
Diluted 1,474,970 437,500
=========== ===========
Net Income (Loss) Per Common Share:
Basic $ .02 $ (.14)
=========== ===========
Diluted $ .02 $ (.14)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-52-
<PAGE> 54
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN SUBSCRIBED ACCUMULATED
SHARES AMOUNT CAPITAL STOCK DEFICIT TOTAL
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT MARCH 31, 1996 10,000 $ 8,101 $ -- $ -- $ (81,305) $ (73,204)
Exchange of 1 share of CTA for 100
shares of IBC; change from no par
to $.001 per share. (Notes 1 and 8) 990,000 (7,101) 7,101 -- -- --
Stock issued for services at $.50 per share 250,000 250 124,750 -- -- 125,000
Shares subscribed at $.50 per share -- -- -- 150,000 -- 150,000
Net loss -- -- -- -- (62,672) (62,672)
--------- --------- --------- --------- --------- ---------
BALANCE AT MARCH 31, 1997 1,250,000 1,250 131,851 150,000 (143,977) 139,124
Issuance of subscribed stock 300,000 300 149,700 (150,000) -- --
Exercise of "A" and "B" warrants 246,450 246 189,104 37,500 -- 226,850
Issuance of stock at $.60 per share 120,000 120 71,880 -- -- 72,000
Net income -- -- -- -- 32,509 32,509
--------- --------- --------- --------- --------- ---------
BALANCE AT MARCH 31, 1998 1,916,450 $ 1,916 $ 542,535 $ 37,500 $(111,468) $ 470,483
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-53-
<PAGE> 55
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss) $ 32,509 $ (62,672)
Adjustments to reconcile net income (loss) to cash
provided by operating activities:
Depreciation 10,755 9,080
Stock issued for services -- 125,000
Deferred income taxes 1,207 130
Net trade revenue earned over trade costs (106,570) (39,549)
Changes in operating assets and liabilities:
Accounts receivable (4,323) (6,275)
Contracts receivable 1,927 129
Prepaids and other assets 3,578 113
Accounts payable and other liabilities 12,931 (4,188)
--------- ---------
Net Cash Provided by Operating Activities (47,986) 21,768
--------- ---------
CASH USED IN INVESTING ACTIVITIES (13,915) --
--------- ---------
CASH PROVIDED BY FINANCING
ACTIVITIES
Proceeds from subscribed stock 298,850 150,000
Repayment of notes payable (16,712) (14,460)
--------- ---------
Net Cash Provided by Financing Activities 282,138 135,540
--------- ---------
Net Increase in Cash 220,237 157,308
Cash at Beginning of Period 162,327 5,019
--------- ---------
Cash at End of Period $ 382,564 $ 162,327
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 5,128 $ 5,785
Cash paid for income taxes -- 5,000
NON-CASH INVESTING AND FINANCING ACTIVITIES
Furniture purchased with Trade Dollars $ 13,735 $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-54-
<PAGE> 56
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1997
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
The Company is engaged in operations in the retail barter exchange area of the
commercial barter industry. The Company acts as a third-party record-keeper of
clients' transactions and balances, which are denominated in Trade Dollars. A
Trade Dollar is an accounting unit used to record the value of trades as
determined by the buying and selling parties in barter transactions. Trade
Dollars denote the right to receive goods or services available from other
clients or the obligation to provide goods or services to other clients. Trade
Dollars may not be redeemed for cash. Trade Dollars are not legal tender,
securities, or commodities. Clients pay cash and Trade Dollar fees and
commissions to the Company. For these services, the Company typically receives a
cash commission of 10% on the purchases made by clients. The Company has also
developed and will operate an Internet "e-commerce" site for bartering products
and services. Users will be able to post and/or search for items available for
barter. Clients will pay a 2%-3% fee to complete each transaction.
The Company operates with the objectives of long-term equity-building while also
ensuring availability of sufficient cash for current operating requirements.
Accordingly, the Company may in any period report significant revenue, profits,
and increases in net assets from transactions denominated in Trade Dollars or
other noncash consideration.
International Barter Corp. (IBC) was incorporated on September 18, 1996, in the
State of Nevada. On November 15, 1996, IBC effected a merger agreement with
Cascade Trade Association (CTA) wherein IBC issued 1,000,000 shares of stock in
exchange for 10,000 shares (100%) of the issued and outstanding stock of CTA.
The corporate existence of CTA will cease to exist upon the filing of
appropriate articles of merger, after a suitable transition period in which both
entities will operate. For accounting purposes, the acquisition has been treated
as a reverse acquisition; the acquisition of IBC by CTA and as a
recapitalization of CTA. The historical financial statements prior to November
15, 1996 are those of CTA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary. Intercompany transactions have been eliminated.
Trade Dollar Transactions
Normal Valuation of Trade Dollars. The Company uses the ratio of one Trade
Dollar to one United States dollar in measuring and accounting for purchases and
sales. This one-for-one ratio is the pervasive standard with the Company and
throughout the barter industry. The Company does not recognize any accounting
implications if differences are observed between trade dollar and U.S. dollar
prices that are within reasonable ranges that might exist between prices of
similar U.S. dollar transaction.
-55-
<PAGE> 57
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) -
Trade Dollar Valuation in the Statements of Operations and the Balance Sheets.
The ratio of $1 per Trade Dollar is applicable to revenue and costs and expenses
in the statement of operations.
The negative Trade Dollar balance of the Company is shown as a liability in the
balance sheet. This occurs as a result of the Company "borrowing" trade dollars
through the issuance of Trade Dollars in excess of the amounts earned by the
Company.
At each balance sheet date, in accordance with generally accepted accounting
principles, any positive trade dollar balance of the Company would be evaluated
for net realizable value. The Company would adjust the carrying value of the
trade dollars if the fair value of the trade dollars is less than the carrying
value of it is probable that not all trade dollars will be used.
Information that would be used to support the net realizable value of a
significant positive trade dollar balance at a balance sheet date would include
the Company's past track record of utilizing Trade Dollars, evident ability and
intent to utilize the Trade Dollars in a reasonable time, indicated by the
quantity of Trade Dollars relative to the size of the Company's procurement
budget for items the Trade Dollars may be used for, and preparation of a trade
plan for timely utilization on a $1 per Trade Dollar basis for goods and
services that will be available.
Revenue Recognition
The Company recognizes revenue equal to the cash to be received from the
commission earned when the buyer has made an unconditional commitment to pay and
the earnings process has been completed by the finalization of a trade
transaction. Revenue is recognized for monthly dues after the fees have been
earned and collected. One time set-up fees are recognized as collected and are
considered immaterial to net income (loss) for the years ended March 31, 1998
and 1997.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the bases of certain assets and
liabilities for financial and tax reporting. The deferred taxes represent the
future tax return consequences of those differences which will either be taxable
or deductible when the assets and liabilities are recovered or settled.
Income (Loss) Per Share
Income (loss) per share of common stock is computed on the basis of the weighted
average shares of common stock outstanding, plus common equivalent shares
arising from the effect of dilutive stock warrants under the treasury stock
method.
-56-
<PAGE> 58
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) -
Depreciation and Amortization
Property and equipment are stated at cost. Depreciation is computed on the
straight-line method for financial statement purposes. Estimated useful lives
range from 5 to 7 years.
Allowance for Uncollectible Accounts
The Company provides an allowance for accounts receivable which are doubtful of
collection. The allowance is based upon management's periodic analysis of
receivables, evaluation of current economic conditions, and other pertinent
factors. Ultimate losses may vary from the current estimates and, as additions
to the allowance become necessary, are charged against earnings in the period in
which they become known. Losses are charged and recoveries are credited to the
allowance.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amount of assets, liabilities, revenue,
expenses, gains and losses, and also disclosures about contingent assets and
liabilities. Actual results may vary from estimates and assumptions that were
used in preparing the financial statements.
Concentration of Credit Risk Arising from Cash +Deposits in Excess of Insured
Limits
The company maintains its major cash balances at two financial institutions. The
balances are insured by the Federal Deposit Insurance Corporation up to
$100,000. At March 31, 1998, the Company's uninsured cash balances total
$282,564.
3. NOTES RECEIVABLE
At March 31, 1998 and 1997, notes receivable consisted of the following:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Note receivable from individual, payable over a ten-year
period in monthly installments of $125, including
interest at 10% per annum (collateralized by real estate) $11,025 $11,516
Note receivable from individual, payable over a ten-year
period in monthly installments of $185, including interest
at 10% per annum (collateralized by real estate) 11,457 12,893
</TABLE>
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<PAGE> 59
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
3. NOTES RECEIVABLE (continued) -
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Note receivable from individual, payable over a fifteen-year
period in monthly installments of $146, including interest
at 10.75% per annum (payments in arrears) (collateralized
by real estate) $ 12,715 $ 12,715
-------- --------
35,197 37,124
Less current portion (2,406) (2,052)
-------- --------
$ 32,791 $ 35,072
======== ========
</TABLE>
4. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company estimates that the fair value of all financial instruments at March
31, 1998 and 1997 does not differ materially from the aggregate carrying values
of its financial instruments recorded in the accompanying balance sheets.
5. PROPERTY AND EQUIPMENT
At March 31, 1998 and 1997, property and equipment consisted of the following:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Computer equipment $ 13,915 $ --
Equipment 81,170 81,170
Furniture and fixtures 29,015 15,280
Leasehold improvements 19,706 19,706
Automobile 25,588 25,588
--------- ---------
169,394 141,744
Less, accumulated depreciation (127,135) (116,380)
--------- ---------
$ 42,259 $ 25,364
========= =========
</TABLE>
Depreciation expense for the years ending March 31, 1998 and 1997, was $10,755
and $9,080, respectively.
6. EXCESS OF TRADE DOLLARS ISSUED OVER TRADE DOLLARS EARNED
At March 31, 1998 and 1997, the Company had expended 5,439 and 98,274 Trade
Dollars respectively, in excess of the amount of Trade Dollars earned by the
Company. This situation is commonly referred to in the commercial barter
industry as a "negative trade balance."
-58-
<PAGE> 60
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
6. EXCESS OF TRADE DOLLARS ISSUED OVER TRADE DOLLARS EARNED (continued) -
This provides the Company with additional liquidity and the opportunity to
complete advantageous purchase transactions that benefit the Company. The
Company would be ultimately obligated to provide goods and services to clients
to offset any amounts of Trade Dollars issued in excess of earned.
7. LONG-TERM DEBT
At March 31, 1998 and 1997, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Note payable to Key Bank at $894 per month, including
interest at prime plus 2% per annum (collateralized by
equipment) $ 5,925 $ 15,410
Note payable to Financial Services, Inc. at $793 per month,
including interest at 10% per annum (collateralized by
real estate) 26,246 33,473
-------- --------
32,171 48,883
Less, current maturities (13,074) (15,978)
-------- --------
$ 19,097 $ 32,905
======== ========
</TABLE>
The annual maturities of long-term debt for the next five years are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31, AMOUNT
--------- ------
<S> <C>
1999 $13,074
2000 7,898
2001 8,849
2002 2,350
2003 --
-------
Total $32,171
=======
</TABLE>
-59-
<PAGE> 61
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
8. CAPITAL STOCK
Cascade Trade Association (CTA) was organized on October 26, 1987, in the State
of Washington. Subsequent to its organization, it issued 10,000 shares of common
stock for $8,101. The Company was incorporated on September 18, 1996, in the
State of Nevada. On November 15, 1996, the Company effected a merger agreement
with CTA wherein the Company issued 1,000,000 shares of common stock in exchange
for all of the issued and outstanding shares of CTA.
On January 2, 1997, the Company issued 250,000 shares of common stock in
exchange for services valued at $.50 per share.
In January through March of 1997, the Company completed a private placement
(Offering) of its common stock pursuant to which 300,000 shares were subscribed
for $150,000. Under the terms of the Offering, one "A" warrant and one "B"
warrant was issued with each one share of common stock issued. The warrants are
immediately exercisable and tradeable after the closing of the offering. Each
"A" warrant entitles the holder to purchase one additional share at a price of
$.75 per share during a six-month period after the closing of the Offering. Each
"B" warrant entitles the holder to purchase one additional share at a price of
$1.00 per share during a nine-month period after closing of the Offering. The
warrants may be extended upon appropriate notice given shareholders by the
management.
In February of 1998, the Company completed a private placement (Placement) of
its common stock pursuant to which 120,000 shares were issued for $72,000. Under
the terms of the Placement, one "C" warrant and one "D" warrant was issued with
each one share of common stock issued. The warrants are immediately exercisable
and tradeable after the closing of the Placement. Each "D" warrant entitles the
holder to purchase one additional share at the price of $1.10 per share during a
three-month period after closing of the Placement. The warrants may be extended
upon appropriate notice given shareholders by the management.
During fiscal 1998, "A" and "B" warrants were exercised for 246,450 shares of
common stock (of which 50,000 shares remained unissued at March 31, 1998) for
$226,850. Also during fiscal 1998, 300,000 shares of previously subscribed stock
were issued.
At March 31, 1998, the number of warrants issued and outstanding were as
follows: "A" warrants - 12,850, "B" warrants - 288,700, "C" warrants - 120,000,
and "D" warrants - 120,000.
-60-
<PAGE> 62
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
9. INCOME TAXES
The components of the provision for income taxes at December 31, 1998 and 1997
are as follows:
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Current - Federal $ -- $ --
Deferred - Federal 1,207 130
------ ------
Income tax expense $1,207 $ 130
====== ======
</TABLE>
A reconciliation of the consolidated income tax expense on income per the U.S.
Federal statutory rate to the reported income tax follows:
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Taxes at U.S. Federal statutory rate $ -- $ --
Non-deductible expenses -- --
Depreciation and bad debts allowance 1,207 130
------ ------
Effective tax $1,207 $ 130
====== ======
</TABLE>
Deferred tax liabilities (assets) consisted of the following at March 31, 1998
and 1997:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Depreciation $ 231 $ 351
-------- --------
Gross deferred tax liabilities 231 351
-------- --------
Bad debt allowance (665) (1,992)
Loss carryforwards (10,078) (20,604)
-------- --------
Gross deferred tax assets (10,743) (22,596)
Valuation allowance - deferred tax asset 10,078 20,604
-------- --------
$ (434) $ (1,641)
======== ========
</TABLE>
The net change in the valuation allowance for deferred taxes was a decrease of
$10,526 for fiscal year 1997. The change relates to a loss carryforward from
fiscal year 1997.
As of March 31, 1998, approximately $30,000 of loss carryforwards are available
for future use. Their use, however, is limited to future earnings of the
Company. The carryforwards expire in fiscal year 2012. No benefit for such
amounts have been recognized in the financial statements.
-61-
<PAGE> 63
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
10. COMMITMENTS AND CONTINGENCIES
The Company leases office space for $1,850 per month, payable $1,300 per month
in cash and $550 in Trade Dollars. Future minimum rental commitments consist of
the following:
<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31, AMOUNT
-------- -------
<S> <C>
1999 $22,200
2000 11,100
-------
Total $33,300
=======
</TABLE>
Of the minimum rental commitments due, $23,400 is payable in cash and $9,900 is
payable in Trade Dollars.
11. INCOME (LOSS) PER SHARE
During the current fiscal year, the Company adopted FASB Statement No. 128,
Earnings Per Share. Statement 128 requires presentation of basic earnings per
share and diluted earnings per share. Basic earnings per share excludes
potential dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. Diluted earnings per share is
computed similarly to fully diluted earnings per share under previous generally
accepted accounting principles in the United States. All prior year earnings per
share data are restated to conform with Statement 128 for consistent
presentation of all years.
Following is a reconciliation of the numerators of the basic and diluted income
(loss) per share at March 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Net income (loss) available to
common stockholders $ 32,509 $ (62,672)
========== ==========
Weighted average shares 1,316,212 437,500
Effect of dilutive securities:
Warrants 158,759 --
---------- ----------
1,474,970 437,500
========== ==========
Basic income (loss) per share (based on
weighted average shares) $ .02 $ (.14)
========== ==========
</TABLE>
-62-
<PAGE> 64
INTERNATIONAL BARTER CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
12. REVENUE
The following table summarizes the cash and trade (consisting of IBC Trade
Dollars) components of revenue for the years ended July 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Trade $304,760 $106,842
Cash 379,302 345,831
-------- --------
$684,062 $452,673
======== ========
</TABLE>
13. SUBSEQUENT EVENT
The Company adopted a Stock Option Plan (Plan) effective June 1, 1998 whereby,
stock options for up to 10% of the shares of common stock outstanding may be
granted at the fair market price at the date of grant to Directors, Officers,
Employees and Consultants. Pursuant to the Plan, effective June 1, 1998, the
Company granted 148,500 stock options to eleven individuals and entities;
exercisable at $1.625 per share for up to 5 years.
-63-
<PAGE> 65
PART II
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by Section 78.751 of the Nevada General Corporation Law,
the Company may indemnify its officers and directors against expenses incurred
by such persons in connection with any threatened, pending or completed action,
suit or proceedings, whether civil, criminal, administrative or investigative,
involving such persons in their capacities as officers and directors, so long as
such persons acted in good faith and in a manner which they reasonably believed
to be in the best interests of the Company. If the legal proceeding, however, is
by or in the right of the Company, the director or officer may not be
indemnified in respect of any claim, issue or matter as to which he is adjudged
to be liable for negligence or misconduct in the performance of his duty to the
Company unless a court determines otherwise.
Under Nevada law, corporations may also purchase and maintain insurance
or make other financial arrangements on behalf of any person who is or was a
director or officer (or is serving at the request of the corporation as a
director or officer of another corporation) for any liability asserted against
such person and any expenses incurred by him in his capacity as a director or
officer. These financial arrangements may include trust funds, self insurance
programs, guarantees and insurance policies.
Article Twelfth of the Articles of Incorporation of the Company, as
amended, provides that no director or officer of the Company shall be personally
liable to the Company or any of its stockholders for damages resulting from
breaches of fiduciary duty as a director or officer for acts or omissions,
except for damages resulting from acts or omissions which involve intentional
misconduct, fraud, knowing violation of law, or the payment of dividends in
violation of the Nevada Revised Statutes.
Section 14 of the Company's bylaws provide for the indemnification of
officers and directors to the fullest extent possible under Nevada Law, against
expenses (including attorney's fees), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding,
arising by reason of the fact that such person is or was an agent of the
Company. The Company is also granted the power, to the maximum extent and in the
manner permitted by the Nevada Revised Statutes, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the Company.
The Company maintains Director and Officer liability insurance with an
aggregate coverage amount of $1,000,000.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses for the issuance and distribution of the shares
registered by this prospectus are set forth in the following table:
<TABLE>
<CAPTION>
ITEM AMOUNT
---- ------
<S> <C>
SEC Registration Fee $ 2,000
Transfer Agent Fees 500
Legal Fees 20,000
Accounting Fees --
</TABLE>
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<PAGE> 66
<TABLE>
<S> <C>
Printing and Engraving Costs 10,000
Miscellaneous 3,000
-------
Total $35,500
=======
</TABLE>
ITEM 26. RECENT SALE OF UNREGISTERED SECURITIES
Since its organization in September 1996 the Company has issued and
sold the following securities. The information has been adjusted to give effect
to the 2 for 1 stock split on July 24, 1998.
1. In November 1996, the Company merged with Cascade Trade
Association. In connection with and in consideration for the
merger, the Company issued an aggregate of 2,000,000 shares of
common stock to the 2 shareholders of Cascade Trade
Association.
2. During the period from January 1997 to March 1998, the Company
sold an aggregate of 500,000 shares of common stock to 3
persons for consulting services rendered the Company.
3. During March 1997, the Company completed the sale of an
aggregate of 600,000 units, each unit consisting of one share
of common stock, one $.375 A Warrant, and one $.50 B Warrant,
at a purchase price of $.25 per unit to approximately 58
persons. The aggregate purchase price of the units was
$150,000. During the period from February 1998 to March 1998,
the Company sold 576,000 shares of common stock to prior
investors for an aggregate purchase price of $216,000 in
connection with the exercise of outstanding A Warrants. During
the period from February 1998 to March 1998, the Company sold
23,400 shares of common stock to prior investors for an
aggregate purchase price of $11,700 in connection with the
exercise of outstanding B Warrants. This offering of units,
together with offers and sales of common stock underlying the
warrants, was a transaction exempt from registration under
Section 3(b) of the Securities Act pursuant to Rule 504
promulgated thereunder.
3. During February 1998, the Company completed the sale of an
aggregate of 240,000 units, each unit consisting of one share
of common stock, one $.40 C Warrant, and one $.55 D Warrant,
at a purchase price of $.30 per unit to 5 persons. The
aggregate purchase price of the units was $72,000. This
offering of units was a transaction exempt from registration
under Section 3(b) of the Securities Act pursuant to Rule 504
promulgated thereunder.
4. During the period from June 1998 to September 1998, the
Company sold an aggregate of 557,000 shares of common stock to
32 prior investors for an aggregate purchase price of $278,500
in connection with the exercise of outstanding B Warrants.
5. During the period from July 1998 to September 1998, the
Company sold 240,000 shares of common stock for an aggregate
purchase price of $96,000 to 5 prior investors in connection
with the exercise of outstanding C Warrants. During the same
period, the Company sold 240,000 shares of common stock for an
aggregate purchase price of $132,000 to the same 5 persons
upon exercise of outstanding D Warrants.
-65-
<PAGE> 67
6. During July 1998, the Company sold an aggregate of 800,000
units, each unit consisting of one share of common stock and
one $1.50 E Warrant, at a purchase price of $1.25 per unit to
3 persons. The aggregate purchase price of the units was
$1,000,000.
With the exception of the issuances described above in items (2) and
(3), which were deemed exempt from registration under Section 3(b) of the
Securities Act pursuant to Rule 504 promulgated thereunder, the issuances
described above were deemed to be exempt from registration under the Act in
reliance on Section 4(2) of the Securities Act as transactions by an issuer not
involving any public offering. In these four offerings, the recipients of
securities in each such transaction had pre-existing relationships with the
Company and had adequate access, through their relationships with the Company,
to information about the Company. All offerings were made without the use of any
general solicitation or advertising.
ITEM 27. EXHIBITS
<TABLE>
<S> <C>
3.1 Articles of Incorporation, as filed with the Nevada Secretary of State
on September 18, 1996
3.2 Certificate of Amendment to Articles of Incorporation
3.4 Bylaws
4.1 Form of Warrant issued in private placement
5.1 Opinion of Tollefsen Business Law P.C.
10.1 Merger Agreement with Cascade Trade Association, dated as of November 15, 1996
10.2 1998 Stock Option Plan with Form of Option Agreement
10.3 Employment Agreement with Steven White
10.4 Employment Agreement with Alan Zimmelman
10.5 Employment Agreement with Richard Mayer
10.6 Employment Agreement with Kevin Andersen
10.7 Consulting Agreement with Liad Meidar
10.8 Premises Lease Agreement dated as of September 29, 1997
21.1 Subsidiaries of the registrant
23.1 Consent of Andersen Andersen & Strong LC
23.2 Consent of Counsel (see Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
</TABLE>
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set forth in the
registration statement; and
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement.
-66-
<PAGE> 68
(2) For the purpose of determining any liability under the Securities
Act, to treat each post-effective amendment that contains a prospectus as a new
registration statement of the securities offered, and the offering of the
securities at that time as the initial bona fide offering of those securities.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described above in Item 24, or
otherwise, the registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
of the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(4) For purposes of determining any liability under the Securities Act,
to treat the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1), or (4), or
497(h) under the Securities Act as part of this registration statement as of the
time the SEC declared it effective.
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<PAGE> 69
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of Seattle,
State of Washington, on the 23rd day of January, 1999.
INTERNATIONAL BARTER CORP.
(Registrant)
By: /s/ Steven White
-------------------------------------
Steven White
President and Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven M. White, as his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement on Form SB-2 of International Barter Corp., and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, grant unto said attorney-in-fact and agent,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitutes, may
lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Steven M. White Chairman and Chief January 23, 1999
- ---------------------- Executive Officer
/s/ Kevin R. Andersen Chief Financial Officer January 23, 1999
- ----------------------
/s/ Alan Zimmelman Director January 23, 1999
- ----------------------
/s/ Richard Mayer Director January 23, 1999
- ----------------------
</TABLE>
-68-
<PAGE> 70
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Articles of Incorporation, as filed with the Nevada
Secretary of State on September 18, 1996
3.2 Certificate of Amendment to Articles of Incorporation
3.4 Bylaws
4.1 Form of Warrant issued in private placement
5.1 Opinion of Tollefsen Business Law P.C.
10.1 Merger Agreement with Cascade Trade Association,
dated as of November 15, 1996
10.2 1998 Stock Option Plan with Form of Option Agreement
10.3 Employment Agreement with Steven White
10.4 Employment Agreement with Alan Zimmelman
10.5 Employment Agreement with Richard Mayer
10.6 Employment Agreement with Kevin Andersen
10.7 Consulting Agreement with Liad Meidar
10.8 Premises Lease Agreement dated as of September 29, 1997
21.1 Subsidiaries of the registrant
23.1 Consent of Andersen Andersen & Strong LC
23.2 Consent of Counsel (see Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
</TABLE>
-69-
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
INTERNATIONAL BARTER CORP.
FIRST. The name of the corporation is:
INTERNATIONAL BARTER CORP.
SECOND. Its registered office in the State of Nevada is located at 2533
North Carson Street, Carson City, Nevada 89706 that this Corporation may
maintain an office, or offices, in such other place within or without the State
of Nevada as may be from time to time designated by the Board of Directors, or
by the By-Laws of said Corporation, and that this Corporation may conduct all
Corporation business of every kind and nature, including the holding of all
meetings of Directors and Stockholders, outside the State of Nevada as well as
within the State of Nevada.
THIRD. The objects for which this Corporation is formed are: To engage
in any lawful activity, including, but not limited to the following:
(A) Shall have such rights, privileges and powers as may be conferred
upon corporations by any existing law.
(B) May at any time exercise such rights, privileges and powers, when
not inconsistent with the purposes and objects for which this corporation is
organized.
(C) Shall have power to have succession by its corporate name for the
period limited in its certificate or articles of incorporation, and when no
period limited, perpetually, or until dissolved and its affairs wound up
according to law.
(D) Shall have power to sue and be sued in any court of law or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and convey real and personal
estate and to mortgage or lease any such real and personal estate with its
franchises. The power to hold real and personal estate shall include the power
to take the same by devise or bequest in the State of Nevada, or in any other
state, territory or country.
(G) Shall have power to appoint such officers and agents as the affairs
of the corporation shall require, and to allow them suitable compensation.
(H) Shall have power to make By-Laws not inconsistent with the
constitution or laws of the United States, or of the State of Nevada, for the
management, regulation and government of its affairs and property, the transfer
of its stock, the transaction of its business, and the calling and holding of
meetings of its stockholders.
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<PAGE> 2
(I) Shall have power to wind up and dissolve itself, or be wound up or
dissolved.
(J) Shall have power to adopt and use a common seal or stamp, and alter
the same at pleasure. The use of a seal or stamp by the corporation on any
corporate documents is not necessary. The corporation may use a seal or stamp,
if it desires, but such use or nonuse shall not in any way affect the legality
of the document.
(K) Shall have power to borrow money and contract debts when necessary
for the transaction of its business, or for the exercise of its corporate
rights, privileges or franchises, or for any other lawful purpose of its
incorporation; to issue bonds, promissory notes, bills of exchange, debentures,
and other obligations and evidences of indebtedness, payable at a specified time
or times, or payable upon the happening of a specified event or events, whether
secured by mortgage, pledge or otherwise, or unsecured, for money borrowed, or
in payment for property purchased, or acquired, or for any other lawful object.
(L) Shall have power to guarantee, purchase, hold, sell, assign,
transfer, mortgage, pledge or otherwise dispose of the shares of the capital
stock of, or any bonds, securities or evidences of the indebtedness created by,
any other corporation or corporations of the State of Nevada, or any other state
or government, and, while owners of such stock, bonds, securities or evidences
of indebtedness, to exercise all the rights, powers and privileges of ownership,
including the right to vote, if any.
(M) Shall have power to purchase, hold, sell and transfer shares of its
own capital stock, and use therefor its capital, capital surplus, surplus, or
other property or fund.
(N) Shall have power to conduct business, have one or more offices, and
hold, purchase, mortgage and convey real and personal property in the State of
Nevada, and in any of the several states, territories, possessions and
dependencies of the United States, the District of Columbia, and any foreign
countries.
(O) Shall have power to do all and everything necessary and proper for
the accomplishment of the objects enumerated in its certificate or articles of
incorporation, or any amendment thereof, or necessary or incidental to the
protection and benefit of the corporation, and, in general, to carry on any
lawful business necessary or incidental to the attainment of the objects of the
corporation, whether or not such business is similar in nature to the objects
set forth in the certificate or articles of incorporation of the corporation, or
any amendment thereof.
(P) Shall have power to make donations for the public welfare or for
charitable, scientific or educational purposes.
(Q) Shall have power to enter into partnerships, general or limited, or
joint ventures, in connection with any lawful activities, as may be allowed by
law.
FOURTH. That the total number of common stock authorized that may be
issued by the Corporation is Twenty Five Thousand (25,000) shares of stock
without nominal par value and no other class of stock shall be authorized. Said
shares may be issued by the corporation from time to time for such
considerations as may be fixed by the Board of Directors.
FIFTH. The governing board of this corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the
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<PAGE> 3
By-Laws of this Corporation, providing that the number of directors shall not be
reduced to fewer than one (1).
The name and post office address of the first board of Directors shall
be one (1) in number and listed as follows:
<TABLE>
<CAPTION>
NAME POST OFFICE ADDRESS
---- -------------------
<S> <C>
Robert Seligman 2533 North Carson Street
Carson City, Nevada 89706
</TABLE>
SIXTH. The capital stock, after the amount of the subscription price,
or par value, has been paid in, shall not be subject to assessment to pay the
debts of the corporation.
SEVENTH. The name and post office address of the Incorporator signing
the Articles of Incorporation is as follows:
<TABLE>
<CAPTION>
NAME POST OFFICE ADDRESS
---- -------------------
<S> <C>
Robert Seligman 2533 North Carson Street
Carson City, Nevada 89706
</TABLE>
EIGHTH. The resident agent for this corporation shall be:
LAUGHLIN ASSOCIATES, INC.
The address of said agent, and, the registered or statutory address of this
corporation in the state of Nevada, shall be:
2533 North Carson Street
Carson City, Nevada 89706
NINTH. The corporation is to have perpetual existence.
TENTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
Subject to the By-Laws, if any, adopted by the Stockholders, to make,
alter or amend the By-Laws of the Corporation.
To fix the amount to be reserved as working capital over and above its
capital stock paid in; to authorize and cause to be executed, mortgages and
liens upon the real and personal property of this Corporation.
By resolution passed by a majority of the whole Board, to designate one
(1) or more committees, each committee to consist of one or more of the
Directors of the Corporation, which, to the extent provided in the resolution,
or in the By-Laws of the Corporation, shall have and may exercise the powers of
the Board of Directors in the management of the business and affairs of the
Corporation. Such
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committee, or committees, shall have such name, or names, as may be stated in
the By-Laws of the Corporation, or as may be determined from time to time by
resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the Stockholders
holding stock entitling them to exercise at least a majority of the voting power
given at a Stockholders meeting called for that purpose, or when authorized by
the written consent of the holders of at least a majority of the voting stock
issued and outstanding, the Board of Directors shall have power and authority at
any meeting to sell, lease or exchange all of the property and assets of the
Corporation, including its good will and its corporate franchises, upon such
terms and conditions as its board of Directors deems expedient and for the best
interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a matter of right to
subscribe for or receive additional shares of any class of stock of the
Corporation, whether now or hereafter authorized, or any bonds, debentures or
securities convertible into stock, but such additional shares of stock or other
securities convertible into stock may be issued or disposed of by the Board of
Directors to such persons and on such terms as in its discretion it shall deem
advisable.
TWELFTH. No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission of any
such director or officer; provided, however, that the foregoing provision shall
not eliminate or limit the liability of a director or officer (i) for acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law, or (ii) the payment of dividends in violation of Section 78.300 of the
Nevada Revised Statutes. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director or
officer of the Corporation for acts or omissions prior to such repeal or
modification.
THIRTEENTH. This Corporation reserves the right to amend, alter, change
or repeal any provision contained in the Articles of Incorporation, in the
manner now or hereafter prescribed by statute, or by the Articles of
Incorporation, and all rights conferred upon Stockholders herein are granted
subject to this reservation.
I, THE UNDERSIGNED, being the Incorporator hereinbefore named for the
purpose of forming a Corporation pursuant to the General Corporation Law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set my hand this 18th day of September 1996.
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<PAGE> 5
/s/ ROBERT SELIGMAN
---------------------------------
Robert Seligman
STATE OF NEVADA )
) SS:
CARSON CITY )
On this 18th day of September, 1996 in Carson City, Nevada, before me, the
undersigned, a Notary Public in and for Carson City, State of Nevada, personally
appeared:
Robert Seligman
Known to me to be the person whose name is subscribed to the foregoing document
and acknowledged to me that he executed the same.
(Notary seal) /s/ LISA MARIE VANNUCCI
-------------------------------------
Notary Public
I, Laughlin Associates, Inc. hereby accept as Resident Agent for the previously
named Corporation.
September 18, 1996 /s/ ROBERT SELIGMAN
- ------------------ -------------------------------------
Date Executive Vice President
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<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF ARTICLES
(AFTER ISSUANCE OF STOCK)
INTERNATIONAL BARTER CORP.
We the undersigned President and Secretary of the above named corporation do
hereby certify:
That the Board of Directors of said corporation at a meeting duly convened, held
on the 29th day of September, 1996, adopted a resolution to amend the original
articles as follows:
Article Number Four is amended to read as follows:
That the total number of common stock authorized that may be
issued by the Corporation is Twenty Five Million (25,000,000) shares of
stock with par value of .001 per share. Said shares may be issued by
the corporation from time to time for such considerations as may be
fixed by the Board of Directors.
The number of shares of the Corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 25,000; that the said change and
amendment have been consented to and approved by a majority of the stockholders
holding at least a majority of each class of stock outstanding and entitled to
vote thereon.
/s/ Steven White
-------------------------------------
President
/s/ Norma Fetz
-------------------------------------
Secretary
State of Washington )
)SS.
County of King )
On this 22nd day of September, 1997, personally appeared before me, a Notary
Public, who acknowledged that he/she/they, executed the above instrument.
(Notary seal) /s/ Deanna Burnett Keener
[SEAL] -------------------------------------
Notary Public
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<PAGE> 1
EXHIBIT 3.4
BYLAWS
OF
INTERNATIONAL BARTER CORP.
A NEVADA CORPORATION
ADOPTED JANUARY 23, 1999
1.0 OFFICES
1.1 The initial resident office of International Barter Corp. (the
"Company") in the State of Nevada shall be in c/o Laughlin Associates, Inc.,
2533 North Carson Street, Carson City, Nevada 89706. The Company may establish
other offices either within or without the State of Nevada, at such place or
places as the Board of Directors may from time to time appoint or the business
of the Company may require.
2.0 BOARD OF DIRECTORS
2.1 General Powers and Duties. Subject to the provisions of the Nevada
Revised Statutes and any limitations in the Articles of Incorporation or these
Bylaws relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the Company shall be managed and
all corporate powers shall be exercised by or under the direction of the Board
of Directors. The Board of Directors may elect any member of the Board as
Chairman. He shall, if present, preside at all meetings of the Board of
Directors. He shall have other powers and duties as the Board prescribes, but
shall not be considered an officer of the Company by virtue of his duties as
Chairman.
2.2 Number, Tenure and Qualifications. The number of Directors of the
Company shall be no fewer than one (1) nor more than nine (9). The number of
Directors may at any time be increased or decreased by the Directors or by the
shareholders at any regular or special meeting provided that no decrease shall
have the effect of shortening the term of any incumbent Director except as
otherwise provided in these Bylaws. Directors shall be elected at the annual
meeting of shareholders and the term of office of each Director shall be until
the next annual meeting of shareholders or the election and qualification of his
or her successor, or until his or her death, resignation or removal. Any
directorship to be filled by reason of an increase in the number of Directors
may be filled by the Board of Directors for a term of office continuing only
until the next election of Directors, or by shareholders for the term of office
associated with the class to which Directors are elected. Directors need not be
shareholders of the Company or residents of the State of Nevada.
2.3 Regular Meetings. A regular meeting of the Board of Directors shall
be held without notice other than the notice given by these Bylaws immediately
after and at the same place as the annual meeting of shareholders. Additional
regular meetings shall be held at the principal office of the Company in the
absence of any designation in the resolution.
2.4 Special Meetings. Special meetings of the Board of Directors for
any purpose or purposes may be called by or at the request of the President,
Chairman of the Board, or any two directors, and shall be held at the principal
place of business of the Company or at any other place as the Directors may
determine.
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<PAGE> 2
2.5 Action of Directors by Communications Equipment. Any regular or
special meeting of the Directors may be called and held over telephone or other
electronic means, and communication from a Director by telephone or other
electronic means constitutes attendance at the meeting so held.
2.6 Notice. Notice of any special meeting shall be given at least
forty-eight (48) hours before the time fixed for the meeting, by written or oral
notice delivered personally or mailed to each Director at his business address,
by facsimile, by telegram, or by teletype, wire or wireless equipment which
transmits a facsimile of the notice. If mailed, the notice shall be deemed to be
delivered when deposited in the United States mail with postage prepaid, not
less than five (5) days prior to the commencement of the above stated notice
period. If notice is given by telegram, the notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any Director
may waive notice of any meeting. The attendance of a Director at a meeting shall
constitute a waiver of notice of the meeting, except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of the
meeting.
2.7 Quorum. Except as otherwise required by law, a majority of the
number of Directors fixed by these Bylaws, or as amended, shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
but if less than a majority is present at a meeting, a majority of the Directors
present may adjourn the meeting from time to time without further notice. At an
adjourned meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
notified. The Directors present at the duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Directors to leave less than a quorum, if any action taken is approved by at
least a majority of the remaining Directors.
2.8 Board Decisions. The act of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors. However, an actual majority shall be required for:
(a) Recommending to the shareholders an amendment to the
Articles of Incorporation;
(b) Adopting a plan of merger or consolidation;
(c) Recommending to the shareholders the sale, lease,
exchange, mortgage, pledge, or other disposition of all or
substantially all the property and assets of the Company other than in
the usual and regular course of its business;
(d) Recommending to the shareholders a voluntary dissolution
of the Company or a revocation of the Company;
(e) Amending the Bylaws of the Company.
(f) Filling vacancies on the Board of Directors;
(g) Authorizing or approving reacquisition of shares, except
according to a formula or method prescribed by the Board of Directors;
(h) Authorizing or approving the issuance or sale or contract
for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that
the Board of Directors may authorize a committee to do so within the
limits specifically prescribed by the Board of Directors.
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<PAGE> 3
2.9 Vacancies. Any vacancy occurring in the Board of Directors
including one created by an increase in the number of Directors shall be filled
by the affirmative vote of a majority of the remaining Directors though less
than a quorum of the Board of Directors, or by a sole remaining Director. A
Director elected to fill a vacancy not created by an increase in the number of
Directors shall be elected for the unexpired term of his predecessor in office.
A Director elected to fill a vacancy created by an increase in the number of
directors shall be elected for a term of office continuing until the next
election of Directors.
2.10 Board Action By Written Consent Without A Meeting. Unless
otherwise restricted by the Articles of Incorporation or these Bylaws, any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing is filed with the minutes of proceedings of the board or committee.
Written consents representing actions taken by the Board of Directors or
committee may be executed by telex, telecopy or other facsimile transmission,
and such facsimile shall be valid and binding to the same extent as if it were
an original.
2.11 Compensation. Unless otherwise restricted by the Articles of
Incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of the Directors or reimburse the Directors for their
expenses, if any, of attendance at each meeting of the Board of Directors, and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as Director. No such payment shall preclude any Director from
serving the Company in any other capacity and receiving compensation therefor.
2.12 Presumption of Assent. A Director who is present at a meeting of
the Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment of the meeting or shall forward his dissent by registered
mail to the secretary of the Company immediately after the adjournment of the
meeting. The right to dissent shall not apply to a Director who voted in favor
of the action.
2.13 Approval of Loans to Officers. The Company may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the Company or of its subsidiary, including any officer or employee who is a
director of the Company or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Company. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the Company. Nothing in this section contained shall be deemed to deny
limit or restrict the powers of guaranty or warranty of the Company at common
law or under any statute.
2.14 Executive Committee. By resolution passed by a majority of the
entire Board of Directors, the Board of Directors may designate one (1) or more
committees, each committee to consist of one (1) or more Directors to constitute
an executive committee to the extent provided in the resolution and shall have
and may exercise all the authority of the Board of Directors in the management
of the Company, but no such committee shall have the power or authority to :
(a) Recommend to the shareholders the amendment to the
Articles of Incorporation;
(b) Adopt a plan of merger or consolidation;
(c) Recommend to the shareholders the sale, lease, exchange,
mortgage, pledge, or other disposition of all or substantially all the
property and assets of the Company otherwise than in the usual and
regular course of its business;
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(d) Recommend to the shareholders a voluntary dissolution of
the Company or a revocation of the Company;
(e) Amend the Bylaws of the Company.
(f) Fill vacancies on the Board of Directors;
(g) Authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the Board of Directors;
(h) Authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that
the Board of Directors may authorize a committee to do so within the
limits specifically prescribed by the Board of Directors;
(i) Take any action expressly required by the Nevada Revised
Statutes to be submitted to shareholders of the Company for approval.
2.15 Standards of Conduct for Directors. A Director shall discharge the
duties of a Director, including the duties as a member of a committee, in good
faith, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances and in a manner the Director reasonably
believes to be in the best interests of the Company.
In discharging the duties of a Director, a Director is entitled to rely
in good faith upon information, opinions, reports or statements including
financial statements and other financial data, if prepared or presented by (1)
an officer or employee of the Company whom the Director reasonably believes to
be reliable and competent in the matters presented; (2) legal counsel, public
accountants or other persons as to matters the Director reasonably believes are
within the professional or expert competence of such legal counsel, public
accountants or other persons who have been selected with reasonable care by or
on behalf of the Company; or (3) a committee of the Board of Directors of which
the Director is not a member if the Director reasonably believes the committee
merits confidence.
A Director is not liable for any action taken as a Director, or any
failure to take any action, if the Director performed the duties of the
Director's office in compliance with these Bylaws.
3.0 SHAREHOLDERS
3.1 Annual Meeting. The annual meeting of the shareholders of the
Company shall be held on such date, time, and place, either within or without
the State of Nevada, as may be designated by resolution of the Board of
Directors each year. At the meeting, directors shall be elected and any other
proper business may be transacted.
3.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President or by the Board of Directors, and shall be called by the President
at the request of the holders of not less than a majority of the outstanding
shares of the Company entitled to vote at the meeting.
3.3 Place of Meeting. The Board of Directors may designate any place
within or outside of the State of Nevada as the place of meeting for any annual
meeting or for any special meeting called by the Board of Directors. A waiver of
notice signed by a majority of shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Nevada, as the place
for the holding of the meeting.
3.4 Notice of Meeting. Written or printed notice stating the place,
day, and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall
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be delivered not less than ten (10) nor more than sixty (60) days, except as
otherwise required by statute, before the date of the meeting, either personally
or by mail, by or at the direction of the President, Secretary, or the officer
or persons calling the meeting, to each shareholder of record entitled to vote
at the meeting. If mailed, the notice shall be deemed to be delivered when
deposited in the United States mail with postage prepaid, addressed to the
shareholder at his address as it appears on the stock transfer books of the
Company. Any shareholder may waive notice of any meeting by written notice
signed by him or his duly authorized attorney-in-fact, either before or after
the meeting.
3.5 Record Date. For the purpose of determining the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty (60) days nor less than ten (10) days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day preceding the date of
notice, or if notice is waived, at the close of business on the day preceding
the date of the meeting. Written notice of any meeting of shareholders, if
mailed, is given when deposited in the United States mail, postage prepaid,
directed to the stockholder at his address as it appears on the records of the
Company. An affidavit of the Secretary or an Assistant Secretary of the Company
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
For the purpose of determining the shareholders entitled to consent to
any corporate action of the Company in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten (10) days after the
date upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining shareholders entitled to consent to corporate action
of the Company in writing without a meeting, when no prior action by the Board
of Directors is required under Nevada law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Company. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required under Nevada
law, the record date for determining which shareholders are entitled to consent
to corporate action of the Company in writing without a meeting shall be at the
close of business on the day on which the Board of Directors adopts a resolution
taking such prior action.
For the purpose of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which date shall be not more that sixty (60) days prior to such action. If
no record date is fixed, the record date for determining shareholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
3.6 Quorum. Forty percent (40%) of the outstanding shares of the
Company entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. If less than forty percent (40%) of the
outstanding shares is represented at a meeting, then either (a) the Chairman of
the meeting or (b) a majority of the shares so represented may adjourn the
meeting from time to time without further notice. At the adjourned meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. If a quorum is present, the
affirmative vote of the majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders.
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3.7 Proxies. At all meetings of shareholders, a shareholder may vote by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. The proxy shall be filed with the Secretary of the Company
before or at the time of the meeting. Any solicitation of proxies by the
Directors or management of the Company shall be made by mailing the proxies by
certified mail or providing them to the shareholder in an alternative acceptable
manner at least not less than ten (10) days nor more than sixty (60) days before
the date of the meeting for which the proxies are solicited. Each shareholder as
of the record date shall receive a proxy. Proxies shall describe the location
and purpose of the meeting and the matter or business for which the proxy is
solicited. No proxy shall be valid after the expiration of six (6) months from
the date of its creation, unless otherwise permitted by the Nevada Revised
Statutes.
3.8 Voting of Shares. Subject to the provisions of any applicable law,
each outstanding share entitled to vote shall be entitled to one vote on each
matter submitted to a vote at a meeting of the shareholders. No shareholder
shall be entitled to cumulate his votes for election of directors.
3.9 Consent to Action. Any action which may be taken at a meeting of
the shareholders may be taken without a meeting if a consent in writing setting
forth the action so taken is signed in original, facsimile or counterpart form
by shareholders holding at least a majority of the voting power.
3.10 Shareholder's Right of Inspection. Any shareholder, in person or
by attorney or other agent, upon written demand under oath stating the purpose
thereof, has the right during usual hours for business to inspect for any proper
purpose the Company's stock ledger, a list of its shareholders, and its other
books and records and to make copies or extracts therefrom.
4.0 OFFICERS
4.1 Number. The officers of the Company shall be a Chief Executive
Officer, President, one or more Vice Presidents (the number of Vice Presidents
to be determined by the Board of Directors), a Secretary, a Chief Financial
Officer and a Treasurer each of whom shall be appointed by the Board of
Directors. Other officers and assistant officers as may be deemed necessary may
be appointed by the Board of Directors or by the Chief Executive Officer. Any
two or more offices may be held by the same person.
Each officer has the authority and shall perform the duties set forth
in these Bylaws or, to the extent consistent with these Bylaws, the duties
prescribed by the Board of Directors or by direction of the Chief Executive
Officer.
4.2 Appointment and Term of Office. The officers of the Company shall
be appointed by the Board of Directors or the Chief Executive Officer. Each
officer shall hold office until his successor has been duly appointed and
qualifies or until his death or until he resigns or is removed in the manner
provided by these Bylaws.
4.3 Removal. Any officer or agent appointed by the Board of Directors
or the Chief Executive Officer may be removed by the Board of Directors or the
Chief Executive Officer whenever in their judgment the best interests of the
Company would be served by that removal, but the removal shall be without
prejudice to the contractual rights, if any, of the person so removed.
4.4 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term in the manner prescribed by these Bylaws
for the regular election or appointment of such office.
4.5 Standards of Conduct for Officers. An officer with discretionary
authority shall discharge the duties of an officer under that authority in good
faith, with the care an ordinarily prudent
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person in a like position would exercise under similar circumstances, and in a
manner the officer reasonably believes to be in the best interests of the
Company.
In discharging the duties of an officer, an officer is entitled to rely
in good faith upon information, opinions, reports or statements including
financial statements and other financial data, if prepared or presented by (1)
an officer or employee of the Company whom the officer reasonably believes to be
reliable and competent in the matters presented or legal counsel, public
accountants or other persons as to matters the officer reasonably believes are
within the professional or expert competence of such legal counsel, public
accountants or other persons who have been selected with reasonable care by or
on behalf of the Company.
An officer is not acting in good faith if the officer has knowledge
concerning the matter in question that makes reliance otherwise permitted by
these bylaws unwarranted.
An officer is not liable for any action taken as an officer, or any
failure to take any action, if the officer performed the duties of the office in
compliance with these bylaws.
If any certificate or report made or public notice given by an officer
of the Company shall be false or fraudulent in any material representation, any
officer knowingly and intentionally signing the same shall be jointly and
severally and personally liable to any person who has become a creditor or
stockholder of the Company upon the faith of any such material representation
therein to the amount of the debt contracted upon the faith thereof if not paid
when due, or the damage sustained by any purchaser of or subscriber to its stock
upon the faith thereof.
The liability imposed by this section shall exist in all cases where
the contents of any such certificate, report or notice of any material
representation therein shall have been communicated either directly or
indirectly to the person so becoming a creditor or stockholder and he became
such creditor or stockholder upon the faith thereof.
4.6 Powers and Duties of the Chief Executive Officer. The Chief
Executive Officer shall preside at all meetings of the shareholders and in the
absence of the Chairman of the Board, at all meetings of the Board of Directors.
He shall have ultimate responsibility and authority for management including but
not limited to, the power to appoint committees, officers, agents or employees
from time to time as he may, in his discretion, decides is appropriate to assist
in the conduct of the affairs of the Company. He shall enforce these Bylaws and
generally shall supervise and control the business, affairs and property of the
Company. He shall have general and active supervision over the Company's
officers and may sign, execute and deliver in the name of the Company corporate
documents, instruments, powers of attorney, contracts, bonds and other
obligations.
4.7 Powers and Duties of the President. The President shall have the
authority and perform such duties as the Board of Directors authorizes or
directs. If no Chief Executive Officer has been appointed, or in the event of
the death of the Chief Executive Officer or his or her inability to act, the
President shall perform the duties of the Chief Executive Officer, except as may
be limited by resolution of the Board, with all the powers of, and subject to
all of the restrictions upon, the Chief Executive Officer. 4.8. Duties of the
Vice President(s). The Vice President(s) shall have the authority and perform
duties as the Board of Directors or Chief Executive Officer may authorize or
direct.
4.9 Duties of the Secretary. The Secretary shall subscribe the minutes
of all meetings of the shareholders and the Board of Directors. He shall mail
notices to the shareholders and the Directors of the Company of the holding of
any meeting as prescribed by these Bylaws. If the Company has a seal, the
secretary shall be the custodian of the seal and shall affix it to minutes,
notices or other instruments executed by the Company as required. He shall have
the authority and perform other duties as the Board of Directors or Chief
Executive Officer may authorize or direct.
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4.10 Duties of the Chief Financial Officer. The Chief Financial Officer
for the Company shall have charge of and be responsible for all funds and
securities belonging to the Company and shall keep and deposit the funds for and
on behalf of the Company in a bank or banks to be designated by the Board of
Directors. He shall have the authority and perform other duties as the Board of
Directors or Chief Executive Officer may authorize or direct.
4.11 Duties of the Treasurer. The Treasurer shall have the authority
and perform such duties as the Board of Directors authorize or direct.
4.12 Subordinate Officers and General Managers. The Board of Directors
or Chief Executive Officer may create subordinate offices and employ subordinate
officers or agents as it from time to time deems expedient and may fix the
compensation of the officers or agents and define their powers and duties,
provided the powers and duties do not constitute a delegation of the authority
as is reposed in the Directors by law, which shall be exercised and performed
exclusively by them. The Board of Directors or the Chief Executive Officer shall
also have the power to appoint a General Manager, who shall hold office at the
pleasure of the Board. The Board of Directors or the Chief Executive Officer
shall have the power to delegate to the General Manager the executive power and
authority as it may deem necessary to facilitate the handling and management of
the Company's property and interests.
4.13 Salaries. The salaries of the officers shall be fixed from time to
time by the Board of Directors, and no officer shall be prevented from receiving
a salary by reason of the fact that he is also a Director of the Company.
5.0 CONTRACTS, CORPORATE FUNDS, LOANS, CHECKS AND DEPOSITS
5.1 Contracts. Without limiting any powers elsewhere granted by these
Bylaws to the President or other officer of the Company, the Board of Directors
may authorize any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Company, and the authority may be general or confined to specific instances.
5.2 Corporate Funds. All funds of the Company shall be under the
supervision of the Board of Directors and shall be handled and disposed of in
the manner and by the officers or agents of the Company as provided in these
Bylaws or as the Board of Directors may authorize by proper resolutions from
time to time.
5.3 Loans. No loans shall be contracted on behalf of the Company and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. The authority may be general or confined
to specific instances.
5.4 Checks, Drafts, or Orders. All checks, drafts, or other orders for
the payment of money, notes, or other evidence of indebtedness issued in the
name of the Company shall be signed by an officer or officers, authorized agent
or agents of the Company and in a manner as shall from time to time be
determined by resolution of the Board of Directors.
5.5 Deposits. All funds of the Company not otherwise employed shall be
deposited from time to time to the credit of the Company in banks, trust
companies, or other depositories as the Board of Directors may in its discretion
select.
6.0 CERTIFICATES FOR SHARES; TRANSFERS
6.1 Certificates for Shares. Certificates representing shares of the
Company shall be in a form as shall be determined by the Board of Directors. The
certificates shall be signed by the President or a Vice President. The
certificate shall also be signed by the Treasurer or the Secretary. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of
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the person to whom the shares represented by the certificates are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books to the Company. All certificates surrendered to the Company for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed, or mutilated certificate a
new one may be issued on the terms and indemnity to the Company as the Board of
Directors may prescribe.
6.2 Registrar. The registrar is the person designated by the Company to
keep official shareholder records, including names and addresses of shareholders
and number of shares owned. The registrar may hold one or more offices or no
offices of the Company.
6.3 Transfer of Shares. Transfer of shares of the Company shall be made
in the manner specified in the Uniform Commercial Code. The Company shall
maintain stock transfer books, and any transfer shall be registered only on
request and surrender of the stock certificate representing the transferred
shares, duly endorsed. The Company shall have the absolute right to recognize as
the owner of any shares of stock issued by it, the person or persons in whose
name the certificate representing the shares stands according to the books of
the Company for all proper Company purposes, including the voting of the shares
represented by the certificate at a regular or special meeting of shareholders,
and the issuance and payment of dividends on the shares.
6.4 Shares of Another Corporation. Shares owned by the Company in
another corporation, domestic or foreign, may be voted by an officer, agent or
proxy as the Board of Directors may determine or, in the absence of a
determination, by the President of the Company.
6.5 Subscriptions. Subscriptions to the shares shall be paid at times
and in installments as the Board of Directors may determine. The Board of
Directors may adopt resolutions prescribing penalties for default on
subscription agreements.
7.0 FISCAL YEAR
7.1 The fiscal year end of the Company is shall be March 31st of each
year, unless otherwise changed by the Board of Directors. The Board of Directors
may change the fiscal year of the Company from time to time.
8.0 DIVIDENDS
8.1 Subject to the restrictions of the Nevada Revised Statutes, the
Board of Directors may from time to time declare, and the Company may pay,
dividends on its outstanding shares in the manner and on the terms and
conditions provided by law and its Articles of Incorporation.
9.0 SEAL
9.1 The Board of Directors may adopt a corporate seal, which shall be
circular in form and shall have inscribed on it the name of the Company, the
year incorporated, the state of incorporation and the words "corporate seal."
The seal shall be stamped or affixed to documents as may be prescribed by law or
by the Board of Directors.
10.0 CONFLICT OF INTEREST
10.1 No contract or other transaction between the Company and one or
more of its Directors or any other corporation, firm, association or entity in
which one or more of its Directors are Directors or officers or are financially
interested, shall be either void or voidable because of the relationship or
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interest or because the Director or Directors are present at the meeting of the
Board of Directors or a committee of Directors which authorizes, approves or
ratifies a contract or transaction or because his or their votes are counted for
that purpose, if:
(a) The material facts of a relationship or interest are
disclosed or known to the Board of Directors or committee which in good
faith authorizes, approves or ratifies the contract or transaction by a
vote or consent sufficient for the purpose without counting the votes
or consents of the interested Director(s); or
(b) The material facts of a relationship or interest is
disclosed or known to the shareholders entitled to vote and they in
good faith authorize, approve or ratify a contract or transaction by
vote or written consent; or
(c) The contract or transaction is fair and reasonable as to
the Company at the time it is authorized, approved, and ratified by the
Board of Directors, committee designated by the Board of Directors, or
the shareholders.
11.0 NOTICE AND CONSENT
11.1 Waiver of Notice. Whenever any notice is required to be given to
any shareholder or Director of the Company under the provisions of these Bylaws,
the Articles of Incorporation, or by law, a waiver in writing, signed in
original, facsimile or counterpart by the person or persons entitled to notice,
whether before or after the time stated in the notice, shall be deemed
equivalent to the giving of a notice. Any shareholder or Director may waive
notice of any meeting by a notice signed by him or his duly authorized attorney,
either before or after the meeting. Attendance of a shareholder or Director of
the Company at a meeting shall constitute waiver of notice of a meeting except
where a shareholder or Director attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or adjourned.
11.2 Consent to Action. Any action which may be taken at a meeting of
the shareholders, may be taken without a meeting if a consent in writing setting
forth the action so taken is signed in original, facsimile or counterpart by
shareholders holding at least a majority of the voting power. Any action which
may be taken at a meeting of the Board of Directors may be taken without a
meeting if written consent is signed by all members of the Board or Directors
entitled to vote on the action. The consent shall have the same force and effect
as a unanimous vote of the shareholders or Directors. Notice requirements of
these Bylaws which apply to meetings of shareholders and Directors are deemed
waived by all Directors and shareholders if a Consent to Action is signed in
lieu of holding an actual meeting.
12.0 RESTRICTIONS ON TRANSFER
12.1 Transfer of shares. No securities of this Company or certificates
representing the securities shall be transferred in violation of any law or of
any restriction on transfer set forth in the Articles of Incorporation or
amendments to the Articles, or the Bylaws; or contained in any buy/sell
agreements, right of first refusal, or other agreement restricting a transfer
which has been executed by the Company, or filed with the Secretary of the
Company and signed by the parties to the agreement. The Company shall not be
bound by any restrictions not so filed and noted.
12.2 Restrictive Legend. The Company and any party to any agreement
shall have the right to have a restrictive legend imprinted upon any of the
certificates and any certificates issued in replacement or exchange or with
respect to them.
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13.0 AMENDMENTS
13.1 The power to alter, amend or repeal the Articles of Incorporation
is vested exclusively in the shareholders and must be approved by a majority
vote of all classes of shareholders having the right to vote. The Board of
Directors have the power to submit to the shareholders a recommendation to
alter, amend or repeal the Bylaws or to adopt new Bylaws.
13.2 Changes in and additions to the Bylaws by the Board of Directors
shall be reported to the shareholders at their next regular or special meeting
and shall be subject to the approval or disapproval of the shareholders at the
meeting. If no action is then taken by the shareholders on a change in or
addition to the Bylaws, the change or addition shall be deemed to be fully
approved and ratified by the shareholders.
14.0 INDEMNIFICATION AND LIABILITY
14.1 Indemnification of Directors. The Company shall indemnify officers
and Directors to the fullest extent possible under Nevada law, against expenses
(including attorney's fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the Company. For
purposes of this section, a "director" or "officer" of the Company includes any
person (a) who is or was a director or officer of the corporation, (b) who is or
was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise, or
(c) who was a director or officer of a corporation which was a predecessor
corporation of the Company or of another enterprise at the request of such
predecessor corporation.
14.2 Neither the Company, its Directors nor its officers will be in any
way liable to the shareholders where legal counsel has been relied on in a
matter.
14.3 Indemnification of Others. The Company shall have the power, to
the maximum extent and in the manner permitted by the Nevada Revised Statutes,
to indemnify each of its employees and agents (other than directors and
officers) against expenses (including attorneys' fees), judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the Company. For purposes of this section, an "employee" or "agent" of
the Company (other than a director or officer) includes any person (a) who is or
was an employee or agent of the Company, (b) who is or was serving at the
request of the Company as an employee or agent of another corporation
partnership, joint venture, trust or other enterprise, or (c) who was an
employee or agent of a Company which was a predecessor corporation of the
Company or of another enterprise at the request of such predecessor corporation.
CERTIFICATION AS TO THE BYLAWS OF THE COMPANY
I, the undersigned, being the Secretary of the Company do hereby
certify the foregoing to be the Bylaws of the Company.
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DICK MAYER, Secretary
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EXHIBIT 4.1
FORM OF WARRANT
THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF
A REGISTRATION STATEMENT COVERING SAID WARRANTS OR AN OPINION OF COUNSEL TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
COMMON STOCK PURCHASE WARRANT
(Non-Transferable)
For the Purchase of Common Stock, Par Value $.001 per share
Of International Barter Corp.
(Incorporated Under the Laws of the State of Nevada)
Name of Registered Owner: _________________________________________
No. of Warrants _______________________________ (___________) Warrant to
Purchase __________
______________________ (___________) shares of Common Stock.
THIS IS TO CERTIFY that, for value received,
_________________________________ (the "Holder"), is entitled, subject to the
terms and conditions hereinafter set forth, on or after date of issuance hereof
and at any time prior to 5:00 P.M. Pacific Standard Time, _______________, 1998
but not thereafter, to purchase such number of shares (the "Shares") of
International Barter Corp., a Nevada corporation (the "Corporation"), from the
Corporation as stated above and upon payment to the Corporation of _____ Dollars
and _____ Cents ($_____) per shares (the "Purchase Price") if and to the extent
this Warrant is exercised, in whole or in part, during the period this Warrant
remains in force, subject in all cases to adjustment as provided in Article II
hereof, and to receive a certificate or certificates representing the Shares so
purchased, upon presentation and surrender to the Corporation of this Warrant,
with the form of subscription attached hereto duly executed, and accompanied by
payment of the Purchase Price of each Share purchased.
ARTICLE 1 - TERMS OF THE WARRANT
Section 1.01 Subject to the provisions of Section 1.04 hereof, this
Warrant may be exercised at any time and from time to time after the day after
the date of issuance hereof (the "Exercise Commencement Date"), but no later
than 5:00 P.M. Pacific Standard Time, _____________, 1998 (the "Expiration
Time") at which it shall become void, and all rights hereunder shall thereupon
cease. Any rights to purchase the Company's Common Stock subject to the Warrants
will be forfeited to the extent such Warrants are not exercised prior to the
Expiration Time.
Section 1.02 (1) The holder of this Warrant (the "Holder") may exercise
this Warrant, in whole or in part, upon surrender of this Warrant with the form
of subscription attached hereto duly executed, to the Corporation at its
corporate office in Portland, Oregon, together with the full Purchase Price for
each share to be purchased in lawful money of the United States, or by certified
check, bank draft or postal or
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express money order payable in United States dollars to the order of the
Corporation, and upon compliance with and subject to the conditions set forth
herein.
(2) Upon receipt of this Warrant with the form of subscription duly
executed and accompanied by payment of the aggregate Purchase Price for the
Shares for which this Warrant is being exercised, the Corporation shall cause to
be issued certificates for the total number of whole Shares for which this
Warrant is being exercised in such denominations as are required for delivery to
the Holder, and the Corporation shall thereupon deliver such certificates to the
Holder or its nominees.
(3) In case the Holder shall exercise this Warrant with respect to less
than all of the Shares that may be purchased under this Warrant, the Corporation
shall execute a new Warrant for the balance of the Shares that be purchased upon
exercise of this Warrant and deliver such new Warrant to Holder.
(4) The Corporation covenants and agrees that it will pay when due any
and all taxes which may be payable in respect to the issue of this Warrant, or
the issue of any shares upon the exercise of this Warrant. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issuance or delivery of the Shares in a name other than
that of the Holder at the time of surrender, and until the payment of such tax
the Corporation shall not be required to issue such Shares.
Section 1.03 This Warrant is not and shall not be transferable by the
registered holder hereof.
Section 1.04 Nothing contained in this Warrant shall be construed as
conferring upon the Holder the right to vote or to consent to receive notice as
a stockholder in respect of any meetings of stockholders for the election of
directors or any other matters, or as having any rights whatsoever as a
stockholder of the Corporation. If, however, at any time prior to the expiration
of this Warrant and prior to its exercise, any of the following shall occur:
The Corporation shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Corporation; or
The Corporation shall offer to the holders of its Common Stock any
additional shares of capital stock of the Corporation or securities convertible
into or exchangeable for shares of capital stock of the Corporation, or any
opinion, right or warrant to subscribe therefor; or
There shall be proposed any capital reorganization or reclassification
of the Common Stock, or a sale of all or substantially all of the assets of the
Corporation, or a consolidation or merger of the Corporation with another
entity; or
There shall be proposed a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; then, in any one or more of said
cases, the Corporation shall cause to be mailed to the Holder, at the earliest
practicable time (and, in any event, not less than thirty (30) days before any
record date or other date set for definite action), written notice of the date
on which the books of the Corporation shall close or a record shall be taken to
determine the stock holders entitled to such dividend, distribution, convertible
or exchangeable securities or subscription rights, or entitled to vote on such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be. Such notice shall also set forth
such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Purchase Price and the
kind and amount of the Common Stock of record shall participate in said
distribution or subscription rights or
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shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, sale
consolidation, merger, dissolution, liquidation or winding up, as the case may
be (on which date, in the event of voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, the right to exercise this Warrant
shall terminate).
Without limiting the obligation of the Corporation to provide notice to
the holder of actions hereunder, it is agreed that failure of the Corporation to
give notice shall not invalidate such action of the Corporation.
Section 1.05 If this Warrant is lost, stolen, mutilated or destroyed,
the Corporation shall, on such reasonable terms as to indemnity or otherwise as
it may impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant, which shall thereupon become void. Any such
new Warrant shall constitute an additional contractual obligation of the
Corporation, whether or not the Warrant so lost, stolen, destroyed or mutilated
shall be at any time enforceable by anyone.
Section 1.06 (1) The Corporation covenants and agrees that at all times
it shall reserve and keep available for the exercise of this Warrant such
numbers of authorized Shares as are sufficient to permit the exercise in full of
this Warrant.
(2) The Corporation covenants that all Shares when issued upon the
exercise of this Warrant will be validly issued, fully paid, non-assessable and
free of preemptive rights.
ARTICLE II - ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES PURCHASED UPON
EXERCISE
Section 2.01 In case the Corporation shall, while this Warrant remains
unexercised, in whole or in part, and in force effect a recapitalization of such
character that the Shares purchasable hereunder shall be changed into or become
exchangeable for a larger or smaller number of shares, then after the date of
record for effecting such recapitalization, the number of Shares of Common Stock
which the Holder hereof shall be entitled to purchase hereunder shall be
increased or decreased, as the case may be, in direct proportion to the increase
or decrease. The number of shares of Common Stock shall in the case of an
increase in the number of such Shares be proportionately reduced, and the case
of a decrease in the number of such Shares shall be proportionately increased.
For the purposes of this Section 2.01, a Stock dividend, stock split-up or
reverse split shall be considered as a recapitalization and as an exchange for a
larger or smaller number of shares, as the case may be.
Section 2.02 In case of any consolidation of the Corporation with, or
merger of the Corporation into, any other corporation, or in case of any sale or
conveyance of all or substantially all of the assets of the Corporation other
than in connection with a plan of complete liquidation of the Corporation, then
as a condition of such consolidation, merger, or sale or conveyance, adequate
provision shall be made whereby the Holder shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of Shares of Common Stock immediately theretofore
purchasable and received upon the exercise of the rights represented hereby,
such shares of stock or securities as may be issued in connection with such
consolidation, merger or sale or conveyance, with respect or in exchange for the
number of outstanding shares of Common Stock equal to the number of shares of
Common Stock immediately theretofore purchasable or and receivable upon the
exercise of the rights represented hereby had such consolidation, merger or
sale, or conveyance, not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of the
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Holders of this Warrant to the end that the provisions hereof shall be
applicable as nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise hereof.
Section 2.03 (a) In case the Corporation shall, while this Warrant
remains unexercised, in whole or in part, and in force, issue (otherwise than by
stock dividend or split-up or reverse split) or sells shares of its Common Stock
(hereinafter referred to as "Additional Shares") for a consideration per share
(before deduction of expenses or commissions or underwriting discounts or
allowances in connection therewith) which shall be less than the Purchase Price,
per share, in effect immediately prior to the time of the issuance or sale of
such Additional Shares, then after the date of such issuance or sale, the
Purchase Price per share shall be reduced to a price determined by dividing (1)
an amount equal to (a) the total amount of shares of Common Stock outstanding
immediately prior to the time of the issuance or sale of such Additional Shares
plus (b) the consideration (before deduction of expenses or commission or
underwriting discounts or allowances in connection therewith), if any, received
by the Corporation upon such issuance or sale of such Additional Shares, by (2)
the total number of shares of Common Stock outstanding after the ate of the
issuance or sale of such Additional Shares.
(b) For the purpose of subsection (a) above, in case the Corporation
shall issue or sell Additional Shares, issue or grant any rights to subscribe
for or to purchase, or any options for the purchase of Common Stock, or issue or
sell for a consideration other than cash or a consideration part of which shall
be other than cash, the amount of the consideration received by the Corporation
plus the fair value of the consideration other than cash, as determined by the
Board of Directors of the Corporation in good faith, before deduction of
commissions, underwriting discounts or allowances or other expenses paid or
incurred by the Corporation for any underwriting of, or otherwise in connection
with such issuance, grant or sale.
Section 2.04 Subject to the provisions of Section 2.05 below, in case
the Corporation shall, while this Warrant remains unexercised, in whole or in
part, and in force, declare to make any distribution of its assets to holders of
Common Stock as a partial liquidation dividend, by way of return of capital or
otherwise, then, after the date of record for determining stock holders entitled
to such distribution, but prior to the date of distribution, the Holder shall be
entitled upon exercise of this Warrant and purchase of any or all of the Shares
of Common Stock subject hereto, to receive the amount of such assets (or, at the
option of the Corporation, a sum equal to the value thereof at the time if such
distribution to the holders of Common Stock as such value is determined by the
Board of Directors of the Corporation in good faith) which would have been
payable to the Holder had he been the holder of such Shares of Common Stock on
the record date for the determined of stockholders entitled to such
distribution.
Section 2.05 Except as otherwise provided in Section 2.02 above, in
case of any sale or conveyance of all or substantially all of the assets of the
Corporation in connection with a plan of complete liquidation of the
Corporation, in the case of the dissolution, liquidation or winding-up of the
Corporation, all rights under this Warrant shall terminate on a date fixed by
the Corporation of such date of dissolution, liquidation or winding-up and not
later than thirty (30) days after such commencement date. Notice of such
termination of purchase rights shall be given to the Holder at least thirty (30)
days prior to such termination date.
Section 2.06 Any adjustment pursuant to the provisions of this Article
II shall be made on the basis of the number of Shares of Common Stock the Holder
would have been entitled to acquire by exercise of this Warrant immediately
prior to the event giving rise to such adjustment and, as to the Purchase Price
per share in effect immediately prior to such adjustment. Whenever any such
adjustment is required to be made, the Corporation shall upon the exercise and
receipt of the Purchase Price, issue the largest number of whole Shares
purchasable upon exercise of this Warrant. The Corporation shall
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not be required to make any cash or other adjustment in respect of such fraction
of a Share to which the Holder would otherwise be entitled. The Holder, by the
acceptance of this Warrant, expressly waives his right to receive a certificate
for any fraction of a Share upon exercise hereof.
Section 2.07 Anything contained herein to the contrary notwithstanding,
the Corporation shall not be required to issue any fraction of a Share in
connection with the exercise of this Warrant, and in any case where the Holder
would, except for the provisions of this Section 2.07 be entitled under the
terms of this Warrant to receive a fraction of a Share upon such exercise, the
Company shall upon the exercise of this and receipt of the Purchase Price, issue
the largest number of whole Shares purchasable upon exercise of this Warrant.
The Corporation shall not be required to make any cash or other adjustment in
respect of such fraction of a Share to which the Holder would otherwise be
entitled. The Holder, by the acceptance of this Warrant, expressly waives his
right to receive a certificate for any fraction of a Share to which he is
entitled upon exercise hereof.
Section 2.08 The form of Warrant need not be changed because of any
change pursuant to this Article II in the Purchase Price or in the number of
Shares of Common Stock purchasable upon the exercise of a Warrant, and Common
Stock Purchase Warrants issued after such change may state the same Purchase
Price and the same of Common Stock as are stated in the Warrants initially
issued pursuant to the Agreement.
ARTICLE III - REGISTRATION UNDER THE ACT OF 1933
Section 3.01 This Warrant and Share of Common Stock issuable upon
exercise of this Warrant has not been registered under the Act of 1933, as
amended (the "Act"). Any Shares of Common Stock issued upon exercise of this
Warrant shall be bear the following legend:
"The Shares represented by this Certificate have not been registered
under the Act of 1933, as amended, and may not be transferred in the
absence of a registration statement covering said Shares or an opinion
of Counsel to the Corporation that such registration is not required."
Section 3.02 The Holder of this Warrant shall have the right to include
any Shares of Common Stock issuable upon exercise of this Warrant in any
registration statement filed by the Corporation under the Securities Act of
1933, as amended. The Holder shall pay Holders proportionate share of all costs,
fees and expense in connection with the filing of any registration for the
Shares issuable upon exercise of this Warrant. The Corporation shall take all
necessary action, which may be required in qualifying and registering the Shares
issuable upon exercise of this Warrant.
ARTICLE IV - OTHER MATTERS
Section 4.01 All the covenants and provisions of this Warrant by or for
the benefits of the Corporation shall bind and inure to the benefit of its
successors and assigns hereunder.
Section 4.02 Notice or demands pursuant to this Warrant to be given by
the Holder to or on the Corporation shall be sufficiently given or made if sent
by certified or registered mail, return receipt requested, postage prepaid and
addressed, until another address is designated in writing by the Corporation, as
follows:
International Barter Corp.
Suite 207
21400 International Blvd.,
Seattle, Washington 98198
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Notices to the Holder provided for in this Warrant shall be deemed
given or made by the Corporation if sent by certified or registered mail, return
receipt requested, postage prepaid and addressed to the Holder at his last known
address as it shall appear on the books of the Corporation.
The laws of the State of Nevada shall govern section 4.03 The validity,
interpretation and performance of this Warrant.
Section 4.04 Nothing in this Warrant expressed and nothing that may be
implied from any of the provisions hereof is intended, or shall be construed, to
confer upon, or give to, any person or corporation other than the Corporation
and the Holder any right, remedy or claim under promise or agreement hereof, and
all covenants, conditions, stipulations, promises and agreements contained in
this Warrant shall be for the sole and exclusive benefit of the Corporation and
its successors and of the Holder and his heirs, personal representatives and
administrators.
Section 4.05 The Article headings herein are for convenience only and
are not part of this Warrant and shall not affect the interpretation thereof.
IN WITNESS WHEREOF this Warrant has been duly executed by the
Corporation under its corporate seal as of the ___ day of __________________,
199_.
International Barter Corp.
By: ___________________________________ (corporate seal)
President
By: ___________________________________
Secretary
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EXHIBIT 5.1
January 29, 1999
International Barter Corp.
21400 International Blvd., Suite 207
Seattle, WA 98198
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have examined the Registration Statement on Form SB-2 to be filed by
you with the Securities and Exchange Commission on or about the date of this
letter ("Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, on behalf of certain shareholders of the
Company ("Selling Shareholders") of (i) 1,803,800 shares of common stock, par
value $.001 per share ("Common Stock") issued to them in certain private
placements completed on or before September 1998; and (ii) 800,000 shares of
Common Stock issuable upon exercise of the Warrants (as defined in the
Registration Statement). The Common Stock offered pursuant to the Registration
Statement and the Common Stock underlying the Warrants are referred herein as
the "Shares."
We understand that the Shares will be sold by the Selling Stockholders
to the public as described in the Registration Statement. As your counsel in
connection with the preparation and filing of this Registration Statement, we
have examined the proceedings taken by you in connection with the original
issuance of the Common Stock and are familiar with the proceedings proposed to
be taken by you in connection with the issuance and sale of the Shares upon
exercise of the Warrants.
In so acting, we have examined and relied upon the originals or copies,
certified or otherwise identified to our satisfaction, of such Company records,
documents, certificates and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinions expressed below. Based upon
the foregoing and such examination of law as we have deemed necessary, we are of
the opinion that:
1. The Shares to be offered by the Selling Stockholders, when sold
under the circumstances contemplated in the Registration Statement, will be
legally issued, fully paid and non-assessable.
2. The shares of Common Stock issuable upon exercise of the Warrants,
when issued upon exercise of the Warrants in accordance with their terms and
with the resolutions adopted by the Board of Directors of the Company, will be
legally issued, fully paid and non-assessable.
We consent to the use of this letter as an Exhibit to the Registration
Statement and to the use of our name under the heading "Legal Matters" included
in the Prospectus forming a part of the Registration Statement, and in any
amendment or supplement thereto.
TOLLEFSEN BUSINESS LAW P.C.
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EXHIBIT 10.1
MERGER AGREEMENT FOR PURCHASE AND SALE OF STOCK
DATED: 11-15-96
BETWEEN: International Barter Corporation ("IBC")
AND: Cascade Trade Association ("CTA")
AND: Steven White ("WHITE")
AND: Norma Fetz ("FETZ")
WHEREAS, the parties to this AGREEMENT have duly agreed on a plan and contract
of merger, this document reduces to writing the AGREEMENT that International
Barter Corporation ("IBC") (a corporation organized under the laws of the state
of Nevada, with its principal office located at 21400 International Boulevard,
Suite 207, city of Seattle, county of King, state of Washington) be merged with
Cascade Trade Association ("CTA") (a corporation organized under the laws of the
State of Washington, with its principal office located at 21400 International
Boulevard, Suite 207, city of Seattle, county of King, state of Washington).
1.0 RECITALS
1.1 The parties identified above have agreed that CTA should merge with
IBC. IBC will be the "surviving corporation" and obtain 100% of the ownership
and debt of CTA through purchase of CTA's outstanding stock, and CTA will
receive IBC stock in consideration for the merger, with CTA shareholders WHITE
and FETZ sharing on a pro rata basis in proportion to their respective holdings
in CTA.
1.2 The total number of shares which IBC is authorized to issue is
25,000,000 shares, consisting of a single class of common stock with par value
of $0.001 per share. Currently, no stock has been issued and there are no
shareholders.
1.3 The total number of shares which CTA is authorized to issue is
50,000 shares, consisting of a single class of common stock with no par value. A
total of 10,000 shares have been issued, 9,000 are held by Steven White and
1,000 are held by Norma Fetz.
1.4 The respective Boards of Directors of IBC and CTA (collectively
"the constituent corporations") deem it desirable and in the best interests of
the corporations and their shareholders that CTA, (also called the "nonsurviving
corporation"), be merged into IBC (also called the "surviving corporation").
For the reasons set forth above, and in consideration of the mutual covenants
and promises of the parties contained herein, the constituent corporations
agree, pursuant to applicable law, that CTA shall be merged into IBC as a single
corporation, in the manner detailed herein, wherein the parties have agreed to
prescribe the terms and conditions of such merger, the method of carrying it
out, and the manner of converting the shares of CTA into shares of IBC.
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2.0 DEFINITIONS
2.1 "AGREEMENT" means this merger agreement for the purchase and sale
of stock.
2.2 "EFFECTIVE DATE" means the date entered on page one of this
AGREEMENT.
3.0 AGREEMENT
3.1 IBC TO BE SURVIVING CORPORATION. CTA shall be merged into IBC, and
the corporate existence of CTA shall cease to exist upon the filing of
appropriate articles of merger, after a suitable transition period in which both
entities will operate. These articles will be filed at the direction and sole
discretion of IBC. After the articles are filed, the existence of CTA shall
cease and all rights not already transferred by this AGREEMENT shall, without
limitation, be transferred to IBC as the sole owner of all CTA assets and
liabilities. IBC agrees that it shall become immediately subject to all the
debts and liabilities of CTA, even before articles of merger are filed, in the
same manner as if IBC has incurred them. Any and liens on the property of any of
the corporations shall remain unimpaired.
3.2 PRINCIPAL OFFICE. The principal office of IBC shall remain the same
after this merger.
3.3 OBJECTS AND PURPOSES. The nature of the business and the objects
and purposes of this merger are to continue the same business objects and
purposes of CTA, namely that of engaging in wholesale and retail barter, under
the name and sponsorship of IBC. There shall be continuity of all purposes, and
the business of CTA shall remain unchanged.
3.4 AMENDED ARTICLES. Upon the completion of the transition period, the
articles of incorporation of IBC, as amended, shall be amended to read as
follows:
FOURTEENTH. IBC shall enter into negotiations with and
conclude agreements of merger with various barter exchanges which are deemed in
the best interests of its shareholders and the corporation. Upon such
agreements, IBC shall merge with said exchanges, which exchange shall obtain all
the rights and privileges of IBC members, and IBC shall obtain all the rights
and privileges defined in the agreement of merger. These articles shall then be
amended to so state those corporations or associations which have merged with
IBC. They are listed as follows:
1. Cascade Trade Association, a Washington corporation.
3.5 BYLAWS. The present bylaws of IBC, insofar as not inconsistent with
this AGREEMENT, shall be the bylaws of the corporation following the merger.
3.6 DIRECTORS. The names and addresses of the directors of IBC shall
remain the same following merger, and they shall hold office until the next
regularly scheduled meeting of the Board of Directors.
3.7 METHOD OF CONVERTING SHARES. As of the date of this AGREEMENT, the
shares of the constituent corporations shall, without any other action on the
part of the respective holders thereof, become converted into shares of IBC as
follows:
A. IBC shall obtain 100% of all outstanding and treasury stock
of CTA.
B. CTA shall receive 1,000,000 shares of IBC stock, valued at
$0.50 per share.
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C. Shares received by CTA shall be issued to shareholders as
follows: 900,000 shares in the name of Steven White, and 100,000 shares in the
name of Norma Fetz. By signing below, the aforementioned shareholders warrant
that this distribution represents a fair pro rata distribution of the shares
received, and that each shareholder has received full and fair disclosure of the
terms of this merger. In addition, each shareholder recognizes that their
interest in IBC is subject to immediate and substantial dilution if IBC offers
more shares for any reason. However, IBC shall not be authorized to issue more
than 25,000,000 shares without due consideration of the rights of minority
shareholders by law.
3.8 EXTRAORDINARY TRANSACTIONS. No constituent corporation shall enter
into any extraordinary transactions prior to the effective date of this merger
without the prior written consent of the other party.
3.9 TRANSFER OF PROPERTY RIGHTS. All of the property, rights,
privileges, leases, trademarks, copyrights and patents of any nature whatsoever
shall be transferred from CTA to IBC. This includes but is not limited to the
rights in the name "Cascade Trade Association". The officers and directors are
authorized as necessary to execute all deeds, conveyances, assignments or
documents of any nature that are necessary to carry out this intent.
3.10 AGREEMENT AND RATIFICATION OF SHAREHOLDERS. The shareholders
signing below hereby waive any and all notice of meetings, and hereby consent to
and approve the merger of IBC and CTA. Said shareholders constitute 100% of the
ownership of outstanding voting shares, and are empowered under the articles of
incorporation and bylaws to approve and ratify mergers, and hereby approve and
adopt such merger as recommended by the Board of CTA and represent that they
have had full information and opportunity to inquire into the specifics of this
merger. Thus, this merger is approved by 100% of the shareholders of CTA.
3.11 INSTRUMENTS OF FURTHER ASSURANCE. If at any time it shall be
determined or advised that any instruments of further assurance are desirable in
order to evidence the vesting in IBC of all powers, assets and liabilities of
CTA, the appropriate officers or directors are hereby authorized to execute and
acknowledge all such instruments of further assurance, and to do such further
acts or things, either in the name of the constituent corporations or in the
name of IBC, as may be desirable to carry out the purposes and details of the
AGREEMENT of merger.
4.0 EXECUTING SIGNATURES
4.1 IN WITNESS WHEREOF, the Directors and Shareholders of IBC and the
Directors and Shareholders of CTA have EXECUTED this AGREEMENT under their
respective corporate seals and with duly authorized authority at Seattle,
Washington, the day and year first above written.
/s/ STEVEN WHITE
- ----------------------------------
Steven White, President, CEO
and on behalf of the Board of Directors
International Barter Corporation
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/s/ STEVEN WHITE
- ----------------------------------
Steven White, President, Cascade Trade Association,
and on behalf of the Board of Directors of
Cascade Trade Association
/s/ STEVEN WHITE
- ----------------------------------
Steven White, Shareholder,
Cascade Trade Association
/s/ NORMA FETZ
- ----------------------------------
Norma Fetz, Shareholder,
Cascade Trade Association
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EXHIBIT 10.2
INTERNATIONAL BARTER CORP.
1998 STOCK OPTION PLAN
This 1998 Stock Option Plan ("Plan") provides for the grant of options to
acquire shares of common stock, $0.001 par value ("Common Stock") of
International Barter Corp., a Nevada corporation ("Company"). Stock options
granted under this Plan are referred to in this Plan as "Options." Options that
qualify under Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), are referred to in this Plan as "Incentive Stock Options." Options
granted under this Plan that do not qualify under Section 422 of the Code are
referred to as "Nonqualified Stock Options."
1.0 PURPOSES
1.1 The purposes of this Plan are (i) to retain the services of a management
team, qualified employees of the Company and non-employee advisors or
consultants as the Plan Administrators shall select in accordance with this
Plan; (ii) to retain the services of valued non-employee directors pursuant to
Section 5.15 below; (iii) to provide these persons with an opportunity to obtain
or increase a proprietary interest in the Company, to provide incentives for
effective service and high-level performance, to strengthen their incentive to
achieve the objectives of the shareholders of the Company; and (iv) to serve as
an aid and inducement in the hiring or recruitment of new employees,
consultants, non-employee directors and other persons needed for future
operations and growth of the Company. Employees, non-employee advisors and
consultants are referred to in this Plan as "Service Providers."
2.0 ADMINISTRATION
2.1 This Plan shall be administered by, or in accordance with the recommendation
of, the Board of Directors of the Company ("Board"). The Board may, in its
discretion, establish a committee composed of two or more members of the Board
to administer this Plan ("Committee") which may be an executive, compensation or
other committee, including a separate committee especially created for this
purpose. The Committee shall have the powers and authority as the Board may
delegate to it, including the power and authority to interpret any provision of
this Plan or of any Option. The members of the Committee shall serve at the
discretion of the Board. The Board, and/or the Committee if one has been
established by the Board, are referred to in this Plan as the "Plan
Administrators."
2.2 Following registration of any of the Company's securities under Section 12
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), the Plan
Administrators shall not take any action which is not in full compliance with
the exemption from Section 16(b) of the Exchange Act provided by Rule 16b-3, as
amended, or any successor rule or rules, and any other rules or regulations of
the Securities and Exchange Commission, a national exchange, the Nasdaq Stock
Market, the NASD Bulletin Board, or any other applicable regulatory authorities,
and any such action shall be void and of no effect.
2.3 Except as limited by Section 5.15 below, and subject to the provisions of
this Plan, and with a view to effecting its purpose, the Plan Administrators
shall have sole authority, in their absolute discretion, to (i) construe and
interpret this Plan; (ii) define the terms used in this Plan; (iii) prescribe,
amend and
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rescind rules and regulations relating to this Plan; (iv) correct any defect,
supply any omission or reconcile any inconsistency in this Plan; (v) select the
Service Providers to whom Options shall be granted under this Plan and whether
the Option is an Incentive Stock Option or a Nonqualified Stock Option; (vi)
determine the time or times at which Options shall be granted under this Plan;
(vii) determine the number of shares of Common Stock subject to each Option, the
exercise price of each Option, the duration of each Option and the times at
which each Option shall become exercisable; (viii) determine all other terms and
conditions of Options; (ix) approve the forms of agreement to be used under the
Plan; (x) to determine the "Fair Market Value", as defined in Section 2.4 below;
(xi) to reduce the exercise price of any Option to the then current Fair Market
Value if the Fair Market Value of the Common Stock covered by the Option shall
have declined since the date the Option was granted; (xii) to institute a
program whereby outstanding options are surrendered in exchange for options with
a lower exercise price; (xiii) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the shares of Common
Stock to be issued upon exercise of an Option that number of shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by an Optionee
to have shares withheld for this purpose shall be made in such form and under
such conditions as the Plan Administrators may deem necessary or advisable;
(xiv) to authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Option previously granted by the Plan
Administrators; and (xv) make all other determinations necessary or advisable
for the administration of this Plan. All decisions, determinations and
interpretations made by the Plan Administrators shall be binding and conclusive
on all participants in this Plan and on their legal representatives, heirs and
beneficiaries. None of the Plan Administrators shall be liable for any action
taken or determination made in good faith with respect to the Plan or any grant.
2.4 "Fair Market Value" shall be deemed to be, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national market system, or if the principal market for the Common Stock is the
over-the-counter market, including without limitation Nasdaq NMS or Nasdaq
SmallCap of the Nasdaq Stock Market, the NASD Electronic Bulletin Board or
over-the-counter, as the case may be, its Fair Market Value shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the last market trading day immediately
preceding the date of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) In the absence of an established market for the Common Stock, the Fair
Market Value shall be determined in good faith by the Administrator.
3.0 ELIGIBILITY
3.1 Incentive Stock Options may be granted to any individual who, at the time
the Option is granted, is an employee of the Company or any parent, subsidiary
or other corporation permitted by the Code, including employees who are
directors of the Company ("Employees"). Nonqualified Stock Options may be
granted to Service Providers as the Plan Administrators shall select, and to
non-employee directors of the Company pursuant to the formula set forth in
Section 5.15 below. Options may be granted in substitution for outstanding
Options of another corporation in connection with the merger, consolidation,
acquisition of property or stock or other reorganization between such other
corporation and the Company or any subsidiary of the Company. Options also may
be granted in exchange for outstanding Options. Any person to whom an Option is
granted under this Plan is referred to as an "Optionee."
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<PAGE> 3
4.0 NUMBER OF SHARES AVAILABLE
4.1 The Plan Administrators are authorized to grant Options to acquire up to a
total of 20% of the total number of outstanding shares of the Company's Common
Stock. The number of shares with respect to which Options may be granted
hereunder is subject to adjustment as set forth below in Section 5.14. If any
outstanding Option expires or is terminated for any reason, the shares of Common
Stock allocable to the unexercised portion of such Option may again be subject
to an Option to the same Optionee or to a different person eligible under this
Plan.
5.0 TERMS AND CONDITIONS OF OPTIONS
5.1 Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrators ("Agreement"). Agreements may
contain such additional provisions, not inconsistent with this Plan, as the Plan
Administrators in their discretion may deem advisable. All Options also shall
comply with the following requirements.
5.2 Number of Shares and Type of Option. Each Agreement shall state the number
of shares of Common Stock to which it pertains and designate whether the Option
is intended to be an Incentive Stock Option or a Nonqualified Stock Option. In
the absence of action or designation to the contrary by the Plan Administrators
in connection with the grant of an Option, all Options shall be Nonqualified
Stock Options. The aggregate Fair Market Value, determined at the Date of Grant,
as defined below, of the stock with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year, granted
under this Plan and all other Incentive Stock Option plans of the Company, a
related corporation or a predecessor corporation, shall not exceed $100,000, or
such other limit as may be prescribed by the Code as it may be amended from time
to time. Any Option which exceeds the annual limit shall not be void but rather
shall be a Nonqualified Stock Option.
5.3 Date of Grant. Each Agreement shall state the date the Plan Administrators
have deemed to be the effective date of the Option for purposes of, and in
accordance with, this Plan ("Date of Grant").
5.4 Option Price. Each Agreement shall state the price per share of Common Stock
at which it is exercisable. The exercise price shall be fixed by the Plan
Administrators at whatever price the Plan Administrators may determine in the
exercise of its sole discretion; provided, that the per share exercise price for
any Option granted following the effective date of registration of any of the
Company's securities under the Exchange Act shall not be less than the Fair
Market Value per share of the Common Stock at the Date of Grant as determined by
the Plan Administrators in good faith; and, provided further, that Incentive
Stock Options granted in substitution for outstanding Options of another
corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization involving such other corporation and
the Company or any subsidiary of the Company may be granted with an exercise
price equal to the exercise price for the substituted Option of the other
corporation, subject to any adjustment consistent with the terms of the
transaction pursuant to which the substitution is to occur.
5.5 Duration of Options. At the time of the grant of the Option, the Plan
Administrators shall designate, subject to paragraph 5.8 below, the expiration
date of the Option, which date shall not be later than 5 years from the Date of
Grant; provided, that the expiration date of any Incentive Stock Option granted
to a greater-than-10 percent shareholder of the Company (as determined with
reference to Section 424(d) of
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<PAGE> 4
the Code) shall not be later than five years from the Date of Grant. In the
absence of action to the contrary by the Plan Administrators in connection with
the grant of a particular Option, and except in the case of Incentive Stock
Options as described above, all Options granted under this Plan shall expire 5
years from the Date of Grant.
5.6 Vesting Schedule. No Option shall be exercisable until it has vested. The
vesting schedule for each Option shall be specified by the Plan Administrators
at the time of grant of the Option; provided, that if no vesting schedule is
specified at the time of grant or in the Agreement, the entire Option shall vest
according to the following schedule:
NUMBER OF YEARS FOLLOWING DATE OF GRANT and
PERCENTAGE OF TOTAL OPTION TO BE EXERCISABLE
<TABLE>
<S> <C>
After first twelve months 50%
After eighteen months 75%
After twenty-four months 100%
</TABLE>
5.7 Acceleration of Vesting. The vesting of one or more outstanding Options may
be accelerated by the Plan Administrators at such times and in such amounts as
it shall determine in its sole discretion. The vesting of Options also shall be
accelerated under the circumstances described below in Section 5.14.
5.8 Term of Option.
5.8.1 Vested Options shall terminate, to the extent not previously exercised,
upon the occurrence of the first of the following events: (i) the expiration of
the Option, as designated by the Plan Administrators; (ii) the expiration of 90
days from the date of an Optionee's termination of employment, contractual or
director relationship with the Company or any Related Corporation for any reason
whatsoever other than death or Disability, as defined below, unless, in the case
of a Nonqualified Stock Option, the exercise period is otherwise defined by
terms of an agreement with Optionee entered into prior to the effective date of
the Plan, or the exercise period is extended by the Plan Administrators until a
date not later than the expiration date of the Option; or (iii) the expiration
of one year from (A) the date of death of the Optionee or (B) cessation of an
Optionee's employment, contractual or director relationship with the Company or
any Related Corporation by reason of Disability (as defined below) unless, in
the case of a Nonqualified Stock Option, the exercise period is extended by the
Plan Administrators until a date not later than the expiration date of the
Option. If an Optionee's employment, contractual or director relationship with
the Company or any Related Corporation is terminated by death, any Option held
by the Optionee shall be exercisable only by the person or persons to whom such
Optionee's rights under such Option shall pass by the Optionee's will or by the
laws of descent and distribution of the state or county of the Optionee's
domicile at the time of death. "Disability" shall mean that a person is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuous period of
not less than 12 months. The Plan Administrators shall determine whether an
Optionee has incurred a Disability on the basis of medical evidence acceptable
to the Plan Administrators. Upon making a determination of Disability, the
Committee shall, for purposes of the Plan, determine the date of an Optionee's
termination of employment, contractual or director relationship.
5.8.2 Unless accelerated as set forth above, unvested Options shall terminate
immediately upon termination of Optionee's employment, contractual or director
relationship with the Company or any Related Corporation for any reason
whatsoever, including death or Disability. If, in the case of an
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Incentive Stock Option, an Optionee's relationship with the Company changes
(e.g., from an employee to a non-employee, such as a consultant, or a
non-employee director), such change shall not necessarily constitute a
termination of an Optionee's contractual relationship with the Company but
rather the Optionee's Incentive Stock Option shall automatically be converted
into a Nonqualified Stock Option. For purposes of this Plan, transfer of
employment between or among the Company and/or any Related Corporation shall not
be deemed to constitute a termination of employment with the Company or any
Related Corporation. For purposes of this subsection with respect to Incentive
Stock Options, employment shall be deemed to continue while the Optionee is on
military leave, sick leave or other bona fide leave of absence as determined by
the Plan Administrators. The foregoing notwithstanding, employment shall not be
deemed to continue beyond the first 90 days of such leave, unless the Optionee's
re-employment rights are guaranteed by statute or by contract.
5.8.3 Unvested Options shall terminate immediately upon any material breach, as
determined by the Plan Administrators, by Optionee of any employment,
non-competition, non-disclosure or similar agreement by and between the Company
and Optionee.
5.9 Exercise of Options. Options shall be exercisable, either all or in part, at
any time after vesting, until the Option terminates for any reason set forth
under this Plan, unless the exercise period is extended by the Plan
Administrators until a date not later than the expiration date of the Option. If
less than all of the shares included in the vested portion of any Option are
purchased, the remainder may be purchased at any subsequent time prior to the
expiration of the Option term. No portion of any Option for less than fifty (50)
shares, as adjusted pursuant to Section 5.14 below, may be exercised; provided,
that if the vested portion of any Option is less than fifty (50) shares, it may
be exercised with respect to all shares for which it is vested. Only whole
shares may be issued pursuant to an Option, and to the extent that an Option
covers less than one share, it is unexercisable. Options or portions thereof may
be exercised by giving written notice to the Company, which notice shall specify
the number of shares to be purchased, and be accompanied by payment in the
amount of the aggregate exercise price for the Common Stock so purchased, which
payment shall be in the form specified in this Plan. The Company shall not be
obligated to issue, transfer or deliver a certificate of Common Stock to any
optionee, or to his personal representative, until the aggregate exercise price
has been paid for all shares for which the Option shall have been exercised and
adequate provision has been made by the Optionee for satisfaction of any tax
withholding obligations associated with such exercise. During the lifetime of an
Optionee, Options are exercisable only by the Optionee and those assigees
specified in Section 5.12 of this Plan.
5.10 Payment upon Exercise of Option. Upon the exercise of any Option, the
aggregate exercise price shall be paid to the Company in cash or by certified or
cashier's check. In addition, upon approval of the Plan Administrators, an
Optionee may pay for all or any portion of the aggregate exercise price by (i)
delivering to the Company shares of Common Stock previously held by Optionee
which have been owned by Optionee for more than six (6) months on the date of
surrender; (ii) having shares withheld from the amount of shares of Common Stock
to be received by the Optionee; (iii) delivery of an irrevocable subscription
agreement obligating the Optionee to take and pay for the shares of Common Stock
to be purchased within one year of the date of such exercise; (iv) consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan; (v) a reduction in the amount of any
Company liability to the Optionee, including any liability attributable to the
Optionee's participation in any Company-sponsored deferred compensation program
or arrangement; or (vi) such other consideration and method of payment for the
issuance of shares to the extent permitted by Applicable Laws. The shares of
Common Stock received or withheld by the Company as payment for shares of Common
Stock purchased upon the exercise of Options shall have a Fair Market Value at
the date of exercise (as determined by the Plan Administrators) equal to the
aggregate exercise price (or portion thereof) to be paid by the Optionee upon
such exercise.
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5.11 Rights as a Shareholder. An Optionee shall have no rights as a shareholder
with respect to any shares covered by an Option until such Optionee becomes a
record holder of the shares, irrespective of whether such Optionee has given
notice of exercise. Subject to the provisions of Section 5.14 of this Plan, no
rights shall accrue to an Optionee and no adjustments shall be made on account
of dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights declared on, or created in, the
Common Stock for which the record date is prior to the date the Optionee becomes
a record holder of the shares of Common Stock covered by the Option,
irrespective of whether such Optionee has given notice of exercise.
5.12 Transfer of Option. Options granted under this Plan and the rights and
privileges conferred by this Plan may not be transferred, assigned, pledged or
hypothecated in any manner, whether by operation of law or otherwise, other than
by will, by applicable laws of descent and distribution or to family members,
entities owned by family members and trusts benefitting family members or, with
respect to Nonqualified Stock Options, pursuant to a domestic relations order,
and shall not be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any
Option or of any right or privilege conferred by this Plan contrary to the
provisions hereof, or upon the sale, levy or any attachment or similar process
upon the rights and privileges conferred by this Plan, such Option shall
thereupon terminate and become null and void.
5.13 Securities Regulation and Tax Withholding.
5.13.1 Shares shall not be issued with respect to an Option unless the exercise
of such Option and the issuance and delivery of such shares shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations thereunder and the requirements of any stock exchange
upon which such shares may then be listed. The issuance shall be further subject
to the approval of counsel for the Company with respect to such compliance,
including the availability of an exemption from registration for the issuance
and sale of such shares. The inability of the Company to obtain from any
regulatory body the authority deemed by the Company to be necessary for the
lawful issuance and sale of any shares under this Plan, or the unavailability of
an exemption from registration for the issuance and sale of any shares under
this Plan, shall relieve the Company of any liability with respect to the
non-issuance or sale of such shares.
5.13.2 As a condition to the exercise of an Option, in order to comply with
federal or state securities laws the Plan Administrators may require the
Optionee to represent and warrant in writing at the time of such exercise that
the shares are being purchased only for investment and without any then-present
intention to sell or distribute such shares. At the option of the Plan
Administrators, a stop-transfer order against such shares may be placed on the
stock books and records of the Company, and a legend indicating that the stock
may not be pledged, sold or otherwise transferred unless an opinion of counsel
is provided stating that such transfer is not in violation of any applicable law
or regulation, may be stamped on the certificates representing such shares in
order to assure an exemption from registration. The Plan Administrators also may
require such other documentation as may from time to time be necessary to comply
with federal and state securities laws. THE COMPANY HAS NO OBLIGATION TO
UNDERTAKE REGISTRATION OF OPTIONS OR THE SHARES OF STOCK ISSUABLE UPON THE
EXERCISE OF OPTIONS.
5.13.3 As a condition to the exercise of any Option granted under this Plan, the
Optionee shall make such arrangements as the Plan Administrators may require for
the satisfaction of any federal, state or local withholding tax obligations that
may arise in connection with such exercise. Alternatively, the Plan
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Administrators may provide that a Grantee may elect, to the extent permitted or
required by law, to have the Company deduct federal, state and local taxes of
any kind required by law to be withheld upon such exercise from any payment of
any kind due to the Grantee. Without limitation, at the discretion of the Plan
Administrators, the withholding obligation may be satisfied by the withholding
or delivery of shares of Common Stock.
5.13.4 The issuance, transfer or delivery of certificates of Common Stock
pursuant to the exercise of Options may be delayed, at the discretion of the
Plan Administrators, until the Plan Administrators are satisfied that the
applicable requirements of the federal and state securities laws and the
withholding provisions of the Code have been met.
5.14 Stock Dividend, Reorganization or Liquidation.
5.14.1 If (i) the Company shall at any time be involved in a transaction
described in Section 424(a) of the Code (or any successor provision) or any
"corporate transaction" described in the regulations thereunder; (ii) the
Company shall declare a dividend payable in, or shall subdivide or combine, its
Common Stock or (iii) any other event with substantially the same effect shall
occur, the Plan Administrators shall, with respect to each outstanding Option,
proportionately adjust the number of shares of Common Stock and/or the exercise
price per share so as to preserve the rights of the Optionee substantially
proportionate to the rights of the Optionee prior to such event, and to the
extent that such action shall include an increase or decrease in the number of
shares of Common Stock subject to outstanding Options, the number of shares
available under Section 4.0 of this Plan shall automatically be increased or
decreased, as the case may be, proportionately, without further action on the
part of the Plan Administrators, the Company or the Company's shareholders.
5.14.2 If the Company is liquidated or dissolved, the Plan Administrators shall
allow the holders of any outstanding Options to exercise all or any part of the
unvested portion of the Options held by them; provided, however, that such
Options must be exercised prior to the effective date of such liquidation or
dissolution. If the Option holders do not exercise their Options prior to such
effective date, each outstanding Option shall terminate as of the effective date
of the liquidation or dissolution.
5.14.3 The foregoing adjustments in the shares subject to Options shall be made
by the Plan Administrators, or by any successor administrator of this Plan, or
by the applicable terms of any assumption or substitution document.
5.14.4 The grant of an Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure, to merge, consolidate or dissolve, to
liquidate or to sell or transfer all or any part of its business or assets.
5.15 Option Grants to Non-Employee Directors.
5.15.1 Automatic Grants. Upon the initial appointment of a Non-Employee
Director, as defined below, the Plan Administrators are authorized to grant
initial Options ("Initial Options") to each Non-Employee Director in such
amounts and upon such terms, provisions and vesting schedule as determined in
the sole discretion of the Plan Administrators. After the Initial Options are
fully vested, or in the event no Initial Options are granted to a Non-Employee
Director, Options shall be granted to Non-Employee Directors under the terms and
conditions of this Section 5.15 of this Plan. Unless the number of shares
available under Section 4.0 of this Plan shall have been decreased to less than
15,000, immediately after each annual meeting of shareholders at which he or she
is elected a director, each Non-Employee Director, as defined below, of the
Company shall automatically be granted a Nonqualified Stock Option to purchase
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2.500 shares of Common Stock for each year included in the term for which such
he or she was elected a director at such meeting; provided, however, that if a
director is appointed to fill a vacancy in the Company's Board of Directors, a
Non-Employee Director shall be granted a Nonqualified Stock Option to purchase
that number of shares of Common Stock equal to 2.500 multiplied by a fraction,
the numerator of which shall be equal to the number of months from the date of
his or her appointment until the next regularly scheduled annual meeting of
shareholders at which directors are to be elected (as determined by the
Company's bylaws and rounded to the nearest whole number) and the denominator of
which shall be twelve (12). "Non-Employee Director" shall have the meaning set
forth in Rule 16b-3 under the Exchange Act as such rule is in effect on the date
this Plan is approved by the shareholders of the Company, as it may be amended
from time to time, or any successor rule or rules.
5.15.2 Option Price. The option price for the Options granted under Section 5.15
shall be not less than one hundred percent (100%) of the Fair Market Value of
the shares of Common Stock on the Date of Grant, as determined by the Plan
Administrators in good faith in accordance with the definition set forth in
Section 2.4 of this Plan. Each such Option shall have a five-year term from the
Date of Grant, unless earlier terminated pursuant to Section 5.8.
5.15.3 Vesting Schedule. No Option shall be exercisable by a Non-Employee
Director until it has vested. For Options granted in connection with the
election of a director at an annual meeting of shareholders, each Option shall
vest as to 2,500 shares of Common Stock for each year of service as a director
on each anniversary date of the annual meeting. For Options granted in
connection with the appointment of a director, each Option shall vest as to
2,500 shares of Common Stock (or, if a lesser number of shares of Common Stock
remain unvested, the remaining number of shares) for each year of service as a
director on each anniversary date of such appointment.
5.16 Common Stock Repurchase Rights
5.16.1 Repurchase Option. At the sole discretion of the Plan Administrators,
each Option granted under this Plan may contain repurchase provisions pursuant
to which, after exercise of the Option, the Company is granted an irrevocable,
exclusive option ("Repurchase Option") to purchase from Optionee the Common
Stock issued upon exercise of the Option. If the Plan Administrators determine
that Options granted under the Plan will be subject to a Repurchase Option,
Service Providers shall be notified by the Plan Administrators of the terms,
conditions and restrictions of the Repurchase Option by means of a Restricted
Stock Purchase Agreement, and Options shall be accepted by Service Providers by
execution of a Restricted Stock Purchase Agreement in the form determined by the
Plan Administrators. Unless the Plan Administrators determine otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
service with the Company for any reason (including death or disability).
5.16.2 Purchase Price and Duration. The purchase price for shares of Common
Stock repurchased pursuant to the Restricted Stock Purchase Agreement shall be
the original price per share paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The Repurchase
Option shall lapse after one year following the date of exercise, unless the
repurchase period is shortened in accordance with a rate determined by the Plan
Administrators.
5.16.3 Escrow of Shares. The Restricted Stock Purchase Agreement may also
provide that the shares of Common Stock be delivered and deposited with an
escrow holder designated by the Company until such time as the Repurchase Option
expires.
5.16.4 Other Provisions. The Restricted Stock Purchase Agreement shall contain
such other terms,
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provisions and conditions not inconsistent with the Plan as may be determined by
the Administrator in its sole discretion.
5.16.5 Rights as a Shareholder. Once the Option is exercised and unless and
until the Repurchase Option is exercised by the Company, the purchaser shall
have the rights equivalent to those of a shareholder, and shall be a shareholder
when his or her purchase is entered upon the records of the duly authorized
transfer agent of the Company.
6.0 EFFECTIVE DATE; TERM
6.1 This Plan shall be effective as of June 1, 1998. The Plan shall include all
options granted by Plan Administrators prior to the effective date of the Plan,
in accordance with the effective Date of Grant and other terms of each agreement
with Optionee. Incentive Stock Options may be granted by the Plan Administrators
from time to time thereafter until June 1, 2003. Nonqualified Stock Options may
be granted until this Plan is terminated by the Board in its sole discretion.
Termination of this Plan shall not terminate any Option granted prior to such
termination. Any Incentive Stock Options granted by the Plan Administrators
prior to the approval of this Plan by a majority of the shareholders of the
Company shall be granted subject to ratification of this Plan by the
shareholders of the Company within 12 months after this Plan is adopted by the
Board, and if shareholder ratification is not obtained, each and every Incentive
Stock Option shall become a Nonqualified Stock Option.
7.0 NO OBLIGATIONS TO EXERCISE OPTION
7.1 The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8.0 NO RIGHT TO OPTIONS OR TO EMPLOYMENT, CONTRACTUAL OR DIRECTOR
RELATIONSHIP
8.1 Except as provided in Section 5.15 above, whether or not any Options are to
be granted under this Plan shall be exclusively within the discretion of the
Plan Administrators, and nothing contained in this Plan shall be construed as
giving any person or Service Provider any right to participate under this Plan.
The grant of an Option shall in no way constitute any form of agreement or
understanding binding on the Company or any Related Corporation, express or
implied, that the Company or any Related Corporation will employ, contract with,
or use any efforts to cause to continue service as a director by, an Optionee
for any length of time.
9.0 APPLICATION OF FUNDS
9.1 The proceeds received by the Company from the sale of Common Stock issued
upon the exercise of Options shall be used for general corporate purposes,
unless otherwise directed by the Board.
10.0 INDEMNIFICATION OF PLAN ADMINISTRATOR
10.1 In addition to all other rights of indemnification they may have as members
of the Board, members of the Plan Administrators shall be indemnified by the
Company for all reasonable expenses and
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liabilities of any type or nature, including attorneys' fees, incurred in
connection with any action, suit or proceeding to which they or any of them are
a party by reason of, or in connection with, this Plan or any Option granted
under this Plan, and against all amounts paid by them in settlement thereof,
provided that such settlement is approved by independent legal counsel selected
by the Company, except to the extent that such expenses relate to matters for
which it is adjudged that such Plan Administrators member is liable for willful
misconduct; provided, that within 15 days after the institution of any such
action, suit or proceeding, the Plan Administrator member involved therein
shall, in writing, notify the Company of such action, suit or proceeding, so
that the Company may have the opportunity to make appropriate arrangements to
prosecute or defend the same.
11.0 AMENDMENT OF PLAN
11.1 Except as otherwise provided above in Section 5.15, the Plan Administrators
may, at any time, modify, amend or terminate this Plan and Options granted under
this Plan; provided, that no amendment with respect to an outstanding Option
shall be made over the objection of the Optionee thereof; and provided further,
that if required in order to keep the Plan in full compliance with the exemption
from Section 16(b) of the Exchange Act provided by Rule 16b-3, as amended, or
any successor rule or rules, or any other rules or regulations of the Securities
and Exchange Commission, a national exchange, the Nasdaq Stock Market, the NASD
Bulletin Board, or other regulatory authorities, amendments to this Plan shall
be subject to approval by the Company's shareholders in compliance with the
requirements of any such rules or regulations.
Without limiting the generality of the foregoing, the Plan Administrators may
modify grants to persons who are eligible to receive Options under this Plan who
are foreign nationals or employed outside the United States to recognize
differences in local law, tax policy or custom.
Date Approved by Board of Directors of Company: June 1, 1998
International Barter Corp.
by: Norma Fetz
-------------------------------
Corporate Secretary
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INTERNATIONAL BARTER CORP.
STOCK OPTION AGREEMENT
NEITHER THIS OPTION NOR THE UNDERLYING SHARES OF COMMON STOCK HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"). THIS
OPTION OR THE UNDERLYING COMMON SHARES MAY NOT BE SOLD OR TRANSFERRED UNLESS:
(I) THERE IS AN EFFECTIVE REGISTRATION COVERING THE OPTION OR SHARES, AS THE
CASE MAY BE, UNDER THE SECURITIES ACT AND APPLICABLE STATES SECURITIES LAWS;
(II) THE COMPANY FIRST RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE
BOARD OF DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE ATTORNEY
THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATES SECURITIES LAWS; OR, (III) THE TRANSFER IS MADE PURSUANT TO
RULE 144 UNDER THE SECURITIES ACT.
BETWEEN:
("Optionee")
AND
International Barter Corp. ("Company")
a Nevada corporation
1.0 RECITALS
1.1 The Company has adopted the 1998 Stock Option Plan ("Plan"),
incorporated herein by reference, that provides for the grant of options to
purchase shares of Common Stock ("Shares") of the Company. Unless otherwise
defined in this Agreement, the terms defined in the Plan shall have the same
defined meanings in this Agreement.
2.0 NOTICE OF GRANT
2.1 Optionee has been granted an option to purchase Shares of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
<TABLE>
<S> <C>
GRANT NUMBER: _________________________
DATE OF GRANT: _________________________
VESTING COMMENCEMENT DATE: _________________________
EXERCISE PRICE PER SHARE: _________________________
TOTAL NUMBER OF SHARES GRANTED: _________________________
TOTAL EXERCISE PRICE: $________________________
</TABLE>
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<TABLE>
<S> <C>
TYPE OF OPTION: ___ Incentive Stock Option
___ Nonqualified Stock Option
EXPIRATION DATE: _________________________
</TABLE>
VESTING SCHEDULE: This Option may be exercised, in whole or in part, in
accordance with the following schedule: 50% of the Shares subject to the Option
shall immediately vest and be exercisable after one (1) year following the date
of grant, 75% of the Shares subject to the Option shall be fully vested and be
exercisable after eighteen (18) months following the date of grant, and 100% of
the Shares subject to the Option shall be fully vested and be exercisable after
two (2) years following the date of grant.
TERMINATION PERIOD: This Option may be exercised for 30 days after
Optionee ceases to be a Service Provider. Upon the death or Disability of the
Optionee, this Option may be exercised for such longer period as provided in the
Plan. In no event shall this Option be exercised later than the Expiration Date
as provided above.
3.0 GRANT OF OPTION
3.1 Subject to the terms and conditions of the Plan and of this
Agreement, the Plan Administrators of the Company grant to the Optionee named
above an option ("Option") to purchase the number of Shares, as set forth above
in Section 2.0 entitled "Notice of Grant", at the exercise price per share set
forth above in Notice of Grant ("Exercise Price"). Subject to any mutual
amendments of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Agreement, the terms
and conditions of the Plan shall prevail.
3.2 If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonqualified Stock Option ("NQO").
4.0 EXERCISE OF OPTION
4.1 Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set forth above in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
4.2 Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A ("Exercise Notice"), which
shall state the election to exercise the Option, the number of Shares in respect
of which the Option is being exercised ("Exercised Shares"), and such other
representations and agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise Notice shall be completed by the Optionee
and delivered to the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by the Company of the fully
executed Exercise Notice accompanied by the aggregate Exercise Price.
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<PAGE> 13
5.0 COMPLIANCE WITH APPLICABLE LAW
5.1 No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with applicable state or federal law,
including securities laws, corporate laws, the Code or any stock exchange or
quotation system. If the Plan Administrators at any time determine that
registration or qualification of the Shares or the Option under state or federal
law, or the consent approval of any governmental regulatory body is necessary or
desirable, then the Option may not be exercised, in whole or in part, until such
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Plan Administrators.
Assuming compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
5.2 If required by the Company at the time of any exercise of the
Option in order to comply with federal or state securities laws, as a condition
to such exercise, the Employee shall enter into an agreement with the Company in
form satisfactory to counsel for the Company by which the Employee: (i) shall
represent that the Shares are being acquired for the Employee's own account for
investment and not with a view to, or for sale in connection with, any resale or
distribution of such Shares; and, (ii) shall agree that if the Employee should
decide to sell, transfer, or otherwise dispose of any such Shares, the Employee
may do so only if the Shares are registered under the Securities Act and the
relevant state securities law, unless, in the opinion of counsel for the
Company, such registration is not required, or the transfer is pursuant to the
Securities and Exchange Commission Rule 144.
6.0 METHOD OF PAYMENT
6.1 Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) certified or cashier's check;
(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;
(d) with the Plan Administrator's consent, surrender of other Shares
which (i) in the case of Shares acquired upon exercise of an option, have been
owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate
Exercise Price of the Exercised Shares; or
(e) with the Plan Administrator's consent, delivery of Optionee's
promissory note (the "Note") in the form approved by Plan Administrators, in the
amount of the aggregate Exercise Price of the Exercised Shares and any
associated withholding taxes incurred in connection with the exercise, together
with the execution and delivery by the Optionee of a Security Agreement in the
form approved by Plan Administrators. The Note shall bear interest at the
"applicable federal rate" prescribed under the Code and its regulations at time
of purchase, and shall be secured by a pledge of the Shares purchased by the
Note pursuant to the Security Agreement.
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<PAGE> 14
7.0 NON-TRANSFERABILITY OF OPTION
7.1 This Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.
8.0 TERM OF OPTION
8.1 This Option may be exercised only within the term set forth above
in the Notice of Grant, and may be exercised during that term only in accordance
with the Plan and the terms of this Option Agreement.
9.0 TAX CONSEQUENCES
Some of the federal tax consequences relating to this Option, as of the
date of this Option, are set forth below. THIS SUMMARY IS INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
9.1 Exercising the Option.
9.1.1 Nonqualified Stock Option. The Optionee may incur regular federal
income tax liability upon exercise of a NQO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if these withholding amounts are not delivered at the time of
exercise.
9.1.2 Incentive Stock Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonqualified Stock Option on the date three (3) months and one (1)
day following this change of status.
9.2 Disposition of Shares.
9.2.1 NQO. If the Optionee holds NQO Shares for at least one year,
except for that portion treated as compensation income at the time of exercise,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.
9.2.2 ISO. If the Optionee holds ISO Shares for at least one year after
exercise and two years after the grant date, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Optionee disposes of ISO Shares within one year after exercise
or two years after the grant date, any gain realized on such disposition will be
treated as
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<PAGE> 15
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the lesser of (i) the difference between the Fair Market
Value of the Shares acquired on the date of exercise and the aggregate Exercise
Price, or (ii) the difference between the sale price of such Shares and the
aggregate Exercise Price. Any additional gain will be taxed as capital gain,
short-term or long-term depending on the period that the ISO Shares were held.
9.3 Notice of Disqualifying Disposition of ISO Shares. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on
or before the later of (i) two years after the grant date, or (ii) one year
after the exercise date, the Optionee shall immediately notify the Company in
writing of the disposition. The Optionee agrees that he or she may be subject to
income tax withholding by the Company on the compensation income recognized from
such early disposition of ISO Shares by payment in cash or out of the current
earnings paid to the Optionee.
10.0 RESALE RESTRICTIONS
10.1 Optionee acknowledges and agrees that whatever period determined
appropriate by the Company, underwriter, or federal and state regulatory
officials including, but not limited to, the Securities and Exchange Commission,
National Association of Securities Dealers and NASDAQ, following the effective
date of a registration statement of the Company covering common stock (or other
securities) of the Company to be sold on its behalf in an underwriting, Optionee
will not sell or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) Shares of the Company held by Optionee at any time
during such period except securities included in that registration.
10.2 Optionee acknowledges and agrees that if for purposes of a
registration statement of the Company the underwriter or federal or state
regulatory officials fix a specific Common Stock or Option lockup period, such
fixed lockup period shall apply to Optionee under this Agreement.
11.0 NO GUARANTEE OF CONTINUED SERVICE
11.1 Optionee acknowledges and agrees that the vesting of shares
pursuant to the vesting schedule set forth in this Agreement is earned only by
continuing as a Service Provider at the will of the Company, and not through the
act of being hired, being granted an option or purchasing shares under this
Agreement. Optionee further acknowledges and agrees that this Agreement, the
transactions contemplated and the vesting schedule set forth in it do not
constitute an express or implied promise of continued engagement as a Service
Provider for the vesting period, for any period, or at all, and shall not
interfere with Optionee's right or the Company's right to terminate Optionee's
relationship as a Service Provider at any time, with or without cause.
12.0 SIGNATURES
Dated________________,1998
INTERNATIONAL BARTER CORP.
By:_______________________________
Steven White, President
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<PAGE> 16
Optionee acknowledges and represents that he or she has received a copy of the
Plan, has reviewed the Plan and this Agreement in their entirety, is familiar
with its and fully understands its terms and provisions. Optionee accepts this
Option subject to all the terms and provisions of the Plan and this Agreement.
Optionee has had an opportunity to obtain the advice of counsel prior to
executing this Agreement. Optionee agrees to accept as binding, conclusive and
final all decisions or interpretations of the Plan Administrators upon any
questions arising under the Plan and Agreement. Optionee further agrees to
notify the Company upon any change in the residence address indicated on the
first page of this Agreement.
Dated________________,1998
OPTIONEE:
__________________________________
Signature
__________________________________
Print Name
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and approves the terms and
conditions of the Plan and this Agreement. In consideration of the Company's
granting his or her spouse the right to purchase Shares as set forth in the Plan
and this Agreement, the undersigned agrees to be irrevocably bound by the terms
and conditions of the Plan and this Option Agreement and further agrees that any
community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under the Plan or this Agreement.
__________________________________
Spouse of Optionee
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<PAGE> 1
EXHIBIT 10.3
- --------------------------------------------------------------------------------
INTERNATIONAL BARTER CORP.
EXECUTIVE EMPLOYMENT AGREEMENT
- --------------------------------------------------------------------------------
This Executive Employment Agreement ("Agreement") is made and effective this
November 24, 1998 by and between International Barter Corp., a Nevada
Corporation (Company) and Steven White (Executive).
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT:
Company hereby agrees to employ Executive as its President and Chief Executive
Officer and Executive hereby accepts such employment in accordance with the
terms of this Agreement and the terms of employment applicable to regular
employees of Company. In the event of any conflict or ambiguity between the
terms of this Agreement and terms of employment applicable to regular employees,
the terms of this Agreement shall control.
Election or appointment of Executive to another office or position, regardless
of whether such office or position is inferior to Executive's initial office or
position, shall not be a breach of this Agreement.
2. DUTIES OF EXECUTIVE:
The Executive shall be responsible for and have such authority and such
responsibility as are normally inherent in such office. Executive shall report
directly to the Board.
Executive shall devote his full working time, energy, skill, ability and
attention to the business of the Company and shall perform all duties in a
professional, ethical and businesslike manner which will further the business
and interests of Company or its affiliates.
It is important that the Company be of the utmost priority to the Executive at
all times.
3. COMPENSATION:
Executive will be paid compensation during this Agreement as follows:
- - Base salary of $85,000.00 per year, payable in installments according
to the Company's regular payroll schedule, which is paid on the 1st and
15th of each month. The base salary shall be adjusted at the discretion
of the Board.
- - Medical and hospitalization coverage per an approved insurance policy.
Premium to be paid by Company.
- - Auto expenses will be paid by company including company vehicle, auto
insurance, maintenance, repairs and all costs instituted thereto.
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- - Travel and entertainment expenses incurred by the Executive while
performing business for the Company.
- - Executive will be granted 40,000 stock options for each year of
employment under the terms of the Company's Stock Option Plan. The
initial 40,000 options granted for the first year of employment have an
Option Price of $0.8125 per share. The Company will adjust the number
of options pursuant to any forward or reverse splits.
- - Company will pay for seminars and continuing education courses in
management.
4. TERM AND TERMINATION:
A. Initial Term of this Agreement shall commence on December 1, 1998 and it
shall continue in effect for a period of three (3) years. Thereafter, the
Agreement shall be renewed upon the mutual agreement of Executive and Company.
B. This Agreement may be terminated by Executive at Executive's discretion by
providing at least thirty (30) days prior written notice to Company. In the
event of termination by Executive pursuant to this subsection, Company may
immediately relieve Executive of all duties and immediately terminate this
Agreement, provided that Company shall pay Executive at the then applicable base
salary rate to the termination date included in Executive's original termination
notice.
C. In the event that Executive is in breach of any material obligation owed
Company in this Agreement, habitually neglects the duties to be performed under
this Agreement, engages in any conduct which is dishonest, damages the
reputation or standing of the Company, or is convicted of any criminal act or
engages in any act of moral turpitude, then Company may terminate this Agreement
upon five (5) days notice to Executive. In event of termination of the agreement
pursuant to this subsection, Executive shall be paid only at the them applicable
base salary rate up to and including the date of termination. Executive shall
not be paid any incentive salary payments or other compensation, prorated or
otherwise.
D. In the event Company is acquired, or is the non-surviving party in a merger,
or sells all or substantially all of its assets, this Agreement shall not be
terminated and Company agrees to use its best efforts to ensure that the
transferee or surviving company is bound by the provisions of this
Agreement. Executive shall be compensated One Million Dollars ($1,000,000)
from the above date in addition to whatever other sum may be due him from
Company, all of which shall be paid out in such manner as Executive shall
reasonably request.
E. In the event of cessation of employment, all options granted to Executive
will continue to vest under the Vesting Schedule in the Companies 1998 Stock
Option Plan as amended unless termination was a result of items related in
section 4C.
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5. NOTICES:
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery services;
If to Company:
International Barter Corp.
21400 International Blvd., Suite 207
Seattle WA 98198-6086
If to Executive:
Steven White
3216 162nd Pl SE
Bellevue, WA 98008
6. FINAL AGREEMENT:
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. Only a further writing that is duly executed by
both parties may modify this Agreement.
7. GOVERNING LAW:
This Agreement shall be construed and enforced in accordance with the laws of
the state of Washington.
8. HEADINGS:
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
9. NO ASSIGNMENT:
Neither this Agreement nor any or interest in this Agreement may be assigned by
Executive without the prior express written approval of Company, which may be
withheld by Company at Company's absolute discretion.
10. SEVERABILITY:
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
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11. INDEMNIFICATION OF OFFICER
In addition to all other rights of indemnification he may have as an Officer of
the Company, he shall be indemnified by the Company for all reasonable expenses
and liabilities of any type or nature, including attorneys' fees, incurred in
connection with any action, suit or proceeding to which he is a party by reason
of, or in connection with his position as an Officer of the Company and against
all amounts paid by him in settlement thereof, provided that such settlement is
approved by independent legal counsel selected by the Company, except to the
extent that such expenses relate to matters for which it is adjudged that such
Officer is liable for willful misconduct; provided, that within 15 days after
the institution of any such action, suit or proceeding, the Officer involved
therein shall, in writing, notify the Company of such action, suit or
proceeding, so that the Company may have the opportunity to make appropriate
arrangements to prosecute or defend the same.
Company will supply officers liability insurance.
12. ARBITRATION:
The parties agree that they will use their best efforts to amicable resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof. Any such arbitration shall be
conducted in King County, Seattle Washington, or such other place as may be
mutually agreed upon by the parties. Within fifteen (15) days after the
commencement of the arbitration, each party shall select one person to act as
arbitrator, and the two arbitrators so selected shall select a third arbitrator
within ten (10) days of their appointment. Each party shall bear its own costs
and expenses and an equal share of the arbitrator's expenses and administrative
fees of arbitration.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
International Barter Corp.
By:_______________________________
Steven White
President/CEO
Approved by action of the Board of Directors on November 24, 1998
By:_______________________________
Dick Mayer
Secretary
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EXHIBIT 10.4
- --------------------------------------------------------------------------------
INTERNATIONAL BARTER CORP.
EXECUTIVE EMPLOYMENT AGREEMENT
- --------------------------------------------------------------------------------
This Executive Employment Agreement ("Agreement") is made and effective this
November 24, 1998 by and between International Barter Corp., a Nevada
Corporation (Company) and Alan Zimmelman (Executive).
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT:
Company hereby agrees to employ Executive as its Vice-President of Area Broker
Relations and Executive hereby accepts such employment in accordance with the
terms of this Agreement and the terms of employment applicable to regular
employees of Company. In the event of any conflict or ambiguity between the
terms of this Agreement and terms of employment applicable to regular employees,
the terms of this Agreement shall control.
Election or appointment of Executive to another office or position, regardless
of whether such office or position is inferior to Executive's initial office or
position, shall not be a breach of this Agreement.
2. DUTIES OF EXECUTIVE:
The Executive shall be responsible for and have such authority and such
responsibility as are normally inherent in such office. Executive shall report
directly to the President.
Executive shall devote his full working time, energy, skill, ability and
attention to the business of the Company and shall perform all duties in a
professional, ethical and businesslike manner which will further the business
and interests of Company or its affiliates.
Company is aware Executive resides in San Diego, CA and has no plans on
relocating residence. It is important that the Company be of the utmost priority
to the Executive at all times.
3. COMPENSATION:
Executive will be paid compensation during this Agreement as follows:
- - Base salary of $50,000.00 per year, payable in installments according
to the Company's regular payroll schedule, which is paid on the 1st and
15th of each month. The base salary shall be adjusted at the discretion
of the president and CEO.
- - Travel and entertainment expenses incurred by the Executive while
performing business for the Company.
- - Executive will be granted 40,000 stock options for each year of
employment under the terms of the Company's Stock Option Plan. The
initial 40,000 options granted for the first year of
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employment have an Option Price of $0.8125 per share. The Company will
adjust the number of options pursuant to any forward or reverse splits.
- - Company will pay for seminars and continuing education courses in
management.
4. TERM AND TERMINATION:
A. Initial Term of this Agreement shall commence on December 1, 1998 and it
shall continue in effect for a period of three (3) years. Thereafter, the
Agreement shall be renewed upon the mutual agreement of Executive and Company.
B. This Agreement may be terminated by Executive at Executive's discretion by
providing at least thirty (30) days prior written notice to Company. In the
event of termination by Executive pursuant to this subsection, Company may
immediately relieve Executive of all duties and immediately terminate this
Agreement, provided that Company shall pay Executive at the then applicable base
salary rate to the termination date included in Executive's original termination
notice.
C. In the event that Executive is in breach of any material obligation owed
Company in this Agreement, habitually neglects the duties to be performed under
this Agreement, engages in any conduct which is dishonest, damages the
reputation or standing of the Company, or is convicted of any criminal act or
engages in any act of moral turpitude, then Company may terminate this Agreement
upon five (5) days notice to Executive. In event of termination of the agreement
pursuant to this subsection, Executive shall be paid only at the them applicable
base salary rate up to and including the date of termination. Executive shall
not be paid any incentive salary payments or other compensation, prorated or
otherwise.
D. In the event Company is acquired, or is the non-surviving party in a merger,
or sells all or substantially all of its assets, this Agreement shall not be
terminated and Company agrees to use its best efforts to ensure that the
transferee or surviving company is bound by the provisions of this
Agreement. Executive shall be compensated One Hundred Fifty Thousand Dollars
($150,000) from the above date in addition to whatever other sum may be due
him from Company, all of which shall be paid out in such manner as Executive
shall reasonably request.
E. In the event of cessation of employment, all options granted to Executive
will continue to vest under the Vesting Schedule in the Companies 1998 Stock
Option Plan as amended unless termination was a result of items related in
section 4C.
5. NOTICES:
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery services;
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<PAGE> 3
If to Company:
International Barter Corp.
21400 International Blvd., Suite 207
Seattle WA 98198-6086
If to Executive:
Alan Zimmelman
1151 Wild Canary Lane.
Encinitas, CA 92024
6. FINAL AGREEMENT:
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. Only a further writing that is duly executed by
both parties may modify this Agreement.
7. GOVERNING LAW:
This Agreement shall be construed and enforced in accordance with the laws of
the state of Washington.
8. HEADINGS:
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
9. NO ASSIGNMENT:
Neither this Agreement nor any or interest in this Agreement may be assigned by
Executive without the prior express written approval of Company, which may be
withheld by Company at Company's absolute discretion.
10. SEVERABILITY:
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
11. INDEMNIFICATION OF OFFICER
In addition to all other rights of indemnification he may have as an Officer of
the Company, he shall be indemnified by the Company for all reasonable expenses
and liabilities of any type or nature, including attorneys' fees, incurred in
connection with any action, suit or proceeding to which he is a party by reason
of, or in connection with his position as an Officer of the Company and against
all amounts paid by him in settlement thereof, provided that such settlement is
approved by independent legal counsel selected by the Company, except to the
extent that such expenses relate to matters for which it is
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adjudged that such Officer is liable for willful misconduct; provided, that
within 15 days after the institution of any such action, suit or proceeding, the
Officer involved therein shall, in writing, notify the Company of such action,
suit or proceeding, so that the Company may have the opportunity to make
appropriate arrangements to prosecute or defend the same.
Company will supply officers liability insurance.
12. ARBITRATION:
The parties agree that they will use their best efforts to amicable resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof. Any such arbitration shall be
conducted in King County, Seattle Washington, or such other place as may be
mutually agreed upon by the parties. Within fifteen (15) days after the
commencement of the arbitration, each party shall select one person to act as
arbitrator, and the two arbitrators so selected shall select a third arbitrator
within ten (10) days of their appointment. Each party shall bear its own costs
and expenses and an equal share of the arbitrator's expenses and administrative
fees of arbitration.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
International Barter Corp.
By:_______________________________
Alan Zimmelman
Executive
Approved by action of the Board of Directors on November 24, 1998
By:_______________________________ By:_________________________________
Steven White Dick Mayer
President/CEO Secretary
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EXHIBIT 10.5
- --------------------------------------------------------------------------------
INTERNATIONAL BARTER CORP.
EXECUTIVE EMPLOYMENT AGREEMENT
- --------------------------------------------------------------------------------
This Executive Employment Agreement ("Agreement") is made and effective this
November 24, 1998 by and between International Barter Corp., a Nevada
Corporation (Company) and Dick Mayer (Executive).
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT:
Company hereby agrees to employ Executive as its Vice-President of Marketing and
Operations and Executive hereby accepts such employment in accordance with the
terms of this Agreement and the terms of employment applicable to regular
employees of Company. In the event of any conflict or ambiguity between the
terms of this Agreement and terms of employment applicable to regular employees,
the terms of this Agreement shall control.
Election or appointment of Executive to another office or position, regardless
of whether such office or position is inferior to Executive's initial office or
position, shall not be a breach of this Agreement.
2. DUTIES OF EXECUTIVE:
The Executive shall be responsible for and have such authority and such
responsibility as are normally inherent in such office. Executive shall report
directly to the President.
Executive shall devote his full working time, energy, skill, ability and
attention to the business of the Company and shall perform all duties in a
professional, ethical and businesslike manner which will further the business
and interests of Company or its affiliates.
Company is aware Executive is President of the Board of Lakehaven Utility. It
is important that the Company be of the utmost priority to the Executive at
all times.
3. COMPENSATION:
Executive will be paid compensation during this Agreement as follows:
- - Base salary of $50,000.00 per year, payable in installments according
to the Company's regular payroll schedule, which is paid on the 1st and
15th of each month. The base salary shall be adjusted at the discretion
of the president and CEO.
- - Travel and entertainment expenses incurred by the Executive while
performing business for the Company.
- - Executive will be granted 40,000 stock options for each year of
employment under the terms of the Company's Stock Option Plan. The
initial 40,000 options granted for the first year of
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<PAGE> 2
employment have an Option Price of $0.8125 per share. The Company
will adjust the number of options pursuant to any forward or reverse
splits.
- - Company will pay for seminars and continuing education courses in
management.
4. TERM AND TERMINATION:
A. Initial Term of this Agreement shall commence on December 1, 1998 and it
shall continue in effect for a period of three (3) years. Thereafter, the
Agreement shall be renewed upon the mutual agreement of Executive and Company.
B. This Agreement may be terminated by Executive at Executive's discretion by
providing at least thirty (30) days prior written notice to Company. In the
event of termination by Executive pursuant to this subsection, Company may
immediately relieve Executive of all duties and immediately terminate this
Agreement, provided that Company shall pay Executive at the then applicable base
salary rate to the termination date included in Executive's original termination
notice.
C. In the event that Executive is in breach of any material obligation owed
Company in this Agreement, habitually neglects the duties to be performed under
this Agreement, engages in any conduct which is dishonest, damages the
reputation or standing of the Company, or is convicted of any criminal act or
engages in any act of moral turpitude, then Company may terminate this Agreement
upon five (5) days notice to Executive. In event of termination of the agreement
pursuant to this subsection, Executive shall be paid only at the them applicable
base salary rate up to and including the date of termination. Executive shall
not be paid any incentive salary payments or other compensation, prorated or
otherwise.
D. In the event Company is acquired, or is the non-surviving party in a merger,
or sells all or substantially all of its assets, this Agreement shall not be
terminated and Company agrees to use its best efforts to ensure that the
transferee or surviving company is bound by the provisions of this
Agreement. Executive shall be compensated One Hundred Fifty Thousand Dollars
($150,000) from the above date in addition to whatever other sum may be due
him from Company, all of which shall be paid out in such manner as Executive
shall reasonably request.
E. In the event of cessation of employment, all options granted to Executive
will continue to vest under the Vesting Schedule in the Companies 1998 Stock
Option Plan as amended unless termination was a result of items related in
section 4C.
5. NOTICES:
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery services;
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<PAGE> 3
If to Company:
International Barter Corp.
21400 International Blvd., Suite 207
Seattle WA 98198-6086
If to Executive:
Dick Mayer
30709 5th PL S
Federal Way, WA 98003
6. FINAL AGREEMENT:
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. Only a further writing that is duly executed by
both parties may modify this Agreement.
7. GOVERNING LAW:
This Agreement shall be construed and enforced in accordance with the laws of
the state of Washington.
8. HEADINGS:
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
9. NO ASSIGNMENT:
Neither this Agreement nor any or interest in this Agreement may be assigned by
Executive without the prior express written approval of Company, which may be
withheld by Company at Company's absolute discretion.
10. SEVERABILITY:
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
11. INDEMNIFICATION OF OFFICER
In addition to all other rights of indemnification he may have as an Officer of
the Company, he shall be indemnified by the Company for all reasonable expenses
and liabilities of any type or nature, including attorneys' fees, incurred in
connection with any action, suit or proceeding to which he is a party by reason
of, or in connection with his position as an Officer of the Company and against
all amounts paid by him in settlement thereof, provided that such settlement is
approved by independent legal counsel selected by the Company, except to the
extent that such expenses relate to matters for which it is adjudged that such
Officer is liable for willful misconduct; provided, that within 15 days after
the institution of any such action, suit or proceeding, the Officer involved
therein shall, in writing, notify the
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<PAGE> 4
Company of such action, suit or proceeding, so that the Company may have the
opportunity to make appropriate arrangements to prosecute or defend the same.
Company will supply officers liability insurance.
12. ARBITRATION:
The parties agree that they will use their best efforts to amicable resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof. Any such arbitration shall be
conducted in King County, Seattle Washington, or such other place as may be
mutually agreed upon by the parties. Within fifteen (15) days after the
commencement of the arbitration, each party shall select one person to act as
arbitrator, and the two arbitrators so selected shall select a third arbitrator
within ten (10) days of their appointment. Each party shall bear its own costs
and expenses and an equal share of the arbitrator's expenses and administrative
fees of arbitration.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
International Barter Corp.
By:_______________________________
Dick Mayer
Executive
Approved by action of the Board of Directors on November 24, 1998
By:_______________________________
Steven White
President/CEO
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<PAGE> 1
EXHIBIT 10.6
- --------------------------------------------------------------------------------
INTERNATIONAL BARTER CORP.
EXECUTIVE EMPLOYMENT AGREEMENT
- --------------------------------------------------------------------------------
This Executive Employment Agreement ("Agreement") is made and effective this
August 01, 1998 by and between International Barter Corp., a Nevada Corporation
("Company) and Kevin Andersen ("Executive") SSN: ###-##-####.
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT:
Company hereby agrees to employ Executive as its Chief Financial Officer and
Executive hereby accepts such employment in accordance with the terms of this
Agreement and the terms of employment applicable to regular employees of
Company. In the event of any conflict or ambiguity between the terms of this
Agreement and terms of employment applicable to regular employees, the terms of
this Agreement shall control.
Election or appointment of Executive to another office or position, regardless
of whether such office or position is inferior to Executive's initial office or
position, shall not be a breach of this Agreement.
2. DUTIES OF EXECUTIVE:
The Executive shall be responsible for and have such authority and such
responsibility as are normally inherent in such office. Executive shall report
directly to the President.
Executive shall devote priority working time, energy, skill, ability and
attention to the business of the Company and shall perform all duties in a
professional, ethical and businesslike manner which will further the business
and interests of Company or its affiliates.
Company is aware Executive currently accepts auditing work from other businesses
and competitor's of the Company and Company fully agrees and accepts the terms
of those agreements.
Company is aware Executive resides in Salt Lake City, Utah and has no plans on
relocating residence. Position is part time.
It is important that the Company be of the utmost priority to the Executive at
all times. Responsibilities of Executive are on attached sheet, including items
listed in this document.
3. COMPENSATION:
Executive will be paid compensation during this Agreement as follows:
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<PAGE> 2
A. A base salary of $50,000.00 per year, payable in installments according to
the Company's regular payroll schedule, which is paid on the 1st and 15th
of each month. The base salary shall be adjusted at the discretion of the
board of directors.
B. Base salary may be adjusted on a temporary basis for additional duties in
connection with mergers and acquisitions, implementing accounting
information systems, special regulatory filings and other activities deemed
necessary by the Board.
C. Travel and entertainment expenses incurred by the Executive while
performing business for the Company.
D. $250 per month for office expenses and supplies, phone, paper, etc. To be
adjusted as necessary
E. Executive will be granted 40,000 stock options for each year of employment
under the terms of the Company's Stock Option Plan. The initial 40,000
options granted for the first year of employment will have a Option Price
of $0.8125 per share. The Company will adjust the number of options
pursuant to any forward or reverse splits.
F. The month of September and October 1998, salary to be $10,000 per month in
order to bring Company current in SEC filings, new accounting software,
option software package and general accounting necessities. Executive will
be full time for these two months.
G. Company will pay for seminars and continuing education courses in
accounting, financial and SEC reporting matters.
4. TERM AND TERMINATION:
A. Initial Term of this Agreement shall commence on August 01, 1997 and it shall
continue in effect for a period of Three (3) years. Thereafter, the Agreement
shall be renewed upon the mutual agreement of Executive and Company.
B. This Agreement may be terminated by Executive at Executive's discretion by
providing at least thirty (30) days prior written notice to Company. In the
event of termination by Executive pursuant to this subsection, Company may
immediately relieve Executive of all duties and immediately terminate this
Agreement, provided that Company shall pay Executive at the then applicable base
salary rate to the termination date included in Executive's original termination
notice.
C. In the event that Executive is in breach of any material obligation owed
Company in this Agreement, habitually neglects the duties to be performed under
this Agreement, engages in any conduct which is dishonest, damages the
reputation or standing of the Company, or is convicted of any criminal act or
engages in any act of moral turpitude, then Company may terminate this Agreement
upon five (5) days notice to Executive. In event of termination of the agreement
pursuant to this subsection, Executive shall be paid only at the then applicable
base salary rate up to and including the date of termination. Executive shall
not be paid any incentive salary payments or other compensation, prorated or
otherwise.
-127-
<PAGE> 3
D. In the event Company is acquired, or is the non-surviving party in a merger,
or sells all or substantially all of its assets, this Agreement shall not be
terminated and Company agrees to use its best efforts to ensure that the
transferee or surviving company is bound by the provisions of this
Agreement. Executive shall be compensated Fifty Thousand Dollars ($50,000)
from the above date in addition to whatever other sum may be due him from
Company, all of which shall be paid out in such manner as Executive shall
reasonably request.
E. In the event of cessation of employment, all options granted to Executive
will continue to vest under the Vesting Schedule in the Companies 1998 Stock
Option Plan as amended unless termination was a result of items related in
section 4C.
F. In the event of a regulatory restriction by the U.S. Securities and Exchange
Commission (Commission) on the Executives ability to practice under Rule
1102 CE of the Commissions Rules of Practice, termination of employment
provisions under 4.C. of this agreement will not apply and all options
granted to Executive will continue to vest under the Vesting Schedule in the
Companies 1998 Stock Option Plan (or as amended)
5. NOTICES:
Any notice required by this Agreement or given in connection with it, shall be
in writing and shall be given to the appropriate party by personal delivery or
by certified mail, postage prepaid, or recognized overnight delivery services;
If to Company:
International Barter Corp.
21400 International Blvd., Suite 207
Seattle WA 98198-6086
If to Executive:
Kevin Andersen
941 East 3300 South, Suite 202
Salt Lake City, Utah 84106
6. FINAL AGREEMENT:
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. Only a further writing that is duly executed by
both parties may modify this Agreement.
7. GOVERNING LAW:
This Agreement shall be construed and enforced in accordance with the laws of
the state of Washington.
8. HEADINGS:
Headings used in this Agreement are provided for convenience only and shall not
be used to construe meaning or intent.
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<PAGE> 4
9. NO ASSIGNMENT:
Neither this Agreement nor any or interest in this Agreement may be assigned by
Executive without the prior express written approval of Company, which may be
withheld by Company at Company's absolute discretion.
10. SEVERABILITY:
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
11. INDEMNIFICATION OF OFFICER:
In addition to all other rights of indemnification he may have as an Officer of
the Company, he shall be indemnified by the Company for all reasonable expenses
and liabilities of any type or nature, including attorneys' fees, incurred in
connection with any action, suit or proceeding to which he is a party by reason
of, or in connection with his position as an Officer of the Company and against
all amounts paid by him in settlement thereof, provided that such settlement is
approved by independent legal counsel selected by the Company, except to the
extent that such expenses relate to matters for which it is adjudged that such
Officer is liable for willful misconduct; provided, that within 15 days after
the institution of any such action, suit or proceeding, the Officer involved
therein shall, in writing, notify the Company of such action, suit or
proceeding, so that the Company may have the opportunity to make appropriate
arrangements to prosecute or defend the same.
Company will supply officers liability insurance.
12. ARBITRATION:
The parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy, claim or
dispute that cannot be so resolved shall be settled by final binding arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof. Any such arbitration shall be
conducted in King County, Seattle Washington, or such other place as may be
mutually agreed upon by the parties. Within fifteen (15) days after the
commencement of the arbitration, each party shall select one person to act as
arbitrator, and the two arbitrators so selected shall select a third arbitrator
within ten (10) days of their appointment. Each party shall bear its own costs
and expenses and an equal share of the arbitrator's expenses and administrative
fees of arbitration.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
International Barter Corp.
By:_______________________________ By:_________________________________
Steven White Kevin Andersen
President/CEO Executive
Approved by action of the Board of Directors on August 6, 1998
By:_______________________________
Norma Kay Fetz
Secretary
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EXHIBIT 10.7
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of October 1, 1998, by and between
INTERNATIONAL BARTER CORP., a Nevada corporation, with its principal place of
business at 21400 International Boulevard, Suite 207, Seattle, Washington, 98198
(hereinafter together with all of its affiliates referred to collectively as the
"Company"), and Liad Meidar, residing at 61 West 62nd Street, Apt. 19D, New
York, New York 10023 (hereinafter referred to as the "Consultant").
WHEREAS, the Company wishes to retain the Consultant and the Consultant
wishes to become a consultant to the Company, on the terms and conditions set
forth herein; and
WHEREAS the execution of this Agreement, has been approved by the Board
of Directors of the Company;
NOW THEREFORE, the parties hereto agree as follows:
1. Term. The Company hereby retains the Consultant, and the Consultant
hereby accepts such retainer, for an initial term commencing as of the date
hereof and ending on the second anniversary of such date, unless sooner
terminated in accordance with the provisions of Section 4 or Section 5 (the
"Initial Term"); with such retainer to continue in accordance with the terms of
this Agreement from year to year thereafter (subject to termination as
aforesaid) unless written notice of non-renewal is given to Consultant prior to
ninety (90) days before the expiration of the Initial Term or any continuation
term (said Initial Term and any continuation thereof being hereinafter referred
to as the "Term").
2. Services. The Consultant agrees to perform for the Company the
following services:
(a) to provide general consulting services to the Company in connection
with, and in furtherance of, the development and expansion of the Company's
business and the development of new business ventures;
(b) to participate in efforts to raise capital for the Company;
(c) to assist in developing a business plan for the Company and advise
the Company with respect to its capital structure;
(d) to seek potential acquisition and investment opportunities for the
Company ("Target Companies");
(e) to perform a financial and strategic review of the Company and to
assist the Company in formulating its future strategy;
(f) to assist the Company in the performance of due diligence and to
advise the Company with respect to the pricing, financing, form structure and
negotiation of a Transaction (as hereinafter defined) involving a Target
Company.
(g) to provide general consulting services on such matters as may be
requested by the Board of Directors of the Company.
The Consultant agrees to devote at least fifteen hundred (1,500) hours
per twelve month period of the Term (a "Year") to the performance of his
services hereunder.
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3. Compensation.
3.1 Retainer. The Company shall pay the Consultant during the Term a
retainer (the "Annual Retainer"), of $80,000 per annum, payable in four equal
annual installments commencing on October 1, 1998 and the first business day of
each three month period next following October 1, 1998.
3.2 Additional Remuneration. (a) In the event that (i) any Transaction
is consummated during the Term or at any time within one year after the Term or
(ii) any agreement is entered into during the Term or during such one-year
period which subsequently results in a consummated Transaction, then, upon the
closing of each and every such Transaction, an additional fee (the "Transaction
Fee") shall be payable to the Consultant in an amount equal to 3.0% of the
Consideration (as hereinafter defined) paid in such Transaction. Such
Transaction Fee shall be payable 50% in cash and 50% in duly authorized, fully
paid and non-assessable shares of common stock ("Common Stock") $.001 par value
per share or any other equivalent voting common stock issued by the Company in
lieu of the Common Stock. The number of shares of Common Stock issuable to the
Consultant with respect to any consummated Transaction shall be determined by a
fraction the numerator of which shall be the dollar amount attributable to the
Common Stock portion of the Transaction Fee and the denominator of which shall
be the Fair Market Value (as hereinafter defined) of one share of Common Stock,
calculated in accordance with paragraph (C) of this section with respect to the
calculation of Fair Market Value for non-cash consideration.
(b) Subject to the immediately succeeding paragraph, "Consideration"
means the total proceeds and other consideration paid and to be paid or
contributed and to be contributed, directly or indirectly, in connection with a
Transaction (which consideration shall be deemed to include amounts paid or to
be paid into escrow) by the Company including, without limitation: (1) cash;
(ii) notes, securities and other property (including all options, warrants or
other instruments or arrangements convertible into or exercisable for any of the
foregoing) at the Fair Market Value thereof; (iii) all interest bearing
liabilities of any Target Company not specifically excluded from the Transaction
by agreement of the Company and of any Target Company; (iv) payments to be made
in installments; (v) amounts paid or payable under consulting, supply, service,
distribution, licensing agreements, equipment or real property lease agreements,
agreements not to compete or similar arrangements.
(c) The Fair Market Value of non-cash consideration consisting of
securities issued by the Company (including any notes, options, warrants or
other instruments or arrangements convertible into, or exercisable for, any of
the foregoing) shall be determined based upon (A) the 20 trading day average
closing sale price for such securities on the registered national securities
exchange, NASDAQ or other securities market providing the primary market for
such securities, (the "Determination Period"), (B) if such securities are not so
traded on any day during the Determination Period, the price of such securities
with respect to such day shall be the mean between the high closing bid and low
closing asked prices as reported by the primary market for the securities
calculated in the same manner as above, or (C) if such securities are not so
traded or reported, Fair Market Value shall be determined by agreement between
the Company and Consultant. In each case, the Determination Period shall end on
the day next preceding the closing of the relevant Transaction. The Fair Market
Value of (i) any non-cash Consideration other than securities and (ii) any
Consideration consisting of a contingent payment shall in each case be
determined by agreement of the Company and Consultant. If all or any portion of
Consideration is to be paid over time, then that portion of the Transaction Fee
attributable thereto shall be payable as and when such payments are made. No fee
payable to any other financial adviser either by the Company or any other entity
shall reduce or otherwise affect the fees payable hereunder to the Consultant.
(d) For purposes of this Agreement, the term "Transaction" shall mean,
whether in one or a series of transactions, (i) any merger, consolidation,
reorganization, recapitalization, leveraged buy-out, restructuring or other
business combination involving any one or more Target Companies, (ii) the
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acquisition, directly or indirectly, through public or private purchases or
otherwise of all or any portion of securities, assets, liabilities, properties
and/or business of any one or more Target Companies, (iii) the formation of a
joint venture or partnership for the purpose of combining all or any portion of
the securities, assets, liabilities, properties and/or businesses of Company and
any Target Company, (iv) any management, consulting, supply, service,
distribution, licensing or similar arrangement involving the Company and any one
or more of the Target Companies entered into in relation to a Transaction; and
(v) in the case of any financing provided to the Company, all financing of any
kind received by or on behalf of the Company, from any financial source
including cash or other consideration and the present value of any future
commitments, received by the Company.
3.3 Independent Contractor Status. The Consultant acknowledges and
agrees that, during the Term, the relationship between the Consultant and the
Company is that of an independent contractor and, accordingly, the Consultant
shall not be permitted to participate in any group life, hospitalization or
disability insurance plans, health programs, pension plans or similar benefits
(collectively, "Benefits Programs") that may be available to employees of the
Company generally unless Consultant pays the costs incurred for his share of
such Benefit Programs; provided, however, the Consultant shall participate in
the Company's 1998 Stock Option Plan and any other option plans sponsored by the
Company. Nothing in this Agreement shall be construed as establishing the place
and time of performance of Consultant's services.
3.4 Expenses. The Company shall pay or reimburse the Consultant for all
reasonable out-of-pocket expenses actually incurred or paid by the Consultant
during the Term in the performance of the Consultant's services under this
Agreement; provided, however, Consultant shall bear the rental costs of his
office.
4. Termination Upon Death or Disability. If the Consultant dies during the Term,
this Agreement shall terminate as of the date of the Consultant's death. If the
Consultant by virtue of ill health or other disability is unable to perform one
thousand (1000) hours of service per year for any consecutive twelve month
period the Company shall have the right to terminate this Agreement upon notice
in writing to the Consultant. Upon such termination, the Consultant shall be
entitled to receive any retainer amounts and other benefits earned and accrued
prior to the date of termination and reimbursement for expenses incurred prior
to the date of termination. No provision of this Agreement shall limit any of
Consultant's rights under any Benefits Programs of the Company in which the
Consultant has participated in accordance with Section 3.3 for which the
Consultant shall be eligible at the time of such death or disability.
5. Termination for Cause. If the Consultant (i) is convicted of a felony or any
crime involving the Company (other than pursuant to actions taken at the
direction or with the approval of the Company's Board of Directors), (ii) is
found by determination of the Board of Directors of the Company to have engaged
in (A) fraud, (B) misappropriation or (C) embezzlement in the performance of his
services hereunder, the Company may, at any time within 30 days of the
occurrence of any of the events described in clauses (i), (ii) and (iii) above,
by written notice to the Consultant, terminate this Agreement. The Consultant
shall have no right to receive any compensation or benefit hereunder on and
after the effective date of the notice provided in the preceding sentence other
than salary and other benefits earned and accrued prior to the date of
termination and reimbursement for expenses incurred prior to the date of
termination.
5.1 Stock Options. Consultant shall have the right to participate in the
Company's 1998 Stock Option Plan (the "Plan"). The Company shall issue options
to Consultant as set forth in accordance with
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Exhibit A hereto. The shares of Common Stock subject to such options will
represent the percentage of shares of common stock outstanding on a fully
diluted basis as set forth in Exhibit A.
6. Confidentiality.
(a) During the Restricted Period and thereafter, the
Consultant shall keep secret and retain in strictest confidence, and shall not
use for his benefit or the benefit of others, except in connection with the
business and affairs of the Company, all confidential matters relating to the
Company and its business learned by the Consultant heretofore or hereafter
directly or indirectly from the Company including any information concerning the
business, affairs, customers, clients, sources of supply and customer lists of
the Company (the "Confidential Company Information") and shall not disclose them
to anyone except with the Company's express written consent and except for
Confidential Company Information which (1) is at the time of receipt publicly
known, or thereafter becomes publicly known, through no wrongful act of the
Consultant or (2) is received from a third party not under an obligation to keep
such information confidential and without breach of this Agreement. These rights
of the Company are in addition to and without limitation to those rights and
remedies available under common law for protection of the types of such
confidential information which constitute "trade secrets" as construed under
controlling law.
(b) During the Restricted Period, the Consultant shall not,
without the Company's prior written consent, directly or indirectly, knowingly
solicit or encourage to leave the employment of the Company, any employee of the
Company or hire any employee who has left the employment of the Company within
one year of the termination of such employee's employment with the Company.
(c) All memoranda, notes, lists, records and other documents
(and all copies thereof) constituting Confidential Company Information made or
compiled by the Consultant or made available to the Consultant concerning the
Company shall be the Company's property, shall be kept confidential in
accordance with the provisions of this Section 6.1 and shall be delivered to the
Company at any time on request.
7. Other Provisions.
7.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, five days after the date of deposit in the United States mails as
follows:
(i) If to the Company, to:
International Barter Corp.
21400 International Boulevard, Suite 207
Seattle, Washington 98198
with a copy to:
Steven M. White, Chairman, Chief Executive Officer
and President
c/o International Barter Corp.
21400 International Boulevard, Suite 207
Seattle, Washington 98198
(ii) If to the Consultant, to:
Liad Meidar
with a copy to:
Rogers & Wells, LLP
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<PAGE> 5
200 Park Avenue
New York, NY 10166
ATTN: Samuel M. Feder, Esq.
Any such person may by notice given in accordance with this Section to the other
parties hereto designate another address or person for receipt by such person of
notices hereunder.
7.2 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.
7.3 Waivers and Amendments. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any such right, power or privilege nor
any single or partial exercise of any such right, power or privilege, preclude
any other or further exercise thereof or the exercise of any other such right,
power or privilege.
7.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington applicable to agreements
made and to be performed entirely within such State.
7.5 Assignment. This Agreement, and the Consultant's rights and obligations
hereunder, may be assigned by the Consultant to any corporation majority owned
by the Consultant provided that the Consultant remains solely responsible for
the performance of all of the services and compliance with all of the provisions
of this Agreement. Any assignment of this Agreement by Consultant in violation
of the terms hereof shall be null and void. In the event of any sale, transfer
or other disposition of all or substantially all of the Company's assets or
business, whether by merger, consolidation or otherwise, the Company may assign
this Agreement and its rights hereunder.
7.6 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, permitted assigns,
heirs, executors and legal representatives.
7.7 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original but all such counterparts together shall constitute one and the same
instrument. Each counterpart may consist of two copies hereof each signed by one
of the parties hereto.
7.8 Headings. The headings in this Agreement are for reference only and shall
not affect the interpretation of this Agreement.
7.9 Indemnification. The Company agrees to indemnify the Consultant and its
affiliates and their respective directors, officers, employees, agents and
controlling persons (the Consultant and each such person being an "Indemnified
Party") from and against any and all losses, claims, damages and liabilities,
joint or several, (collectively "Losses") to which such Indemnified Party may
become subject under any applicable federal or state law, or otherwise, and
related to or arising out of any Transaction contemplated by this Agreement or
the engagement of Consultant pursuant to and the performance by Consultant of
the services contemplated by, this Agreement and will reimburse any Indemnified
Party for all reasonable expenses (including reasonable counsel fees and
expenses) as they are incurred in
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connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company. The Company
will not be liable under the foregoing indemnification provision to the extent
that any loss, claim damage, liability or expense is found in a final judgment
by a court to have resulted from the Consultant's bad faith or gross negligence.
The Company also agrees that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company or
its security holders or creditors related to or arising out of the engagement of
the Consultant pursuant to, or the performance by the Consultant of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage or liability is found in a final judgment by a court to have resulted
from the Consultant's bad faith or gross negligence.
If the indemnification of an Indemnified Party provided for in this
letter agreement is for any reason held unenforceable, the Company agrees to
contribute to the losses, claims, damages and liabilities for which such
indemnification is held unenforceable (i) in such proportion as is appropriate
to reflect the relative benefits to the Company, on the one hand, and the
Consultant, on the other hand, of the Transaction as contemplated (whether or
not the Transaction is consummated) or (ii) if (but only if) the allocation
provided for in clause (i) is for any reason held unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of the Company, on the one hand,
and the Consultant, on the other hand, as well as any other relevant equitable
considerations; provided, however, that to the extent permitted by applicable
law, in no event shall the Indemnified Parties be required to contribute an
aggregate amount in excess of the aggregate fees actually paid to the Consultant
under this Agreement.
The Company agrees that, without Consultant's prior written consent, it
will not settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding in respect of which
indemnification could be sought under the indemnification provision of this
Agreement (whether or not the Consultant or any other Indemnified Party is an
actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action or
proceeding.
In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against the
Company in which such Indemnified Party is not named as a defendant the Company
agrees to reimburse Consultant for all reasonable out-of-pocket expenses
incurred by it in connection with such Indemnified Party's appearing and
preparing to appear as such a witness, including, without limitation, the fees
and disbursements of its legal counsel.
IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and
year first above written.
/s/ Liad Meidar
Liad Meidar
INTERNATIONAL BARTER CORP.
By /s/ Steven White
Steven M. White, Chairman,
Chief Executive Officer & President
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<PAGE> 7
Exhibit A - Meidar Options
<TABLE>
<CAPTION>
Percentage Shares
Outstanding based on
6,050,000 shares of
Strike Price Options Common Stock outstanding
- ------------ ------- ------------------------
<S> <C> <C>
$ 4.00 10,000 0.17%
$ 6.00 20,000 0.33%
$ 8.00 40,000 0.66%
$ 10.00 80,000 1.32%
$ 12.00 160,000 2.64%
$ 14.00 320,000 5.29%
</TABLE>
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<PAGE> 1
EXHIBIT 10.8
K & P LEASING COMPANY
OFFICE BUILDING LEASE
THIS LEASE is made and entered into this 29th,day of September,1997, by and
between K & P Leasing Company (hereinafter "Landlord") and International Barter
Corporation (hereinafter "Tenant").
For and in consideration of the rental and of the covenants and agreements
hereinafter set forth to be kept and performed by the Tenant, Landlord hereby
leases to Tenant and Tenant hereby leases from Landlord the Premises herein
described for the term, at the rental and subject to and upon all of the terms,
covenants and agreements hereinafter set forth.
1. PREMISES
1.1 Description. Landlord hereby leases to Tenant and Tenant hereby
hires from Landlord those certain Premises (hereinafter "Premises") together
with appurtenances, situated in the City of SeaTac, County of King, State of
Washington, commonly known as the 21400 Building, more particularly described as
follows:
Suites 206/207
21400 Building
21400 Pacific Highway South
Seatac, WA 98198
1.2 Work of Improvement. The obligations of Landlord and Tenant to
perform the work and supply the necessary materials and labor to prepare the
Premises for occupancy are set forth in detail. Landlord and Tenant shall expend
all funds and do all acts required of them and shall have the work performed
promptly and diligently in a first class workmanlike manner.
2. TERM
2.1 Term. The term of this lease shall be for a period of TWO YEARS
commencing on the 1st day of October 1997, and ending on the 30th day of
September, 1999, unless sooner terminated pursuant to this Lease.
2.2 Delay in Commencement. Tenant agrees that in the event of the
inability of Landlord for any reason to deliver possession of the Premises to
Tenant on the commencement date set forth in Section 2.1, Landlord shall not be
liable for any damage thereby nor shall such inability affect the validity of
this Lease of the obligations of Tenant hereunder, but in such case Tenant shall
not be obligated to pay rent or other monetary sums until possession of the
Premises is tendered to Tenant. If Tenant with Landlord's consent takes
possession prior to the commencement of the term, Tenant shall do so subject to
all of the terms and conditions hereof and shall pay rent for the period ending
with the commencement of the term at the same rental.
2.3 Acknowledgment of Commencement Date. In the event the commencement
date of the term of the Lease is other than as provided in Section 2.1, then
Landlord and Tenant shall execute a written
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acknowledgment of the date of commencement and shall attach it to the Lease.
3. RENT. Tenant shall pay to Landlord as rent for the Premises in advance on the
first day of each calendar month of the term of this Lease without deduction,
offset, prior notice or demand, in lawful money of the United States, the sum of
ONE THOUSAND EIGHT HUNDRED AND FIFTY DOLLARS ($1850.00). Rent shall be paid as
follows: $1.300.00 Cash Per Month plus $550.00 IBC Trade Dollars Per Month. IBC
Trade payable in advance each year. Landlord reserves the right to discontinue
IBC Trade Dollars at Landlord's discretion. If Landlord exercises this right,
Landlord and Tenant will meet to renegotiate the lease terms. The rental of
Suite 201 will be subject to the cost of living adjustment annually after the
base year oPound Sterling 1997, based on the CPI for all urban consumers for the
geographical area of Seattle/Tacoma, using January 1997 as the base year. In any
case, the rent shall never be less than $1850.00 per month and shall not
increase greater than FIVE PERCENT (5%) in any one year.
If commencement date is not the first day of a month, or if the Lease
termination date is not the last day of a month, a prorated monthly installment
shall be paid at the then current rate for a fractional month during which the
Lease commences and/or terminates.
Concurrently with Tenant's execution of this Lease, Tenant shall pay to Landlord
the sum of $1850.00 as rent for the month(s) of OCTOBER, 1997.
4. SECURITY DEPOSIT. Concurrently with Tenant's execution oPound Sterling this
Lease, Tenant shall deposit with Landlord the sum of TWELVE HUNDRED DOLLARS
(ALREADY PAID) ($1200.00). Said sum shall be held by Landlord as a Security
Deposit for the faithful performance by Tenant of all of the terms, covenants,
and conditions of this Lease to be kept and performed by Tenant during the term
hereof. If Tenant defaults with respect to any provision of this Lease,
including but not limited to the provisions relating to the payment oPound
Sterling rent and any of the monetary sums due herewith, Landlord may (but shall
not be required to) use, apply or retain all or any part of this Security
Deposit for the payment of any other amount which Landlord may spend by reason
of Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
Deposit is so used or applied, Tenant shall, within ten (10) days after written
demand therefore deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to its original amount; Tenant's failure to do so shall be
a material breach of this Lease. Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the Security
Deposit or any balance thereof shall be returned to Tenant (or, at Landlords'
option. to the last assignee of Tenant's interests hereunder) at the expiration
of the Lease term and after Tenant has vacated the Premises. In the event of
termination of Landlord's interest in this Lease, Landlord shall transfer said
Deposit to Landlord's successor in interest whereupon Tenant agrees to release
Landlord from liability for the return of such Deposit or the accounting
therefore.
5. TAXES
5.1 Personal Property Taxes. During the term hereof Tenant shall pay
prior to delinquency all taxes assessed against and levied upon fixtures,
furnishings, equipment and all other personal property of Tenant contained in
the Premises, and when possible, Tenant shall cause said fixtures, furnishings,
equipment and other personal property to be assessed and billed separately from
the real property of Landlord. In the event any or all of Tenant's fixtures,
furnishings, equipment and other personal property shall be assessed and taxed
with Landlord's real property, the Tenant shall pay to Landlord its share of
such taxes within ten (10) days after delivery to Tenant by Landlord of a
statement in writing setting forth the amount of such taxes applicable to
Tenant's property. For the purpose of determining
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said amount, figures supplied by the County Assessor as to the amount so
assessed shall be conclusive. Tenant shall comply with the provisions of any
law, ordinance, or rule of taxing authorities which requires Tenant to file a
report of Tenant's property located in the Premises.
6. USE
6.1 Use. The Premises shall be used and occupied by Tenant for general
office use and for no other purpose without the prior written consent of
Landlord.
6.2 Suitability. Tenant acknowledges that neither Landlord nor any
agent of Landlord has made any representation or warranty with respect to the
Premises or the Building (if any) of which the Premises may be a part or with
respect to the suitability of either for the conduct of Tenant's business, nor
has Landlord agreed to undertake any modification, alteration or improvement to
the Premises except as provided in this Lease. The taking of possession of the
Premises by Tenant shall conclusively establish that the Premises and said
Building were at such time in satisfactory condition unless within fifteen (15)
days after such date Tenant shall give Landlord written notice specifying in
reasonable detail the respects in which the Premises or the Building were not in
satisfactory condition.
6.3 Uses Prohibited.
(a) Tenant shall not do or permit anything to be done in or about the
Premises nor bring or keep anything therein which will in any way increase the
existing rate or affect any fire or other insurance upon the Premises or the
Building (if any) of which the Premises may be a part or any of its contents
(unless Tenant shall pay any increased premium as a result of such use or acts),
or cause a cancellation of any insurance policy covering said Premises or said
Building or any part thereof or any of its contents, nor shall Tenant sell or
permit to be kept, used or sold in or about said Premises any articles which may
be prohibited by a standard form policy of fire insurance.
(b) Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building (if any) or injure or annoy them or use or
allow the Premises to be used for any unlawful or objectionable purpose, nor
shall Tenant cause, maintain or permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer to be committed any waste in or upon
the Premises.
(c) Tenant shall not use the Premises or permit anything to be done in
or about the Premises which will in any way conflict with any law, statute,
ordinance or governmental rule or regulation or requirement of duly constituted
public authorities now in force or which may hereafter be enacted or
promulgated. Tenant shall at its sole cost and expense promptly comply with all
laws, statutes, ordinances and governmental rules, regulations or requirements,
now in force or which may hereafter be in force and with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted
relating to or affecting the condition, use of occupancy of the Premises,
excluding structural changes not relating to or affecting the condition. use of
occupancy of the Premises, or not related or afforded by Tenant's improvements
or acts. The judgment of any court or competent jurisdiction or the admission of
Tenant in any action against Tenant, whether Landlord be a party thereto or not,
that Tenant has violated by law, statute, ordinance, or governmental rule,
regulation or requirement shall be conclusive of the fact as between Landlord
and Tenant.
7. UTILITIES. Tenant shall during the term hereof pay prior to delinquency all
charges for telephone services and shall hold Landlord harmless from any
liability therefrom.
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8. MAINTENANCE AND REPAIRS; ALTERATIONS AND ADDITIONS.
8.1 Maintenance and Repairs.
(a) Landlord's Obligations. Landlord shall maintain in good order,
condition and repair the Building and all other portions of the Premises not the
obligation of the Tenant or any other Tenant in the Building.
(b) Tenant's Obligations.
(i) Tenant at Tenant's sole cost and expense, except fur services
furnished by Landlord shall maintain the Premises in good order, condition and
repair including the interior surfaces of the ceilings, walls and floors, all
doors, and equipment installed by or at the expense of Tenant. Tenant expressly
waives the benefits of any statute now or hereafter in effect which would
otherwise afford Tenant the right to make repairs at Landlord's expense or to
terminate this Lease because of Landlord's failure to keep the Premises in good
order, condition and repair.
(ii) Upon the expiration or earlier termination of this Lease, Tenant
shall surrender the Premises in the same condition as received, ordinary wear
and tear and damage by fire, earthquake, act of God or the elements alone
excepted, and shall promptly remove or cause to be removed at Tenant's expense
from the Premises and the Building any signs, notices and displays placed by
Tenant.
(iii) Tenant agrees to repair any damage to the Premises or the
Building caused by or in connection with the removal of any articles of personal
property. business or trade fixtures, machinery, equipment, cabinetwork,
furniture, movable partition or permanent improvements or additions, including
without limitation thereto, repairing the floor and patching and painting the
walls where required by Landlord to Landlord's reasonable satisfaction, all at
Tenant's sole cost and expense. Tenant shall indemnify the Landlord against any
loss or liability resulting from delay by Tenant in so surrendering the
Premises, including without limitation any claims made by any succeeding tenant
founded on such delay.
(iv) In the event Tenant fails to maintain the Premises in good order,
condition and repair, Landlord shall give Tenant notice to do such acts as are
reasonably required to so maintain the Premises. In the event Tenant fails to
promptly commence such work and diligently prosecute it to completion, then
Landlord shall have the right to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work. Any amount so
expended by Landlord shall be paid by Tenant promptly after demand with interest
at ten percent (10%) per annum from the date of such work. Landlord shall have
no liability to Tenant for any damage, inconvenience or interference with the
use of the Premises by Tenant as a result of performing any such work.
(c) Compliance with Law. Landlord and Tenant shall each do all acts
required to comply with all applicable laws, ordinances. regulations and rules
of any public authority relating to their respective maintenance obligations as
set forth herein.
8.2 Alterations and Additions.
(a) Tenant shall make no alterations, additions or improvements to the
Premises or any part thereof without obtaining the prior written Consent of
Landlord.
(b) Landlord may impose as a condition to the aforesaid consent such
requirements as Landlord may deem necessary in its sole discretion, including
without limitation thereto, the manner in which the work is done, a right of
approval of the contractor by whom the work is to be performed, the times during
which it is to be accomplished. and the requirement that upon written request of
Landlord prior to the expiration or earlier termination of the Lease, Tenant
will remove any and all permanent improvements or additions to the Premises
installed at Tenant's expense and all movable partitions, counters, personal
property, equipment, fixtures, and furniture.
(c) A11 such alterations, additions or improvements shall at the
expiration or earlier termination of the Lease become the property of Landlord
and remain upon and surrendered with the Premises, unless specified pursuant to
Section 8.2(b) above.
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(d) All articles of personal property and all business and trade
fixtures, machinery and equipment, cabinetwork, furniture and movable partitions
owned by Tenant or installed by Tenant at its expense in the Premises shall be
and remain the property of Tenant and may be removed by Tenant at any time
during the Lease term when Tenant is not in default hereunder.
9. ENTRY BY LANDLORD. Landlord reserves and shall at any and all times have the
right to enter the Premises to inspect the same, to supply janitor service and
any other service to be provided by Landlord to Tenant hereunder, to submit said
Premises to prospective purchasers or tenants, to post notices of
non-responsibility and "for lease" signs, and to alter, improve or repair the
Premises and any portion of the Building without abatement of rent, and may for
that purpose erect scaffolding and other necessary structures where reasonably
required by the character of the work to be performed, always providing the
entrance to the Premises shall not be blocked thereby, and further providing
that the business of Tenant shall not be interfered with unreasonably. Tenant
hereby waives any claim for damages for any injury or inconvenience to or
interference with Tenant's business, any loss of occupancy or quiet enjoyment of
the Premises, and any other loss occasioned thereby. For each of the aforesaid
purposes, Landlord shall at all times have and retain a key with which to unlock
all of the doors in, upon and about the Premises, excluding Tenant's vaults and
safes, and Landlord shall have the right to use any and all means which Landlord
my deem proper to open said doors in an emergency, in order to obtain entry to
the Premises, and any entry to the Premises obtained by Landlord by any of said
means, or otherwise, shall not under any circumstances be construed or deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction of Tenant from the Premises or any portion thereof.
10. LIENS. Tenant shall keep the Premises and any building of which the Premises
are a part free from any liens arising out of work performed, materials
furnished, or obligations incurred by Tenant and shall indemnify, hold harmless
and defend Landlord from any liens and encumbrances arising out of any work
performed or materials furnished by or at the direction of Tenant. In the event
that Tenant shall not, within twenty (20) days following the imposition of any
such lien, cause such lien to be released of record by payment or posting of a
proper bond, Landlord shall have, in addition to all other remedies provided
herein and by law, the right, but not obligation, to cause the same to be
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien. A11 such sums paid by Landlord and all expenses
incurred by it in connection therewith including attorney's fees and costs shall
be payable to Landlord by Tenant on demand with interest at the rate of ten
percent (10%) per annum. Landlord shall have the right at all times to post and
keep posted on the Premises, any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord and the Premises, and
any other party having an interest therein, from mechanics' and materialmen's
liens, and Tenant shall give to Landlord at least ten (10) business days prior
written notice of the expected date of commencement of any work relating to
alterations or additions to the Premises.
11. INSURANCE; INDEMNIFICATION.
11.1 Tenant, at its sole expense, shall obtain within ten (10) days of
Landlord's execution of this Lease and keep in force during the term of this
Lease insurance policies providing the following coverages:
(a) Standard fire insurance, with extended coverage, covering all of
Tenant's fixtures, furniture, equipment, and other personal property on the
Premises, and also covering leasehold improvements and alterations made by
Tenant, to the extent of at least eighty percent (80%) of the replacement value
thereof from time to time.
(b) Comprehensive public liability and property damage insurance
insuring against all claims, accidents, injuries and damages for bodily injury
to and death of persons, and for loss of or damage to property, arising out of
the use, occupancy or maintenance of the leased Premises by Tenant, and by
Tenant's employees, agents and representatives. Such insurance shall have
liability limits of (I) not less
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than one million dollars ($1,000,000) per occurrence for bodily injuries or
death and (ii) not less than one million dollars ($1,000,000) per occurrence for
property damage.
All policies of insurance provided for herein shall (I) be approved as
to form and substance by Landlord, which approval shall not be unreasonably
withheld, (ii) be issued by insurance companies which are qualified to do
business in the State of Washington, (iii) be issued in the names of Landlord
and Tenant and shall be for the mutual and joint benefit and protection of
Landlord and Tenant, (iv) give Landlord thirty (30) days prior written notice of
any cancellation or lapse or any reduction in the amounts of insurance, and (v)
contain an endorsement containing an express waiver of any right of subrogation
by the insurance company against Landlord (whether Landlord is named as an
insured or not). A1l public liability. property damage and other casualty
policies provided for herein shall (1) contain a provision that Landlord,
although named as an insured, shall nevertheless be entitled to recover under
said policies for any loss occasioned to Landlord or to Landlord's employees,
agents or representatives, and (ii) be written as primary policies, not
contributing with and not in excess or coverage which Landlord may carry.
Executed copies or such policies or insurance or certificates thereof
shall be delivered to Landlord within ten (10) days after delivery or possession
of the Premises to Tenant and thereafter at least fifteen (15) days prior to the
expiration of the term of such policy.
11.2 Tenant, as a material part of the consideration to Landlord,
hereby assumes all risk of damage to property or injury to person in, upon or
about the leased Premises arising from any cause and Tenant hereby waives all
claims thereof against Landlord, except for any claims arising from the willful
or grossly negligent misconduct or Landlord, its agents or employees. Tenant
shall, and hereby agrees to, indemnify and hold Landlord harmless against all
claims, actions, causes of action, damages, liabilities, expenses, costs and
attorney's fees, including expenses, costs and attorney's fees on appeal,
arising from or incident to (1) Tenants use or the leased Premises; (ii) the
business conducted by Tenant; (iii) any act, omission. or negligence of Tenant
or Tenant's agents, representatives, employees, invitees. or other persons, with
or without authority of Tenant, in entering upon or performing any act relating
to the leased Premises; (iv) any accident. injury or damage whatsoever caused to
any person or property in the leased Premises; or (v) any breach or default in
the performance of any obligation on the Tenant's part to be performed under the
terms of this Lease.
Tenant, upon notice from Landlord shall defend the same at Tenant's
expense by counsel reasonably acceptable to Landlord.
12. ASSIGNMENT AND SUBLETTING.
12.1 Landlord's Consent Required. Tenant shall not assign, transfer,
mortgage, pledge, hypothecate or encumber this Lease or any interest therein,
and shall not sublet the Premises or any part thereof, without the prior written
consent of Landlord and any attempt to do so without such consent being first
had and obtained shall be wholly void and shall constitute a breach of this
Lease.
12.2 Reasonable Consent. If Tenant complies with the following
conditions, Landlord shall not unreasonably withhold its consent to the
subletting of the Premises or any portion thereof or the assignment of this
Lease. Tenant shall submit in writing to Landlord (1) the name and legal
composition or the proposed subtenant or assignee; (ii) the nature of the
business proposed to be carried on in the Premises; (iii) the terms and
provisions or the proposed sublease, (iv) such reasonable financial information
as Landlord may request concerning the proposed subtenant or assignee.
12.3 No Release of Tenant. No consent by Landlord to any assignment or
subletting by Tenant shall relieve Tenant of any obligation to be performed by
Tenant under this Lease, whether occurring before or after such consent,
assignment or subletting. The consent by Landlord to any assignment or
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subletting shall not relieve Tenant from the obligation to obtain Landlord's
express written consent to any other assignment or subletting. The acceptance of
rent by Landlord from any other person shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any assignment,
subletting or other transfer. Consent to one assignment, subletting or other
transfer shall not be deemed to constitute consent to any subsequent assignment,
subletting or other transfer.
13. DEFAULT; REMEDIES.
13.1 Default. The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant
(a) Any failure by Tenant to pay the rent or any other monetary sums
required to be paid hereunder (where such failure continues for five (5) days
after written notice by Landlord to Tenant);
(b) The abandonment or vacation of the Premises by Tenant;
(c) A failure by Tenant to observe and perform any other provision of
this Lease to be observed or performed by Tenant, where such failure continues
for twenty (20) days after written notice thereof by Landlord to Tenant;
provided, however, that of the nature of the default is such that the same
cannot reasonably be cured within said twenty (20) day period. Tenant shall not
be deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion;
(d) The making by Tenant of any general assignment or general
arrangement for the benefit of creditors; the filing by or against Tenant of a
petition to have Tenant adjudged a bankrupt or of a petition for reorganization
or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within sixty (60) days);
the appointment of a trustee or receiver to take possession of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where possession is not restored to Tenant within thirty (30) days; or
the attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
where such seizure is not discharged within thirty (30) days.
13.2 Remedies. In the event of any such material default or breach by
Tenant, Landlord may, at any time thereafter without limiting Landlord in the
exercise of any right or remedy at law or in equity which Landlord may have by
reason of such default or breach:
(a) Maintain this Lease in full force and effect and recover the rent
and other monetary charges as they become due, without terminating Tenant's
right to possession irrespective of whether Tenant shall have abandoned the
Premises. In the event Landlord elects not to terminate the Lease, Landlord
shall have the right to attempt to re-let the Premises at such rent and upon
such conditions and for such a term, and to do all acts necessary to maintain or
preserve the Premises as Landlord deems reasonable and necessary without being
deemed to have elected to terminate the Lease, including removal of all persons
and property from the Premises; such property may be removed and stored in a
public warehouse or elsewhere at the cost of and for the account of Tenant. In
the event any such re-letting occurs, this Lease shall terminate automatically
upon the new tenant taking possession of the Premises. Notwithstanding that
Landlord fails to elect to terminate the Lease initially, Landlord at any time
during the term of this Lease may elect to terminate this Lease by virtue of
such previous default of Tenant.
(b) Terminate Tenant's right to possession by any lawful means, in
which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event Landlord shall be entitled
to recover from Tenant all damages incurred by Landlord by reason of Tenant's
default, including without limitation thereto, the following: (1) the worth at
the time of award of any unpaid rent which had been earned at the time of such
termination; plus (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until
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the time of award exceeds the amount of such rental loss that is proved could
have been reasonably avoided: plus (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that is proved could be reasonably
avoided: plus (iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform his obligations
under this Lease or which in the ordinary course of events would be likely to
result therefrom; plus (v) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable State law. Upon any such re-entry Landlord shall have the right to
make any reasonable repairs, alterations or modification to the Premises, which
Landlord in its sole discretion deems reasonable and necessary. As used in (1)
above, the "worth at the time of award" is computed by allowing interest at the
rate of ten percent (10%) per annum from the date of default. As used in (ii)
and (iii) the "worth at the time of award" is computed by discounting such
amount at the discount rate of the U.S. Federal Reserve Bank at the time of
award plus one percent (1%). The term "rent," as used in this Section 13. shall
be deemed to be and to mean the rent to be paid pursuant to Section 3 and all
other monetary sums required to be paid by Tenant pursuant to the terms of this
Lease.
13.3 Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms oPound Sterling any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Tenant shall not be received by Landlord or Landlord's designee within ten (10)
days after such amount shall be due, Tenant shall pay to Landlord a late charge
equal to ten percent (10%) of such overdue amount. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Landlord
will incur by reason of late payment by Tenant. Acceptance oPound Sterling such
late charge by Landlord shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount nor prevent Landlord from exercising
any of the other rights and remedies granted hereunder.
13.4 Default by Landlord. Landlord shall not be In default unless
Landlord fails to perform obligations required of Landlord within a reasonable
time, but in no event later than thirty (30) days after written notice by Tenant
to Landlord and to the holder oPound Sterling any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligations; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for performance,
then Landlord shall not be in default if Landlord commences performance within
such thirty-day period and thereafter diligently prosecutes the same to
completion
14. MISCELLANEOUS.
14.1 Entire Agreement. This Instrument along with any exhibits and
attachments hereto constitutes the entire agreement between Landlord and Tenant
relative to the Premises and this Agreement and the exhibits and attachments may
be altered, amended or revoked only by an instrument in writing signed by both
Landlord and Tenant. Landlord and Tenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and their agents or
representatives relative to the leasing of the Premises are merged in or revoked
by this Agreement.
14.2 Severability. If any term or provision of this Lease shall, to any
extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and
each term and provision of this Lease shall be valid and be enforceable to the
fullest extent permitted by law.
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14.3 Signs. Tenant shall not place or permit to be placed in or upon
the Premises, where visible from outside the Premises, or outside the Premises
or any part of the Building any signs, notices, drapes, shutters, blinds or
displays of any type without the prior written consent of Landlord. Landlord
reserves the right in Landlords' sole discretion to place and locate on the
roof. exterior of the Building, and in any area of the Building not leased to
Tenant such signs, notices, displays and similar items as Landlord deems
appropriate in the proper operation of the Building.
14.4 Rules and Regulations; Parking.
(a) Tenant and Tenant's agents, employees, visitors and licensees shall
observe and comp]y fully and faithfully with all reasonable and
non-discriminatory rules and regulations adopted by Landlord for the care,
protection, cleanliness and operation of the Building and its Tenants. Landlord
shall not be responsible to Tenant for the non-performance by any other tenant
or occupant of the Building of any of said rules and regulations.
(b) Tenant shall be allocated Five (5) reserved parking stalls.
14.5 Notices. All notices or demands of any kind required or desired to
be given by Landlord or Tenant hereunder shall be in writing and shall be deemed
delivered forty-eight (48) hours after depositing the notice or demand in the
United States mail, certified or registered, postage prepaid, addressed to the
Landlord or Tenant respectively at the addresses set forth after their
signatures at the end of this Lease.
14.6 Corporate Authority. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the By-laws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. If Tenant is a corporation Tenant shall, within thirty (30) days
after execution of this Lease, deliver to Landlord a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the date and
year first above written.
LANDLORD TENANT
K & P LEASING INTERNATIONAL BARTER CORPORATION
/signature/ /s/ Steven White, President
21400 Pacific Highway South 21400 Pacific Highway South
Suite 301, Seatac WA 98198 Suite 301, Seatac WA 98198
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EXHIBIT 21.1
The sole subsidiary of the Company is Cascade Trade Association, a Washington
corporation
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EXHIBIT 23.1
[ANDERSEN ANDERSEN & STRONG L.C.]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ANDERSEN ANDERSEN & STRONG L.C.
Salt Lake City, Utah
January 25, 1999
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