<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the three months ending September 30th, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission file number 0-7267
WEB PRESS CORPORATION________________________________
(Exact name of registrant as specified in its charter)
Washington __________ 91-0851298 _______
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22023 68th Avenue S., Kent, Washington 98032
(Address of principal executive offices)
Registrant's telephone number, including area code (206) 395-3343
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past ninety
(90) days Yes X No __
All reports during the preceding 12 months have been filed.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date
(applicable only to corporate issuers): Common Stock, $.025 par
value per share; 3,105,413 shares outstanding as of November 6,
1998.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Page 1 of 14 pages in this document
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INTRODUCTORY REMARKS
The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the
information presented not misleading.
The information furnished reflects all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results for the interim period.
It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes
therein included in the Company's latest annual report on Form
10-KSB.
<PAGE>
PART I
FINANCIAL INFORMATION
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
ASSETS September 30, 1998
Current Assets:
Cash.......................... $ 22
Accounts receivable, less
allowance for doubtful
accounts of $6.............. 1,027
Inventories................... 4,430
Refundable income taxes....... 111
Deferred tax assets........... 36
Deposits...................... 42
Prepaid expenses.............. ____47
Total Current Assets............ 5,715
Machinery and Leasehold
Improvements, at cost:
Machinery and equipment....... 3,378
Leasehold improvements........ ___195
3,573
Less accumulated depreciation
and amortization............ _2,662
Machinery and Leasehold
Improvements (Net)............ 911
Total Assets.................... $6,626
The above figures are unaudited. The accompanying notes are an
integral part of the balance sheet.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY September 30, 1998
Current Liabilities:
Notes payable ............................ $ 447
Accounts payable ......................... 936
Customer deposits ........................ 330
Accrued expenses ......................... 602
Current portion of long-term debt ........ __ 315
Total Current Liabilities .................. 2,629
Long-Term Debt, less current portion ....... 848
Deferred taxes on income ................... 438
Stockholders' Equity:
Common stock, par value $.025 per share:
Authorized, 4,000,000 share
Issued, 3,436,513 shares ................ 86
Paid in capital .......................... 320
Retained earnings ........................ _2,403
2,809
Treasury stock, 331,100 shares at cost ... ___(97)
Total Stockholders' Equity ................. _2,712
Total Liabilities and Stockholders' Equity $6,626
The above figures are unaudited. The accompanying notes are an
integral part of the balance sheet.
<PAGE>
WEB PRESS CORPORATION
Consolidated Statements of Operations
For the three and nine months ending September 30,
(Dollars in Thousands Except Earnings Per Share)
THREE MONTHS NINE MONTHS
1998 1997 1998 1997
Sales....................... $1,901 $1,960 $6,020 $5,360
Cost of sales............... _1,465 1,460 4,596 4,045
436 500 1,424 1,315
Selling, general and
administrative expenses... 519 282 1,261 942
(83) 218 163 373
Interest expense............ 54 78 157 182
Earnings (loss) before taxes
(benefit) ................ (137) 140 6 191
Taxes (benefit) on earnings
(loss) .................. (47) 48 2 65
Net earnings (loss)......... $ (90) $ 92 $ 4 $ 126
Earnings (loss) per share .. $(.03) $.03 $.00 $.04
The above figures are unaudited. The accompanying notes are an
integral part of these statements of earnings.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ending September 30th,
(Dollars in Thousands)
1998 1997
Cash flows from operating activities:
Net earnings........................... $ 4 $ 126
Adjustments to reconcile net
earnings to net cash provided
(used)by operating activities:
Depreciation and amortization........ 161 158
Provision for losses on accounts
receivable.......................... 6 (7)
Deferred taxes on income............. 2 65
Inventory valuation reserve.......... 112 42
Retirement of plant assets........... 3 1
Increase (Decrease) in cash from
changes in operating accounts:
Accounts receivable................ 2,440 (1)
Inventory.......................... (1,792) (166)
Deposits........................... 65
Prepaid expenses................... (9) (21)
Accounts payable................... 248 (26)
Customer deposits.................. 136 (447)
Accrued expenses................... (706) (300)
Income taxes payable............... ___(38)
Total adjustments.................. ___666 __(740)
Net cash Provided (used) by
operating activities .............. 670 (614)
Cash flows from investing activities:
Capital expenditures................... (575) (205)
Proceeds from retirement of assets..... ____55 ______
Net Cash used by investing activities.... (520) (205)
Cash flows from financing activities:
Proceeds from issuance of long-term
debt................................. 421 1,111
Payments on long-term debt............. (230) (1,044)
Net borrowings under line of credit.... __(325) ___752
Net cash provided (used) by
financing activities.................. __(134) 819
Continued on following page
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Continued from previous page
Net increase in cash..................... 16 0
Cash at beginning of period.............. ____ 6 _____6
Cash at end of period.................... $ 22 $ 6
Supplemental disclosures of cash
flow information:
Cash was paid during the year for:
Interest............................... $146 $164
Taxes.................................. 57
The above figures are unaudited. The accompanying notes are an
integral part of these statements of cash flows.
<PAGE>
WEB PRESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1998
Note 1 - Summary of Significant Accounting Policies:
Principles of consolidation
The accompanying consolidated financial statements include the
accounts of Web Press Corporation and Web Leader International,
Inc., its wholly owned Domestic International Sales Corporation
(DISC). All significant inter-company accounts and transactions
have been eliminated in consolidation.
Inventories
Raw materials, work-in-progress and finished goods inventories
are stated at the lower of average cost or market. Used presses
and other related press equipment are stated at the lower of
cost (specific identification basis) or market. Inventory costs
include material, labor, and manufacturing overhead.
Inventories were classified as follows:
(Dollars in Thousands)
September 30, 1998
Raw materials and parts
(including subassemblies)..... $1,598
Work-in-progress.............. 1,301
Finished goods................ 1,021
Used equipment................ ___510
$4,430
Machinery and leasehold improvements
Machinery and equipment are depreciated on the straight-line
method, for financial statement purposes, based upon useful
lives of three to twelve years. Leasehold improvements are
amortized over their useful lives or the term of the lease,
whichever is shorter. For income tax purposes, accelerated
methods are used for all eligible assets.
Maintenance and repairs are charged directly to costs or
expenses as incurred. Equipment of only nominal value and
renewals and betterments that do not appreciably extend the life
of the asset are charged directly to costs or expenses.
Fully depreciated or fully amortized assets which are no longer
in use or are not identifiable are written off by charges to the
allowance for accumulated depreciation and amortization. When
assets are retired or disposed of, the costs and accumulated
depreciation of such assets are removed from the accounts and
the difference between the net depreciated cost and the amount
received is recorded in the statements of operations.
Revenue recognition
Revenue from sales of manufactured products under firm contracts
is recognized generally at the time equipment is available for
shipment. All freight and installation costs are accrued at the
time revenue is recognized. Estimated costs related to product
warranties are provided at the time of sale. Proceeds received
on contracts prior to recognition as a sale are recorded as
deposits.
Income taxes
Income taxes are provided on income for financial reporting
purposes without regard to the period in which such taxes are
payable. Deferred taxes are provided for all significant items
which are reported for tax purposes in different periods than
the consolidated statements of earnings. Investment tax credits
are recorded as a reduction of Federal income taxes in the year
available.
Earnings per share
Earnings per share calculations are based on the weighted
average number of shares outstanding.
Note 2 - Financing:
The Company has a line of credit with a commercial bank for
borrowing up to $1.2 million. The interest rate charged is 2
percent above the bank's prime rate. Borrowings against this
line were $388 Thousand on September 30, 1998. Accounts
receivable, firm orders in production, inventories, and values
in excess of the long-term financing on equipment are pledged as
collateral.
The company has a second line of credit with the bank for
borrowing up to an additional $1 million to manufacture
equipment for export. The loan is a revolving line of credit
based on a series of transactions backed by letter of credit
orders acceptable to the bank. The line is secured by an
"export working capital guarantee" from the Export-Import Bank
of the United States. The interest rate charged is 1.5 percent
above the bank's prime rate. Borrowings against this line were
$59 Thousand on September 30, 1998.
Long-term debt consists of the following:
(Dollars in Thousands)
September 30, 1998
Term note, 2% above prime rate, due
in monthly installments of $24,837
including interest. Final payment
due February, 2001........................ $ 637
Note payable for equipment, 8%, due
in monthly installments of $6,794
including interest. Final
payment due in March, 2003................ 399
Note payable for equipment, 9.38%, due
in monthly installments of $2,198
including interest. Final payment
due in March, 2004........................ 113
Note payable for equipment and leasehold
improvements, 12%, due in monthly install-
ments of $2,262 including interest. Final
payment due in October, 1998.............. 2
Note payable for equipment, 10%, due in
monthly installments of $1,039 including
interest. Final payment due in
November, 1998............................ 2
Note payable for equipment, 8.23%,
due in monthly installments of
$277 including interest. Final
payment due December, 2001................ _ 10
1,163
Less current portion...................... 315
$ 848
Equipment with original cost of $621 thousand is pledged as
collateral under the notes payable for equipment and the
equipment purchase contracts.
Note 3 - Common Stock:
The Company's Stock Option Plan permits issuance of stock
options to key employees at prices not less than 100% of market
price at the date of grant. An aggregate of 600,000 shares of
common stock is reserved in connection with this Plan. As of
September 30, 1998, no options had been granted under this Plan.
MANAGEMENT'S DISCUSSION AND ANLYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Operating Results
Sales during the first nine months of 1998 increased $660
thousand to $6.020 million, an increase of 12.3 percent from 1997
sales of $5.360 million for the first nine months. In the third
quarter of 1998 sales were $1.901 million, compared with $1.960
million in the third quarter of 1997. New equipment sales in
1998 were $1.558 million in the third quarter and $4.4 million
for the first nine months, compared with 1997 sales of $1.424
million in the third quarter and $4.152 million for the first
nine months. Used equipment sales in 1998 were $29 thousand in
the third quarter and $583 thousand for the first nine months.
In 1997, used equipment sales were $80 thousand for the nine-
month period. The sale of replacement parts and service
decreased 8.1 percent in the first nine months of 1998, compared
with the first nine months of 1997. International sales, as a
percentage of total sales, for the nine-month period declined to
30.4 percent in 1998 from 74.3 percent in 1997. The backlog of
firm orders was $3.397 million on November 6, 1998.
Cost of sales, as a percentage of sales, increased to 77 percent
in the third quarter of 1998, compared with 75 percent in the
third quarter of 1997. For the first nine months, it was 76
percent in 1998 and 75 percent in 1997. The gross profit margin
on new equipment sales was approximately the same in both 1998
and 1997; however, higher sales of used equipment in 1998, on
which the gross profit margin is lower, counteracted the benefit
from higher new equipment sales in 1998. Development costs for
the new Quad-Stack press in 1998 resulted in a $117 thousand
increase in research and development expenses during the first
nine months of 1998, compared with the first nine months of 1997.
Selling, general and administrative expenses for the third
quarter of 1998 increased 84 percent, compared with the same
period in 1997. For the first nine months of 1998, they were 34
percent higher than 1997 expenses for the same period. Higher
selling expenses, which increased $220 thousand in the third
quarter and $305 thousand for the first nine months of 1998 from
the corresponding periods in 1997, caused the increase. In 1998,
the introduction of the Quad-Stack printing unit to both the
domestic and international markets resulted in significantly
higher trade show costs, and increased advertising and
promotional expenses. The Company spent $238 thousand attending
trade shows during the first nine months of 1998, compared with
$98 thousand in 1997. Advertising and promotional expenses for
the nine-month period were $177 thousand in 1998 versus $86
thousand in 1997. Sales commissions and other payroll costs
increased $26 thousand and $70 thousand in the third quarter and
for the first nine months of 1998, respectively, compared with
the same periods in 1997. Most other selling, general and
administrative expenses did not change significantly.
Interest expense in 1998, decreased 31 percent to $54 thousand in
the third quarter and 14 percent to $157 thousand for the nine-
month period from the corresponding periods in 1997. The average
interest rate on the Company's borrowings from the bank in 1998
were 10.4 for both the third quarter and the first nine months,
compared with 10.3 percent for the respective periods in 1997.
The average interest rate is higher in 1998 because of lower
borrowings from the export line of credit, which has a lower
interest rate than the operating line of credit. Average short-
term borrowings from the bank were $624 thousand in the third
quarter and $538 thousand for the first nine months in 1998. In
1997, average short-term borrowings were $928 thousand in the
third quarter and $712 thousand for the nine-month period.
The Company had a net loss of $90 thousand in the third quarter
of 1998, compared with net earnings of $140 thousand for the same
period in 1997. For the nine-month period, net earnings were $4
thousand in 1998 and $126 thousand in 1997. Lower net earnings
in 1998 are the direct result of developing and promoting the new
Quad-Stack press. Net earnings for the nine-month period would
have been approximately $239 thousand in 1998 had the Company not
incurred the incremental costs for promoting the Quad-Stack
press.
The Company's operating results for the first nine months of 1998
are not necessarily indicative of results to be expected for the
full year, particularly because of the high value of each order
for the Company's equipment and their irregular timing. The
Company expects 1998 sales and earnings to exceed those of 1997.
Liquidity
Net wording capital was $5.715 million and the current ratio was
2.2:1 on September 30, 1998. Net cash provided by operating
activities was $670 thousand for the first nine months of 1998.
Changes in working capital components include a decline in
accounts receivable of $2.440 million; inventories increased
$1.792 million; accounts payable increased $248 thousand; accrued
expenses decreased $706 thousand; and customer deposits increased
$136 thousand.
Higher inventory levels are required to meet the Companies
backlog of firm orders and to manufacture the new Quad-Stack
printing unit. During 1998, raw materials and parts inventories
have increased by $374 thousand, work-in-progress has increased
by $790 thousand, finished goods have increased by $251 thousand,
and used equipment inventories have increased by $265 thousand
Funds provided by operations are the Company's primary source of
liquidity. In addition, the Company uses short-term debt from
two separate revolving lines of credit with a commercial bank to
finance fluctuating working capital requirements. On September
30, 1998, the Company had additional borrowing capacity of $812
thousand from its operating line of credit and $941 thousand from
its export working capital line of credit.
Capital Resources
Total assets decrease by $454 thousand during the first nine
months of 1998. Stockholders' equity increase by $4 thousand;
working capital decreased by $199 thousand; and long-term debt
increased by $153 thousand.
Long-term debt and deferred income taxes (net of deferred tax
assets), as a percentage of total capitalization was 32 percent
on September 30, 1998. The Company believes that its borrowing
capacity is sufficient to provide for orderly growth.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
The Following exhibits are filed herewith:
(10a) being the Change in Terms Agreement between
Web Press Corporation and Washington First
International Bank dated October 15, 1998.
(10b) being the Borrowing Agreement between Web
Press Corporation and the Export-Import
Bank of the United States dated October 15,
1998.
(b) Reports on Form 8-K - There are no reports on Form
8-K filed for the three months ending September
30, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
WEB PRESS CORPORATION
(Registrant)
November 12, 1998 \S\Gary B. Palmer___________
Date Gary B. Palmer, President
November 12, 1998 \S\Craig L. Mathison________
Date Craig L. Mathison, Vice
President of Finance
4
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 1033
<ALLOWANCES> 6
<INVENTORY> 4430
<CURRENT-ASSETS> 5715
<PP&E> 3573
<DEPRECIATION> 2662
<TOTAL-ASSETS> 6626
<CURRENT-LIABILITIES> 2629
<BONDS> 0
0
0
<COMMON> 86
<OTHER-SE> 2626
<TOTAL-LIABILITY-AND-EQUITY> 6626
<SALES> 6020
<TOTAL-REVENUES> 6020
<CGS> 4596
<TOTAL-COSTS> 4596
<OTHER-EXPENSES> 1261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 157
<INCOME-PRETAX> 6
<INCOME-TAX> 2
<INCOME-CONTINUING> 4
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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Exibit (10b) Borrowing Agreement Between Web Press Corporation and
The Export-Import Bank of the United States.
ANNEX B
EXPORT-IMPORT BANK OF THE UNITED STATES WORKING
CAPITAL GUARANTEE PROGRAM
BORROWER AGREEMENT
THIS BORROWER AGREEMENT (this "Agreement") is made and
entered into by the entity identified as the Borrower on the signature page
hereof (the "Borrower") and is acknowledged by the institution identified as
the Lender on the signature page hereof (the "Lender").
RECITALS
A. The Lender shall make a loan (the "Loan") to the Borrower for
the purpose of providing the Borrower with pre-export working capital to
finance the manufacture, production or purchase and subsequent export sale
of the Items (as hereinafter defined).
B. The Loan shall be in a principal amount (the "Loan Amount") not
to exceed at any time outstanding the amount specified in Section (5)(A) of
the Loan Authorization Agreement between the Lender and the Export-
Import Bank of the United States (Eximbank") which is attached hereto as
Annex A1 or Annex A2 and incorporated herein as a part of this
Agreement. If the Loan is being made pursuant to the Lender's Delegated
Authority from Eximbank, all references herein to the Loan Authorization
Agreement shall be deemed to be to the Loan Authorization Notice
provided to Eximbank and the Borrower by the Lender.
C. The Loan shall be evidenced by a valid and enforceable
promissory note payable by the Borrower to the order of the Lender (the
"Note") and shall be made pursuant to a written agreement related solely
thereto between the Borrower and the Lender (the "Loan Agreement").
D. A condition precedent to the making of the Loan by the Lender is
that Eximbank guarantee the payment of ninety percent (90%) of the Loan
Amount and all interest accrued thereon, subject to the terms and conditions
of a master guarantee agreement (the "Master Guarantee Agreement")
between Eximbank and the Lender.
E. In consideration for and as a condition precedent to the Lender's
making the Loan and Eximbank's entering into the Master Guarantee
Agreement, the Borrower shall execute this Agreement for the benefit of
the Lender and Eximbank.
NOW, THEREFORE, the Borrower hereby agrees as follows:
2
ARTICLE I
DEFINITIONS
"Accounts Receivable" shall mean those trade accounts from the sale
of the Items due and payable to the Borrower in the United States and any
notes, drafts, letters of credit or insurance proceeds supporting payment
thereof.
"Availability Date" shall mean the last date on which the Lender
may make a Disbursement as set forth in Section (10) of the Loan
Authorization Agreement or, if such date is not a Business Day, the next
Business Day thereafter.
"Borrowing Base" shall mean the Collateral Value as discounted by
the applicable Disbursement Rate(s).
"Borrowing Base Certificate" shall mean the certificate in form
provided by the Lender and executed by the Borrower setting forth the
Borrowing Base supporting one or more Disbursements.
"Business Day" shall mean any day on which the Federal Reserve
Bank of New York is open for business.
"Buyer" shall mean an entity which has entered into one or more
Export Orders with the Borrower.
"Closing Date" shall mean the date on which the Loan Documents
are executed by the Borrower.
"Collateral" shall mean the property of the Borrower in which the
Borrower has granted to the Lender a valid and enforceable security interest
as security for the payment of all principal and interest due under the Loan,
and which is identified in Section (6) of the Loan Authorization Agreement,
including all proceeds (cash and non-cash) thereof.
"Collateral Value" shall mean at any given time the value of all
Collateral against which Disbursements may be made as set forth in Section
(5)(C) of the Loan Authorization Agreement, valued according to GAAP.
"Country Limitation Schedule" shall mean the most recent schedule
published by Eximbank and provided to the Borrower by the Lender which
sets forth on a country by country basis whether and under what conditions
Eximbank will provide coverage for the financing of export transactions to
countries listed therein.
Debarment Regulations shall have the meaning set forth in
Section 2.16.,
3
"Disbursed Amount" shall mean the aggregate outstanding amount
of the Disbursements.
"Disbursement" shall mean an advance of the Loan from the Lender
to the Borrower under the Loan Agreement.
"Disbursement Rate" shall mean the rate specified in Section (5)(C)
of the Authorization Agreement for each category of Collateral.
"Dollars" or "$" shall mean the lawful money of the United States of
America.
"Export Order" shall mean a written export order or contract for the
purchase by the Buyer from the Borrower of any of the Items.
"GAAP" shall mean the generally accepted accounting principles
issued by the American Institute of Certified Public Accountants.
"Guarantor" shall mean each person or entity, if any, identified in
Section (3) of the Loan Authorization Agreement who shall guarantee
(jointly and severally if more than one) the Borrower' s obligation to repay
all mounts outstanding under the Note.
"Inventory" shall mean the raw materials work-in-process and
finished goods purchased or manufactured by the Borrower for resale and
located in the United States.
"Items" shall mean the finished goods or services which are intended
for export, as specified in Section (4)(A) of the Loan Authorization
Agreement.
"Letter of Credit" shall mean an irrevocable letter of credit subject to
UCP 500, payable in the United States or at the issuing bank and issued for
the benefit of the Borrower on behalf of a Buyer in connection with the
purchase of the Items.
"Loan Documents" shall mean the Note, the Loan Agreement, this
Agreement and any other instrument, agreement or document previously,
simultaneously or hereafter executed by the Borrower or any Guarantors
evidencing, securing, guaranteeing or in connection with the Loan.
Principals shall have the meaning set forth in Section 2.16.
"Revolving Loan" shall mean a Loan under which amounts
disbursed and repaid may be disbursed on a continuous basis during the
term of the Loan.
"Transaction Specific Loan" shall mean a Loan under which
amounts disbursed and repaid may not be disbursed again.
"U.S." or "United States" shall mean the United States of America and its
territorial
4
possessions.
"U.S. Content" shall mean with respect to any Item all the labor,
materials and services which are of U.S. origin or manufacture, and which
are incorporated into an Item in the United States.
ARTICLE II
OBLIGATIONS OF THE BORROWER
Until payment in full of the Loan, the Borrower agrees to the
following:
Section 2.1 Use of Disbursements. The Borrower shall use
Disbursements only for the purpose of enabling the Borrower to finance the
cost of manufacturing, producing, purchasing or selling the Items. The
Borrower may not use Disbursements for the purpose of: (a) servicing any
of the Borrower' s pre-existing or future indebtedness unrelated to the Loan;
(b) acquiring fixed assets or capital goods for use in the Borrower's
business; (c) acquiring, equipping or renting commercial space outside of
the United States; (d) paying the salaries of non-U.S. citizens or non-U.S.
permanent residents who are located in offices outside the United States; or
(e) serving as a retainage or warranty bond.
In addition, Disbursements may not be used to finance the
manufacture, purchase or sale of any of the following:
(a) Items to be sold to a Buyer located in a country in which
Eximbank is legally prohibited from doing business as designated in the
Country Limitation Schedule;
(b) that part of the cost of the Items which is not U.S. Content unless
such part is not greater than fifty percent (50 % ) of the cost of the Items
and is incorporated into the Items in the United States;
(c) defense articles or defense services; or
(d) without Eximbank's prior written consent, any Items to be used
in the construction, alteration, operation or maintenance of nuclear power,
enrichment, reprocessing, research or heavy water production facilities.
Section 2.2 Borrowing Base Certificates and Export Orders. In order
to receive a Disbursement under the Loan, the Borrower shall deliver to the
Lender a Borrowing Base Certificate current within the past five (5)
Business Days and a copy of the Export Order(s) (or, for Revolving Loans,
if permitted by the Lender, a written summary of the Export Orders) against
which the Borrower is requesting a Disbursement. If the Lender permits
summaries of Export Orders, the Borrower shall also deliver promptly to
the Lender copies of any Export Orders
5
requested by the Lender. Additionally, the Borrower shall deliver to the
Lender at least once every thirty (30) calendar days a Borrowing Base
Certificate current within the past five (5) Business Days, which
requirement may be satisfied by submission of a Borrowing Base
Certificate when requesting a Disbursement.
Section 2.3 Exclusions from the Borrowing Base. In determining
the amount of a requested Disbursement, the Borrower shall exclude
from the Borrowing Base the following:
(a) any Inventory which is not located in the United
States;
(b) any demonstration Inventory or Inventory sold on
consignment;
(c) any Inventory consisting of proprietary software;
(d) any Inventory which is damaged, obsolete, returned,
defective, recalled or unfit for further processing;
(e) any Inventory which has been previously exported
from the United States;
(f) any Inventory which constitutes defense articles or
defense services or any Accounts Receivable generated by sales of such
Inventory;
(g) any Inventory which is to be incorporated into Items
destined for shipment to, and any Account Receivable in the name of a
Buyer located in, a country in which Eximbank is legally prohibited
from doing business as designated in the Country Limitation Schedule;
(h) any Inventory which is to be incorporated into Items
destined for shipment to, and any Account Receivable in the name of a
Buyer located in, a country in which Eximbank coverage is not
available for commercial reasons as designated in the Country
Limitation Schedule, unless and only to the extent that such Items are to
be sold to such country on terms of a Letter of Credit confirmed by a
bank acceptable to Eximbank;
(i) any Inventory which is to be incorporated in the Items
whose sale would result in an ineligible Account Receivable;
(j) any Account Receivable with a term in excess of net
one hundred eighty (180) days;
(k) any Account Receivable which is more than sixty (60)
calendar days past the original due date, unless it is insured through
Eximbank export credit insurance for comprehensive commercial and
political risk, or through Eximbank approved private insurers for
comparable coverage, in which case ninety (90) calendar days shall apply;
6
(l) any intra-company Account Receivable or any Account
Receivable from a subsidiary of the Borrower, from a person or entity with
a controlling interest in the Borrower or from an entity which shares
common controlling ownership with the Borrower;
(m) any Account Receivable evidenced by a Letter of Credit,
until the date of shipment of the Items covered by the subject Letter of
Credit;
(n) any Account Receivable which the Lender or Eximbank,
in its reasonable judgment, deems uncollectible for any reason;
(o) any Account Receivable payable in a currency other than
Dollars, except as may be approved in writing by Eximbank;
(p) any Account Receivable from a military Buyer, except as
may be approved in writing by Eximbank; and
(q) any Account Receivable due and collectible outside the
United States, except as may be approved in writing by Eximbank.
Section 2.4 Schedules, Reports and Other Statements. The Borrower
shall submit to the Lender in writing each month (a) an Inventory schedule
for the preceding month and (b) an Accounts Receivable aging report for
the preceding month detailing the terms of the amounts due from each
Buyer. The Borrower shall also furnish to the Lender promptly upon
request such information, reports, contracts, invoices and other data
concerning the Collateral as the Lender may from time to time specify..
Section 2.5 Additional Security or Payment. The Borrower shall at
all times ensure that the Borrowing Base exceeds the Disbursed Amount. If
informed by the Lender or if the Borrower otherwise has actual knowledge
that the Borrowing Base is at any time less than the Disbursed Amount, the
Borrower shall, within five (5) Business Days, either (a) furnish additional
security to the Lender, in form and amount satisfactory to the Lender and
Eximbank, or (b) pay to the Lender an amount equal to the difference
between the Disbursed Amount and the Borrowing Base.
Section 2.6 Continued Security Interest. The Borrower shall notify
the Lender in writing within five (5) Business Days if (a) the Borrower
changes its name or identity in any manner, (b) the Borrower changes the
location of its principal place of business, (c) the nature of any of the
Collateral is changed or any of the Collateral is transferred to another
location or (d) any of the books or records related to the Collateral are
transferred to another location. The Borrower shall execute such additional
financing statements or other documents as the Lender may reasonably
request in order to maintain its perfected security interest in the Collateral.
Section 2.7 Inspection of Collateral. The Borrower shall permit the
representatives of the Lender and Eximbank to make at any time during
normal business hours reasonable inspections
7
of the Collateral and of the Borrower's facilities, activities, and books and
records, and shall cause its officers and employees to give full cooperation
and assistance in connection therewith.
Section 2.8 Notice of Debtor's Relief, Dissolution and Litigation.
The Borrower shall notify the Lender in writing within five (5) Business
Days of the occurrence of any of the following:
(a) a proceeding in bankruptcy or an action for debtor's relief
is filed by, against, or on behalf of the Borrower;
(b) the Borrower fails to obtain the dismissal or termination
within thirty (30) calendar days of the commencement of any proceeding or
action referred to in (a) above;
(c) the Borrower begins any procedure for its dissolution or
liquidation, or a procedure therefore has been commenced against it; or
(d) any material litigation is filed against the Borrower.
Section 2.9 Insurance. The Borrower shall maintain insurance
coverage in the manner and to the extent customary in businesses of similar
character.
Section 2.10 Merger or Consolidation. Without the prior written
consent of Eximbank and the Lender, the Borrower shall not (a) merge or
consolidate with any other entity, (b) sell, lease, transfer or otherwise
dispose of any substantial part of its assets, or any part of its assets which
are essential to the conduct of its business or operations, (c) make any
material change in its organizational structure or identity, or (d) enter into
any agreement to do any of the foregoing.
Section 2.11 Reborrowings and Repayment Terms. (a) If the Loan is
a Revolving Loan, provided that the Borrower is not in default under any of
the Loan Documents, the Borrower may borrow, repay and reborrow
amounts under the Loan until the close of business on the Availability Date.
Unless the Revolving Loan is renewed or extended by the Lender, the
Borrower shall pay in full the outstanding Loan Amount and all accrued
and unpaid interest thereon no later than the first Business Day after the
Availability Date.
(b) If the Loan is a Transaction Specific Loan, the Borrower shall,
within two (2) Business Days of the receipt thereof, pay to the Lender (for
application against the outstanding Loan Amount and accrued and unpaid
interest thereon) all checks, drafts, cash and other remittances it may
receive in payment or on account of the Accounts Receivable or any other
Collateral, in precisely the form received (except for the endorsement of the
Borrower where necessary). Pending such deposit, the Borrower shall not
commingle any such items of payment with any of its other funds or
property, but will hold them separate and apart.
Section 2.12 Cross Default. The Borrower shall be deemed in default
under the Loan if
8
the Borrower fails to pay when due any amount payable to the Lender
under any loan to the Borrower not guaranteed by Eximbank.
Section 2.13 Financial Statements. The Borrower shall provide
quarterly financial statements to the Lender no later than forty-five (45)
days after the end of each quarter. This is in addition to any other financial
statements that may be required by the Lender under the Loan Agreement.
Section 2.14 Taxes, Judgments and Liens. The Borrower shall
remain current on all of its federal, state and local tax obligations. In
addition, the Borrower shall notify the Lender in the event (i) any judgment
is rendered against the Borrower, or (ii) any lien is filed against any of the
assets of the Borrower.
Section 2.15 Munitions List. If any of the Items are articles, services,
or related technical data that are listed on the United States Munitions List
(part 121 of title 22 of the Code of Federal Regulations), the Borrower shall
send a written notice promptly to the Lender describing the Item(s) and the
corresponding invoice amount.
Section 2.16 Suspension and Debarment, etc. On the date of this
Agreement neither the Borrower nor its Principals (as defined below) are
(A) debarred, suspended, proposed for debarment with a final
determination still pending, declared ineligible or voluntarily excluded (as
such terms are defined under any of the Debarment Regulations referred to
below) from participating in procurement or nonprocurement transactions
with any United States federal government department or agency pursuant
to any of the Debarment Regulations (as defined below) or (B ) indicted,
convicted or had a civil judgment rendered against the Borrower or any of
its Principals for any of the offenses listed in any of the Debarment
Regulations. Unless authorized by Eximbank, the Borrower will not
knowingly enter into any transactions in connection with the Item with any
person who is debarred, suspended, declared ineligible or voluntarily
excluded from participation in procurement or nonprocurement transactions
with any United States federal government department or agency pursuant
to any of the Debarment Regulations. The Borrower will provide
immediate written notice to the Leader if at any time it learns that the
certification set forth in this Section 2.16 was erroneous when made or has
become erroneous by reason of changed circumstances. For the purposes
hereof, (1) "Principals" shall mean any officer, director, owner, partner, key
employee, or other person with primary management or supervisory
responsibilities with respect to the Borrower; or any other person (whether
or not an employee) who has critical influence on or substantive control
over the transaction covered by this Agreement and (2) the Debarment
Regulations shall mean (x) the Governmentwide Debarment and
Suspension (Nonprocurement) regulations (Common Rule), 53 Fed. Reg.
19204 (May 26, 1988), (y) Subpart 9.4 (Debarment, Suspension, and
Ineligibility) of the Federal Acquisition Regulations, 48 C.F.R. 9.400-9.409
and (z) the revised Governmentwide Debarment and Suspension
(Nonprocurement) regulations (Common Rule), 60 Fed. Reg. 33037 (June
26, 1995).
Section 2.17 Special Conditions. The Borrower shall comply with all
Special Conditions, if any, referenced in Section (11 ) of the Loan
Authorization Agreement or the Loan Authorization Notice.
9
ARTICLE III
RIGHTS AND REMEDIES
Section 3.1 Indemnification. Upon Eximbank's payment of a claim
to the Lender in connection with the Loan pursuant to the Master Guarantee
Agreement, Eximbank shall assume all rights and remedies of the Lender
under the Loan Documents and may enforce any such rights or remedies
against the Borrower, the Collateral and any Guarantors. Additionally, the
Borrower shall hold Eximbank and the Lender harmless from and
indemnify them against any and all liabilities, damages, claims, costs and
losses incurred or suffered by either of them resulting from (a) any
materially incorrect certification or statement knowingly made by the
Borrower or its agent to Eximbank or the Lender in connection with the
Loan, this Agreement or any of the other Loan Documents or (b) any
material breach by the Borrower of the terms and conditions of this
Agreement or any of the other Loan Documents. The Borrower also
acknowledges that any statement, certification or representation made by
the Borrower in connection with the Loan is subject to the penalties
provided in Article 18 U.S.C. Section 1001.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Governing Law. This Agreement shall be governed by,
and construed in accordance with the law of the State of New York, United
States of America.
Section 4.2 Notification. All notifications required by this
Agreement shall be given in the manner provided in the Loan Agreement.
Section 4.3 Partial Invalidity. If at any time any of the provisions of
this Agreement becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, neither the legality, the validity nor the
enforceability of the remaining provisions hereof shall in any way be
affected or impaired.
10
IN WITNESS WHEREOF, the Borrower has caused this Agreement
to be duly executed as of the 15th day of October, 1998.
WEB PRESS CORPORATION/WEB LEADER INTERNATIONAL, INC.
(Name of Borrower)
By \S\ GARY PALMER
Title PRESIDENT & CHAIRMAN
(Print or Type)
ACKNOWLEDGED:
WASHINGTON FIRST INTERNATIONAL BANK
(Name of Lender)
By \S\ MICHAEL C.C. LUM
Name MICHAEL C.C. LUM
(Print or Type)
Title VICE PRESIDENT
(Print or Type)
Guaranteed Loan No. AP073281XX
ANNEXES:
A1 - Loan Authorization Agreement or
A2 - Loan Authorization Notice
(Revised April 1, 1996)
17
Exhibit(10a) Change in Terms Agreement Between Web Press
Corporation and Washington First International Bank
Change in Terms Agreement
Principal
$1,000,000.00
Loan
Date
Maturity
04/15/1999
Loan No.
8015480008
Call
Collateral
14
Account
801548
Officer
305
Initial
Reference in the shaded area for Lender's use only and do not
limit the applicability of this document to any particular
loan or item.
Borrower: WEB PRESS CORPORATION AND Lender: Washington First
WEB LEADER INTERNATIONAL, INC. International Bank
22023 68TH AVENUE SOUTH 9709 Third Avenue
KENT, WA 98032 Suite 110
Seattle, WA 98115
_________________________________________________________________
Principal Amount: $1,000,000.00
Date of Agreement: October 15, 1998
DESCRIPTION OF EXISTING INDEBTEDNESS. That certain promissory
note executed by Borrower to Lender on April 3, 1998 in the
original amount of $1,000,000.00, as it may have been amended or
renewed form time to time.
DESCRIPTION OF CHANGE IN TERMS. The maturity date of the existing
indebtedness described above is hereby extended from October 15,
1998 to April 15, 1999. All other terms and conditions will
remain unchanged.
PROMISE TO PAY. WEB PRESS CORPORATION AND WEB LEADER
INTERNATIONAL, INC. ("Borrower") promises to pay to Washington
First International Bank ("Lender"), or order, in lawful money of
the United States of America, the principal amount of One Million
& 00/100 Dollars ($1,000,000.00) or so much as may be
outstanding, together with interest on the unpaid outstanding
principal balance of each advance. Interest shall be calculated
from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan on demand, or if no demand
is made, in one payment of all outstanding principal plus all
accrued unpaid interest on April 15, 1998. In addition, Borrower
will pay regular monthly payments of accrued unpaid interest
beginning November 15, 1998, and all subsequent interest payments
are due on the same day of each month after that. The annual
interest rate for this Agreement is computed on a 365/360 basis;
that is, by applying the ratio of the annual interest rate over a
year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal
balance is outstanding. Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to any unpaid
collection costs and any late charges, then to any unpaid
interest, and any remaining amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Agreement is
subject to change from time to time based on changes in an index
which is Lender's Prime Rate (the "Index"). This is the rate
Lender charges, or would charge, on 90-day unsecured loans to the
most creditworthy corporate customers. This rate may or may not
be the lowest rate available from Lender at any given time.
10-15-98 Change in Terms Agreement Page 2
(continued)
Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more
often than each DAY. The Index currently is 8.250% per annum. The
interest rate to be applied to the unpaid principal balance of
this Agreement will be at a rate of 1.500 percentage points over
the Index, resulting in an initial rate of 9.750% per annum.
NOTICE: Under no circumstances will the interest rate on this
Agreement be more than the maximum rate allowed by applicable
law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid
finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether
voluntary or as a result of default), except as otherwise
required by law. Except for the foregoing, Borrower may pay
without penalty all or a portion of the amount owed earlier than
it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, they will
reduce the principal balance due.
LATE CHARGE. If a payment is 15 days or more late, Borrower will
be charged 5.000% of the regularly scheduled payment or $15.00,
whichever is greater.
DEFAULT. Borrower will be in default if any of the following
happens: (a) Borrower fails to make any payment when due. (b)
Borrower breaks any promise Borrower has made to Lender, or
Borrower fails to comply with or to perform when due any other
term, obligation, covenant, or condition contained in this
Agreement or any agreement related to this Agreement, or in any
other agreement or loan Borrower has with Lender. (c) Borrower
defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of
any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Agreement
or perform Borrower's obligations under this Agreement or any of
the Related Documents. (d) Any representation or statement made
or furnished to Lender by Borrower or on Borrower's behalf is
false or misleading in any material respect either now or at the
time made or furnished. (e) Borrower becomes insolvent, a
receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any
proceeding is commenced either by Borrower or against Borrower
under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a
lien or security interest. This includes a garnishment of any of
Borrowers accounts with Lender. (g) Any guarantor dies or any of
the other events described in this default section occurs with
respect to any guarantor of this Agreement. (h) A material
adverse change occurs in Borrower's financial condition, or
Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
If any default, other than a default in payment, is curable and
if Borrower has not been given a notice of a breach of the same
provision of this Agreement within the preceding twelve (12)
months, it may be cured (and no event of default will have
10-15-98 Change in Terms Agreement Page 3
(continued)
occurred) if Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within
fifteen (15) days; or (b) if the cure requires more than fifteen
(15) days, immediately initiates steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably
practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire
unpaid principal balance on this Agreement and all accrued unpaid
interest immediately due, without notice, and then Borrower will
pay that amount. Upon default, including failure to pay upon final
maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this
Agreement to 6.500 percentage points over the Index. The interest
rate will not exceed the maximum rate permitted by applicable
law. Lender may hire or pay someone else to help collect this
Agreement if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable
law, Lender's attorneys' fees and Lender's legal expenses whether
or not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. If not prohibited
by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. This Agreement has
been delivered to Lender and accepted by Lender in the State of
Washington. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of King
County, the State of Washington. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Washington.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00
if Borrower makes a payment on Borrower's loan and the check or
preauthorized charge with which Borrower pays is later
dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual
possessory security interest in and hereby assigns, conveys,
delivers, pledges, and transfers to Lender all Borrower's right,
title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or
some other account), including without limitation all accounts
held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and
all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums
owing on this Agreement against any and all such accounts.
LINE OF CREDIT. This Agreement evidences a revolving line of
credit. Advances under this Agreement may be requested only in
writing by Borrower or by an authorized person. All
communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Lender's office shown
above. The following party or parties are authorized to request
10-15-98 Change in Terms Agreement Page 4
(continued)
advances under the line of credit until Lender receives from
Borrower at Lender's address shown above written notice of
revocation of their authority: GARY B. PALMER, President: Web
Press Corp.; CRAIG L. MATHISON, Secretary/Treasurer: WEB PRESS
CORP.; GARY B. PALMER, Chairman: WEB LEADER INTERNATIONAL, INC.;
and CHARLES A. GATH, President: International, Inc. Borrower
agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b)
credited to any of Borrower's accounts with Lender. The unpaid
principal balance owing on this Agreement at any time may be
evidenced by endorsements on this Agreement or by Lenders
internal records, including daily computer printouts. Lender will
have no obligation to advance funds under this Agreement if: (a)
Borrower or any guarantor is in default under the terms of this
Agreement or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the
signing of this Agreement; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims
or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Agreement or any other loan with Lender; or (d)
Borrower has applied funds provided pursuant to this Agreement
for purposes other than those authorized by Lender.
CONTINUING VALIDITY. Except as expressly changed by this
Agreement, the terms of the original obligation or obligations,
including all agreements evidenced or securing the obligation(s),
remain unchanged and in full force and effect. Consent by Lender
to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender
to make any future change in terms. Nothing in this Agreement
will constitute a satisfaction of the obligation(s). It is the
intention of Lender to retain as liable parties all makers and
endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in
writing. Any maker or endorser, including accommodation makers,
will not be released by virtue of this Agreement. If any person
who signed the original obligation does not sign this Agreement
below, then all persons signing below acknowledge that this
Agreement is given conditionally, based on the representation to
Lender that the non-signing party consents to the changes and
provisions of this Agreement of otherwise will not be released by
it. This waiver applies not only to any initial extension,
modification or release, but also to all such subsequent actions.
MISCELLANEOUS PROVISIONS. This Agreement is payable on demand.
The inclusion of specific default provisions or rights of Lender
shall not preclude Lender's right to declare payment of this
Agreement on its demand. Lender may delay or forgo enforcing any
of its rights or remedies under this Agreement without losing
them. Borrower and any other person who signs, guarantees or
endorses this Agreement, to the extent allowed by law, waive
presentment demand for payment protest and notice of dishonor.
Upon any change in the terms of this Agreement, and unless
otherwise expressly stated in writing, no party who signs this
Agreement, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties
agree that Lender may renew or extend (repeatedly and for any
10-15-98 Change in Terms Agreement Page 5
(continued)
length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action
deemed
necessary by Lender without the consent of or notice to anyone.
All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party
with whom the modification is made.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL
THE PROVISIONS OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST
RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE AGREEMENT
AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE AGREEMENT.
BORROWER:
WEB PRESS CORPORATION AND WEB LEADER INTERNATIONAL, INC.
BY: \S\ GARY B. PALMER
_________________________________________
President: WEB PRESS CORP.
BY: \S\ GARY B. PALMER
_________________________________________
Chairman: WEB LEADER INTERNATIONAL, INC.
