As filed with the Securities and Exchange Commission on March 15, 2000
Registration No. 333-74381
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
AMENDMENT NO. 3
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------------------
JVWEB, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant specified in charter)
Delaware 7389 76-0552098
- --------------------------------------------------------------------------------
(State of (Primary Industrial (I.R.S. Employer
Incorporation) Classification) I.D.#)
5444 Westheimer, Suite 2080
Houston, Texas 77056
Tel: (713) 622-9287
- --------------------------------------------------------------------------------
(Address, including zip code of principal place of business
and telephone number, including area code of
Registrant's principal executive offices.)
Greg J. Micek With a copy to:
President Randall W. Heinrich
5444 Westheimer, Suite 2080 Gillis & Slogar, L.L.P.
Houston, Texas 77056 1000 Louisiana, Suite 6905
Tel: (713) 622-9287 Houston, Texas 77002
(Name, address, including zip code (713) 951-9100
and telephone number, including
area code of agent for service.)
Approximate date of commencement date or proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ]. <TABLE> <CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Title of each class Proposed maximum
of securities to be Amount to be maximum offering aggregate Amount of
registered registered price per share* offering price* registration fee
<S> <C> <C> <C> <C>
Common Stock 1,092,000 $.45 $491,400.00 $136.61**
- --------------------
</TABLE>
* Estimated solely for purposes of calculating the registration fee based on the
closing price of the Registrant's common stock as reported on the OTC Bulletin
Board on March 10, 1999, or $.45 per share.
** Fee has already been paid.
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 said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 15, 2000
JVWEB INC.
5444 Westheimer, Suite 2080
Houston, Texas 77056
Telephone: (713) 622-9287
354,500 Shares of Common Stock
--------------------------
We are a comparatively new company formed to pursue electronic commerce
opportunities. We now have a fee-for-service division (which provides certain
Internet services) and a brands-under-management division (which offers
products, services, content and advertising through sites on the World Wide Web
owned either directly or through joint ventures).
This prospectus relates to up to 354,500 shares of our Common Stock,
par value $.01 per share. These shares have been issued (or may be issued in the
future pursuant to exercises of certain outstanding options) to security holders
named under the "SELLING STOCKHOLDERS" section. We will not receive any of the
proceeds from the sale of these shares by such stockholders other than amounts
received upon exercise of the options in accordance with their terms.
----------------------
Trading Symbol:
NASD OTC Bulletin Board - JVWB
----------------------
You should consider carefully the Risk Factors beginning on page 2 of
this Prospectus.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is March 15, 2000.
<PAGE>
RISK FACTORS
The securities covered by this Prospectus involve a high degree of risk.
Accordingly, they should be considered extremely speculative. You should read
the entire Prospectus and carefully consider, among the other factors and
financial data described herein, the following risk factors:
OUR EXTREMELY LIMITED OPERATING HISTORY MAKES AN EVALUATION OF US AND
OUR FUTURE EXTREMELY DIFFICULT.
The Company was incorporated in October 1997. Upon incorporation, the
Company continued preliminary work commenced by the founder of the Company
several months earlier. In view of the length of its operating history, you may
have difficulty in evaluating the Company and its business and prospects. You
must consider our business and prospects in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development. This is particularly true of companies in new and rapidly evolving
markets such as electronic commerce. Such risks include an evolving and
unpredictable business model and the management of possible rapid growth. To
address these risks, we must successfully undertake most of the following
activities:
* Continue to develop the strength and quality of our operations *
Maximize the value delivered to our clients * Enhance our current and
future brands * Develop and increase our customer bases * Implement and
successfully execute our business and marketing
strategy
* Continue to develop and upgrade our technology and transaction
-processing systems
* Respond to competitive developments
* Identify and pursue suitable electronic commerce opportunities
* Identify and enter into binding agreements with suitable joint
venture partners
* Create and constantly improve our Web sites
* Provide superior customer service and order fulfillment
* Attract, retain and motivate qualified personnel.
* Identify and consummate suitable acquisitions
There can be no assurance that we will be successful in undertaking such
activities. Our failure to address successfully our risks could materially and
adversely affect our business, prospects, financial condition and results of
operations. Moreover, the Company has incurred net losses since inception. As of
December 31, 1999, we had an accumulated deficit of $1,872,917.
QUARTERLY, SEASONAL AND OTHER FLUCTUATIONS IN OUR BUSINESS AND
OPERATING RESULTS MAY MATERIALLY AND ADVERSELY AFFECT THE TRADING PRICE OF OUR
COMMON STOCK.
We expect that our operating results will fluctuate in the future due
to a number of factors. We do not control many of these factors. These factors
include the following:
* The level of usage of the Internet * Demand for our products,
services and advertising * Our ability to attract new customers at a
steady rate * The productivity of our fee-for-service division * Our
ability to attract and retain personnel with the necessary
strategic, technical and creative skills required to service
clients effectively
* Our ability to pursue suitable electronic commerce
opportunities, enter into suitable joint ventures and
consummate suitable acquisitions at a steady rate
* The rate at which we add or lose advertisers
* The rate at which we or our competitors introduce new
products, services or Web sites
* Pricing changes for Web-based products, services and
advertising
* Technical difficulties affecting our Web sites
* The amount and timing of capital expenditures and other costs
relating to the expansion of our operations
* Costs relating to our marketing programs and acquisitions
* Client budgetary cycles
* Government regulation and legal developments regarding the use
of the Internet
* General economic conditions and economic conditions
specific to the Internet and Web sites.
To respond to changes in our competitive environment, we may occasionally make
certain service, marketing or supply decisions or acquisitions. We may benefit
from these decisions or acquisitions in the long run. However, in the short run,
such decisions or acquisitions could materially and adversely affect our
quarterly results of operations and financial condition. We also expect that
(like other retailers) we may experience seasonality in our businesses in the
future. Due to all of the foregoing factors, in some future quarter our
operating results may fall below the expectations of investors and any
securities analysts who follow our Common Stock. In such event, the trading
price of our Common Stock could be materially adversely affected. Further, we
believe that period-to-period comparisons of our financial results may not be
very meaningful. Accordingly, you should not conclude that such comparisons
indicate future performance.
WE EXPECT TO HAVE FUTURE CAPITAL NEEDS, AND THE PROCUREMENT OF
ADDITIONAL FINANCING TO MEET THESE NEEDS IS UNCERTAIN.
We currently have no constant and continual flow of revenues. Our
future liquidity and capital requirements will depend upon numerous factors,
including the success of our existing and future services and the success of our
Web sites. We anticipate that during the remainder of fiscal 2000 we will need
to raise additional funds through public or private financing, strategic
relationships or other arrangements. There can be no assurance that such
additional funding (if needed) will be available on terms acceptable to us.
Furthermore, debt financing (if available and undertaken) may involve
restrictions limiting our operating flexibility. Moreover, if we issue equity
securities to raise additional funds, the following results will or may occur:
* The percentage ownership of our existing stockholders will be
reduced
* Our stockholders may experience additional dilution in net
book value per share
* The new equity securities may have rights, preferences or
privileges senior to those of the holders of our Common Stock.
We can not now predict our additional capital requirements because of the
uncertainty of our actual capital requirements. However, to pursue our business
plan as desired, we believe that our future capital requirements will exceed our
current financial position. We expect to finance our operations for fiscal 2000
through cash flow from operations, proceeds from the exercise of certain
outstanding warrants and options to purchase shares of our Common Stock, and the
possible private placement of our equity securities. We are looking for sources
of additional capital. However, there can be no assurance that we will find such
sources. If adequate funds are not available on acceptable terms, we may be
prevented from pursing future opportunities, responding to competitive pressures
or continuing our business as we have historically. Our failure to pursue future
opportunities, respond properly to competitive pressures or continue our
business in an appropriate manner could materially and adversely affect our
business, results of operations and financial condition.
WE DEPEND HEAVILY ON THE INTERNET, AND ANY ADVERSE DEVELOPMENT WITH
REGARD TO THE INTERNET COULD MATERIALLY ADVERSELY AFFECT US.
Our future success substantially depends upon continued growth in the
use of the Internet and the Web. Such growth seems necessary to support the sale
of our products, services and advertising. Rapid growth in the use of the
Internet and the Web is a recent phenomenon. There can be no assurance that
communication or commerce over the Internet will become more widespread. In
addition, if Internet use continues to grow significantly, there can be no
assurance that the Internet infrastructure will remain adequate for supporting
the increased demands placed upon it. The Internet could lose its viability due
to either:
* Delays in the development or adoption of new standards and
protocols required to handle increased levels of
Internet activity; or
* Increased governmental regulation
Changes in or insufficient availability of telecommunications services to
support the Internet also could slow response times and adversely affect usage
of the Web and our Web sites. The failure of the Internet use to continue to
grow, or failure of the Internet infrastructure to support effectively growth
that may occur, could materially adversely affect our business, operating
results and financial condition.
WE ARE EXPOSED TO NUMEROUS RISKS DUE TO POTENTIAL FUTURE
TECHNOLOGICAL CHANGE.
The Internet and electronic markets involve certain characteristics
that expose our existing and future Web sites, technologies, service practices
and methodologies to the risk of obsolescence. These characteristics included
the following:
* Rapid changes in technology
* Rapid changes in user and customer requirements
* Frequent new service or product introductions embodying new
technologies
* The emergence of new industry standards and practices
Our performance will partially depend on our ability to license leading
technologies, enhance our existing services, and respond to technological
advances and emerging industry standards and practices on a timely and
cost-effective basis. The development of Web sites entails significant technical
and business risks. There can be no assurance that we will use new technologies
effectively or adapt our Web sites to consumer, vendor, advertising or emerging
industry standards. Our inability (for technical, legal, financial or other
reasons) to adapt in a timely manner to changing market conditions or customer
requirements could materially adversely affect our business, results of
operations and financial condition.
WE RELY ON A NUMBER OF THIRD PARTIES, AND SUCH RELIANCE EXPOSES US TO A
NUMBER OF RISKS.
Our operations will depend on a number of third parties. We will have
limited control over these third parties. We will probably not have many
long-term agreements with many of them. We do not own a gateway onto the
Internet. Instead, we now and presumably always will rely on a network operating
center to connect our Web sites to the Internet. We also will rely on a variety
of technology that we will license from third parties. Our loss of or inability
to maintain or obtain upgrades to any of these technology licenses could result
in delays. These delays could materially adversely affect our business, results
of operations and financial condition, until equivalent technology could be
identified, licensed or developed and integrated. Furthermore, we will depend on
hardware suppliers for prompt delivery, installation and service of servers and
other equipment used to deliver our products and services. Our inability to
maintain satisfactory relationships with such third parties on acceptable
commercial terms, or the failure of such third parties to maintain the quality
of products and services they provide at a satisfactory standard, could
materially adversely affect our business, results of operations and financial
condition. In addition, we will also depend upon Web browsers for access to the
products, services and advertising that we will offer.
THE SUCCESS OF OUR BUSINESS DEPENDS TO A GREAT EXTENT ON THE
RECRUITMENT AND RETENTION OF INTERNET PROFESSIONALS, AND CURRENTLY COMPETITION
FOR THESE PROFESSIONALS IS EXTREMELY INTENSE.
Our fee-for-service division is labor intensive. Accordingly, the
success of this division partially depends on our and our subcontractors'
abilities to identify, hire, train and retain consulting professionals who can
provide the Internet strategy, technology, marketing, audience development and
creative skills required by clients. There is currently a shortage of such
personnel. This shortage is likely to continue for the foreseeable future. We
and our subcontractors will have to compete intensely with other companies for
qualified personnel. There can be no assurance that we and our subcontractors
will attract, assimilate or retain other highly qualified technical, marketing
and managerial personnel in the future. The inability to attract and retain the
necessary technical, marketing and managerial personnel could materially and
adversely affect our business, results of operations and financial condition.
THE ACCEPTANCE OF THE INTERNET AS A MEDIUM FOR COMMERCE IS UNCERTAIN,
AND THE FAILURE OF THE INTERNET TO GAIN SUCH ACCEPTANCE COULD MATERIALLY
ADVERSELY AFFECT US.
For our business plan to succeed, a broad base of consumers, vendors
and advertisers must adopt the Internet as a medium for commerce. We intend to
target consumers, vendors and advertisers who have historically used traditional
means of commerce to conduct business. Most of our customers, vendors and
advertisers will have only limited experience with the Web as a commercial
medium and may not find the Web as an effective medium for transacting business.
Moreover, critical issues concerning the commercial use of the Internet remain
unresolved and may affect the growth of Internet use or the attractiveness of
conducting commerce by means of Web sites. These critical issues include the
following:
* Ease of access
* Security
* Reliability
* Cost and quality of service
* Development of the necessary infrastructure (such as a reliable
network backbone) * Timely development and commercialization of
performance improvements (including high speed modems)
ELECTRONIC COMMERCE IS A DEVELOPING MARKET AND INVOLVES CONSIDERABLE
UNCERTAINTY.
The electronic market for products, services and advertising has only
recently begun to develop and is rapidly changing. As is typical for a new and
rapidly evolving market, demand for products, services and advertising over the
Internet is considerably uncertain. There exist few proven services and
products. Since the market for electronic commerce on the Internet is new and
evolving, predictions of the size and future growth (if any) of this market are
difficult. Moreover, no standards have yet been widely accepted for the
measurement of the effectiveness of Web-based advertising. There can be no
assurance that such standards will develop sufficiently to support Web-based
advertising as a significant advertising medium. In addition, there can be no
assurance that advertisers will determine that banner advertising offered on Web
sites is an effective or attractive advertising medium. Moreover, there can be
no assurance that we will effectively transition to any other forms of Web-based
advertising if they develop. Furthermore, certain advertising filter software
programs are available that limit or remove advertising from an Internet user's
desktop. If generally adopted by users, such software may materially and
adversely affect the viability of advertising on the Internet. Our business,
results of operations and financial condition could be materially adversely
affected if any of the following events occur:
* The markets for our electronic commerce fail to develop * The markets
for our electronic commerce develop more slowly than expected * The
markets for our electronic commerce become saturated with competitors *
Our electronic commerce fails to achieve market acceptance
THE SUCCESS OF OUR BUSINESS DEPENDS TO A GREAT EXTENT ON OUR ABILITY TO
SELECT EXCELLENT BUSINESS OPPORTUNITIES.
An integral part of our business strategy is the identification and
pursuit of potentially successful electronic commerce opportunities. There can
be no assurance that we will be able to identify successful electronic commerce
opportunities or that we will be able to pursue these opportunities successfully
even if identified. Some of the business opportunities that we have pursued in
the past have failed to meet our expectations and have had to be abandoned.
There is no specific criterion for selecting electronic opportunities.
Accordingly, we will have significant flexibility in selecting such
opportunities. Our failure to select good electronic commerce opportunities
could materially and adversely affect our business, results of operations and
financial condition.
WE HAVE NO ASSURANCE THAT OUR BRANDS WILL BE ACCEPTED.
While we expect to offer the brands of other persons, we also intend to
develop our own brands. We believe that, due to the growing number of Internet
sites and the relatively low barriers to entry, the importance of brand
recognition will increase as more companies engage in commerce over the
Internet. Development and awareness of our brands will depend largely on our
success in establishing and maintaining a position as a leader in Internet
commerce and in providing high quality products and services. There can be no
assurance that we will succeed in this regard. To attract and retain customers,
vendors and advertisers and to promote and maintain our brands in response to
competitive pressures, we may need to increase our marketing and advertising
budgets or otherwise to increase substantially our financial commitment to
creating and maintaining brand loyalty among vendors and consumers. Our
business, results of operations and financial condition could be materially
adversely affected if any of the following events occur:
* We are unable to provide high quality products, services and
advertising * We otherwise fail to promote and maintain our brands * We
are unable to achieve or maintain a leading position in Internet
commerce
* We incur significant expenses in attempting to achieve or
maintain a leading position in Internet commerce or to promote
and maintain our brands
OUR FAILURE TO DEVELOP APPEALING CONTENT AND GRAPHIC COULD MATERIALLY
ADVERSELY AFFECT US.
Content and (to a lesser degree) graphic development relating to our
Web sites are key elements to the success of our brands-under-management
division. If these sites fail to have solid content (which is modified on a
continual basis) and appealing graphics, we expect that consumers, vendors and
advertisers will not be attracted to, or will discontinue to visit and utilize,
the sites. We expect that (as a consequence) we will fail to develop
successfully our brands. We have relied and will continue to rely substantially
on content and graphic development efforts of third parties. There can be no
assurance that our current or future third-party providers will effectively
implement our Web sites, or that their efforts will result in significant
revenue to us. Any failure to develop and maintain high-quality and successful
Web sites could materially and adversely affect our business, results of
operations and financial condition.
ELECTRONIC COMMERCE INVOLVES A NUMBER OF SECURITY RISKS.
A significant barrier to electronic commerce and communications is the
secure transmission of confidential information over public networks. We will
rely on encryption and authentication technology licensed from third parties to
provide the security and authentication necessary for secure transmission of
confidential information. There can be no assurance that advances in computer
capabilities, new discoveries in the field of cryptography or other events or
developments will not compromise or breach the algorithms we use to protect
customer transaction data. Any such compromise of our security could materially
and adversely affect our business, results of operations and financial
condition. A party able to circumvent our security measures could misappropriate
proprietary information or cause interruptions in our operations. We may need to
expend significant capital and other resources to protect against the threat of
such security breaches or to alleviate problems caused by such breaches.
Concerns over the security of Internet transactions and the privacy of users may
also inhibit the growth of the Internet generally, and the Web in particular,
especially as a means of conducting commercial transactions. To the extent that
our activities or the activities of third party contractors involve the storage
and transmission of proprietary information (such as credit card numbers),
security breaches could expose us to a risk of loss or litigation and possible
liability. There can be no assurance that our security measures will prevent
security breaches or that failure to prevent such security breaches will not
materially and adversely affect our business, results of operations and
financial condition.
WE EXPECT TO RELY EXTENSIVELY ON MERCHANDISE VENDORS AND THIRD PARTY
MANUFACTURERS OVER WHOM WE WILL HAVE LITTLE CONTROL.
We expect that we will depend entirely upon vendors and third party
manufacturers to supply merchandise for sale through our Web sites. We expect
that the availability of merchandise is and will be unpredictable. We expect
that we will generally have no long-term contracts or arrangements with our
vendors and manufacturers that guarantee the availability of merchandise. There
can be no assurance of the following:
* That our current and future vendors and manufacturers will
continue to sell merchandise to or manufacture merchandise for
us or otherwise provide merchandise for sale through our Web
sites
* That we will be able to establish new vendor or manufacturer
relationships that ensure merchandise will be available.
We will also rely on many of our vendors, manufacturers and joint venture
partners to process and ship merchandise to customers. We will have limited
control over the shipping procedures of our vendors, manufacturers and our joint
venture partners. Shipments by these vendors, manufacturers and joint venture
partners may be subject to delays. We expect that most merchandise we will sell
will carry a warranty supplied either by the manufacturer or the vendor, and we
will not be legally obligated to accept merchandise returns. Nonetheless, we may
voluntarily accept returns from customers. We may or may not receive
reimbursements from our vendors or manufacturers for accepting such returns. Our
business, results of operations and financial condition could be materially
adversely affected by any of the following events:
* We are unable to develop and maintain satisfactory
relationships with vendors and manufacturers on
acceptable commercial terms
* We are unable to obtain sufficient quantities of merchandise
* The quality of service provided by our vendors and
manufacturers falls below a satisfactory standard
* Our level of returns exceeds our expectations
WE ARE EXPOSED TO THE RISK OF SYSTEM FAILURE, AND SUCH A FAILURE COULD
MATERIALLY ADVERSELY AFFECT US.
Our success largely depends upon communications hardware and computer
hardware provided by a third party in a facility located in Arizona. Like all
computer systems, this system is vulnerable to damage from earthquake, fire,
floods, power loss, telecommunications failures, break-ins and similar events.
Despite our security measures, our servers are also vulnerable to computer
viruses, physical or electronic break-ins and similar disruptive problems. The
occurrence of any of these problems could lead to interruptions, delays, loss of
data or cessation in service to users of our services and products. We do not
presently have redundant systems or a formal disaster recovery plan, although we
are currently in the processing of developing these. We do not now and will not
for the foreseeable future maintain business interruption insurance. Any system
failure that interrupts or increases response times of our Web sites could
result in less traffic to such sites. If sustained or repeated, such failure
could reduce the attractiveness to consumers, vendors and advertisers of our
products, services and advertising. In addition, a key element of our strategy
is to generate a high volume of visits to and activity with respect to our Web
sites. An increase in the volume of visits to our Web sites could strain the
capacity of the software or hardware we use. This strain could lead to slower
response time or system failures. Such events could adversely affect sales of
products, services and advertising and the number of impressions received by
advertising and thus our advertising revenues.
OUR SUCCESS DEPENDS TO A GREAT EXTENT ON OUR ABILITY TO PROTECT OUR
INTELLECTUAL PROPERTY.
The development of our brands depends significantly on the protection
of our trademarks and trade names. We have registered the "JVWeb", "Dad & me",
"familylifestyle" and "crisis communications" trademarks in the United States.
We also claim common law trade name rights in these and other names.
Nonetheless, there can be no assurance that we will be able to secure
significant protection for these trademarks. Our current and future competitors
or others may adopt product or service names similar to our trademarks, thereby
impeding our ability to build brand identity and possibly leading to customer
confusion. Our inability to protect our trademarks and trade names might
materially and adversely affect our business, results of operations and
financial condition. In addition, in the future third parties may claim certain
aspects of our business infringe their intellectual property rights. While we
are not currently subject to any such claim, any future claim (with or without
merit) could result in one or more of the following:
* Significant litigation costs
* Diversion of resources, including the attention of management
* Our agreement to certain royalty and licensing arrangements
Any of these developments could materially and adversely affect our business,
results of operations and financial condition. In the future, we may also need
to file lawsuits to enforce our intellectual property rights, to protect our
trade secrets, or to determine the validity and scope of the proprietary rights
of others. Such litigation, whether successful or unsuccessful, could result in
substantial costs and diversion of resources. Such costs and diversion could
materially and adversely affect our business, results of operations and
financial condition.
WE COULD BE MATERIALLY ADVERSELY AFFECTED BY FUTURE REGULATORY CHANGES
AND CERTAIN CURRENT REGULATIONS APPLICABLE TO OUR BUSINESS.
We are not currently subject to direct regulation by any government
agency in the United States, other than regulations applicable to businesses
generally. There are currently few laws or regulations directly applicable to
access to or commerce on the Internet. Due to the increasing popularity and use
of the Internet, 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. Such legislation could dampen the growth
in use of the Web generally and decrease the acceptance of the Web as a
communications and commercial medium. Such a development could materially and
adversely affect our business, results of operations and financial condition. In
addition, because our products and services will be available and sold over the
Internet in multiple states and foreign countries and because we expect to sell
to numerous consumers resident in such states and foreign countries, such a
jurisdiction may claim that we are required to qualify to do business as a
foreign entity in such jurisdiction. We are qualified to do business in only two
states. Our failure to qualify to do business as a foreign entity in a
jurisdiction where we are required to do so could subject us to taxes and
penalties for the failure to qualify. Any application of laws or regulations of
a jurisdiction in which we are not currently qualified could materially and
adversely affect our business, results of operations and financial condition.
BECAUSE OF THE NATURE OF OUR BUSINESS, WE ARE EXPOSED TO A NUMBER OF
SOURCES OF OTHER POTENTIAL LIABILITIES.
Certain of our services will involve the development, implementation
and maintenance of applications that are critical to the operations of our
clients' businesses. Our failure or inability to meet a client's expectations in
the performance of our services could injure our business reputation or result
in a claim for substantial damages against us, regardless of our responsibility
for such failure. We will attempt to limit contractually our damages arising
from negligent acts, errors, mistakes or omissions in rendering our services.
However, there can be no assurance that any contractual protections will be
enforceable in all instances or would otherwise protect us from liability for
damages. In addition, Internet users will be able to download certain materials
from our Web sites and subsequently distribute the materials to others. Because
of this, claims could be asserted against us (with or without merit) in the
future on a variety of legal theories (including defamation, negligence and
copyright and trademark infringement) depending on the nature and content of
such materials. For example, we could be liable for any of the following:
* Libel for any defamatory information we provided about a person * Any
losses incurred by a person in reliance on incorrect information we
negligently provided * Copyright and trademark infringement resulting
from information we provided
Moreover, we expect that we may agree with third parties to provide links to
such third parties' Web sites. A claimant might successfully argue that by
providing such links, we are liable for wrongful actions by such third parties
through such Web sites, for such matters as the following:
* Defamation
* Negligence
* Copyright and trademark infringement
* Losses resulting from the products and services sold by the third
party.
We are in the process of procuring general liability insurance. Even if we
procure this insurance, the insurance may not cover all potential claims or may
not adequately indemnify us for all liability to which we are imposed. Any
liability or legal defense expenses not covered by insurance or exceeding our
insurance coverage could materially and adversely affect our business, operating
results and financial condition.
OUR OBLIGATION TO INDEMNIFY OUR OFFICERS AND DIRECTORS COULD PREVENT
OUR RECOVERY FOR LOSSES CAUSED BY THEM.
Our Bylaws provide that we must indemnify each director, officer, agent
and/or employee to the maximum extent provided for in the General Corporation
Law of Delaware. Further, we have purchased and maintain customary officer and
director insurance on behalf of certain of these persons. Such insurance may
cover certain matters for which we do not have the power to indemnify such
persons. Consequently, because of the actions of officers, directors, agents and
employees, we could incur substantial losses and be prevented from recovering
such losses from such persons. Further, the United States Securities and
Exchange Commission maintains that indemnification is against the public policy
expressed in the Securities Act of 1933 (the "Act"), and is therefore
unenforceable.
WE ARE EXPOSED TO INTENSE COMPETITION.
The electronic commerce market (particularly on the Internet) is new,
rapidly evolving and intensely competitive. Most of our current and potential
competitors have longer operating histories, larger customer bases, longer
relationships with clients and significantly greater financial, technical,
marketing and public relations resources than we do, and could decide at any
time to increase their resource commitments to our market. We expect competition
to intensify in the future. There can be no assurance that existing or future
competitors will not develop or offer services that provide significant
performance, price, creative or other advantages over those we offer. Such a
development could materially adversely affect our business, results of
operations and financial condition. In addition, certain current competitors
have established, and certain other current competitors (as well as future
competitors) may in the future establish, cooperative relationships among
themselves or directly with vendors to obtain exclusive or semi-exclusive
sources of merchandise. Accordingly, new competitors or alliances among
competitors and vendors may emerge and rapidly acquire market share. Increased
competition may result in reduced operating margins, loss of market share and a
diminished brand franchise. As a result of their larger size, our competitors
may be able to secure merchandise from vendors on more favorable terms than we
can. Moreover, they may be able to respond more quickly to changes in customer
preferences or to devote greater resources to the development, promotion and
sale of their merchandise than we can. Any of these circumstances could
materially adversely affect our business, results of operations and financial
condition.
FUTURE ACQUISITIONS COULD EXPOSE US TO NUMEROUS RISKS.
As part of our business strategy, we may acquire complementary
companies, products, services or technologies. Any acquisition would be
accompanied by the risks commonly encountered in an transaction. Such risks
include the following;
* Difficulty of assimilating the operations and personnel of the
acquired companies
* Potential disruption of our ongoing business
* Inability of management to maximize our financial and
strategic position through the successful incorporation
of acquired businesses and technologies
* Additional expenses associated with amortization of acquired
intangible assets
* Maintenance of uniform standards, controls, procedures and
policies
* Impairment of relationships with employees, customers, vendors
and advertisers as a result of any integration of new
management personnel
* Potential unknown liabilities associated with acquired
businesses
There can be no assurance that we would be successful in overcoming these risks
or any other problems encountered in connection with such acquisitions. Due to
all of the foregoing, any future acquisition may materially and adversely affect
our business, results of operations, financial condition and cash flows.
Although we do not expect to use cash for acquisitions, we may be required to
obtain additional financing if we choose to use cash in the future. There can be
no assurance that such financing will be available on acceptable terms. In
addition, if we issue stock to complete any future acquisitions, existing
stockholders will experience further ownership dilution.
WE RELY HEAVILY UPON CERTAIN DIRECTORS AND OFFICERS, AND OUR LIMITED
MANAGEMENT RESOURCES MAY NOT BE SUFFICIENT FOR THE FUTURE.
We substantially depend upon the efforts and skills of Greg J. Micek, a
director and the President of the Company. The loss of Mr. Micek's services, or
his inability to devote sufficient attention to our operations, could materially
and adversely affect our operations. We do not maintain key man life insurance
on Mr. Micek. In addition, there can be no assurance that the current level of
management is sufficient to perform all responsibilities necessary or beneficial
for management to perform. Our success in attracting additional qualified
personnel will depend on many factors, including our ability to provide them
with competitive compensation arrangements, equity participation and other
benefits. There is no assurance that we will be successful in attracting highly
qualified individuals in key management positions.
OUR MANAGEMENT HAS LIMITED EXPERIENCE IN CERTAIN ASPECTS OF OUR
BUSINESS.
We believe that we have ample experience to manage our fee-for-service
division. However, our brands-under-management division requires management
experience of a different nature. We expect that we will generally have little
or no direct experience in the management or operation of the types of
businesses represented by the products and services we will offer through our
brands-under-management division (either directly or through joint ventures) by
means of Web sites. In the case of joint ventures, we expect that our joint
venture partners will have a requisite level of experience. However, there can
be no assurance that we will be familiar enough with the joint venture's
proposed business to ascertain this. Because of our lack of experience, we may
be more vulnerable than others to certain risks. We also may be more vulnerable
to errors in judgment that could have been prevented by more experienced
management. As a result, our lack of previous experience could materially and
adversely affect our future operations and prospects.
A CERTAIN STOCKHOLDER OF THE COMPANY HAS CONTROL OF THE COMPANY, AND
CUMULATIVE VOTING AND PREEMPTIVE RIGHTS ARE DENIED TO STOCKHOLDERS.
Greg J. Micek, a director and the President of the Company, owns
approximately 50.4% of the outstanding Common Stock (considered on an undiluted
basis). Cumulative voting in the election of Directors is not provided for.
Accordingly, the holder or holders of a majority of the outstanding shares of
Common Stock (currently Mr. Micek) may elect all of our Board of Directors after
completion of the offering. There are no preemptive rights in connection with
our Common Stock. Thus, the percentage ownership of existing stockholders may be
diluted if we issue additional shares in the future.
THE COMPANY'S AUTHORIZED PREFERRED STOCK EXPOSES STOCKHOLDERS TO
CERTAIN RISKS.
Our Certificate of Incorporation authorizes the issuance of up to
10,000,000 shares of Preferred Stock, par value $.01 per share. No shares of
Preferred Stock were issued as of March 9, 2000. The authorized Preferred Stock
constitutes what is commonly referred to as "blank check" preferred stock. This
type of preferred stock allows the Board of Directors to divide the Preferred
Stock into series, to designate each series, to fix and determine separately for
each series any one or more relative rights and preferences and to issue shares
of any series without further stockholder approval. Preferred stock authorized
in series allows our Board of Directors to hinder or discourage an attempt to
gain control of the Company by a merger, tender offer at a control premium
price, proxy contest or otherwise. Consequently, the Preferred Stock could
entrench our management. The market price of our Common Stock could be
materially and adversely affected by the existence of the Preferred Stock.
OUR COMMON STOCK HAS A LIMITED TRADING MARKET.
Our Common Stock trades in the United States only in the
over-the-counter market on the OTC Electronic Bulletin Board. Public trading of
our Common Stock commenced on June 30, 1998. Thus far, the prices at which our
Common Stock has traded have fluctuated fairly widely on a percentage basis. See
"PRICE RANGE OF COMMON STOCK." There can be no assurance as to the prices at
which our Common Stock will trade in the future, although they may continue to
fluctuate significantly. Prices for our Common Stock will be determined in the
marketplace and may be influenced by many factors, including the following:
* The depth and liquidity of the markets for our Common Stock
* Investor perception of us and the industry in which we
participate
* General economic and market conditions
WE HAVE OUTSTANDING A LARGE NUMBER OF SHARES OF COMMON STOCK THAT ARE
ELIGIBLE FOR SALE UNDER CERTAIN CIRCUMSTANCES, AND SALES, OR EVEN THE MERE
POSSIBILITY OF SALES, OF THESE SHARES MAY MATERIALLY ADVERSELY THE PRICE OF THE
COMMON STOCK.
Approximately 11,400,057 shares of Common Stock are issued and
outstanding. We believe that approximately 7,475,000 of these shares are
"restricted securities" as that term is defined in Rule 144 promulgated under
the Act. Rule 144 provides in general that a person (or persons whose shares are
aggregated) who has satisfied a one-year holding period, may sell within any
three month period, an amount which does not exceed the greater of 1% of the
then outstanding shares of Common Stock or the average weekly trading volume
during the four calendar weeks before such sale. The vast majority of the
restricted shares have been outstanding for over one year and thus are eligible
for sale under Rule 144. Rule 144 also permits the sale of shares, under certain
circumstances, without any quantity limitation, by persons who are not
affiliates of the Company and who have beneficially owned the shares for a
minimum period of two years. Hence, the possible sale of these restricted shares
may, in the future dilute an investor's percentage of freely tradeable shares
and may depress the price of our Common Stock. Also, if substantial, such sales
might also adversely affect our ability to raise additional equity capital.
However, most of the approximately 7,475,000 shares believed to be "restricted
securities" are held by affiliates of the Company and must (by law) be sold
subject to the volume limitations of Rule 144 described above, thus restraining
the number of shares that can sold in any period of time.
WE HAVE THE ABILITY AND THE OBLIGATION TO ISSUE ADDITIONAL SHARES OF
COMMON STOCK IN THE FUTURE, AND SUCH FUTURE ISSUANCE MAY MATERIALLY ADVERSELY
AFFECT STOCKHOLDERS.
We have registered an aggregate of 5,000,000 shares of Common Stock for
issuance in possible future business combination transactions. Most of these
shares are still available for issuance in the future. Moreover, we have
registered an aggregate of 1,000,000 shares of Common Stock for issuance to
outside consultants to compensate them for services provided. Most of these
shares are still available for issuance in the future. For issuances of shares
in connection with acquisitions and issuances to consultants, our Board of
Directors will determine the timing and size of the issuances and the
consideration or services required therefor. Our Board of Directors intends to
use its reasonable business judgment to fulfill its fiduciary obligations to our
then existing stockholders in connection with any such issuance. Nonetheless,
future issuances of additional shares could cause immediate and substantial
dilution to the net tangible book value of shares of Common Stock issued and
outstanding immediately before such transaction. Any future decrease in the net
tangible book value of such issued and outstanding shares could materially and
adversely affect the market value of the shares. In addition, we have
outstanding certain warrants to purchase shares of Common Stock. We also have
the obligation to issue additional such warrants in the future. These warrants
permit the holders to purchase shares of Common Stock at specified prices. These
purchase prices may be less than the then current market price of our Common
Stock. A total of approximately 7.5 million additional shares of Common Stock
would be issued if all of the warrants currently outstanding (and we are
obligated to issue in the future) were exercised. Any shares of Common Stock
issued pursuant to these warrants would further dilute the percentage ownership
of existing stockholders. The terms on which we could obtain additional capital
during the life of these warrants may be adversely affected because of such
potential dilution.
THE TRADING PRICE OF OUR COMMON STOCK ENTAILS ADDITIONAL REGULATORY
REQUIREMENTS, WHICH MAY NEGATIVELY AFFECT SUCH TRADING PRICE.
The trading price of our Common Stock has been below $5.00 per share.
As a result of this price level, trading in our Common Stock is subject to the
requirements of certain rules promulgated under the Securities Exchange Act of
1934. These rules require additional disclosure by broker-dealers in connection
with any trades generally involving any non-NASDAQ equity security that has a
market price of less than $5.00 per share, subject to certain exceptions. Such
rules require the delivery, before any penny stock transaction, of a disclosure
schedule explaining the penny stock market and the risks associated therewith,
and impose various sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited investors
(generally institutions). For these types of transactions, the broker-dealer
must determine the suitability of the penny stock for the purchaser and receive
the purchaser's written consent to the transaction before sale. The additional
burdens imposed upon broker-dealers by such requirements may discourage
broker-dealers from effecting transactions in our Common Stock affected. As a
consequence, the market liquidity of our Common Stock could be severely limited
by these regulatory requirements.
STOCKHOLDERS HAVE NO GUARANTEE OF DIVIDENDS.
The holders of our Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors out of funds legally available
therefore. To date, we have paid no cash dividends. The Board of Directors does
not intend to declare any dividends in the foreseeable future, but instead
intends to retain all earnings, if any, for use in our business operations. If
we obtain additional financing, our ability to declare any dividends will
probably be limited contractually.
For all of the aforesaid reasons and others set forth herein, the shares covered
by this Prospectus involve a high degree of risk. You should be aware of these
and other factors set forth in this Prospectus.
<PAGE>
USE OF PROCEEDS
The shares covered by this Prospectus may be sold by the Selling
Stockholders from time to time at their discretion, and the Company will not
receive any proceeds from the sale of the shares. However, certain of the shares
covered by this Prospectus may be acquired by the Selling Stockholders pursuant
to exercises of stock options. The Company will receive the purchase price for
such shares upon exercise of such options. The Company expects that such
proceeds will be used for general corporate purposes.
DIVIDEND POLICY
The Company has paid no cash dividends on its Common Stock, and the
Company presently intents to retain earnings to finance the expansion of its
business. Payment of future dividends, if any, will be at the discretion of the
Board of Directors after taking into account various factors, including the
Company's financial condition, results of operations, current and anticipated
cash needs and plans for expansion.
PRICE RANGE OF COMMON STOCK
The Common Stock is traded on the OTC Bulletin Board under the symbol
"JVWB". As of March 9, 2000, the Company had approximately 264 holders of
record. Trading in the Common Stock commenced on June 30, 1998. Presented below
are the high and low closing prices of the Common Stock for the periods
indicated:
<TABLE>
<CAPTION>
High(1) Low(1)
Fiscal year ending June 30, 2000:
<S> <C> <C>
Second Quarter $ .593 $ .156
First Quarter $ .937 $ .33
Fiscal year ended June 30, 1999:
Fourth Quarter $1.81 $ .43
Third Quarter $ .78 $ .36
Second Quarter $ .562 $ .125
First Quarter $1.250 $ .406
Fiscal year ended June 30, 1998:
Fourth Quarter $ .75 $ .75
- ---------------
</TABLE>
(1) Reflects sole trade to occur during fiscal 1998 on June 30, 1998, the date
trading in the Common Stock commenced.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
In general, the Company is structured to pursue two main business
activities: 1) the joint venturing of brands that have strong on-line commerce
potential, and 2) the building of a strong fee-for-service division to deepen
our capabilities.
Quarter Ended December 31, 1999
General Discussion
During this quarter, management completed its efforts at re-defining
the manner in which we would execute our business model. We successfully
separated ourselves from our overall reliance on Lernout and Hauspie for
execution support, through the addition of key management in the areas of sales
and operations. We also completed a review of our existing projects, and, a
result, established priority projects to concentrate on in the next year.
Therefore, our budget for the upcoming year relies, to a material extent, on a
successful launch of www.ihomeline.com, www.dadandme.com, www.linksxpress.com,
and other projects under development. We are also relying on the establishment
of our fee-for-service division, which offers integrated sponsorship, web
hosting and web development, and strategic consulting services to our joint
venture partners and third party clients.
Balance Sheet
Current Assets: Cash and other current assets remain at a sufficient level to
meet our obligations. The note receivable regards a loan made to AMP3.com,
which, management believes, remains as a collectible asset. AMP3 is under
various discussions for the sale of its business, at which time the note will be
paid.
Other Assets: The Company made an investment, along with Linksxpress.com, Inc.,
in the establishment of Linksxpress.co.uk, Inc., a european edition of
www.linksxpress.com. The investment gave the Company a 45% interest in this
separate entity in exchange for 600,000 shares of the Company. We are also
reporting our investment in Linksxpress.com, Inc., which is unchanged for the
quarter. Finally, we continue to report our initial investment in AMP3.com,
which, as we stated, is under various discussions to be sold.
Total Liabilities: Overall, accounts payables remain at a manageable level, as
we strive to keep a balance between incurring obligations and investing in
meeting our growth goals for the year. The note payable to related parties has
grown an additional $104,812 for the quarter, as continued investments are being
made into the Company's future.
Total Stockholders' Equity: The increase in shares outstanding was principally
due to the linksxpress.co.uk, Inc. transaction. Additional shares were issued to
consultants performing services on various projects under development. In the
quarter, stock options issued included 1,000,000 options issued to Carlo
Pellegrini and 400,000 options issued to Ken Gooley, under the Company's stock
option plan. These options, if exercised, would be converted into restricted
shares.
Income Statement
Revenues: The principal revenues for the quarter were derived from services
performed in launching www.ihomeline.com, in which the Company has a 50%
interest. Through these efforts, the Company is refining its service offering,
which will be extended to additional joint venture partners and third party
clients.
Expenses: The principal expenses for the quarter involved recorded stock
issuances to consultants engaged in various research & development projects on
behalf of the Company. Other material expenses incurred related to the launching
of ihomeline, and other projects under development. It is the policy of the
Company to take the conservative position of expensing items related to projects
under development, as opposed to setting up "work in progress" asset accounts on
the balance sheet.
Fiscal Year Ended June 30, 1999
Summary
The overall performance of the Company over the last year had a number
of disappointing elements to it. The unwinding of the Wall Street Whispers
transaction, despite management's belief as to it being the right decision at
the time, represented a loss of momentum. The considerable effort in
establishing our New York presence, initiating the web-based crisis services,
and lack of anticipated support from our European services group, combined to
cause us to fall considerably short of our goals for this program. We continue
to strive for success in this area, and do have some promising opportunities.
However, if those opportunities do not materialize into revenue generating
business, we may need to abandon this area. Our hosting facility in Phoenix,
co-located with GTE, remains a viable asset of the Company, although the
European hosting opportunities are proving difficult to acquire.
In the fourth quarter, we entered into a 5% equity position with
AMP3.com, LLC, an on-line music website. We invested considerable efforts with
that business in the fourth quarter, as they were one of the sponsors of
Woodstock held in July. As a result of that effort, the Company has gained
considerable industry and technical knowledge in the entire electronic
downloading of music phenomenon. We are presently aggressively pursuing
opportunities to capitalize on that knowledge.
Promising areas of pursuit remain our core business strategy of joint
venturing with viable brands. The www.ihomeline.com website is now completing
its demonstration site, and is expected to be available for viewing in the near
future. We are actively discussing with two other brands for similar
relationships. This area is anticipated to remain our primary pursuit for the
upcoming year. Our hosting capability in Phoenix remains a viable part of our
core strategy, and is an attraction to prospective joint venture partners as we
had anticipated.
Our lack of overall funding seriously hindered our development efforts
in pursuing our joint venture strategies. Despite that, we successfully
established the joint venture surrounding the www.ihomeline.com project. We are
continuing to look for creative strategies to establish joint ventures,
emphasizing our business strengths and core competencies. We anticipate some
success in pursuing this strategy in the upcoming year. However, we will
continue to be hampered by having access to only minimal funding capabilities.
Also as a general point of reference, the internet commerce environment
in which we operate continues to be highly volatile. Business dynamics change
almost daily. We are affected by these changing dynamics on a daily basis. For
example, the large public relations firms that we targeted in the spring and
summer clearly have a great need for our crisis services. However, as we pursued
those relationships, technology contributed to providing these agencies with
internal solutions (or at least the perception of an internal solution), which
hindered our marketing efforts.
Income Statement
Revenue. The Company generated meaningful consulting revenues in the fourth
quarter, primarily through one engagement. Unfortunately, the unpredictable
nature of internet business forces has contributed to serious questions as to
the collectibility of that invoice. Revenue for web-hosting began in April 1999,
and we are hopeful it will grow as new customers are added.
General and Administrative Expenses. A material percentage of the G&A
expenditures represented travel and other marketing costs associated with the
establishment of a presence in New York and California, as well as the research
costs with evaluating various joint venture opportunities. Remaining G&A
expenditures were related to the costs of being a public Company, including the
associated costs of maintaining a fully reporting status with the S.E.C.
Balance Sheet
Current Assets: Cash balance reported was due primarily to shareholder
contributions. The short term note receivable was to a primary client, and was
guaranteed by a principal shareholder of that client.
Notes Payable to founding shareholder: On June 30, 1999, the founding
shareholder purchased the outstanding loans advanced to the Company by other
related parties.
Capital Requirements
As stated above, the founding shareholder has been, and continues to
provide, minimum funding requirements for the Company, although he is under no
obligation to do so. If the founding shareholder decides to discontinue funding,
the Company would be required to seek alternative financing, which would be
uncertain. Management is continually evaluating the performance of the Company
over this next fiscal year. Alternative business strategies may be considered
this next year if business operations fail to produce desired results, of if
necessary financing becomes unavailable.
BUSINESS
Introduction
JVWeb, Inc. (the "Company") was incorporated on October 28, 1997 under
the laws of the State of Delaware. The Company was formed for purposes of
pursuing electronic commerce opportunities. On May 20, 1998, the Company became
publicly-held through the distribution by LS Capital Corporation ("LS Capital")
of certain of its shares of the Company's common stock to LS Capital's
stockholders.
At the time the Company was formed, electronic commerce opportunities
were expected to arise in several different ways. However, the Company expected
primarily to offer products, services, content and advertising by means of sites
on the World Wide Web (the "Web") of the Internet. The Company expected that the
products, services, content and advertising would usually be offered by joint
ventures between the Company and established businesses although occasionally
they would be offered directly by the Company itself. In the case of joint
ventures, the Company expected to contribute technical expertise and (in certain
instances) financial assistance in developing the joint ventures' Web sites,
while the joint venture partners would be responsible for furnishing the joint
ventures' products or services, the content for the joint ventures' Web sites,
and the related business expertise. This area of the Company's business is
referred to herein as the brands-under-management division. The Company also
expected secondarily to develop a fee-for-service division to sell the
technological, marketing and other abilities that the Company had acquired or in
the future may acquire. From time to time, the Company has given greater
emphasis to either one of its brands-under-management division or its
fee-for-service division over the other.
The address of the Company is 5444 Westheimer, Suite 2080, Houston,
Texas 77056, and its telephone number is 713/622-9287. The Company's own Web
site is located at http://www.jvweb.com. Information contained in the Company's
Web site shall not be deemed to be a part of this Prospectus.
Industry Background
The Internet is an increasingly significant global medium for
communications, content and online commerce. Growth in Internet usage has been
fueled by a number of factors, including the large and growing installed base of
personal computers in the workplace and home, advances in the performance and
speed of personal computers and modems, improvements in network infrastructure,
easier and cheaper access to the Internet and increased awareness of the
Internet among businesses and consumers.
The increasing functionality, accessibility and overall usage of the
Internet and online services have made them an attractive commercial medium. The
Internet and other online services are evolving into a unique sales and
marketing channel, just as retail stores, mail-order catalogs and television
shopping have done. In theory, electronic retailers have virtually unlimited
electronic shelf space and can offer customers a vast selection through
efficient searches and retrieval interfaces. Moreover, electronic retailers can
interact directly with customers by frequently adjusting their featured
selections, editorial insights, shopping interfaces, pricing and visual
presentations. Beyond the benefits of selection, purchasing is more convenient
than shopping in a physical retail store because electronic shopping can be done
24 hours a day and does not require a trip to a store. Web sites can present
advertising and marketing materials in new and compelling fashions, display
products and services in electronic catalogs, offer products and services for
sale electronically, process transactions and fulfill orders, provide customers
with rapid and accurate responses to their questions, and gather customer
feedback efficiently. The minimal cost to develop and maintain a Web site, the
ability to reach and serve a large and global group of customers electronically
from a central location, and the potential for personalized low-cost customer
interaction, provide additional economic benefits for electronic retailers.
Unlike traditional retail channels, electronic retailers do not have the
burdensome costs of managing and maintaining expensive retail real estate and a
significant retail store infrastructure or the continuous printing and mailing
costs of catalog marketing. Furthermore, electronic retailers are generally able
to conduct their businesses with fewer employee than traditional retailers.
Because of these advantages over traditional retailers, electronic retailers
have the potential to build large, global customer bases quickly and to achieve
superior economic returns over the long term. An increasingly broad base of
products and services is successfully being sold electronically, including
computers, travel services, brokerage services, automobiles, music and books. If
this trend continues, the migration from traditional shopping to electronic
shopping will effect dramatic changes in retailing as it has heretofore been
conducted.
In addition to the offering of products and services through electronic
commerce, the Internet has created a new medium for disseminating content, such
as the content historically delivered by newspapers, magazines and journals.
Electronic dissemination of content offers numerous advantages over historical
mediums of content dissemination. First, the content can be provided to
consumers more quickly, as the delays required by printing and delivery are
avoided. For example, a magazine that ordinarily is mailed for delivery on a
particular day can be made available electronically as soon as the magazine is
otherwise ready for print, at least one day before anticipated delivery. In
addition, content can be updated on a real time basis so that only current (and
no outdated) content appears. Moreover, the electronic content can be linked
instantaneously to related content of interest. While newspapers, magazines and
journals can offer only still-shot photography, electronic commerce can offer
moving and even live pictures much akin to television. Equally (if not most)
important, electronic content can be distributed at a much lower cost compared
to historical mediums because electronic dissemination does not involve printing
and delivery costs. The new medium of content dissemination provided by the
Internet has in turn lead to new forms of advertising, especially banner
advertisements that appear as Web sites are displayed. As the presence on the
Web of suppliers of content and advertising increases, the new forms of
advertising such as the banner advertisements should increase in prominence as
well, thus creating additional revenue opportunities.
Although businesses are pursuing electronic commerce rapidly and at
increasing rates, the basic differences of electronic commerce from historical
commerce require companies to take fundamentally new approaches. A number of
Internet professional services firms have emerged to assist businesses with the
development and implementation of their electronic commerce strategies. However,
these firms tend to be small and focused on a particular aspect of electronic
commerce, apparently lacking the necessary depth and integration of strategic,
technical and creative skills to meet all the electronic commerce needs of a
business. After analyzing the very fragmented Internet service industry,
management has concluded that:
1. Most traditional advertising and marketing agencies have
neither a proven track record of success in the area of
electronic commerce and lack the extensive technical skills
(such as application development, and legacy system and
database integration) required to solve increasingly complex
electronic commerce problems.
2. Most vendors of computer and technology products and services
lack the creative and marketing skills required to build
audiences and deliver unique and compelling content, and are
further constrained by their need to recommend their
proprietary brands.
3. Internet access service providers, whose core strength is in
providing Internet access and site hosting, typically lack
both the necessary creative and application development
skills.
Management believes that to provide fully competent Internet services, a service
provider must possesses a full range and integration of strategic, technical and
creative skills required for electronic commerce.
Businesses seeking to realize the benefits provided by electronic
commerce face a formidable series of challenges presented by the need to link
business and marketing strategies, new and rapidly changing technologies and
continuously updated content. The establishment and maintenance of a Web site to
pursue electronic commerce requires significant technical expertise in a number
of areas, such as electronic commerce systems, security and privacy
technologies, application and database programming, mainframe and legacy
integration technologies and advanced user interface and multimedia production.
Marketing expertise in a number of areas (including the development of
audiences, greater search engine presence, and broader ranges of links to the
site) is also required. Apparently, few businesses (especially small, emerging
and mid-sized businesses) have the time, money, and strategic, technical and
creative skills to implement an electronic commerce strategy on their own. In
addition, management believes that the novelty, complexity and rapid development
of electronic commerce has left many businesses (especially small, emerging and
mid-sized businesses) bewildered and reluctant to act, despite a strongly felt
need to become involved in electronic commerce.
Overall the Company believes that electronic commerce presents
excellent business opportunities for the foreseeable future. Because of the
relative novelty of electronic commerce, the Company believes that the market
for electronic commerce is fairly wide-open, although market leadership has
already been established in a number of respects. Nonetheless, plenty of
opportunities still exist. The Company believes that customer unfamiliarity and
the fragmented state of the electronic commerce market creates an opportunity
for a company with fully integrated strategic, technical and creative Internet
skills that can assist businesses. Despite the Company's optimism about the
future of electronic commerce, the pursuit of a plan of a business plan based on
electronic commerce is not without considerable risks. For more information
about these risks, see "BUSINESS AND PROPERTIES - RISK FACTORS -We depend
heavily on the Internet, and any adverse development with regard to the Internet
could materially adversely affect us, -We are exposed to numerous risks due to
potential future technological change, -- The acceptance of the Internet as a
medium for commerce is uncertain, and the failure of the Internet to gain such
acceptance could materially adversely affect us, -- Electronic commerce is a
developing market and involves considerable uncertainty, -- Electronic commerce
involves a number of security risks, -We are exposed to the risk of system
failure, and such a failure could materially adversely affect us, -- We could be
materially adversely affected by future regulatory changes and certain current
regulations applicable to our business, and -- Because of the nature of our
business, we are exposed to a number of sources of other potential liabilities."
Web Sites
The proper development and implementation of a Web site for a business
involves a number of steps. First, a thorough study is undertaken to determine
the likelihood that the business will succeed in electronic commerce. Once the
study determines that the business is likely to succeed in electronic commerce,
a strategy for developing a Web site is developed by a team composed of the
business principals, advertising agency, web developer and content site manager.
A domain name is agreed upon and obtained. The Web site is then "story boarded"
or laid out conceptually and graphically. A web developer develops the structure
of the Web site, including electronic commerce systems; host integration;
implementation of third-party applications and security technologies; and
integration of hardware, software and Internet access products. A compelling
user interface is created to attract and hold the attention of the target
audience while conforming to brand images and marketing campaigns. A
relationship with a third-party vendor is established to provide secure,
state-of-the-art, high-availability Web site hosting and integrated services for
e-mail and secure electronic commerce. Once operational, a Web site requires
ongoing support services for content maintenance, site administration, technical
problems, assistance with the hosting environment, and software support. As the
Web site nears completion, electronic marketing objectives are developed to
establish and increase Web site traffic, strengthen brand awareness and generate
sales leads. Electronic media planning and purchasing, and electronic public
relations are undertaken. This is followed by efforts to optimize the Web site's
search engine presence, increase site access through hyperlink recruitment and
disseminate key messages to Internet newsgroups, mailing lists and forums.
Typically a Web site starts as a basic site costing several thousand dollars. It
can then become increasingly more complex through the addition of more Web
pages, links and commercial capability. Ultimately, an extremely complex Web
site can cost several million dollars.
The JVWeb Solution
The Company was founded to seek out and capitalize on business
opportunities presented by electronic commerce. The Company believes that the
anticipated migration from traditional shopping to electronic shopping, and the
anticipated increase in the electronic dissemination of content, will present
for the foreseeable future excellent business opportunities of at least two
particular types. The first type of opportunities presented is to offer
products, services and content that are now either not available at all or are
available only to a limited extent in electronic commerce, and to offer new
forms of advertising made available by the Internet. The second type of
opportunities presented is to provide Internet services to persons offering or
proposing to offer products, services, content or advertising in electronic
commerce or offering. Because these two types of opportunities are very
distinct, the Company has established two divisions to pursue these
opportunities separately. These divisions are the Company's
brands-under-management division and the Company's fee-for-service division.
From time to time the Company has given a greater emphasis to one of these
division over the other.
Fee-For-Services Division
The Company's fee-for-services division provides clients with the
vision, expertise and resources required to develop new strategies and improve
business processes for electronic commerce. To capitalize on the opportunity
presented by the rapid growth in electronic commerce, the Company has developed
certain internal capabilities relating to electronic commerce and Internet
services. Moreover, the Company has formed and continues to form certain
strategic relationships with third parties to supplement the Company's internal
capabilities to ensure that the Company offers a full, integrated ensemble of
strategic, technical and creative skills required for electronic commerce and
Internet services. In each consulting engagement, the client can contract for
the specific services it requires, depending on the nature of the engagement and
the capabilities of the client's organization. The Company expects to bill most
of its engagements on a time and materials basis, although it may work on a
fixed-price basis.
The Company's fee-for-services division has been divided into four
distinct functional areas. The first functional area of the Company's
fee-for-services division provides strategic Internet services consulting. The
services provided by this area of the fee-for-services division include the
following:
* strategy consulting regarding business and marketing
strategies best suited for pursuing the client's
business in electronic commerce
* creation of a system or process design that defines the roles
that the system or process will perform for meeting the
client's strategic requirements
* development of a testable version of the client's system
including all necessary programs and components and a
compelling user interface for the system to enable it to
attract and hold the attention of the client's target audience
while conforming to the client's brand image and marketing
campaigns
* testing of the system in preparation of deployment into a full
production system and installation of the system after
all tests are completed
* audience development to increase Web site traffic,
strengthening brand awareness and generating sales leads
* maintenance of the Web site and its content, and provision of
technical support
While at one time the Company had planned on organizing a subsidiary that would
employ a number of strategic Internet service consultants, the Company now plans
on adding additional strategic Internet service consultants on a more gradual
basis as qualified personnel can be hired.
The second functional area of the Company's fee-for-services division
involves Web site development. As an outgrowth of the Company's Web site
development services, the Company developed a web-based communications service
for targeting Advertising and Public Relations Agencies in North America. This
service experienced limited success during its initial push, a period of
inactivity and (due to recent expressions of interest by potential customers)
recent reconsideration of reactivatation in a meaningful way,. In the near
future, the Company intends to conduct a marketing campaign of the Company's web
development services, focused on the Gulf Coast region of Texas.
The third functional area of the Company's fee-for-services division
provides Web hosting services. In this connection, the Company has entered into
a Web hosting agreement with GTE Internetworking, a division of GTE Corporation.
Under the terms of this agreement, GTE makes available to the Company GTE's Web
Advantage Service from GTE's worldwide secure global data-center based in
Phoenix. GTE's Web Advantage Service is a high-performance, highly reliable,
cost-effective Web hosting service. Under the terms of this agreement, the
Company has access to a bandwidth of up to 10.0 Mbit/sec. This agreement allows
the Company to expand and contract its use of GTE's services as the Company's
traffic fluctuates. The charges that the Company will owe pursuant to the
agreement will depend on the Company's usage. The initial term of this agreement
is for one year. This agreement is renewable by the Company and is terminable by
the Company upon 60 days prior written notice. The Company believes that the GTE
agreement provides suitable Web hosting capacity for the foreseeable future. The
Company also believes that providing hosting services is critical because
hosting is an entry level service and creates the opportunity for offering and
selling additional services. The Company is offering its Web hosting services
over the Web site "jvwebhosting.com."
The fourth functional area of the Company's fee-for-services division
involves the sale of integrated sponsorships. Integrated sponsorships are a
concept developed by the Company by which advertisers can gain simultaneous
exposure through a variety of mediums in a variety of ways. For example, an
integrated sponsorship may be a combination of banner advertising on multiple
Web sites, traditional advertising on radio programs and Web casts, the
advertiser's co-hosting of programs featured on radio programs and Web casts,
and the editing of such programs or other content for use in connection with the
advertiser's own Web site. All of these activities are undertaken simultaneously
in a coordinated fashion. The Company commenced this area of its
fee-for-services division in the middle of January 2000, and management is
pleased with the initial results.
The Company's objective regarding the fee-for-services division is to
become and remain a leading Internet services provider. The Company's strategy
to achieve this objective includes the following elements:
Strengthen Position as an Internet Services Provider. The Company is
continuing to strengthen its position as an Internet services provider
in order to provide clients with superior Internet solutions. The
Company intends to continue identifying, reviewing and integrating the
latest Internet technologies and accumulating and deploying the best
demonstrated practices for electronic commerce.
Developing Brand. In a fragmented industry that lacks brands strongly
identified with Internet services providers the Company believes that
it will need to build a well-recognized brand for its fee-for-services
division. The Company's brand development program will be designed to
reinforce the message that the Company's fee-for-services division can
provide a complete range of services to build and deploy e-commerce
solutions. The Company intends to build and differentiate its
fee-for-services division brand through excellent service and a variety
of marketing and promotional techniques, including advertising on other
Web sites and other media, conducting an ongoing public relations
campaign and developing business alliances and partnerships.
Develop Additional Strategic Relationships. The Company has developed a
number of informal strategic relationships with advertisement agencies,
web developers, site content managers, site hosts and other persons
whose services are necessary to develop and implement an electronic
commerce strategy. Few of these strategic relationships have yet
resulted in legal binding relationships. While the Company intends to
develop the ability to render many of these services internally, the
Company also intends to continue developing strategic relationships so
that the Company can have adequate access to such services for the
foreseeable future.
Brands-Under-Management Division
This division was formed for purposes of pursuing electronic commerce
opportunities involving the sale of products and services in electronic commerce
and the offering of content and advertising over the Internet. Although the
Company expects to undertake some of these electronic commerce opportunities
alone, the Company believes that it will undertake most of these electronic
commerce opportunities through joint ventures with established, profitable
businesses whose products, services or content (in most cases) are not currently
being offered electronically. The Company would furnish expertise in electronic
commerce (and in certain instances financial assistance) for an equity interest
in the resulting electronic business, in lieu of an up-front payment of cash.
Because of the Company's willingness to enter into such an arrangement, the
Company expects to be an attractive joint venture partner for many established
business seeking to become engaged in electronic commerce. This willingness will
allow selected businesses to enter into electronic commerce with minimal
financial investment and risk, while providing the Company with a substantial
potential return for its services and financial contributions. The Company
expects that for the foreseeable future the financial assistance that the
Company will provide to a joint venture in which it participates may range from
fairly minimal amounts to approximately $250,000 at the high end. In order to
provide this financial assistance, the Company will have to procure funds from
various sources, which are discussed above in "RISK FACTORS - We expect to have
future capital needs, and the procurement of additional financing to meet these
needs is uncertain." There can be no assurance that the Company will be
successful in procuring these funds.
Management believes that opportunities in electronic commerce are
either commerce-driven or content-driven. Commerce-driven opportunities involve
the sale of products and services through electronic mediums, such as electronic
stores. Content-driven opportunities involve the provision of content (such as
that historically provided by newspapers, magazines and journals) through
electronic mediums, the attraction of consumers to such content, and the
offering of advertising (and even products and services) in connection with the
provision of such content. The Company will consider both commerce-driven or
content-driven opportunities.
The Company is currently undertaking several brands-under-management
projects. The first of these is the iHomeline.com project. The iHomeline.com
project involves a 50%-owned subsidiary (the "iHomeline.com Subsidiary") that
intends to create, own and operate a World Wide Web site whose objective is to
foster communities of consumers, manufacturers, services providers and
advertisers interested in the examination, purchase, sale or offer of
home-related content, products, services or advertising. The Company's partner
in the iHomeline.com project is Jim Neidner. Mr. Neidner is the President of
Neidner Construction/Remodeling Inc. based in Houston, Texas, and has over 27
years experience in the custom home construction and remodeling business. For
more than four years, Mr. Neidner has co-hosted Home Line Talk Radio, a weekly
Houston radio talk show dealing with topics of interest to homeowners. The
iHomeline.com Web site will offer relevant, informative and entertaining content
of interest to consumers of home-related products and services. The goal of this
Web site is to appeal to manufacturers, services providers and advertisers of
home-related products and services to induce them to offer products, services
and advertising on this Web site and to pay for the opportunity to do so. The
iHomeline.com Web site is expected to feature worldwide, live broadcasts of talk
shows focusing on home-related topics, do-it-yourselfers educational and
reference materials, chat rooms, auctions, a service for referrals to
home-related professionals, home plans and blueprints that can be purchased
on-line, and possibly real estate, mortgage loan, furniture and travel-related
brokerage services. The iHomeline.com Web site is now operational, has been
completed to a phase-one level and is generating revenues. It has already
syndicated its Home Line Talk Radio program to four cities in three states.
Greater development of the iHomeline.com Web site to a final, phase-two level is
planned, but is conditioned upon the procurement of adequate financing, which is
currently being sought.
The second brands-under-management project is the LinksXpress project.
This project involves LinksXpress.com, Inc. ("LinksXpress.com"), a company
formed to create, own and operate a site on the World Wide Web that will serve
as an e-commerce search engine and shopping portal serving the United States and
Canada. The initial LinksXpress.com Web site is nearing completion and should be
operational by July 1, 2000. Once this initial LinksXpress.com Web site is
operational, LinksXpress.com intends to establish a similar Web site that will
serve Great Britain. In anticipation of this, LinksXpress.com formed
LinksXpress.co.uk, Inc. The Company acquired in a securities exchange an
approximately 8% interest (on a non-diluted basis) in LinksXpress.com. As part
of this tranasction, the Company received 500,000 shares of the common stock of
LinksXpress.com, warrants to purchase up to 1,000,000 shares of
LinksXpress.com's common stock at a purchase price of $2.00 per share, and
options to purchase up to 500,000 shares of LinksXpress.com's common stock at
purchase prices ranging from $.25 to $2.00 per share. In exchange for these
securities, LinksXpress.com received 150,000 shares of the Company's common
stock and an option to purchase up to 150,000 additional shares of the Company's
common stock at a purchase price of $.40 per share. In addition to the
securities exchange, LinksXpress.com has entered into a Web hosting agreement
with the Company and a right of first refusal agreement in favor of the Company
regarding LinksXpress.com's future Web development work. The Company also
acquired from LinksXpress.com approximately 35% of the outstanding stock in
LinksXpress.co.uk in exchange for 600,000 shares of the Company's common stock.
The third brands-under-management project is the Crosspointe/Great
Records project. Crosspointe Net, Inc. ("CPNI") is in the process of developing
a family of Christian-related Web sites around a suite of domain names. Great
Records, Inc. is a corporation formed by CPNI for purposes of developing a Web
site that plans on featuring the sale of the music of between five and ten
select Christian recording artists, either through downloading or traditional
compact disks (of the customer's selection). In connection with this project,
the Company entered into a stock exchange with Crosspointe Net, Inc. ("CPNI")
whereby the Company acquired a 7.5% interest in CPNI in exchange for the
issuance of 300,000 shares of the Company's common stock. The Company also
acquired a 50% interest in Great Records, Inc. in exchange for 227,000 shares of
the Company's common stock. Moreover, the Company and CPNI entered into a banner
ad sales agreement, pursuant to which the Company will sell banner ads and
corporate sponsorships onto the CPNI suite of Web sites. Also, CPNI will act as
a marketing agent to sell the Company's web development and strategic consulting
services.
When a joint venture prospect is presented in the future, a thorough
study will be undertaken of the prospect's strategic market position, business
requirements and existing systems and capabilities, to determine the likelihood
that the prospect's business will succeed in electronic commerce. After the
study, the Company's site management team (composed of the site administrator,
web marketing consultant, financial controller and project manager) will either
accept or reject the prospect. This decision will be based on a number of
factors, such as the prospect's historical or prospective ability to fulfill
orders, the lack of a clearly perceived electronic commerce strategy, the lack
of perceived electronic market interest and the size of the initial budget in
relation to the related risk. Currently, the Company intends to charge a $2,500
application fee to defer the costs of screening a prospect. If the Company
decides not to pursue a joint venture with the prospect, the Company will
develop a basic Web site for the prospect in consideration of the application
fee.
If a prospect is accepted, the Company will enter into negotiations
with the prospect to formalize an on-going joint venture relationship. The
Company expects that the joint ventures it forms will assume the form of
corporations or limited liability companies organized in Delaware (a favorable
state for corporations), Texas (the state in which the Company is
headquartered), or another favorable jurisdiction. The Company expects that it
will own between 20% to 80% of the outstanding equity interests in each joint
venture depending on the relative contributions of the venturers. The
documentation governing the joint venture will delineate the respective
responsibilities of the Company and its joint venture partner. In the case of
the Company, these responsibilities are expected to include the contribution of
necessary strategic, technical and creative skills and (in certain instances)
financial assistance in developing the joint venture's Web site. The joint
venture partner's responsibilities will include the furnishing of the joint
ventures' products or services, the content for the joint ventures' Web sites,
and the related business expertise. The Company expects that it and its joint
venture partner will have management authority with respect to the respective
areas for which they have responsibility. The capital contributions of the
venturers should be fairly minimal, and will be worked out on a case-by-case
basis. The Company expects that as the joint ventures with commerce-driven Web
sites receive revenues, such revenues will be first used to reimburse the joint
venture partner for the costs of providing the joint venture's product or
services, then such revenues will be used to pay other joint venture expenses,
and then the remainder will be distributed to the venturers in accordance with
their percentage ownership. A similar scheme will be used for joint ventures
with content-driven Web sites, except that the joint ventures' revenues are
expected to result from additional advertising and additional subscription to
the underlying hardcopy publication resulting from the Web sites. The Company
expects that the documentation governing the joint venture will include a
buy-sell arrangement whereby either the Company or its joint venture partner may
terminate its relationship with the other by setting the price and terms of the
purchase of one of the venturer's interest and allowing the other venturer to
elect to sell to or buy out the venturer setting the price and terms for such
price and upon such terms. The Company also expects that the terms of the joint
ventures will be renewable on an annual basis and the documentation governing
the joint venture will provide for the sale of the joint venture's business upon
dissolution either to a third party, or to the Company or its joint venture
partner at an appraised price.
Other Electronic Commerce Opportunities
In addition to the development of the Company's fee-for-services and
brands-under-management divisions, the Company intends to consider other
electronic commerce opportunities presented to it. The Company intends to select
only those opportunities (if any) that present the greatest likelihood of
success.
Acquisitions
The Company originally intended to pursue an active acquisition program
in an effort to foster the Company's growth over and above the growth that can
be achieved internally. The Company had registered 5,000,000 shares of Common
Stock for this purpose. The Company does not now intend to conduct an active
acquisition program, but is considering select acquisitions on a case-by-case
basis. The Company does not now have any possible acquisitions under
consideration in any meaningful sense.
The Company has not developed, nor does it currently intend to develop,
a valuation model and a standardized transaction structure it will use. Instead,
the Company anticipates considering each acquisition on a case-by-case basis.
However, the Company expects that the purchase price for acquisition candidate
will be based on quantitative factors, including historical revenues,
profitability, financial condition and contract backlog, and the Company's
qualitative evaluation of the candidate's management team, operational
compatibility and customer base. Nonetheless, the Company expects that any
acquisition would assume the form of a merger in exchange for shares of Common
Stock.
Any acquisition is expected to be accounted for using the purchase
method of accounting. Under this method of accounting, for each acquisition, a
portion of the purchase price would be allocated to the tangible and
identifiable intangible assets acquired and liabilities assumed based on their
respective fair values on the acquisition date. This portion would include both
(i) amounts allocated to in-process technology and immediately charged to
operations and (ii) amounts allocated to completed technology and amortized on a
straight-line basis over the estimated useful life of the technology of six
months. The portion of the purchase price in excess of tangible and identifiable
intangible assets and liabilities assumed would be allocated to goodwill and
amortized on a straight-line basis over the estimated period of benefit. The
results of operations of the acquired entity would be consolidated with those of
the Company as of the date the Company acquires effective control of the
acquired entity, which generally would occur prior to the formal legal closing
of the transaction and the physical exchange of acquisition consideration. In
addition, the Company may grant stock options to employees of an acquired
company to provide them with an incentive to contribute to the success of the
Company's overall organization. As a result of both the purchase accounting
adjustments and charges for the stock options just described, the Company may
incur significant non-cash expenses related to its acquisitions.
Acquisitions also a number of risks, including adverse effects on the
Company's reported operating results from increases in goodwill amortization,
acquired in-process technology, stock compensation expense and increased
compensation expenses resulting from newly hired employees, the diversion of
management attention, risks associated with the subsequent integration of
acquired businesses, potential disputes with the sellers of one or more acquired
entities and the failure to retain key acquired personnel. Client satisfaction
or performance problems with an acquired firm also materially and adversely
affect the reputation of the Company as a whole, and any acquired company could
significantly fail to meet the Company's expectations. Due to all of the
foregoing, any individual future acquisition may materially and adversely affect
the Company's business, results of operations, financial condition and cash
flows. If the Company issues Common Stock to complete future acquisitions as it
expects to, there will be ownership dilution to existing stockholders. In
addition, to the extent the Company chooses to pay cash consideration in such
acquisitions, the Company may be required to obtain additional financing and
there can be no assurance that such financing will be available on favorable
terms, if at all.
Intellectual Property
The Company regards its service marks, trademarks, trade dress, trade
secrets and similar intellectual property as critical to its success, and relies
on trademark law, trade secret protection and confidentiality and/or license
agreements with its employees, customers, partners and others to protect its
proprietary rights. The Company pursues the registration of its trademarks and
service marks in the U.S. Effective trademark, service mark, and trade secret
protection may not be available in every country in which the Company's products
and services are made available electronically. The Company may license to third
parties in the future certain of its proprietary rights, such as trademarks.
While the Company will attempt to ensure that the quality of its brands are
maintained by such licensees, there can be no assurance that such licensees will
not take actions that might materially adversely affect the value of the
Company's proprietary rights or reputation, which could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations. There can be no assurance that the steps taken by the Company to
protect its proprietary rights will be adequate or that third parties will not
infringe or misappropriate the Company's trademarks, trade dress and similar
proprietary rights. In addition, there can be no assurance that other parties
will not assert infringement claims against the Company. The Company may be
subject to legal proceedings and claims from time to time in the ordinary course
of its business, including claims of alleged infringement of the trademarks and
other intellectual property rights of third parties by the Company and its
licensees. Such claims, even if not meritorious, could result in the expenditure
of significant financial and managerial resources.
Market and Marketing
With respect to the Company's fee-for-service division, the Company's
marketing efforts are dedicated to demonstrating to key decision makers in
prospective clients the benefits of electronic commerce and the use of Internet
solutions, and the effectiveness of the Company's services. The Company's
marketing program strives to accomplish the following:
* Enhance the Company's Brand. The continued strengthening of
the Company's brand is crucial to the achievement of the
Company's objective of becoming a recognized provider of
Internet professional services. The Company's brand
development efforts are designed to reinforce the message that
the Company can provide a complete range of services to build
and deploy electronic commerce and Internet solutions.
* Develop Marketing and Sales Tools. The Company has developed
marketing and sales materials to be used in connection with
the Company's business generation efforts. These materials are
designed to increase the effectiveness of the sales and
marketing efforts of the Company.
* Generate Client Leads. The Company's marketing campaigns
are intended to generate client leads through the use of
multiple forms of media, with in-person sales calls
comprising the primary form at this time. As far as the
Company's fee-for-services division goes, the Company
recently commenced a direct sales campaign regarding its
integrated sponsorships. This campaign is achieving
satisfactory initial success. During this sales campaign, the
Company found considerable sales synergies between the
Company's existing joint venture Web sites. The Company is
also planning the launch in the near future of an aggressive
direct marketing campaign regarding its web development and
hosting services. This campaign will target the Gulf Coast
region of Texas in close proximity to the Company's
corporate headquarters.
In the future, the Company may employ a variety of other media, program
and product development, business development and promotional activities to
market its fee-for-service division. For example, the Company may place
advertisements on various Web sites. These advertisements should usually take
the form of banners that encourage readers to click through directly to the
Company's Web sites. The Company also may enter into co-marketing agreement
pursuant to which links to the Company's Web sites will be featured on other,
non-Company Web sites. The Company also may engage in a coordinated program of
print advertising in specialized and general circulation newspapers and
magazines. The Company hopes that in the future it will receive free publicity
such in the form of being featured in a wide variety of television shows,
articles and radio programs and widely-read portions of the Internet, such as
portions included on Netscape and Yahoo!
With respect to the Company's brands-under-management division, the
Company's marketing strategies will be designed to strengthen its brand names,
increase customer traffic to its Web sites, build strong customer loyalty,
maximize repeat purchases and develop incremental revenue opportunities. The
Company intends to build customer loyalty by creatively applying technology to
deliver personalized programs and service, as well as creative and flexible
merchandising. The Company will be able to provide increasingly targeted and
customized services by using the extensive customer preference and behavioral
data obtained as a result of its experience. The Internet allows rapid and
effective experimentation and analysis, instant user feedback and efficient
"redecorating of the store for each and every customer," all of which the
Company intends to incorporate in its merchandising. In contrast to traditional
direct-marketing efforts, the Company's personalized notification services will
send highly customized notices to customers at their request. By offering
customers a compelling and personalized value proposition, the Company will seek
to increase the number of visitors that make a purchase, to encourage repeat
visits and purchases and to extend customer retention. Loyal, satisfied
customers also generate word-of-mouth advertising and awareness, and are able to
reach thousands of other customers and potential customers because of the reach
of electronic commerce.
Technology
The Company has implemented a broad array of site management, customer
interaction, transaction-processing and fulfillment services and systems using
commercially available, licensed technologies. The Company's current strategy is
to license commercially available technology whenever possible rather than seek
internally developed solutions.
The Company will use a set of applications for accepting and validating
customer orders, organizing, placing and managing orders with vendors, receiving
product and assigning it to customer orders, and managing shipment of products
and services to customers based on various ordering criteria. These applications
will also manage the process of accepting, authorizing and charging customer
credit cards. In addition, the Company's systems will allow it to maintain
ongoing automated e-mail communications with customers throughout the ordering
process at a negligible incremental cost. These systems will automate many
routine communications entirely, facilitate management of customer e-mail
inquiries and allow customers (on a self-service basis) to check order status,
change their e-mail address or password, and check subscriptions to personal
notification services.
A group of systems administrators and network managers will monitor and
operate the Company's Web sites, network operations and transaction-processing
systems. The continued uninterrupted operation of the Company's Web sites and
transaction-processing systems is essential to the Company's businesses, and the
site operations staff is expected to ensure, to the greatest extent possible,
the reliability of the Company's Web sites and transaction-processing systems.
Competition
In general, the market for Internet professional services and
electronic commerce are relatively new, intensely competitive, rapidly evolving
and subject to rapid technological change. The Company expects competition to
persist, intensify and increase in the future. Barriers to entry are minimal,
and new competitors can enters these markets at a relatively low cost. Most of
the Company's current and potential competitors have longer operating histories,
larger client bases, longer relationships with clients and significantly greater
financial, technical, marketing and public relations resources than the Company
and could decide at any time to increase their resource commitments to the
Company's markets. In addition, these markets are subject to continuing
definition, and, as a result, the core business of certain of the Company's
competitors may better position them to compete in these markets as they mature.
Competition of the type described above could materially adversely affect the
Company's business, results of operations and financial condition.
With regard to the Company's fee-for-services division, the Company
believes that the principal competitive factors in its market are strategic
expertise, technical knowledge and creative skills, brand recognition,
reliability of the delivered solution, client service and price. There can be no
assurance that existing or future competitors will not develop or offer services
that provide significant performance, price, creative or other advantages over
those offered by the Company, which could have a material adverse effect on the
Company's business, results of operations and financial condition. The Company
has no patented technology that would preclude or inhibit competitors from
entering the Internet professional services market.
With regard to the Company's brands-under-management division, the
Company believes that the principal competitive factors in its markets will be
brand recognition, selection, personalized services, convenience, price,
accessibility, customer service, quality of editorial and other site content and
reliability and speed of fulfillment, and the Company intends to compete
vigorously in all of these aspects. Nonetheless, electronic retailers may be
acquired by, receive investments from or enter into other commercial
relationships with larger, well-established and well-financed companies as use
of the Internet and electronic commerce increases. Certain of the Company's
competitors may be able to secure merchandise from vendors on more favorable
terms, devote greater resources to marketing and promotional campaigns, adopt
more aggressive pricing or inventory availability policies and devote
substantially more resources to their Web sites and systems development than the
Company. Increased competition may result in reduced operating margins, loss of
market share and a diminished brand franchise. Further, as a strategic response
to changes in the competitive environment, the Company may from time to time
make certain pricing, service or marketing decisions or acquisitions that could
have a material adverse effect on its business, prospects, financial condition
and results of operations. In addition, companies that control access to
transactions through network access or Web browsers could promote the Company's
competitors or charge the Company a substantial fee for inclusion.
Employees
The Company currently has three full-time employees. The Company
expects that it may have as many as five to ten employees within the next year,
excluding employees of any acquired businesses. Although the competition for
employees is fairly intense, the Company does not now foresee problems in hiring
additional qualified employees to meet its labor needs. The Company also
utilizes the services of five outside consultants, who each devote a
considerable amount of their business time to matters involving the Company.
Facilities
The Company currently leases a small amount of office space for its
corporate offices on a month-to-month basis and a small amount of rack space for
servers in GTE's data-center based in Phoenix on a year-to-year basis. The
Company also owns the intellectual property rights in its domain names and Web
sites. The Company does not own any significant tangible property.
Legal Proceedings
On or about January 17, 2000, the Company was served with a Summons
with Notice dated December 30, 1999 regarding a lawsuit instituted by Louis
Ferro, a former consultant of the Company. This lawsuit was instituted in the
Supreme Court of the State of New York, County of New York (Index No. 605883)
against the Company and Greg J. Micek, a Director and the President of the
Company. (The Supreme Court of the State of New York is the initial level trial
court of the State of New York.) Under the procedural law of the State of New
York, the Summons with Notice received by the Company is not required to give
much information regarding the specifics of the claims being asserted, and no
such specifics were given. However, such Summons with Notice did indicate that
the nature of the action is breach of contract, unjust enrichment and libel, and
that Mr. Ferro is seeking $1,042,132.89 (plus interest) in damages. The Company
otherwise had until about February 17, 2000 to answer this lawsuit; however, the
Company procured an extension from Mr. Ferro's counsel, giving to the Company
the right to file its answer at any time on or prior to March 15, 2000. The
Company believes that the lawsuit is without merit and that the Company has
valid counterclaims against Mr. Ferro, having values that will more than offset
any amounts Mr. Ferro is likely to recover against the Company. Accordingly,
unless settled soon, the Company intends to answer this lawsuit, vigorously
defending against all claims asserted and asserting all available counterclaims.
Notwithstanding the preceding, to avoid the excessive costs of litigation, the
Company has reached a verbal, non-binding settlement with Mr. Ferro in which the
Company would pay to Mr. Ferro an amount extremely small in comparison to the
amount sought by him. The ultimate completion of this settlement depends on one
contingency, the outcome of which is uncertain. As a consequence, the ultimate
outcome of the proposed settlement and of this lawsuit can not now be
determined.
Available Information
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 and exhibits relating
thereto (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), of which this Prospectus is a part. This Prospectus does
not contain all the information set forth in the Registration Statement.
Reference is made to such Registration Statement for further information with
respect to the Company and the securities of the Company covered by this
Prospectus. Statements contained herein concerning the provisions of documents
are necessarily summaries of such documents, and each statement is qualified in
its entirety by reference to the copy of the related document filed with the
Commission.
The Company has registered as a reporting company under the Securities
Exchange Act of 1934 (the "Exchange Act"). As a consequence, the Company will
file with the Commission Annual Reports on Form 10-KSB, Quarterly Reports on
Form 10-QSB, and Current Reports on Form 8-K. The Annual Reports on Form 10-KSB
will contain audited financial statements. After they are filed, these reports
can be inspected at, and copies thereof may be obtained at prescribed rates, at
the Commission's Public Reference Room located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further
information on the Public Reference Room. The Commission maintains a World Wide
Web site that contains reports, proxy statements and information statements and
other information (including the Registration Statement) regarding issuers that
file electronically with the Commission. The address of such site is
http://www.sec.gov. The Company's reports can be inspected at, and copies
downloaded from, the Commission's World Wide Web.
MANAGEMENT
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Positions
<S> <C> <C>
Greg J. Micek 45 Director, President
Lewis E. Ball 68 Director, Treasurer & Secretary
Kevin Dotson 34 Key Consultant
</TABLE>
Greg J. Micek has served as a Director and President of the Company
since inception. Since 1983, Mr. Micek has been a principal of The Micek Group,
a business consulting firm. In this connection, from June 1996 to June 1997 he
served as President and Chief Executive Officer of HyperDynamics Corporation
(formerly Ram-Z Enterprises, Inc.), a publicly traded company focusing on
technology acquisitions. In addition, from 1992 to 1994 Mr. Micek served as the
Project Manager for the City of Austin's Small Contractor Support Network, and
from 1991 to 1992, he served as a business reorganization consultant for Parker
Brothers, Inc. Mr. Micek received a Bachelor of Arts and a Doctorate of
Jurisprudence from Creighton University.
Lewis E. Ball has served as a director of the Company since November 15,
1997. He has been a financial consultant to a number of companies since 1993.
From June 1996 to January 1997, Mr. Ball served as the Chief Financial Officer
of HyperDynamics Corporation (formerly Ram-Z Enterprises, Inc.). Mr. Ball has
many years of industry experience as a Chief Financial Officer and Director of
several major public companies, including Stewart & Stevenson Services, Inc. and
Richmond Tank Car Company (from 1983 to 1993). From February, 1999 to present,
Mr. Ball has served as an Associate with E. Ted Davis & Associates, Inc., a
privately-held valuation firm. He is a Certified Public Accountant, a Certified
Valuation Analyst and a Certified Management Accountant. Mr. Ball earned a
Bachelor of Business Administration in Finance from the University of Texas at
Austin, followed by post-graduate studies in accounting at the University of
Houston.
Kevin Dotson has served as a key consultant to the Company since
December 1, 1997. Since 1995, Mr. Dotson has owned MicroVision Solutions, an
Internet consulting and Web development company. From 1994 to 1995, he worked as
a data entry specialist for Columbia/HCA SMBC in Houston. Earlier he had served
in the United States Army for five years training military personnel on computer
systems. Mr. Dotson attended Arizona State University.
The authorized number of directors of the Company is presently fixed at
two. Each director serves for a term of one year that expires at the following
annual stockholders' meeting. Each officer serves at the pleasure of the Board
of Directors and until a successor has been qualified and appointed. Currently,
directors of the Company receive no remuneration for their services as such, but
the Company will reimburse the directors for any expenses incurred in attending
any directors meeting.
There are no family relationships, or other arrangements or
understandings between or among any of the directors, executive officers or
other person pursuant to which such person was selected to serve as a director
or officer.
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
Summary Compensation Table
The following table sets forth the compensation paid by the Company to
its Chief Executive Officer for services in all capacities to the Company (no
executive officer of the Company had total annual salary and bonus for the
fiscal years ended June 30, 1999 or 1998 exceeding $100,000).
Summary Compensation
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
(a) (b) (c) (g)
Fiscal
Name and Year Securities Underlying
Principal Position Ended Salary Options (number of shares)
<S> <C> <C> <C>
Greg J. Micek 6/30/99 (2) -0-
Chief Executive 6/30/98 (2) 2,000,000
Officer and
President
</TABLE>
- -----------------
(1) The Columns designated by the SEC for the reporting of certain bonuses,
other annual compensation, long-term compensation, including awards of
restricted stock, long term incentive plan payouts, and all other
compensation, have been eliminated as no such bonuses, awards, payouts
or compensation were awarded to, earned by or paid to any specified
person during any fiscal year covered by the table.
(2) Mr. Micek is entitled to an annual salary of $60,000; however, he
voluntary elected not to receive any portion of his salary during
fiscal 1999 or fiscal 1998.
Stock Option Grants
The Company did not grant any stock options during the fiscal year
ended June 30, 1999.
Option Exercises/Value of Unexercised Options
The following table sets forth the number of securities underlying
options exercisable at June 30, 1999, and the value at June 30, 1999 of
exercisable in-the-money options remaining outstanding as to the Chief Executive
Officer of the Company. No SAR's of any kind have been granted.
Aggregated Option
<TABLE>
<CAPTION>
(a) (d) (e)
Number of Securities
Underlying Unexercised Value of Unexercised
Options at June 30, 1999 In-the-Money Options at
(Numbers of Shares) June 30, 1999
Name Exercisable Exercisable
<S> <C> <C>
Greg J. Micek 2,000,000 $1,550,000(2)
</TABLE>
- ---------------------
(1) The Columns designated by the SEC for the reporting of the number of
shares acquired on exercise, the value realized, and the number and
value of unexercisable options have been eliminated as no options were
exercised and no unexercisable options existed during the fiscal year
covered by the table.
(2) The price of the Common Stock used for computing this value was the
$.875 per share closing bid price of the Common Stock on the OTC
Bulletin Board on June 30, 1999.
Other Plans
The Company has no other deferred compensation, pension or retirement
plans in which executive officers participate.
Compensation Agreement with Key Personnel
The Company has entered into an employment agreement (the "Employment
Agreement") with Greg J. Micek, a Director and the President of the Company. The
Employment Agreement has a term of three years and will expire in accordance
with its terms in November 2000. Under the Employment Agreement, Mr. Micek is to
receive an annual salary of $60,000, although as of the date of this Prospectus
he not yet received any payment from the Company on his salary. Mr. Micek is
also entitled to participate in any and all employee benefit plans hereafter
established for the employees of the Company. The Employment Agreement contains
a covenant not to compete barring Mr. Micek from engaging in the electronic
commerce business anywhere in the world for one year after the termination of
the Employment Agreement by the Company with cause or by Mr. Micek without
cause. Moreover, pursuant to an agreement between the Company and Mr. Micek, the
Company granted to Mr. Micek options to purchase 2,000,000 shares of Common
Stock at a per-share purchase price of $.10. The options have a term of five
years.
The Company has entered into an agreement with Kevin Dotson, a person
who provides Internet consulting services to the Company. This agreement
provides that, for providing consulting services to the Company, the Company
shall issue to Mr. Dotson options to purchase shares of Common Stock, at a
purchase price per share equal to the fair market value, on any day on which Mr.
Dotson provides consulting services to the Company. The number of shares with
respect to which Mr. Dotson will be issued options will depend on the number of
hours of consulting services that he provides on any particular day. Mr. Dotson
will be issued an option to purchase 250 shares (on any day on which he consults
for up to four hours), 500 shares (on any day on which he consults for more than
four hours and up to eight hours), 750 shares (on any day on which he consults
for more than eight hours and up to ten hours) and 1,000 shares (on any day on
which he consults for more than ten hours). Notwithstanding the preceding, the
maximum number of shares, with respect to which Mr. Dotson may be granted
options pursuant to the Dotson Option Agreement, is 250,000. Each option issued
under the Dotson Option Agreement will have a term of five years after the date
it is issued. As of March 10, 2000, Mr. Dotson had been issued under his
agreement options to purchase 340,000 shares of Common Stock.
Certain Transactions
In connection with the organization of the Company, the Company issued
to Mr. Micek 6.2 million shares of Common Stock in consideration of a payment of
$62,000. The terms and conditions of Mr. Micek's employment with the Company and
the grant of a stock option to him in this connection are discussed in the
subsection captioned "Compensation Agreement with Key Personnel" immediately
preceding.
Between October 1997 and early June 1999, John J. Micek, Jr. loaned
$200,000 to the Company. John J. Micek, Jr. is the father of Greg J. Micek, a
director and the President of the Company. Such loans were represented by a
number of demand promissory notes bearing interest at a rate of nine percent per
annum. During fiscal 1999, Greg J. Micek acquired from John J. Micek, Jr. all of
these promissory notes in exchange for 300,000 shares of the Company's common
stock held by him. As of December 31, 1999, the total balance owed to Greg J.
Micek on these promissory notes was approximately $_____________.
As a finder's fee for making the introductions leading to the
investment of LS Capital in the Company and for a payment of $.01 per share, the
Company issued to Lewis E. Ball, a director of the Company, 100,000 shares of
Common Stock.
DETERMINATION OF OFFERING PRICE
The shares covered by this Prospectus may be offered for sale from time
to time by the Selling Stockholders. Such sales may be on the OTC Bulletin
Board, elsewhere in the over-the-counter market, in negotiated transactions or
otherwise at prices and at terms then prevailing or at prices related to the
then-current market prices or at such other prices as the Selling Stockholders
may determine in negotiated transactions.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of March 10, 2000 information
regarding the beneficial ownership of Common Stock (i) by each person who is
known by the Company to own beneficially more than 5% of the outstanding Common
Stock; (ii) by each director; and (iii) by all directors and officers as a
group.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Name and Address of Prior to Offering(1) After Offering(1)(2)
Beneficial Owner Number Percent Number Percent
<S> <C> <C> <C> <C>
Greg J. Micek 7,750,000(3) 57.8% 7,750,000(3) 56.3%
5444 Westheimer, Suite 2080
Houston, Texas 77056
Lewis E. Ball 120,000 1.1% 120,000 1.0%
6122 Valley Forge
Houston, Texas 77057
Carlo Pellegrini 1,000,000(4) 8.1% 1,000,000(4) 7.8%
195 High Avenue
New York, NY 10960
All directors and officers 7,870,000(3) 58.7% 7,870,000(3) 57.2%
as a group (two persons)
</TABLE>
(1) Includes shares Stock beneficially owned pursuant to options and
warrants exercisable within 60 days after the date of this Prospectus.
(2) Takes into account the issuance of certain shares being registered.
(3) Includes 5,750,000 shares owned outright and 2,000,000 shares that may
be purchased pursuant an option currently exercisable.
(4) Includes 1,000,000 shares that may be purchased pursuant an option
currently exercisable.
SELLING STOCKHOLDERS
The following table sets forth certain information as of March 10, 2000
pertaining to the beneficial ownership of Common Stock by the Selling
Stockholders.
<TABLE>
<CAPTION>
Beneficial Ownership Number of Shares Beneficial Ownership
Stockholder Prior to Offering Being Offered After Offering (1),(2)
<S> <C> <C> <C>
Tanye Capital Corp. 300,000 (3) 200,000 100,000(4)
DeMonte & Associates 130,000(5) 117,500 12,500(6)
Dudley Anderson 45,000(7) 14,000 31,000(8)
Arthur Hartman 10,000(9) 10,000 -0-
Pat Springle 13,000(10) 13,000 -0-
</TABLE>
(1) Assumes the offer and sale of all shares being registered.
(2) Beneficial ownership of each Selling Stockholder after the offering is
less than 1% of Common Stock outstanding (3) Includes 50,000 owned
outright, 200,000 shares that may purchased pursuant to stock options,
which are currently exercisable, 10,000 shares that Tanye Capital
Corporation is entitled to receive within 60 days of this Prospectus
and 40,000 shares that Keith McKenzie (the controlling person of Tanye
Capital Corporation) is entitled to receive within 60 days of this
Prospectus.
(4) Includes 50,000 shares owned outright, 10,000 shares that Tanye Capital
Corporation is entitled to receive within 60 days if this Prospectus
and 40,000 shares that Keith McKenzie (the controlling person of Tanye
Capital Corporation) is entitled to receive within 60 days of this
Prospectus.
(5) Includes 12,500 shares owned outright and 117,500 shares that may be
purchased pursuant to stock options, which are currently exercisable.
(6) Includes 12,500 shares owned outright.
(7) Includes 2,500 shares owned outright and 42,500 shares that may
purchased pursuant to stock options, which are currently exercisable.
(8) Includes 2,500 shares owned outright and 28,500 shares that may be
purchased pursuant to stock options currently exercisable.
(9) Includes 10,000 shares that may be purchased pursuant to stock
options, which are currently exercisable.
(10) Includes 13,000 shares that may purchased pursuant to stock options,
which are currently exercisable.
PLAN OF DISTRIBUTION
The shares covered by this Prospectus are being registered for the
account of the Selling Stockholders and donees and pledgees selling shares
received from a Selling Stockholder after the date of this prospectus. Such
shares may be sold in (a) ordinary brokerage transactions and transactions, in
the over-the-counter market or (if in the future the Common Stock should be
listed on a national exchange) on such national exchange, in which the
broker-dealer solicits purchases, (b) face-to-face transactions between sellers
and purchasers without a broker-dealer, (c) in connection with pledge to secure
debts and other obligations, (d) in connection with short sales of shares of
Common Stock, or (e) in connection with the writing of non- traded and
exchange-traded call options, in hedge transactions and in settlement of other
transactions in standardized or over-the-counter option. In effecting sales,
brokers or dealers engaged by the selling stockholders may arrange for other
brokers or dealers to participate. The brokers or dealers may receive
commissions or discounts from the selling stockholders in amounts to be
negotiated. Such shares may be offered for sale from time to time at market
prices prevailing at the time of sale or at negotiated prices. The Company will
not receive any proceeds from the resale of common stock by the selling
stockholders.
DESCRIPTION OF CAPITAL STOCK
Capital Stock.
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock, $.01 par value per share and 10,000,000 shares of Preferred Stock,
$.01 par value per share.
Common Stock.
The authorized Common Stock of the Company consists of 50,000,000
shares, par value $0.01 per share. After taking into consideration the issuance
of certain of the shares being registered, approximately 11,754,557 shares of
Common Stock will be issued and outstanding. All of the shares of Common Stock
are validly issued, fully paid and nonassessable. Holders of record of Common
Stock will be entitled to receive dividends when and if declared by the Board of
Directors out of funds of the Company legally available therefor. In the event
of any liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or otherwise, after payment of provision for payment of the
debts and other liabilities of the Company, including the liquidation preference
of all classes of preferred stock of the Company, each holder of Common Stock
will be entitled to receive his pro rata portion of the remaining net assets of
the Company, if any. Each share of Common stock has one vote, and there are no
preemptive, subscription, conversion or redemption rights. Shares of Common
Stock do not have cumulative voting rights, which means that the holders of a
majority of the shares voting for the election of directors can elect all of the
directors.
Preferred Stock.
The Company's Certificate of Incorporation authorizes the issuance of
up to 10,000,000 shares of the Company's $0.01 par value preferred stock (the
"Preferred Stock"). As of the date of this Prospectus, no shares of Preferred
Stock were outstanding. The Preferred Stock constitutes what is commonly
referred to as "blank check" preferred stock. "Blank check" preferred stock
allows the Board of Directors, from time to time, to divide the Preferred Stock
into series, to designate each series, to issue shares of any series, and to fix
and determine separately for each series any one or more of the following
relative rights and preferences: (i) the rate of dividends; (ii) the price at
and the terms and conditions on which shares may be redeemed; (iii) the amount
payable upon shares in the event of involuntary liquidation; (iv) the amount
payable upon shares in the event of voluntary liquidation; (v) sinking fund
provisions for the redemption or purchase of shares; (vi) the terms and
conditions pursuant to which shares may be converted if the shares of any series
are issued with the privilege of conversion; and (vii) voting rights. Dividends
on shares of Preferred Stock, when and as declared by the Board of Directors out
of any funds legally available therefor, may be cumulative and may have a
preference over Common Stock as to the payment of such dividends. The provisions
of a particular series, as designated by the Board of Directors, may include
restrictions on the ability of the Company to purchase shares of Common Stock or
to redeem a particular series of Preferred Stock. Depending upon the voting
rights granted to any series of Preferred Stock, issuance thereof could result
in a reduction in the power of the holders of Common Stock. In the event of any
dissolution, liquidation or winding up of the Company, whether voluntary or
involuntary, the holders of each series of the then outstanding Preferred Stock
may be entitled to receive, prior to the distribution of any assets or funds to
the holders of the Common Stock, a liquidation preference established by the
Board of Directors, together with all accumulated and unpaid dividends.
Depending upon the consideration paid for Preferred Stock, the liquidation
preference of Preferred Stock and other matters, the issuance of Preferred Stock
could result in a reduction in the assets available for distribution to the
holders of the Common Stock in the event of liquidation of the Company. Holders
of Preferred Stock will not have preemptive rights to acquire any additional
securities issued by the Company. Once a series has been designated and shares
of the series are outstanding, the rights of holders of that series may not be
modified adversely except by a vote of at least a majority of the outstanding
shares constituting such series.
One of the effects of the existence of authorized but unissued shares
of Common Stock or Preferred Stock may be to enable the Board of Directors of
the Company to render it more difficult or to discourage an attempt to obtain
control of the Company by means of a merger, tender offer at a control premium
price, proxy contest or otherwise and thereby protect the continuity of or
entrench the Company's management, which concomitantly may have a potentially
adverse effect on the market price of the Common Stock. If in the due exercise
of its fiduciary obligations, for example, the Board of Directors were to
determine that a takeover proposal were not in the best interests of the
Company, such shares could be issued by he Board of Directors without
stockholder approval in one or more private placements or other transactions
that might prevent or render more difficult or make more costly the completion
of any attempted takeover transaction by diluting voting or other rights of the
proposed acquirer or insurgent stockholder group, by creating a substantial
voting block in institutional or other hands that might support the position of
the incumbent Board of Directors, by effecting an acquisition that might
complicate or preclude the takeover, or otherwise.
Delaware Legislation.
The Company is a Delaware corporation and consequently is subject to
certain anti-takeover provisions of the Delaware General Corporation Law (the
"Delaware Law"). The business combination provision contained in Section 203 of
the Delaware Law ("Section 203") defines an interested stockholder of a
corporation as any person that (i) owns, directly or indirectly, or has the
right to acquire, fifteen percent (15%) or more of the outstanding voting stock
of the corporation or (ii) is an affiliate or associate of the corporation and
was the owner of fifteen percent (15%) or more of the outstanding voting stock
of the corporation at any time within the three-year period immediately prior to
the date on which it is sought to be determined whether such person is an
interested stockholder; and the affiliates and the associates of such person.
Under Section 203, a Delaware corporation may not engage in any business
combination with any interested stockholder for a period of three years
following the date such stockholder became an interested stockholder, unless (i)
prior to such date the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, or (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at lease eighty-five percent (85%) of the voting
stock of the corporation outstanding at the time the transaction commenced
(excluding, for determining the number of shares outstanding, (a) shares owned
by persons who are directors and officers and (b) employee stock plans, in
certain instances), or (iii) on or subsequent to such date the business
combination is approved by the board of directors and authorized at an annual or
special meeting of the stockholders by at least sixty-six and two-thirds percent
(66 2/3%) of the outstanding voting stock that is not owned by the interested
stockholder. The restrictions imposed by Section 203 will not apply to a
corporation if (i) the corporation's original certificate of incorporation
contains a provision expressly electing not be governed by this section or (ii)
the corporation, by the action of its stockholders holding a majority of
outstanding stock, adopts an amendment to its certificate of incorporation or
by-laws expressly electing not be governed by Section 203 (such amendment will
not be effective until 12 months after adoption and shall not apply to any
business combination between such corporation and any person who became an
interested stockholder of such corporation on or prior to such adoption). The
Company has not elected out of Section 203, and the restrictions imposed by
Section 203 apply to the Company. Section 203 could, under certain
circumstances, make it more difficult for a third party to gain control of the
Company.
Shares Eligible for Future Sale.
Sales of a substantial amount of Common Stock in the public market, or
the perception that such sales may occur, could adversely affect the market
price of the Common Stock prevailing from time to time in the public market and
could impair the Company's ability to raise additional capital through the sale
of its equity securities in the future. After taking into consideration the
issuance of certain of the shares being registered, approximately 11,754,557
shares of Common Stock will be issued and outstanding, approximately 7,475,000
of which are believed to be "restricted" or "control" shares for purposes of the
Act. "Restricted" shares are those acquired from the Company or an "affiliate"
other than in a public offering, while "control" shares are those held by
affiliates of the Company regardless as to how they were acquired. Nearly all of
these restricted and control shares of Common Stock are now eligible for sale
under Rule 144 subject to the volume limitations of Rule 144. In general, under
Rule 144, one year must have elapsed since the later of the date of acquisition
of restricted shares from the Company or any affiliate of the Company. No time
needs to have lapsed in order to sell control shares. Once the restricted or
control shares may be sold under Rule 144, the holder is entitled to sell within
any three-month period such number of restricted or control shares that does not
exceed the greater of 1% of the then outstanding shares or the average weekly
trading volume of shares during the four calendar weeks preceding the date on
which notice of the sale is filed with the Commission. Sales under Rule 144 are
also subject to certain restrictions on the manner of selling, notice
requirements and the availability of current public information about the
Company. Under Rule 144, if two years have elapsed since the holder acquired
restricted shares from the Company or from any affiliate of the Company, and the
holder is deemed not to have been an affiliate of the Company at any time during
the 90 days preceding a sale, such person will be entitled to sell such Common
Stock in the public market under Rule 144(k) without regard to the volume
limitations, manner of sale provisions, public information requirements or
notice requirements.
EXPERTS
The financial statements and schedules of JVWeb, Inc. as of June 30,
1999 and for the fiscal year ended at June 30, 1999 and for the period from
October 28, 1997 (inception) through June 30, 1998 have been included herein and
in the registration statement in reliance upon the report of Malone & Bailey,
PLLC, independent certified public accountants, included herein, and upon the
authority of said firm as experts in accounting and auditing.
<PAGE>
JVWEB INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
Year Ended June 30, 1999:
<S> <C>
Report of Independent Auditors .......................................................................F-1
Balance Sheet as of June 30, 1999 ................................................................... F-2
Income Statement for the year ended June 30, 1999 and for the period from October 28, 1997
(inception) through June 30, 1998.................................................. F-3
Statement of Stockholders' Equity for the period October 28, 1997
(inception) through June 30, 1999 ..............................................................................F-4
Statement of Cash Flows for the year ended June 30, 1999 and for the period from October 28, 1997
(inception) through June 30, 1998 ............................................................ F-5
Notes to Financial Statements ........................................................................F-6
Six Months Ended December 31,1999 (unaudited):
Balance sheet as of December 31, 1999..................................................................G-1
Income statements for the six months ended December 31, 1999 and 1998..................................G-2
Income statements for the three months ended December 31, 1999 and 1998... ...........................G-3
Statements of cash flows for the six months ended December 31, 1999 and 1998...........................G-4
Notes to financial statements............................................... .........................G-5
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
JVWeb, Inc.
Houston, Texas
We have audited the accompanying balance sheet of JVWeb, Inc., a Delaware
corporation, as of June 30, 1999, and the related statements of expenses,
stockholders' equity, and cash flows for year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of JVWeb, Inc., as of June 30,
1999, and the results of its operations and its cash flows for year then ended
in conformity with generally accepted accounting principles.
MALONE & BAILEY, PLLC
Houston, Texas
October 10, 1999
F-1
<PAGE>
JVWeb, Inc.
Balance Sheet
As of June 30, 1999
ASSETS
<TABLE>
<S> <C>
Cash $ 42,724
Note receivable 50,333
Prepaid professional fees 32,713
Prepaid insurance 45,124
Total Current Assets 170,894
Office equipment and furniture (net of
$1,700 accumulated depreciation) 2,690
AMP3.com LLC Investment 100,000
Total Assets $ 273,584
LIABILITIES & STOCKHOLDERS? EQUITY
Accounts payable $ 54,751
Notes payable to founding shareholder 161,638
Note payable to insurance company 34,510
Total Liabilities 250,899
Preferred stock, $0.01 par, 10,000,000
shares authorized, no shares issued or
outstanding -
Common stock, $0.01 par, 50,000,000 shares
authorized, 9,327,557 shares issued and
outstanding 93,276
Paid-in capital 1,241,236
Accumulated deficit stage (1,311,827)
Total Stockholders' Equity 22,685
Total Liabilities & Stockholders' Equity $ 273,584
</TABLE>
See notes to financial statements.
F-2
<PAGE>
JVWeb, Inc.
Income Statement
For the Year Ended June 30, 1999 and the Period from
October 28, 1997 (Inception)
Through June 30, 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
REVENUES $ 220,825 $ 190
COST OF SALES 53,286 48
Gross Margin 167,539 142
EXPENSES
General and administrative 1,295,154 174,338
Depreciation 1,463 530
1,296,617 174,868
Operating (Loss) (1,129,078) (174,726)
INTEREST INCOME (EXPENSE) ( 8,129) 106
Net Deficit $(1,137,207) $(174,620)
NET LOSS PER COMMON SHARE $( 0.14) $( 0.02)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,968,402 6,681,250
</TABLE>
See notes to financial statements.
F-3
<PAGE>
JVWeb, Inc.
Statement of Stockholders' Equity
Period from October 28, 1997 (Inception)
Through June 30, 1999
<TABLE>
<CAPTION>
Accumulated
Deficit
During the
Common Stock Paid-in Development
Shares Amount Capital Stage Totals
<S> <C> <C> <C> <C> <C>
Shares issued at
Inception to founding
Shareholder for cash 6,200,000 $62,000 $ 7,516 $ 69,516
Shares issued for cash 700,000 7,000 48,000 55,000
Shares issued for
Services 200,000 2,000 58,000 60,000
Shares issued as a
Deposit on purchase
of subsidiary 70,000 700 129,300 130,000
Returnable shares ( 130,000) ( 130,000)
Net (deficit) $( 174,620) ( 174,620)
Balances, June 30, 1998 7,170,000 71,700 112,816 ( 174,620) 9,896
Shares issued for cash 939,597 9,396 325,816 335,212
Shares issued for
Services 1,042,900 10,429 704,355 714,784
Deposit shares returned ( 70,000) ( 700) 700
Fractional shares issued 45,060 451 ( 451)
Shares issued for
investment 200,000 2,000 98,000 100,000
Net deficit $(1,137,207) $(1,137,207)
Balances,
June 30, 1999 9,327,557 $93,276 $ 1,241,236 $(1,311,827) $ 22,685
</TABLE>
See notes to financial
statements.
F-4
<PAGE>
JVWeb, Inc.
Statement of Cash Flows
For the Year Ended June 30, 1999 and the Period from
October 28, 1997 (Inception)
Through June 30, 1998
<TABLE>
<CAPTION>
1999 1998
CASH FLOW FROM OPERATIONS
<S> <C> <C>
Net deficit $(1,137,207) $(174,620)
Adjustments to reconcile net
deficit to cash provided from
operating activities
Depreciation 1,170 530
Common stock for services 714,784 60,000
Writeoff of deposit on purchase
of a subsidiary 25,000
Changes in:
Employee advances 2,550 ( 2,550)
Inventory 5,305 ( 5,305)
Prepaid expenses ( 58,337) ( 19,500)
Accounts payable 46,936 7,481
NET CASH USED BY OPERATING ACTIVITIES (399,799) (133,964)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of office equipment & furniture ( 4,390)
Increase in loan receivable ( 50,000)
Deposit on purchase of subsidiary ( 25,000)
NET CASH USED BY INVESTING ACTIVITIES ( 50,000) ( 29,390)
CASH FLOW FROM FINANCING ACTIVITIES
Change in notes payable
to founding shareholder 123,638 38,000
Proceeds from notes payable 34,510 1,250
Payments on notes payable ( 1,250)
Issuance of common stock 335,212 124,516
NET CASH FROM FINANCING ACTIVITIES 492,110 163,766
NET INCREASE IN CASH 42,311 412
CASH AT BEGINNING OF YEAR 412
CASH AT END OF YEAR $ 42,723 $ 412
</TABLE>
See notes to financial statements.
F-5
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations. JVWeb, Inc. ("Company") was formed October 28, 1997 as a
Delaware corporation. The Company was formed to market and develop internet
sites as commercial sales outlets. The Company also provides internet consulting
services.
Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Cash and cash equivalents. For purposes of the cash flow statement, the Company
considers highly liquid investments with maturities less than 90 days as cash
and cash equivalents.
Revenue and cost recognition. Revenue from consulting is recognized when
services are rendered. Advertising costs are expensed as incurred.
Inventories consist of imprinted sportswear and ad-specialty items. Inventories
are stated at the lower of cost, determined on the first-in, first-out (FIFO)
method, or market. As of June 30, 1999, and 1998, respectively, inventory was $
0 and $5,305.
Office equipment and furniture are valued at cost. Maintenance and repair costs
are charged to expense as incurred. Gains and losses on disposition of property
and equipment are reflected in income. Depreciation is computed on the
straight-line method for financial reporting purposes, based on estimated useful
lives of 3 to 5 years.
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 depreciation differences.
NOTE B - AMP-3.COM, LLC INVESTMENT
On April 12, 1999, the Company agreed to exchange 200,000 shares of Company
common stock for a 5% ownership interest in AMP-3.com, LLC ("AMP-3"), a Texas
limited liability start-up company providing Internet music retail sales and
promotion services to the music industry.
In April 1999, the Company agreed to provide consulting services to AMP-3.
During April through June, the Company invoiced AMP-3 $218,589 for consulting
services and related out-of-pocket expenses, with a further $9,800 in services
performed in July. AMP-3 has not paid or agreed to pay these charges. No further
services have been rendered.
On June 1, 1999, the Company loaned $50,000 to AMP-3 in exchange for an 8%
unsecured convertible subordinated promissory note due August 31, 1999. The note
was convertible into a .5% interest in AMP-3 anytime before August 31, 1999, and
no conversion was elected. The note was not paid at that time, and no
arrangements for payment have been made. Payment was guaranteed individually by
a stockholder of AMP-3.
F-6
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE B - AMP-3.COM, LLC INVESTMENT (Continued)
AMP-3's financial situation is undetermined. The 5% investment is carried at
cost, as management believes the near-term collection prospects are good. The
$218,589 account receivable is fully reserved by an equivalent charge to an
allowance for bad debts, although management believes that the likelihood of
eventual collection is good. The $50,000 cash investment is carried at full
value because of the positive prospects of AMP-3 and the implied solvency of
their guaranteeing stockholder.
NOTE C - RELATED PARTY TRANSACTIONS
The founding shareholder contributed $69,516 cash for the initial common stock
issued. The founding shareholder has loaned the Company $161,638 and $23,000
individually and $0 and $15,000 from a related company as of June 30, 1999 and
1998, respectively. The balance is due upon demand and accrues interest at 9%.
The Company entered into a three-year employment agreement with the founding
shareholder in October 1997 which named him President of the Company and
provided an annual salary of $60,000. The Company has not accrued or paid any
wages to date.
In October 1997, the Company granted 2,000,000 stock options to purchase the
Company's common stock at $0.10 per share to the founding shareholder. The
options may be exercised at any time and expire on October 30, 2002.
NOTE D - TIME FINANCIAL INVESTMENT
The Company entered into an Asset Purchase Agreement in July 1998 with Time
Lending Services, Inc. to purchase all the assets of a publication called Wall
Street Whispers. The purchase price of the publication is $140,000. The Company
paid $55,000 ($25,000 as of June 30, 1998) in cash, and issued 70,000 returnable
shares of the Company's common stock on June 29, 1998. As of October 29, 1998,
the purchase transaction had been abandoned. The $55,000 deposit was written off
and the shares were returned to the Company.
NOTE F - NOTE PAYABLE TO INSURANCE COMPANY
The Company financed its insurance program with an insurance note payable in
nine monthly installments of $5,122, including interest at 9%, due by June 30,
1999.
F-7
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS
NOTE G - OPERATING LEASES
The Company is obligated on a corporate office lease in Houston, Texas and on an
electronic web site lease in Arizona on a month-to-month basis for a total of
$3,000 and $1,500 per month in the years ended June 30, 1999 and 1998,
respectively.
NOTE H - CONSULTING AGREEMENTS
The Company has entered into four consulting agreements by which options to
purchase the Company's common stock at stipulated prices ranging from $.10 to
$1.00 per share were issued. 980,000 and 250,000 options were issued during the
years ended June 30, 1999 and June 30, 1998, respectively. The options are
subject to forfeiture on a prorata basis should the services terminate prior to
the term of the agreement. Pursuant to two of the agreements, a variable monthly
cash retainer is also paid. Additionally, 140,000 shares of stock were issued to
these consultants during the year ended June 30, 1999. The Company is obligated
to issue an additional 50,000 shares of stock to one of these consultants over
the next year.
The Company has entered into five consulting agreements by which options to
purchase the Company's common stock at prices approximating fair market value on
the date of grant are issued at a stipulated rate of shares per hour. During the
years ended June 30, 1999 and 1998, respectively, 105,250 and 55,000 options
have been granted under these agreements. 20,000 shares were issued to one of
these consultants as additional compensation.
The Company entered into another consulting agreement which it canceled in
August 1998. The Company issued 20,000 and 50,000 shares during the years ended
June 30, 1999 and 1998 respectively under this agreement and has no further
liability to this consultant.
The Company entered on March 31, 1999 a two year agreement with one consultant
for business services for $25,000 per quarter, payable in shares. 75,000 S-8
shares have been issued pursuant to this agreement.
F-8
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE H - CONSULTING AGREEEMENTS (Continued)
The Company issued 96,000 options and 420,000 shares to consultants whose
agreements began and terminated during the year ended June 30, 1999.
NOTE I - STOCK OPTIONS
Beginning at inception, the Company adopted the disclosure requirements of FASB
Statement 123, Accounting for Stock Based Incentive Plans. The Company has
granted options pursuant to its stock option plan. Grants are made at
management's discretion, and are compensation for services. Additionally, the
Company issues warrants from time to time. The stock option plan and warrants
issuances are administered by the Board of Directors of the Company, who have
substantial discretion to determine which persons, amounts, time, price,
exercise terms, and restrictions, if any. Both options and warrants carry
certain anti-dilution provisions concerning stock dividends or splits, mergers
and reorganizations.
The Company uses the intrinsic value method of calculating compensation expense,
as described and recommended by Accounting Principles Board (APB) Opinion No. 25
(Accounting for Stock Issued to Employees) and permitted by FASB Statement 123.
Accordingly, no compensation expense has been recognized for the stock options
during the years ended June 30, 1999 and 1998.
Summary information on each are as follows:
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
Share Share
Options Price Warrants Price
--------- -------- --------- --------
Year ended June 30, 1998:
<S> <C> <C> <C> <C>
Granted and outstanding 2,541,250 $0.12 1,500,000 $1.00
Year ended June 30, 1999:
Granted 985,000 0.53
Exercised 432,400 0.26 26,262 1.00
--------- ----- --------- -------
Outstanding at
June 30, 1999 3,093,850 $ 0.23 1,473,738 $ 1.00
========= ======== ========= =======
</TABLE>
F-9
<PAGE>
JVWeb, Inc.
Balance Sheet
As of December 31, 1999
(Unaudited)
ASSETS
<TABLE>
<S> <C>
Cash $ 14,512
Accounts receivable 50,328
Note receivable 52,333
----------
Total Current Assets 117,173
-----------
Office equipment and furniture (net of
$2,580 accumulated depreciation) 1,910
----------
Linksxpress.com, Inc. investment 60,000
Linksxpress.co.uk 288,000
Investment in AMP3 100,000
Total Assets $ 567,083
==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 71,793
Accrued interest 15,883
Notes payable to related parties 359,223
----------
Total Liabilities 446,899
----------
Common stock, $0.01 par, 50,000,000 shares
authorized, 10,414,057 shares issued and
outstanding 104,141
Paid-in capital 1,888,960
Retained Earnings (1,872,917)
Total Stockholders' Equity 120,184
----------
Total Liabilities & Stockholders' Equity $ 567,083
==========
</TABLE>
G-1
<PAGE>
JVWeb, Inc.
Income Statements
For the Three and Six Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
3 Months 6 Months 3 Months 6 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1998
---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
REVENUES $ 40,138 $ 62,971
COST OF SALES 40,459 40,459
--------- ---------
Gross Margin (321) 22,512
EXPENSES
General & administrative 325,243 576,221 $ 125,762 $ 305,043
Depreciation 98 439 244 439
--------- --------- - --------------- ---------
325,341 576,660 126,006 305,482
--------- --------- --------- ---------
Operating (Loss) (325,662) (554,148) (126,006) (305,482)
INTEREST INCOME 1,000 2,000
INTEREST EXPENSE ( 4,408) ( 8,942)
--------- ---------
NET LOSS $(329,070) $(561,090) $(126,006) $(305,482)
========= ========= ========= =========
NET LOSS PER COMMON SHARE $( .04) $( .06) $( .02) $( .04)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 9,716,057 9,626,057 7,894,160 7,497,080
</TABLE>
G-2
<PAGE>
JVWeb, Inc.
Statement of Stockholders' Equity
Through December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Deficit
During the
Common Stock Paid-in Development
Shares Amount Capital Stage Totals
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Shares issued at
inception to founding
shareholder for cash 6,200,000 $ 62,000 $ 7,516 $ 69,516
Shares issued:
for cash 700,000 7,000 48,000 55,000
for services 200,000 2,000 58,000 ` 60,000
deposit on purchase
of subsidiary 70,000 700 129,300 130,000
Returnable shares (130,000) (130,000)
Net (deficit) $(174,620) (174,620)
----------------------------------------------------------- ---------
Balances, June 30,
1999 (Audited) 7,170,000 71,700 112,816 (174,620) 9,896
---------- --------- --------- --------- ---------
Shares issued:
for cash 620,240 6,202 116,976 123,178
for services 358,860 3,589 66,454 70,043
Shares returned from
subsidiary purchase
deposit ( 70,000) ( 700) 700
Fractional shares issued 45,060 451 ( 451)
Shares repurchased from
founding shareholder ( 150,000) ( 1,500) ( 900) ( 2,400)
Net deficit (305,482) (305,482)
---------- ---------- --------- --------- ---------
Balance, December 31,
1999 (Unaudited) 7,974,160 $ 79,742 $295,595 $(480,102) $(104,765)
========== ==============
</TABLE>
G-3
<PAGE>
JVWeb, Inc.
Statements of Cash Flows
For the Six Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
Dec. 31, Dec. 31,
1999 1998
---------- -------
CASH FLOWS FROM OPERATIONS
<S> <C> <C>
Net deficit $(600,270) $(305,482)
Adjustments to reconcile net
deficit to cash provided
from operating activities
Depreciation 780 439
Common stock issued for
services 290,589 70,043
Changes in:
Accounts receivable ( 11,148)
Write off of deposits on
purchase of subsidiary 55,000
Net changes in:
Employee advance 2,550
Inventory ( 3,641)
Prepaid legal expenses 47,624 15,200
Accounts payable 30,926 11,956
--------- ---------
NET CASH USED BY OPERATING
ACTIVITIES (241,499) (153,935)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Deposit on purchase of subsidiary ( 30,000)
--------- -------
NET CASH USED BY INVESTING
ACTIVITIES ( 30,000)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in notes payable to founding
shareholder 197,585 64,500
Payments on note payable ( 24,297) ( 1,250)
Proceeds from notes payable 20,000
Issuance of common stock 20,000 120,778
--------- ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 213,288 184,028
--------- ---------
NET INCREASE (DECREASE) IN CASH ( 28,221) 93
CASH BEGINNING 42,733 412
--------- ---------
CASH ENDING $ 14,512 $ 505
========= =========
</TABLE>
G-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of JVWeb, Inc., a Texas
corporation (`Company'), have been prepared in accordance with generally
accepted accounting principles and the rules of the Securities and Exchange
Commission (?SEC?), and should be read in conjunction with the audited financial
statements and notes thereto contained in the Company's latest Annual Report
filed with the SEC on From 10-KSB. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for the
most recent fiscal year,1999, as reported in Form 10-KSB, have been omitted.
NOTE B - ACQUISITION OF LINKSXPRESS.COM, INC.
On September 15, 1999, the Company acquired 500,000 shares of Linksxpress.com,
Inc. in exchange for 150,000 shares of Company stock, valued at current market
price of $.40 per share.
NOTE C - ACQUISITION OF LINKSXPRESS.CO.UK
On the Company acquired shares of Linksxpress.co.uk in exchange for 600,000
shares of company stock, valued at current market value of $.48 per share.
G-5
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
RISK FACTORS ...................................................................................................___
USE OF PROCEEDS ................................................................................................___
DIVIDEND POLICY ................................................................................................___
PRICE RANGE OF COMMON STOCK ....................................................................................___
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ...................................................................___
BUSINESS .......................................................................................................___
MANAGEMENT .....................................................................................................___
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS ................................................................___
DETERMINATION OF OFFERING PRICE.................................................................................___
PRINCIPAL STOCKHOLDERS .........................................................................................___
SELLING STOCKHOLDERS ...........................................................................................___
PLAN OF DISTRIBUTION ...........................................................................................___
DESCRIPTION OF CAPITAL STOCK ...................................................................................___
EXPERTS ........................................................................................................___
</TABLE>
UNTIL ___________________ _____, 2000, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that, to the
fullest extent authorized by the Delaware Law, the Company shall indemnify each
person who was or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding") because he is or was a director
or officer of the Company, or is or was serving at the request of the Company as
a director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against all expenses,
liabilities and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) actually and
reasonably incurred or suffered by him in connection with such Proceeding.
Under Section 145 of the Delaware Law, a corporation may indemnify a
director, officer, employee or agent of the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any threatened,
pending or completed Proceeding (other than an action by or in the right of the
corporation) if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. In the case of an action brought by or in the
right of the corporation, the corporation may indemnify a director, officer,
employee or agent of the corporation against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of any threatened, pending or completed action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that a
court determines upon application that, in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
The Company's Certificate of Incorporation also provides that expenses
incurred by a person in his capacity as director of the Company in defending a
Proceeding may be paid by the Company in advance of the final disposition of
such Proceeding as authorized by the Board of Directors of the Company in
advance of the final disposition of such Proceeding as authorized by the Board
of Directors of the Company upon receipt of an undertaking by or on behalf of
such person to repay such amounts unless it is ultimately determined that such
person is entitled to be indemnified by the Company pursuant to the Delaware
Law. Under Section 145 of the Delaware Law, a corporation must indemnify a
director, officer, employee or agent of the corporation against expenses
(including attorneys' fees) actually and reasonably incurred in by him in
connection with the defense of a Proceeding if he has been successful on the
merits or otherwise in the defense thereof.
The Company's Certificate of Incorporation provides that a director of
the Company shall not be personally liable to the Company of its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for breach of a director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Law for the willful or negligent unlawful payment of dividends,
stock purchase or stock redemption or (iv) for any transaction from which a
director derived an improper personal benefit.
The Company intends to attempt to procure directors' and officers'
liability insurance which insures against liabilities that directors and
officers of the Company may incur in such capacities.
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND OFFERING. The estimated expenses set
forth below, will be borne by the Company.
<TABLE>
<CAPTION>
Item Amount
<S> <C>
SEC Registration Fee .................................................................................$137
Legal Fees and Expense ............................................................................ 9,500
Accounting Fees and Expenses ........................................................................1,500
Printing ............................................................................................1,000
-----
Total .............................................................................................$12,137
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In connection with the formation of the Company, the Company issued to
Greg J. Micek, a director and the President of the Company, 6.2 million shares
of the Company's common stock (the "Common Stock"), in consideration of $62,000.
Moreover, pursuant to an agreement between the Company and Mr. Micek, the
Company granted to Mr. Micek options to purchase 2,000,000 shares of Common
Stock at a per-share purchase price of $.10. The options have a term of five
years. Because Mr. Micek is a director and President of the Company, the
issuance of Common Stock and the options is claimed, and the issuances of the
Common Stock underlying the option will be claimed, to be exempt pursuant to
Section 4(2) of the Act under the Act.
As a finder's fee for making the introductions leading to the
investment of LS Capital Corporation ("LS Capital") in the Company and for a
payment of $.01 per share, the Company issued to Lewis E. Ball, a director of
the Company, 100,000 shares of Common Stock. In consideration of services
provided to the Company, the Company issued to Mr. Ball 20,000 shares of Common
Stock. Because Mr. Ball is a director, these issuances of Common Stock to him
are claimed to be exempt pursuant Section 4(2) of the Act.
Pursuant to an agreement between the Company and LS Capital dated
November 15, 1997 (as amended), the Company issued to LS Capital 500,000 shares
of Common Stock and 1,500,000 Class A warrants, in consideration of $5,000.00.
The Company also issue to LS Capital 45,060 shares of Common Stock to settle
possible claims to additional shares of Common Stock that LS Capital may have
had against the Company. All of these issuances are claimed to be exempt
pursuant to Regulation D under the Act.
Pursuant to agreements between the Company and several important
service providers, the Company agreed to issue options to purchase shares of
Common Stock to such providers, at a purchase price per share equal to fair
market value, on any day on which the providers provide services to the Company.
The number of shares with respect to which the providers will be issued options
depends on the amount of services provided. As of March 10, 1999, these
providers had been issued options to purchase 382,250 shares of Common Stock.
The exact number of shares of Common Stock with respect to which options will be
issued to such providers can not now be determined. The issuances of the options
is claimed, and the issuances of the underlying Common Stock will be claimed, to
be exempt pursuant to Section 4(2) of the Act and Regulation D under the Act.
Pursuant to a subscription agreement, the Company issued to Universal
Warranty, Inc. 200,000 shares of Common Stock in consideration of $50,000. This
issuance is claimed to be exempt pursuant to Regulation D under the Act.
The Company issued a convertible promissory note to Equitrust Mortgage
Corporation ("Equitrust") in consideration of a loan by Equitrust to the Company
in the amount of $50,000. Subsequently, this convertible promissory note was
automatically converted into 200,000 shares of Common Stock. In this connection,
Equitrust also purchased 300,000 additional shares of Common Stock for an
aggregate purchase price of $75,000. The issuances of the convertible promissory
note, the shares of Common Stock into which it was converted, and the 300,000
additional shares of Common Stock are claimed to be exempt pursuant to
Regulation D under the Act.
For services rendered (and agreed to be rendered in written contracts)
having a value determined to be $132,675, the Company issued to four persons
providing services to the Company an aggregate of 176,900 shares of Common
Stock. This issuance is claimed to be exempt pursuant to Regulation D under the
Act.
The Company has also issued to seven persons providing various services
to the Company options to purchase an aggregate of 176,000 shares of Common
Stock at per-share exercise prices ranging from $.10 to $.25. The issuances of
the options are claimed, and the issuances of the underlying Common Stock will
be claimed, to be exempt pursuant to Regulation D under the Act.
In consideration of the release of amounts actually or possibly owed by
the Company to an individual, the Company issued to such individual 20,000
shares of Common Stock. This issuance is claimed to be exempt pursuant to
Regulation D under the Act.
For services rendered (and agreed to be rendered in a written contract)
having a value determined to be $65,000, the Company has agreed to issue to a
person providing services to the Company an aggregate of 60,000 shares of Common
Stock outright and up to 200,000 shares of Common Stock upon the occurrence of
certain stipulated events. Moreover, the Company granted to this service
provider options to purchase 430,000 shares of Common Stock at per-share
purchase prices of $.25 (for 130,000 of the optioned shares), $.50 (for 100,000
of the optioned shares), $.75 (for 100,000 of the optioned shares) and $1.00
(for 100,000 of the optioned shares). The issuances of Common Stock and the
options are claimed, and the issuances of the Common Stock underlying the
options will be claimed, to be exempt pursuant to Regulation D under the Act.
For services rendered (and agreed to be rendered in a written contract)
having a value determined to be $90,000, the Company agreed to issue to a person
providing legal services to the Company an aggregate of 80,000 shares of the
Company's common stock. This issuance is claimed to be exempt pursuant to
Regulation D under the Act.
On April 12, 1999, the Company entered into a equity exchange with
AMP3.com, LLC whereby the Company acquired a 5.0% interest in AMP3.com, in
exchange for the issuance of 200,000 shares of the Company's common stock. This
issuance is claimed to be exempt pursuant to Regulation D under the Act.
On July 22, 1999, the Company agreed to issue to a person providing
accounting services to the Company an aggregate of 50,000 shares of the
Company's common stock for an aggregate purchase price of $20,000. This issuance
is claimed to be exempt pursuant to Regulation D under the Act.
On September 15, 1999, the Company exchanged 150,000 shares of the
Company's common stock and an option to purchase up to 150,000 additional shares
of the Company's common stock at a purchase price of $.40 per share for 500,000
shares of common stock of Linksxpress.com, Inc., warrants to purchase up to
1,000,000 shares of LinksXpress.com's common stock at a purchase price of $2.00
per share, and an options to purchase up to 500,000 shares of LinksXpress.com's
common stock at purchase prices ranging from $.25 to $2.00 per share. The
issuances of the Company's common stock outright and the option is claimed to be
exempt, and the issuances of the common stock underlying the option will be
claimed to be exempt, pursuant to Regulation D under the Act.
For services rendered and agreed to be rendered, during the fiscal
quarter ended December 31, 1999, the Company granted to one person providing
services to the Company an option to purchase up to 1,000,000 shares of the
Company's common stock and to another person providing services to the Company
an option to purchase up to 400,000 such shares. The exercise price for the
1,000,000 optioned shares is $.21 per share, and the exercise price for the
400,000 optioned shares is $.50 per share. The issuances of these options are
claimed to be exempt, and the issuances of the common stock underlying the
options will be claimed to be exempt, pursuant to Regulation D under the
Securities Act of 1933.
For services rendered, during the fiscal quarter ended December 31,
1999, the Company issued to two persons providing services to the Company an
aggregate of 110,000 shares of the Company's common stock. The issuances of
these shares are claimed to be exempt pursuant to Regulation D under the
Securities Act of 1933.
On January 21, 2000, the Company entered into a stock exchange with
Crosspointe Net, Inc. ("CPNI") whereby the Company acquired a 7.5% interest in
CPNI, in exchange for the issuance of 300,000 shares of the Company's common
stock. This issuance is claimed to be exempt pursuant to Regulation D under the
Act.
ITEM 27. EXHIBITS
EXHIBIT INDEX
Exhibit
No. Description
3.01 Certificate of Incorporation of the Company is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC
File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 3.01.
3.02 Bylaws of the Company is incorporated herein by reference from the
Company's Registration Statement on Form SB-2 (SEC File No. 333-41635)
filed December 29, 1997, Item 27, Exhibit 3.02.
4.01 Specimen Common Stock Certificate is incorporated herein by reference
from the Company's Registration Statement on Form SB-2 (SEC File No.
333-41635) filed December 29, 1997, Item 27, Exhibit 4.01.
4.02 Warrant Agreement dated December 15, 1997 between the Company and
American Stock Transfer & Trust Company is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC
File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 4.02.
4.03 First Amendment to Agreement dated March 31, 1998 between the Company
and American Stock Transfer Company & Trust Company is incorporated
herein by reference from Amendment No. 2 to the Company's Registration
Statement on Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998,
Item 27, Exhibit 4.03.
4.04 Second Amendment to Agreement dated April 15, 1998 between the Company
and American Stock Transfer Company & Trust Company is incorporated
herein by reference from the Company's Registration Statement on Form
SB-2/A (SEC File No. 333-74381) filed March 15, 1999, Item 27, Exhibit
4.04.
5.01 Opinion and Consent of Randall W. Heinrich, Of Counsel to Gillis &
Slogar, as to the legality of securities being registered.
10.01 Agreement dated November 15, 1997 between the Company and LS Capital
Corporation is incorporated herein by reference from the Company's
Registration Statement on Form SB-2 (SEC File No. 333-41635) filed
December 29, 1997, Item 27, Exhibit 10.01.
10.02 Employment Agreement dated December 1, 1997 by and between the Company
and Greg J. Micek is incorporated herein by reference from the
Company's Registration Statement on Form SB-2 (SEC File No. 333-41635)
filed December 29, 1997, Item 27, Exhibit 10.02.
10.03 Stock Option Agreement dated December 1, 1997 executed by the Company
in favor of Greg J. Micek is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.03.
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company
in favor of Dudley R. Anderson is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.04.
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company
in favor of Kevin Dotson is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.05.
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company
in favor of G-2 Advertising is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.06.
10.07 First Amendment dated April 14, 1998 to Agreement dated November 15,
1997 between the Company and LS Capital Corporation is incorporated
herein by reference from Amendment No. 2 to the Company's Registration
Statement on Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998,
Item 27, Exhibit 10.07.
10.08 Agreement dated April 20, 1998 between the Company and LS Capital
Corporation is incorporated herein by reference from Amendment No. 2 to
the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed April 21, 1998, Item 27, Exhibit 10.08.
10.09 Asset Purchase Agreement dated July 31, 1998 by and among Market Data
Corporation and Time Financial Services, Inc. (as sellers) and the
Company (as purchaser) is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Current Report on Form 8-K dated July
31, 1998, Item 7(c), Exhibit 10.01.
10.10 Agreement dated August 3, 1998 by and between Equitrust Mortgage
Corporation and the Company is incorporated herein by reference from
the Company's Current Report on Form 8-K dated July 31, 1998 (SEC File
No. 0-24001), Item 7(c), Exhibit 10.02.
10.11 Promissory Note dated August 3, 1998 in the original principal amount
of $50,000 made payable by the Company to the order of Equitrust
Mortgage Corporation is incorporated herein by reference from the
Company's Current Report on Form 8-K dated July 31, 1998 (SEC File No.
0-24001), Item 7(c), Exhibit 10.02.
10.12 Consulting Services Agreement dated February 15, 1999 by and between
the Company and Tanye Capital Corp. is incorporated herein by reference
from the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 15, 1999, Item 27, Exhibit 10.12.
10.13 Master Services Agreement dated March 1999 between the Company and
Lernout & Hauspie Speech Products, S.A./N.V. is incorporated herein by
reference from the Company's (SEC File No. 0-24001) Annual Report on
Form 10-KSB for the year ended June 30, 1998 Item 13(a), Exhibit 10.13.
10.14 Exchange Agreement dated April 12, 1999 between the Company and
AMP3.com, LLC is incorporated herein by reference from the Company's
(SEC File No. 0-24001) Annual Report on Form 10-KSB for the year ended
June 30, 1998 Item 13(a), Exhibit 10..14.
10.15 Agreement dated September 17, 1999 between the Company and
LinksXpress.com, Inc. is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1999 Item 6(a), Exhibit 10.1.
10.16 Stock Option Agreement dated September 17, 1999 executed by the Company
in favor of LinksXpress.com, Inc. is incorporated herein by reference
from the Company's (SEC File No. 0-24001) Quarterly Report on Form
10-QSB for the quarter ended September 30, 1999 Item 6(a), Exhibit
10.2.
10.17 Stock Option Agreement dated September 17, 1999 executed by
LinksXpress.com, Inc. in favor of the Company is incorporated herein by
reference from the Company's (SEC File No. 0-24001) Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1999 Item 6(a), Exhibit
10.3.
10.18 Warrant dated September 17, 1999 executed by LinksXpress.com, Inc. in
favor of the Company is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1999 Item 6(a), Exhibit 10.4.
10.19 Stock Purchase Agreement dated December 21, 1999 between the Company
and LinksXpress.com, Inc. is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for
the quarter ended December 31, 1999 Item 6(a), Exhibit 10.1.
10.20 Stock Purchase Agreement dated January 21, 2000 between the Company
and Crosspointe Net, Inc.
10.21 Stock Purchase Agreement dated September 20, 1999 between the Company
and LinksXpress.com, Inc.
10.22 Stock Option Agreement dated November 7, 1999 executed by the Company
in favor of Carlo Pellegrini
10.23 Stock Option Agreement dated December 15, 1999 between the Company
and Ken Gooley
21.01 Subsidiaries of Registrant
23.01 Consent of Malone & Bailey, PLLC
23.02 Consent of Randall W. Heinrich, Of Counsel to Gillis & Slogar,
contained in Exhibit 5.01.
25.1 Power of Attorney (included on the signature page thereto)
99.01 The Company's Year 2000 Consultant Compensation Plan is incorporated
herein by reference from the Company's Registration Statement on Form
S-8 (SEC File No. 333-96057) filed February 3, 2000, Item 8, Exhibit
4.02.
99.02 The Company's Year 2000 Non-Qualified Stock Option Plan
<PAGE>
ITEM 28. UNDERTAKINGS
A. The undersigned Registrant will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to include
any prospectus required by section 10(a)(3) of the Securities Act, reflect in
the prospectus any facts or events which, individually or together, represent a
fundamental change in the information in the registration statement, and include
any additional or changed material information on the plan of distribution.
(2) For the purpose of determining any liability under the
Securities Act, treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of such securities at that
time to be the initial bona fide offering thereof.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
B. (1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer 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.
(2) In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the small
business issuer 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 small business issuer will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirement for filing on Form SB-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas on March 15, 2000.
JVWEB INC.
By: /s/ Greg J. Micek
Greg J. Micek
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ Greg. J. Micek Director and President March 15, 2000
- --------------------------------
Greg J. Micek (Principal Executive Officer ,
Principal Financial Officer and
Principal Accounting Officer)
/s/ Lewis E. Ball Director March 15, 2000
- --------------------------------
Lewis E. Ball
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
3.01 Certificate of Incorporation of the Company is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC
File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 3.01.
3.02 Bylaws of the Company is incorporated herein by reference from the
Company's Registration Statement on Form SB-2 (SEC File No. 333-41635)
filed December 29, 1997, Item 27, Exhibit 3.02.
4.01 Specimen Common Stock Certificate is incorporated herein by reference
from the Company's Registration Statement on Form SB-2 (SEC File No.
333-41635) filed December 29, 1997, Item 27, Exhibit 4.01.
4.02 Warrant Agreement dated December 15, 1997 between the Company and
American Stock Transfer & Trust Company is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC
File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 4.02.
4.03 First Amendment to Agreement dated March 31, 1998 between the Company
and American Stock Transfer Company & Trust Company is incorporated
herein by reference from Amendment No. 2 to the Company's Registration
Statement on Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998,
Item 27, Exhibit 4.03.
4.04 Second Amendment to Agreement dated April 15, 1998 between the Company
and American Stock Transfer Company & Trust Company is incorporated
herein by reference from the Company's Registration Statement on Form
SB-2/A (SEC File No. 333-74381) filed March 15, 1999, Item 27, Exhibit
4.04.
5.01 Opinion and Consent of Randall W. Heinrich, Of Counsel to Gillis &
Slogar, as to the legality of securities being registered.
10.01 Agreement dated November 15, 1997 between the Company and LS Capital
Corporation is incorporated herein by reference from the Company's
Registration Statement on Form SB-2 (SEC File No. 333-41635) filed
December 29, 1997, Item 27, Exhibit 10.01.
10.02 Employment Agreement dated December 1, 1997 by and between the Company
and Greg J. Micek is incorporated herein by reference from the
Company's Registration Statement on Form SB-2 (SEC File No. 333-41635)
filed December 29, 1997, Item 27, Exhibit 10.02.
10.03 Stock Option Agreement dated December 1, 1997 executed by the Company
in favor of Greg J. Micek is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.03.
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company
in favor of Dudley R. Anderson is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.04.
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company
in favor of Kevin Dotson is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.05.
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company
in favor of G-2 Advertising is incorporated herein by reference from
Amendment No. 1 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed February 27, 1998, Item 27, Exhibit
10.06.
10.07 First Amendment dated April 14, 1998 to Agreement dated November 15,
1997 between the Company and LS Capital Corporation is incorporated
herein by reference from Amendment No. 2 to the Company's Registration
Statement on Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998,
Item 27, Exhibit 10.07.
10.08 Agreement dated April 20, 1998 between the Company and LS Capital
Corporation is incorporated herein by reference from Amendment No. 2 to
the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed April 21, 1998, Item 27, Exhibit 10.08.
10.09 Asset Purchase Agreement dated July 31, 1998 by and among Market Data
Corporation and Time Financial Services, Inc. (as sellers) and the
Company (as purchaser) is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Current Report on Form 8-K dated July
31, 1998, Item 7(c), Exhibit 10.01.
10.10 Agreement dated August 3, 1998 by and between Equitrust Mortgage
Corporation and the Company is incorporated herein by reference from
the Company's Current Report on Form 8-K dated July 31, 1998 (SEC File
No. 0-24001), Item 7(c), Exhibit 10.02.
10.11 Promissory Note dated August 3, 1998 in the original principal amount
of $50,000 made payable by the Company to the order of Equitrust
Mortgage Corporation is incorporated herein by reference from the
Company's Current Report on Form 8-K dated July 31, 1998 (SEC File No.
0-24001), Item 7(c), Exhibit 10.02.
10.12 Consulting Services Agreement dated February 15, 1999 by and between
the Company and Tanye Capital Corp. is incorporated herein by reference
from the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 15, 1999, Item 27, Exhibit 10.12.
10.13 Master Services Agreement dated March 1999 between the Company and
Lernout & Hauspie Speech Products, S.A./N.V. is incorporated herein by
reference from the Company's (SEC File No. 0-24001) Annual Report on
Form 10-KSB for the year ended June 30, 1998 Item 13(a), Exhibit 10.13.
10.14 Exchange Agreement dated April 12, 1999 between the Company and
AMP3.com, LLC is incorporated herein by reference from the Company's
(SEC File No. 0-24001) Annual Report on Form 10-KSB for the year ended
June 30, 1998 Item 13(a), Exhibit 10..14.
10.15 Agreement dated September 17, 1999 between the Company and
LinksXpress.com, Inc. is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1999 Item 6(a), Exhibit 10.1.
10.16 Stock Option Agreement dated September 17, 1999 executed by the Company
in favor of LinksXpress.com, Inc. is incorporated herein by reference
from the Company's (SEC File No. 0-24001) Quarterly Report on Form
10-QSB for the quarter ended September 30, 1999 Item 6(a), Exhibit
10.2.
10.17 Stock Option Agreement dated September 17, 1999 executed by
LinksXpress.com, Inc. in favor of the Company is incorporated herein by
reference from the Company's (SEC File No. 0-24001) Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1999 Item 6(a), Exhibit
10.3.
10.18 Warrant dated September 17, 1999 executed by LinksXpress.com, Inc. in
favor of the Company is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1999 Item 6(a), Exhibit 10.4.
10.19 Stock Purchase Agreement dated December 21, 1999 between the Company
and LinksXpress.com, Inc. is incorporated herein by reference from the
Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for
the quarter ended December 31, 1999 Item 6(a), Exhibit 10.1.
10.20 Stock Purchase Agreement dated January 21, 2000 between the Company
and Crosspointe Net, Inc.
10.21 Stock Purchase Agreement dated September 20, 1999 between the Company
and LinksXpress.com, Inc.
10.22 Stock Option Agreement dated November 7, 1999 executed by the Company
in favor of Carlo Pellegrini
10.23 Stock Option Agreement dated December 15, 1999 between the Company
and Ken Gooley
21.01 Subsidiaries of Registrant
23.01 Consent of Malone & Bailey, PLLC
23.02 Consent of Randall W. Heinrich, Of Counsel to Gillis & Slogar,
contained in Exhibit 5.01.
25.1 Power of Attorney (included on the signature page thereto)
99.01 The Company's Year 2000 Consultant Compensation Plan is incorporated
herein by reference from the Company's Registration Statement on Form
S-8 (SEC File No. 333-96057) filed February 3, 2000, Item 8, Exhibit
4.02.
99.02 The Company's Year 2000 Non-Qualified Stock Option Plan
EXHIBIT 10.20 - Stock Purchase Agreement - Crosspointe Net, Inc.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
effective as of the _____ day of _______________________, 2000 by and between
CrossPointe Net, Inc., a ___________________ corporation ("Seller") and JVWeb,
Inc., a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the holder of __________ shares of the issued and
outstanding common stock (the "Common Stock") of Great Records, Inc., a Delaware
corporation ("the Company"), which shares represent all of the issued and
outstanding shares of Common Stock; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, __________________ shares of the Common Stock owned by
Seller, which shares represent 50% of the issued and outstanding shares of the
Company (the "Shares"), for the consideration specified below; and
WHEREAS, Seller and Purchaser desire to memorialize in writing the
terms, provisions and conditions of Seller's sale and Purchaser's purchase of
the Shares; and
NOW, THEREFORE, in consideration of the mutual promises, covenants,
agreements, representations and warranties set forth hereinafter, and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged by Seller and Purchaser, and subject to the terms, provisions and
conditions hereof, each of Seller and Purchaser hereby agrees as follows:
ARTICLE I
SALE AND PURCHASE OF STOCK
1.1 Subject to the terms, provisions and conditions set forth herein,
Seller hereby sells and delivers to Purchaser, and Purchaser hereby purchases
and receives from Seller, the Shares, in exchange for the purchase price set
forth hereinafter. Purchaser hereby acknowledges receipt of one or more stock
certificates representing the Shares, duly endorsed or accompanied by duly
executed stock transfer form.
1.2 The purchase price for the Shares shall be ____________ freely
tradable shares of the common stock of Purchaser (the "Purchaser Common Stock").
Seller hereby acknowledges receipt of one or more stock certificates
representing ______________ freely tradable shares of Purchaser Common Stock.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF SELLER
Seller hereby represents and warrants to, and agrees with Purchaser
that:
2.1 Concerning the Shares. All of the Shares are duly and validly
authorized and issued and are fully paid and non-assessable, and were not issued
in violation of the preemptive rights of any current or former shareholder of
the Company. No option, warrant, call, subscription, convertible security, or
commitment of any kind exists obligating the Company to issue any additional
shares of Common Stock or obligating Seller to sell any of the Shares to a third
party. There is not any compensation plan or agreement applicable to any of the
officers, directors, or employees of the Company under which compensation
accrued or payable is determined, in whole or in part, by reference to shares of
Common Stock. There are no agreements or commitments obligating the Company to
repurchase or otherwise acquire any of the outstanding shares of Common Stock.
2.2 Ownership of Stock. All of the Shares are owed by Seller, free and
clear of any mortgage, lien, security interest, claim, charge, pledge,
encumbrance and any restriction on the transfer thereof of any nature
whatsoever. None of the Shares is subject to any voting trust, voting agreement,
or other agreement or understanding with respect to the voting thereof, nor is
any proxy in existence with respect to any such shares.
2.3 Capacity to Enter into Agreement. Seller has been duly organized,
is validly existing and is in good standing in the jurisdiction in which it was
incorporated. Seller has full right, power and capacity to execute and deliver
this Agreement and all other agreements, documents and instruments to be
executed in connection herewith and perform its obligations hereunder and
thereunder. The execution and delivery by Seller of this Agreement and all other
agreements, documents and instruments to be executed by Seller in connection
herewith and therewith have been authorized by all necessary corporate action by
Seller. When this Agreement and all other agreements, documents and instruments
to be executed by Seller in connection herewith are executed by Seller and
delivered to Purchaser, this Agreement and such other agreements, documents and
instruments will constitute the valid and binding agreements of Seller
enforceable against Seller in accordance with their respective terms, and will
vest in Purchaser full right, title and interest in and to the Shares, free and
clear of any mortgage, lien, security interest, claim, charge, pledge,
encumbrance and any restriction on the transfer thereof of any nature
whatsoever.
2.4 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Seller is a party or by which Seller is bound or by which any of the assets of
Seller is bound or affected, (b) result in the creation of any lien, charge or
encumbrance upon any assets of Seller pursuant to the terms of any such
contract, (c) violate any judgment against, or binding upon, Seller or upon the
assets of Seller or (d) violate any provision in the charter documents, bylaws
or any other agreement affecting the governance and control of Seller.
2.5 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
Seller.
2.6 Litigation. There is no action, suit, proceeding, or claim pending
or, to the knowledge of Seller, threatened against Seller by persons not a party
to this Agreement wherein an unfavorable decision, ruling, or finding would
render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
2.7 Transactions with Affiliated Parties. There are no transactions
currently engaged in between the Company and any party affiliated with the
Company (other than transactions inherent in the normal capacities of
shareholders, officers, directors, or employees). Except for the ownership of
non-controlling interests in securities of corporations the shares of which are
publicly traded, no party affiliated with the Company has any investment or
ownership interest, directly, indirectly, or beneficially, in any competitor or
potential competitor, major supplier, or customer of the Company.
2.8 Finder's Fees. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller and its counsel
directly with Purchaser and its counsel without the intervention of any other
person as the result of any act of any of them, and as far as is known to
Seller, without the intervention of any other person in such manner as to give
rise to any valid claim against any of the parties hereto for a brokerage
commission, finder's fee, or any similar payment.
2.9 Untrue Statements. This Agreement, the schedules and exhibits
hereto, and all other documents and information furnished by Purchaser or its
representatives pursuant hereto or in connection herewith do not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made herein and therein not misleading or otherwise.
ARTICLE III
REPRESENTATIONS, WARRANTIES,
AND AGREEMENTS OF PURCHASER
Purchaser hereby represents, warrants, and agrees to and with Seller,
that:
3.1 Capacity to Enter into Agreement. Purchaser has been duly
organized, is validly existing and is in good standing in the jurisdiction in
which it was incorporated. Purchaser has full right, power and authority to
execute and deliver this Agreement and all other agreements, documents and
instruments to be executed in connection herewith and therewith and perform such
its obligations hereunder and thereunder. The execution and delivery by
Purchaser of this Agreement and all other agreements, documents and instruments
to be executed by Purchaser in connection herewith and therewith have been
authorized by all necessary corporate action by Purchaser. When this Agreement
and all other agreements, documents and instruments to be executed by a
Purchaser in connection herewith and therewith are executed by a Purchaser and
delivered to Seller, this Agreement and such other agreements, documents and
instruments will constitute the valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their respective terms.
3.2 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Purchaser is a party or by which Purchaser is bound or by which any of the
assets of Purchaser is bound or affected, (b) result in the creation of any
lien, charge or encumbrance upon any assets of Purchaser pursuant to the terms
of any such contract, or (c) violate any judgment against, or binding upon,
Purchaser or upon the assets of Purchaser, or (d) violate any provision in the
charter documents, bylaws or any other agreement affecting the governance and
control of Purchaser.
3.3 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
Purchaser.
3.4 Litigation. There is no action, suit, proceeding, or claim pending
or, to the knowledge of Purchaser, threatened against Purchaser by persons not a
party to this Agreement wherein an unfavorable decision, ruling, or finding
would render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
3.5 Finder's Fees. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Purchaser and its
counsel directly with Seller and its counsel without the intervention of any
other person as the result of any act by Purchaser, and so far as is known to
Purchaser, without the intervention of any other person in such manner as to
give rise to any valid claim against any of the parties hereto for a brokerage
commission, finders' fee, or any similar payment.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Further Assurances. Following the date hereof, Seller shall execute
and deliver such other documents, and take such other actions, as may be
reasonably requested by Purchaser to complete the transactions contemplated by
this Agreement.
4.2 Publicity. The parties hereto shall jointly prepare any press
release or other public announcement relating to this Agreement, except that the
foregoing shall not prevent any party hereto or any affiliate thereof from
issuing any press release required by applicable law.
4.3 Agreement Regarding the Company. In order to induce each other to
enter into the stock purchase provided for by this Agreement, each party agreed
to enter into the Voting, Right of First Refusal and Buy-Sell Agreement attached
hereto as Exhibit 4.3.
ARTICLE V
SURVIVAL AND INDEMNITY
5.1 Survival of Representations and Warranties. All of the
representations and warranties made by the parties hereto in this Agreement or
pursuant hereto, shall be continuing and shall survive the closing hereof and
the consummation of the transactions contemplated hereby, notwithstanding any
investigation at any time made by or on behalf of any party hereto.
5.2 Indemnification Seller. Seller shall protect, indemnify and hold
harmless Purchaser, and its stockholders, directors, officers, employees,
agents, affiliates, successors and assigns, from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and reasonable attorneys' fees), arising from any breach of any
agreement, representation or warranty made by Seller in this Agreement.
5.3 Indemnification by Purchaser. Purchaser shall protect, indemnify
and hold harmless Seller, and its stockholders, directors, officers, employees,
agents, affiliates, successors and assigns, from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and attorneys' fees), arising from any breach of any agreement,
representation or warranty made by Purchaser in this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. Any notices to be given hereunder by any party to the
other parties may be effected either by personal delivery in writing or sent by
facsimile or by mail, registered or certified, postage prepaid with return
receipt requested, addressed to the one or more parties to be notified at the
addresses set forth beneath such parties' respective signatures below.
6.2 Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one and the
same instrument.
6.3 Amendments and Waivers. This Agreement may not be modified or
amended other than by an agreement in writing signed by all parties affected.
Any waiver of the terms, provisions, covenants, representations, warranties, or
conditions hereof shall be made only by a written instrument executed and
delivered by the party waiving compliance. The failure of any party at any time
or times to require performance of any provision hereof shall in no manner
affect the right to enforce the same. No waiver by any party of any condition,
or of the breach of any term, provision, covenant, representation, or warranty
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or the breach of any other term, provision,
covenant, representation, or warranty.
6.4 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties with respect to the transactions contemplated
hereby and thereby, and supersede all prior agreements, arrangements, and
understandings relating to the subject matter hereof.
6.5 Successors and Assigns. All of the terms, provisions, covenants,
representations, warranties, and conditions of this Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the parties hereto
and their respective assigns and successors.
6.6 Applicable Law. THIS AGREEMENT AND ALL QUESTIONS RELATING TO ITS
VALIDITY, INTERPRETATION, PERFORMANCE, AND ENFORCEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
6.7 Severability. If any term, provision, covenant, or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired, or invalidated.
6.8 Expenses. Each party shall bear its own legal, accounting and
administrative expenses in connection with the investigation, negotiation and
consummation of the transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"SELLER"
CROSSPOINTE NET, INC.
By:__________________________________
_________________, President
Address: _____________________________
-----------------------------
Telecopy: ___________________
"PURCHASER"
JVWEB, INC.
By:_________________________________
Greg J. Micek, President
Address: 5444 Westheimer, Suite 2080
Houston, Texas 77056
Telecopy: 713/840-9034
EXHIBIT 10.21 - Stock Purchase Agreement dated _____________ _____, _____
between the Company and LinksXpress.com, Inc.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
effective as of the _____ day of December, 1999 by and between LINKSXPRESS.COM,
INC., a Delaware corporation ("Seller") and JVWEB, INC., a Delaware corporation
("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the holder of 900,000 shares of the issued and
outstanding common stock (the "Common Stock") of LINKSXPRESS.CO.UK, INC., a
Delaware corporation (the "Company"), which shares represent all of the issued
and outstanding shares of Common Stock; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, 350,000 shares of the Common Stock owned by Seller (the
"Shares"), for the consideration specified below; and
WHEREAS, Seller and Purchaser desire to memorialize in writing the
terms, provisions and conditions of Seller's sale and Purchaser's purchase of
the Shares; and
NOW, THEREFORE, in consideration of the mutual promises, covenants,
agreements, representations and warranties set forth hereinafter, and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged by Seller and Purchaser, and subject to the terms, provisions and
conditions hereof, each of Seller and Purchaser hereby agrees as follows:
ARTICLE I
SALE AND PURCHASE OF STOCK
1.1 Subject to the terms, provisions and conditions set forth herein,
Seller hereby sells and delivers to Purchaser, and Purchaser hereby purchases
and receives from Seller, the Shares, in exchange for the purchase price set
forth hereinafter. Purchaser hereby acknowledges receipt of one or more stock
certificates representing the Shares, duly endorsed or accompanied by duly
executed stock transfer form.
1.2 The purchase price for the Shares shall be 500,000 registered
shares of the common stock of Purchaser (the "Purchaser Common Stock") and the
payment by Purchaser to Tanye Capital Corp. of 100,000 registered shares of
Purchaser Common Stock, representing the payment of the broker fee owed by
Seller. Seller hereby acknowledges receipt of stock certificates representing an
aggregate of 600,000 registered shares of Purchaser Common Stock, one stock
certificate issued in the name of Seller representing 100,000 registered shares
of Purchaser Common Stock and bearing no legend, one or more stock certificates
representing 400,000 registered shares of Purchaser Common Stock issued in the
name of Seller and bearing a restrictive legend regarding the lock-up agreement
entered into in connection with the sale and purchase provided for hereby, and
one stock certificate issued in the name of Tanye Capital Corp. representing
100,000 registered shares of Purchaser Common Stock and bearing no legend.
<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF SELLER
Seller hereby represents and warrants to, and agrees with Purchaser
that:
2.1 Concerning the Shares. All of the Shares are duly and validly
authorized and issued and are fully paid and non-assessable, and were not issued
in violation of the preemptive rights of any current or former shareholder of
the Company. No option, warrant, call, subscription, convertible security, or
commitment of any kind exists obligating the Company to issue any additional
shares of Common Stock or obligating Seller to sell any of the Shares to a third
party. There is not any compensation plan or agreement applicable to any of the
officers, directors, or employees of the Company under which compensation
accrued or payable is determined, in whole or in part, by reference to shares of
Common Stock. There are no agreements or commitments obligating the Company to
repurchase or otherwise acquire any of the outstanding shares of Common Stock.
2.2 Ownership of Stock. All of the Shares are owed by Seller, free and
clear of any mortgage, lien, security interest, claim, charge, pledge,
encumbrance and any restriction on the transfer thereof of any nature
whatsoever. None of the Shares is subject to any voting trust, voting agreement,
or other agreement or understanding with respect to the voting thereof, nor is
any proxy in existence with respect to any such shares.
2.3 Capacity to Enter into Agreement. Seller has been duly organized,
is validly existing and is in good standing in the jurisdiction in which it was
incorporated. Seller has full right, power and capacity to execute and deliver
this Agreement and all other agreements, documents and instruments to be
executed in connection herewith and perform its obligations hereunder and
thereunder. The execution and delivery by Seller of this Agreement and all other
agreements, documents and instruments to be executed by Seller in connection
herewith and therewith have been authorized by all necessary corporate action by
Seller. When this Agreement and all other agreements, documents and instruments
to be executed by Seller in connection herewith are executed by Seller and
delivered to Purchaser, this Agreement and such other agreements, documents and
instruments will constitute the valid and binding agreements of Seller
enforceable against Seller in accordance with their respective terms, and will
vest in Purchaser full right, title and interest in and to the Shares, free and
clear of any mortgage, lien, security interest, claim, charge, pledge,
encumbrance and any restriction on the transfer thereof of any nature
whatsoever.
2.4 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Seller is a party or by which Seller is bound or by which any of the assets of
Seller is bound or affected, (b) result in the creation of any lien, charge or
encumbrance upon any assets of Seller pursuant to the terms of any such
contract, (c) violate any judgment against, or binding upon, Seller or upon the
assets of Seller or (d) violate any provision in the charter documents, bylaws
or any other agreement affecting the governance and control of Seller.
2.5 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
Seller.
2.6 Litigation. There is no action, suit, proceeding, or claim pending
or, to the knowledge of Seller, threatened against Seller by persons not a party
to this Agreement wherein an unfavorable decision, ruling, or finding would
render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
2.7 Transactions with Affiliated Parties. Except for a certain license
of proprietary information pursuant to a written agreement, there are no
transactions currently engaged in between the Company and any party affiliated
with the Company (other than transactions inherent in the normal capacities of
shareholders, officers, directors, or employees). Except for the ownership of
non-controlling interests in securities of corporations the shares of which are
publicly traded, no party affiliated with the Company has any investment or
ownership interest, directly, indirectly, or beneficially, in any competitor or
potential competitor, major supplier, or customer of the Company.
2.8 Finder's Fees. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller and its counsel
directly with Purchaser and its counsel without the intervention of any other
person as the result of any act of any of them, and as far as is known to
Seller, without the intervention of any other person in such manner as to give
rise to any valid claim against any of the parties hereto for a brokerage
commission, finder's fee, or any similar payment.
2.9 Untrue Statements. This Agreement, the schedules and exhibits
hereto, and all other documents and information furnished by Purchaser or its
representatives pursuant hereto or in connection herewith do not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made herein and therein not misleading or otherwise.
ARTICLE III
REPRESENTATIONS, WARRANTIES,
AND AGREEMENTS OF PURCHASER
Purchaser hereby represents, warrants, and agrees to and with Seller,
that:
3.1 Capacity to Enter into Agreement. Purchaser has been duly
organized, is validly existing and is in good standing in the jurisdiction in
which it was incorporated. Purchaser has full right, power and authority to
execute and deliver this Agreement and all other agreements, documents and
instruments to be executed in connection herewith and therewith and perform such
its obligations hereunder and thereunder. The execution and delivery by
Purchaser of this Agreement and all other agreements, documents and instruments
to be executed by Purchaser in connection herewith and therewith have been
authorized by all necessary corporate action by Purchaser. When this Agreement
and all other agreements, documents and instruments to be executed by a
Purchaser in connection herewith and therewith are executed by a Purchaser and
delivered to Seller, this Agreement and such other agreements, documents and
instruments will constitute the valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their respective terms.
3.2 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Purchaser is a party or by which Purchaser is bound or by which any of the
assets of Purchaser is bound or affected, (b) result in the creation of any
lien, charge or encumbrance upon any assets of Purchaser pursuant to the terms
of any such contract, or (c) violate any judgment against, or binding upon,
Purchaser or upon the assets of Purchaser, or (d) violate any provision in the
charter documents, bylaws or any other agreement affecting the governance and
control of Purchaser.
3.3 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
Purchaser.
3.4 Litigation. There is no action, suit, proceeding, or claim pending
or, to the knowledge of Purchaser, threatened against Purchaser by persons not a
party to this Agreement wherein an unfavorable decision, ruling, or finding
would render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
3.5 Finder's Fees. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Purchaser and its
counsel directly with Seller and its counsel without the intervention of any
other person as the result of any act by Purchaser, and so far as is known to
Purchaser, without the intervention of any other person in such manner as to
give rise to any valid claim against any of the parties hereto for a brokerage
commission, finders' fee, or any similar payment.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Further Assurances. Following the date hereof, Seller shall execute
and deliver such other documents, and take such other actions, as may be
reasonably requested by Purchaser to complete the transactions contemplated by
this Agreement.
4.2 Publicity. The parties hereto shall jointly prepare any press
release or other public announcement relating to this Agreement, except that the
foregoing shall not prevent any party hereto or any affiliate thereof from
issuing any press release required by applicable law.
4.3 Agreement Regarding the Company. In order to induce each other to
enter into the stock purchase provided for by this Agreement, each party agreed
to enter into the Voting, Right of First Refusal and Buy-Sell Agreement attached
hereto as Exhibit 4.3.
ARTICLE V
SURVIVAL AND INDEMNITY
5.1 Survival of Representations and Warranties. All of the
representations and warranties made by the parties hereto in this Agreement or
pursuant hereto, shall be continuing and shall survive the closing hereof and
the consummation of the transactions contemplated hereby, notwithstanding any
investigation at any time made by or on behalf of any party hereto.
5.2 Indemnification Seller. Seller shall protect, indemnify and hold
harmless Purchaser, and its stockholders, directors, officers, employees,
agents, affiliates, successors and assigns, from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and reasonable attorneys' fees), arising from any breach of any
agreement, representation or warranty made by Seller in this Agreement.
5.3 Indemnification by Purchaser. Purchaser shall protect, indemnify
and hold harmless Seller, and its stockholders, directors, officers, employees,
agents, affiliates, successors and assigns, from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and attorneys' fees), arising from any breach of any agreement,
representation or warranty made by Purchaser in this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. Any notices to be given hereunder by any party to the
other parties may be effected either by personal delivery in writing or sent by
facsimile or by mail, registered or certified, postage prepaid with return
receipt requested, addressed to the one or more parties to be notified at the
addresses set forth beneath such parties' respective signatures below.
6.2 Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one and the
same instrument.
6.3 Amendments and Waivers. This Agreement may not be modified or
amended other than by an agreement in writing signed by all parties affected.
Any waiver of the terms, provisions, covenants, representations, warranties, or
conditions hereof shall be made only by a written instrument executed and
delivered by the party waiving compliance. The failure of any party at any time
or times to require performance of any provision hereof shall in no manner
affect the right to enforce the same. No waiver by any party of any condition,
or of the breach of any term, provision, covenant, representation, or warranty
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or the breach of any other term, provision,
covenant, representation, or warranty.
6.4 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties with respect to the transactions contemplated
hereby and thereby, and supersede all prior agreements, arrangements, and
understandings relating to the subject matter hereof.
6.5 Successors and Assigns. All of the terms, provisions, covenants,
representations, warranties, and conditions of this Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the parties hereto
and their respective assigns and successors.
6.6 Applicable Law. THIS AGREEMENT AND ALL QUESTIONS RELATING TO ITS
VALIDITY, INTERPRETATION, PERFORMANCE, AND ENFORCEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
6.7 Severability. If any term, provision, covenant, or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired, or invalidated.
6.8 Expenses. Each party shall bear its own legal, accounting and
administrative expenses in connection with the investigation, negotiation and
consummation of the transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"SELLER"
LINKSXPRESS.COM, INC.
By:________________________________
Ian Scott-Moncrieff, President
Address:: #1400-355 Burrard Street,
Vancouver, B.C. V6C-2G8
Telecopy: 604/681-9615
"PURCHASER"
JVWEB, INC.
By:________________________________
Greg J. Micek, President
Address:5444 Westheimer, Suite 2080
Houston, Texas 77056
Telecopy: 713/840-9034
JVWEB, INC.
2000 NON-QUALIFIED STOCK OPTION PLAN
1. NAME AND PURPOSES OF THE PLAN
(a) The plan set forth herein shall be known as "JVWeb, Inc. 2000
Non-Qualified Stock Option Plan" (the "Plan").
(b) The purposes of the Plan are to:
(i) Encourage selected employees, directors and
consultants to improve operations and increase
profits of JVWeb, Inc., a Delaware
corporation (the "Company");
(ii) Encourage selected employees, directors and
consultants to accept or continue employment or
association with the Company or its Affiliates
(as defined below); and
(iii) Increase the interest of selected employees,
directors and consultants in the Company's welfare
through participation in the growth in value of the
common stock of the Company (the "Common Stock").
(c) The options granted pursuant to this Plan are not intended to
qualify as "incentive stock options" under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the provisions of this Plan
need not be construed in a manner consistent with the requirements of that Code
section.
2. ELIGIBLE PERSONS AND CERTAIN DEFINITIONS
Any consultant, non-employee director, or full-time employee of the
Company or of any Affiliate selected by the Administrator (as defined herein) in
its sole discretion is eligible to receive a grant of an option pursuant to this
Plan (an "Option"). The term "Affiliate" as used in the Plan means a parent or
subsidiary corporation as defined in the applicable provisions (currently
Sections 424(e) and (f), respectively) of the Code. The term "employee" includes
an officer or director who is an employee of the Company. The term "consultant"
includes persons employed by, or otherwise affiliated with, a consultant. The
term "Optionee" shall refer to a person in whose favor an Option is granted
pursuant to this Plan. The term "Acquired Shares" shall refer to the shares of
Common Stock acquired by an Optionee pursuant to an exercise of an Option.
3. STOCK SUBJECT TO THIS PLAN
The total number of shares of Common Stock that may be issued under
Options granted pursuant to this Plan shall not exceed 5.0 million. Shares
covered by any Option that expires unexercised shall become available again for
grants under the Plan.
<PAGE>
4. ADMINISTRATION
(a) This Plan shall be administered by the Board of Directors of the
Company (the "Board") or by a committee of at least two Board members to which
administration of the Plan, or of part of the Plan, is delegated (in either
case, the "Administrator").
(b) Subject to the other provisions of this Plan, the Administrator
shall have the authority, in its discretion: (i) to grant Options; (ii) to
determine the Fair Market Value of the Common Stock subject to Options in
accordance with Section 6.11 hereof; (iii) to determine the exercise price of
Options granted; (iv) to determine the persons to whom, and the time or times at
which, Options shall be granted, and the number of shares subject to each
Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind rules
and regulations relating to this Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical), including but
not limited to, the time or times at which Options shall be exercisable; (viii)
with the consent of the Optionee, to modify or amend any Option; (ix) to defer
(with the consent of the Optionee) the exercise date of any Option; (x) to
authorize any person to execute on behalf of the Company any instrument
evidencing the grant of an Option; and (xi) to make all other determinations
deemed necessary or advisable for the administration of this Plan. The
Administrator may delegate nondiscretionary administrative duties to such
employees of the Company as it deems proper.
(c) All questions of interpretation, implementation, and
application of this Plan shall be determined by the Administrator. Such
determinations shall be final and binding on all persons.
(d) With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), if any, transactions
under this Plan are intended to comply with the applicable conditions of Rule
16b-3, or any successor rule thereto. To the extent any provision of this Plan
or action by the Administrator fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Administrator.
Notwithstanding the above, it shall be the responsibility of such persons, not
of the Company or the Administrator, to comply with the requirements of Section
16 of the Exchange Act; and neither the Company nor the Administrator shall be
liable if this Plan or any transaction under this Plan fails to comply with the
applicable conditions of Rule 16b-3 or any successor rule thereto, or if any
such person incurs any liability under Section 16 of the Exchange Act.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
(a) No Options shall be granted under this Plan after ten years from
the date of adoption of this Plan by the Board.
(b) Each Option shall be evidenced by a written stock option agreement
(an "Option Agreement"), in form satisfactory to the Company, executed by the
Company and the person to whom such Option is granted; provided, however, that
the failure by the Company, the Optionee, or both to execute such an agreement
shall not invalidate the granting of an Option, although the exercise of each
Option shall be subject to Section 6.3.
(c) The Administrator may approve the grant of Options under this Plan
to persons who are expected to become employees, directors or consultants of the
Company, but are not employees, directors or consultants at the date of
approval.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to the following
terms and conditions:
6.1 Changes in Capital Structure. Subject to Section 6.2, if the Common
Stock is changed by reason of a stock split, reverse stock split, stock
dividend, or recapitalization, combination or reclassification, appropriate
adjustments shall be made by the Administrator in (a) the number and class of
shares of Common Stock subject to this Plan and each Option outstanding under
this Plan, and (b) the exercise price of each outstanding Option; provided,
however, that the Company shall not be required to issue fractional shares as a
result of any such adjustments. Each such adjustment shall be subject to
approval by the Administrator in its sole discretion.
6.2 Corporate Transactions.
(a) In the event of (i) a dissolution or liquidation of the Company,
(ii) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the Options granted under this
Plan are assumed, converted or replaced by the successor or acquiring
corporation, which assumption, conversion or replacement will be binding on all
Optionees), (iii) a merger in which the Company is the surviving corporation but
after which the shareholders of the Company immediately prior to such merger
(other than any shareholder which merges with the Company in such merger, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own their shares or other equity interests in the Company,
or (iv) the sale of all or substantially all of the assets of the Company, any
or all outstanding Options may be assumed, converted or replaced by the
successor or acquiring corporation (if any), which assumption, conversion or
replacement will be binding on all Optionees. In the alternative, the successor
or acquiring corporation may substitute equivalent options or provide
substantially similar consideration to Optionees as was provided to shareholders
(after taking into account the existing provisions of the Options). The
successor or acquiring corporation may also issue, in place of outstanding
Acquired Shares, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the Optionee
than those which applied to the Acquired Shares immediately prior to such
transaction described in this Section 6.2(a). In the event such successor or
acquiring corporation (if any) does not assume or substitute Options, as
provided above, pursuant to a transaction described in this Section 6.2(a), then
notwithstanding any other provision in this Plan to the contrary, the vesting of
such Options will accelerate and the Options will become exercisable in full
prior to the consummation of such event at such times and on such conditions as
the Administrator determines, and if such Options are not exercised prior to the
consummation of the corporate transaction, they shall terminate upon the
consummation of such corporate transaction.
(b) Subject to any greater rights granted to Optionees under the
foregoing provisions of this Section 6.2, in the event of the occurrence of any
transaction described in Section 6.2(a) hereof, any outstanding Options will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation or sale of assets.
(c) The Company, from time to time, also may substitute or assume
outstanding options granted by another company, whether in connection with an
acquisition of such other company or otherwise, by either (i) granting an Option
under this Plan in substitution of such other company's option, or (ii) assuming
such option as if it had been granted under this Plan if the terms of such
assumed option could be applied to an Option granted under this Plan. Such
substitution or assumption will be permissible if the holder of the substituted
or assumed option would have been eligible to be granted an Option under this
Plan if the other company had applied the rules of this Plan to such grant. In
the event the Company assumes an option granted by another company, the terms
and conditions of such Option will remain unchanged (except that the exercise
price and the number and nature of shares issuable upon exercise of any such
Option will be adjusted appropriately pursuant to Section 424(a) of the Code -
THE PRECEDING LANGUAGE TO BE CONFIRMED BY JOHN MALONE). In the event the Company
elects to grant a new Option rather than assuming an existing option, such new
Option may be granted with a similarly adjusted exercise price.
6.3 Time of Option Exercise. Subject to Section 5, Options granted
under this Plan shall be exercisable (a) immediately as of the effective date of
the Option Agreement granting the Option, or (b) in accordance with a vesting
schedule attached to the Option Agreement and signed by Optionee; provided,
however, that the right to exercise an Option must vest at the rate of at least
20% per year over five years from the date the Option was granted. In any case,
no Option shall be exercisable until an Option Agreement in form satisfactory to
the Company is executed by the Company and the Optionee.
6.4 Option Grant Date. Except in the case of advance approvals
described in Section 5(c), the date of grant of an Option under this Plan shall
be the date as of which the Administrator approves the grant.
6.5 Nonassignability of Option Rights. No Option granted under this
Plan shall be assignable or otherwise transferable by the Optionee except by
will or by the laws of descent and distribution. During the life of the
Optionee, an Option shall be exercisable only by the Optionee.
6.6 Payment. Except as provided below, payment in full, in cash, shall
be made for all Common Stock purchased at the time written notice of exercise of
an Option is given to the Company, and proceeds of any payment shall constitute
general funds of the Company. At the time an Option is granted or exercised, the
Administrator, in the exercise of its absolute discretion after considering any
tax or accounting consequences, may authorize any one or more of the following
additional methods of payment:
(a) Acceptance of the Optionee's full recourse promissory note for all
or part of the exercise price, payable on such terms and bearing such interest
rate as determined by the Administrator (but in no event less than the minimum
interest rate specified under the Code at which no additional interest would be
imputed), which promissory note may be either secured or unsecured in such
manner as the Administrator shall approve (including, without limitation, by a
security interest in the Acquired Shares); and
(b) Delivery by the Optionee of Common Stock already owned by the
Optionee for all or part of the exercise price, provided the Fair Market Value
(determined as set forth in Section 6.11) of such Common Stock is equal on the
date of exercise to the exercise price, or such portion thereof as the Optionee
is authorized to pay by delivery of such stock; provided, however, that if an
Optionee has exercised any portion of any Option granted by the Company by
delivery of Common Stock, the Optionee may not, within six months following such
exercise, exercise any Option granted under this Plan by delivery of Common
Stock without the consent of the Administrator.
6.7 Termination.
(a) Subject to earlier termination pursuant to Section 6.2 hereof and
notwithstanding the exercise periods set forth in the related Option Agreement,
exercise of an Option will always be subject to the following:
(i) If an Optionee is Terminated for any reason except death,
Disability or Cause, then an Optionee may exercise such Optionee's
Options, only to the extent that such Options are exercisable on the
Termination Date and such Options must be exercised by an Optionee, if
at all, within three (3) months after the Termination Date (or within
such shorter time period, not less than thirty (30) days after the
Termination Date, or such longer time period not exceeding five (5)
years after the Termination Date as may be determined by the
Administrator), but in any event, no later than the expiration date of
the Options.
(ii) If an Optionee is Terminated because of Optionee's death
or Disability (or an Optionee dies within three (3) months after
Optionee's Termination other than for Cause), then Optionee's Options
may be exercised, only to the extent that such Options are exercisable
by Optionee on the Termination Date and must be exercised by Optionee
(or Optionee's legal representative or authorized assignee), if at all,
within twelve (12) months after the Termination Date (or within such
shorter time period, not less than six (6) months after the Termination
Date, or such longer time period not exceeding five (5) years after the
Termination Date as may be determined by the Administrator), but in any
event no later than the expiration date of the Options.
(iii) If an Optionee is terminated for Cause, then Optionee's
Options shall expire on such Optionee's Termination Date, or at such
later time and on such conditions as are determined by the
Administrator.
(b) "Termination" or "Terminated" means, for purposes of this Plan with
respect to an Optionee, that the Optionee has for any reason ceased to provide
services as an employee, officer, director or consultant to the Company or an
Affiliate. An Optionee will not be deemed to have ceased to provide services in
the case of (i) sick leave, (ii) military leave, or (iii) any other leave of
absence approved by the Administrator, provided that such leave is for a period
of not more than ninety (90) days, unless reinstatement upon the expiration of
such leave is guaranteed by contract or statute or unless provided otherwise
pursuant to formal policy adopted from time to time by the Company and issued
and promulgated in writing. In the case of any Optionee on (i) sick leave, (ii)
military leave or (iii) an approved leave of absence, the Administrator may make
such provisions respecting suspension of vesting of the Option while the
Optionee is on leave from the Company or an Affiliate as the Administrator may
deem appropriate, except that in no event may an Option be exercised after the
expiration of the term set forth in the related Option Agreement. The
Administrator will have sole discretion to determine whether an Optionee has
ceased to provide services and the effective date on which the Optionee ceased
to provide services (the "Termination Date").
(c) "Disability" means a disability, whether temporary or
permanent, partial or total, as determined by the Administrator.
(d) "Cause" means Termination because of (i) any willful material
violation by the Optionee of any law or regulation applicable to the business of
the Company or an Affiliate, the Optionee's conviction for or guilty plea to, a
felony or a crime involving moral turpitude or any willful perpetration by the
Optionee of a common law fraud, (ii) the Optionee's commission of an act of
personal dishonesty which involves a personal profit in connection with the
Company or any other entity having a business relationship with the Company,
(iii) any material breach by the Optionee of any material provision of any
agreement or understanding between the Company or an Affiliate and the Optionee
regarding the terms of the Optionee's service as an employee, director or
consultant to the Company or an Affiliate, including without limitation, the
willful and continued failure or refusal of the Optionee to perform the material
duties required of such Optionee as an employee, director or consultant of the
Company or an Affiliate, other than as a result of having a Disability, or a
breach of any applicable invention assignment and confidentiality agreement or
similar agreement between the Company or an Affiliate and the Optionee, (iv)
Optionee's intentional disregard of the policies of the Company or an Affiliate
so as to cause loss, damage or injury to the property, reputation or employees
of the Company or an Affiliate, or (v) any other misconduct by the Optionee
which is materially injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company or an Affiliate.
6.8 Repurchase of Stock. At the discretion of the Administrator, the
Company may reserve to itself and/or its assignee(s) in the Option Agreement a
right to repurchase Acquired Shares held by a Optionee following such Optionee's
Termination at any time within ninety (90) days after Optionee's Termination
Date (or in the case of securities issued upon exercise of an Option after the
Optionee's Termination Date, within ninety (90) days after the date of such
exercise) for cash and/or cancellation of purchase money indebtedness, at the
Optionee's exercise price for the Acquired Shares, provided, that such right to
repurchase Acquired Shares at the exercise price shall lapse at the rate of at
least twenty percent (20%) per year over five (5) years from the date of grant
of the Option.
6.9 Withholding and Employment Taxes.
(a) Whenever shares of Common Stock are to be issued in satisfaction of
Options granted under this Plan, the Company may require the Optionee to remit
to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. Whenever, under this Plan, payments in
satisfaction of Options are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
(b) When, under applicable tax laws, an Optionee incurs tax liability
in connection with the exercise or vesting of any Option that is subject to tax
withholding and the Optionee is obligated to pay the Company the amount required
to be withheld, the Administrator may in its sole discretion allow the Optionee
to satisfy the minimum withholding tax obligation by electing to have the
Company withhold from the shares to be issued that number of shares having a
Fair Market Value (determined in accordance with Section 6.11 hereof) equal to
the minimum amount required to be withheld, 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 will be made in accordance with the
requirements established by the Administrator and be in writing in a form
acceptable to the Administrator.
6.10 Other Provisions. Each Option granted under this Plan may
contain such other terms, provisions, and conditions not inconsistent with this
Plan as may be determined by the Administrator.
6.11 Determination of Value. For purposes of the Plan, the Fair Market
Value of Common Stock or other securities of the Company shall be determined as
follows:
(a) If the Common Stock is listed on or included in any established
stock exchange, national market system (including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System), or other recognized trading market (including
without limitation the OTC Bulletin Board or the National Quotation Bureau, Inc.
pink sheets), 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,
system or market (or the most prominent thereof) for the date the Fair Market
Value is to be determined (or if there are no sales for such date, then for the
last preceding business day on which there were sales).
(b) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
means between the high bid and low asked prices for the Common Stock on the date
the Fair Market Value is to be determined (or if there are no quoted prices for
the date of grant, then for the last preceding business day on which there were
quoted prices).
(c) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the
Administrator, with reference to the Company's net worth, prospective earning
power, dividend-paying capacity, and other relevant factors, including the
goodwill of the Company, the economic outlook in the Company's industry, the
Company's position in the industry and its management, and the values of stock
of other corporations in the same or a similar line of business.
6.12 Option Term. No Option shall be exercisable more than ten
years after the date of grant, or such lesser period of time as is set forth in
the Option Agreement.
6.13 Exercise Price. Except as otherwise provided in this Section 6.13,
the exercise price of an Option shall equal the Fair Market Value (determined in
accordance with Section 6.11) of the Common Stock subject to the Option on the
date of grant. Notwithstanding the preceding, the exercise price of any Option
granted to any person who owns, directly or by attribution under the Code
currently Section 424(d), Common Stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or of any
Affiliate (a "Ten Percent Stockholder") shall in no event be less than 110% of
the Fair Market Value (determined in accordance with Section 6.11) of the Common
Stock covered by the Option at the time the Option is granted.
6.14 Escrow; Pledge of Shares. To enforce any restrictions on an
Optionee's Acquired Shares (including, without limitation, the right of
repurchase provided for in Section 6.8), the Administrator may require the
Optionee to deposit all certificates representing the Acquired Shares, together
with stock powers or other instruments of transfer approved by the
Administrator, appropriately endorsed in blank, with the Company or an agent
designated by the Company to hold in escrow until such restrictions have lapsed
or terminated, and the Administrator may cause a legend or legends referencing
such restrictions to be placed on the certificates. Any Optionee who is
permitted to execute a promissory note as partial or full consideration for the
purchase of shares of Common Stock under this Plan will be required to pledge
and deposit with the Company all or part of the shares so purchased as
collateral to secure the payment of Optionee's obligation to the Company under
the promissory note; provided, however, that the Administrator may require or
accept other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company will have full recourse against the
Optionee under the promissory note notwithstanding any pledge of the Optionee's
Acquired Shares or other collateral. In connection with any pledge of the
Acquired Shares, an Optionee will be required to execute and deliver a written
pledge agreement in such form as the Administrator will from time to time
approve. Acquired Shares purchased with the promissory note may be released from
the pledge on a pro rata basis as the promissory note is paid at the discretion
of the Administrator.
7. MANNER OF EXERCISE
(a) An Optionee wishing to exercise an Option shall give written notice
to the Company at its principal executive office, to the attention of the
officer of the Company designated by the Administrator, accompanied by payment
of the exercise price as provided in Section 6.6. The date the Company receives
written notice of an exercise hereunder accompanied by payment of the exercise
price will be considered as the date such Option was exercised.
(b) Promptly after receipt of written notice of exercise of an Option,
the Company shall, without stock issue or transfer taxes to the Optionee or
other person entitled to exercise the Option, deliver to the Optionee or (if the
Acquired Shares are to be placed into escrow) to the escrow holder, one or more
certificates for the requisite number of Acquired Shares. An Optionee or
permitted transferee of an Optionee shall not have any privileges as a
shareholder with respect to any shares of Common Stock covered by the Option
until the date of issuance (as evidenced by the appropriate entry on the books
of the Company or a duly authorized transfer agent) of such shares.
8. EMPLOYMENT, DIRECTOR OR CONSULTING RELATIONSHIP
Nothing in this Plan or any Option granted thereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any Optionee's employment, director or consulting arrangement at any
time, nor confer upon any Optionee any right to continue in the employ of, on
the Board of, or consult with, the Company or any of its Affiliates.
9. CONDITIONS UPON ISSUANCE OF SHARES.
Shares of Common Stock shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended.
10. NONEXCLUSIVITY OF THE PLAN.
The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.
11. AMENDMENT OR TERMINATION OF PLAN
The Board may (without the approval of any Optionee or the Company's
shareholders) modify or amend this Plan in any respect; provided, however, that
no modification or amendment of this Plan shall adversely affect any previously
granted Options without the consent of the related Optionee. The Board may, at
any time or from time to time, suspend or terminate this Plan; provided,
however, that no such action shall adversely affect any previously granted
Options without the consent of the related Optionee.
12. EFFECTIVE DATE OF PLAN
This Plan is effective as of August _____, 1999; provided, however,
that Options may be granted and exercised under this Plan only after there has
been compliance with all applicable federal and state securities laws. This Plan
shall remain in effect until terminated by the Board.
<PAGE>
JVWEB, INC.
2000 NON-QUALIFIED STOCK OPTION PLAN
STOCK OPTION AGREEMENT
OPTION NO. ___________
This Stock Option Agreement (this "Agreement") is made and entered into
as of the Date of Grant set forth below (the "Date of Grant") by and between
JVWeb, Inc., a Delaware corporation (the "Company"), and the Optionee named
below ("Optionee"). Capitalized terms not defined herein shall have the meanings
ascribed to them in the Company's 2000 Non-Qualified Stock Option Plan (the
"Plan").
OPTIONEE: CARLO PELLEGRINI
SOCIAL SECURITY NUMBER: ###-##-####
ADDRESS: 195 HIGH AVENUE, NYACK, NY 10960
TOTAL NUMBER OF OPTION SHARES: 1,000,000
EXERCISE PRICE PER SHARE: $0.21
DATE OF GRANT: November 6, 1999
FIRST VESTING DATE: April 1, 2000
EXPIRATION DATE [unless earlier terminated under section 3 below]: April 1, 2004
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Number of Option Shares (the "Shares") at the
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
of the terms and conditions of this Agreement and the Plan.
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. Unless otherwise provided on a vesting
schedule attached hereto and signed by Optionee, this Option is immediately
exercisable. However, if vesting schedule signed by Optionee is attached hereto,
this Option shall become exercisable in accordance with such vesting schedule.
In all cases, the Shares issued upon exercise of this Option will be subject to
the restrictions on transfer and Repurchase Options set forth in Section 5 and 7
below. Provided Optionee continues to provide services to the Company or an
Affiliate, the Shares issuable upon exercise of this Option (as opposed to the
Option itself) will become vested and free of the repurchase option provided for
in Section 7 hereof with respect to twenty-five percent (25%) of the Shares on
the First Vesting Date set forth above (the "First Vesting Date") and thereafter
at the end of each full succeeding month after the First Vesting Date an
additional 2.08333% of the Shares will become vested until the shares are vested
with respect to 100% of the Shares, provided that if application of the vesting
percentage causes a fractional share, such share shall be rounded down to the
nearest whole share. Notwithstanding any provision in the Plan or this Agreement
to the contrary, Options for Unvested Shares (as defined in Section 2.2 of this
Agreement) will not be exercisable on or after Optionee's Termination Date.
2.2 Vesting of Options. Shares that are vested pursuant to the schedule
set forth in Section 2.1 are "Vested Shares." Shares that are not vested
pursuant to the schedule set forth in Section 2.1 are "Unvested Shares."
Unvested Shares may not be sold or otherwise transferred by Optionee without the
Company's prior written consent.
<PAGE>
2.3 Expiration. This Option shall expire on the Expiration Date set
forth above and must be exercised, if at all, on or before the Expiration Date,
unless earlier terminated under Section 3 below.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or Cause. If
Optionee is Terminated for any reason, except death, Disability or Cause, this
Option, to the extent (and only to the extent) that it is exercisable by
Optionee on the Termination Date, may be exercised by Optionee, if at all, as to
all or some of the Vested Shares calculated as of the Termination Date, no later
than three (3) months after the Termination Date, but in any event no later than
the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause) this Option, to
the extent that it is exercisable by Optionee on the Termination Date, may be
exercised by Optionee (or Optionee's legal representative), if at all, as to all
or some of the Vested Shares calculated as of the Termination Date, no later
than twelve (12) months after the Termination Date, but in any event no later
than the Expiration Date.
3.3 Termination for Cause. If Optionee is Terminated for Cause, then
this Option will expire on Optionee's Termination Date, or at such later time
and on such conditions as are determined by the Administrator.
3.4 Obligation to Employ. Nothing in the Plan or this Agreement shall
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Affiliate, or limit in any way the right of the Company
or any Affiliate to terminate Optionee's employment or other relationship at any
time, with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option, Optionee
(or in the case of exercise after Optionee's death or incapacity, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
from time to time (the "Exercise Agreement"), which shall set forth, inter alia,
Optionee's election to exercise this Option, the number of Shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then such
person must submit documentation reasonably acceptable to the Company that such
person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. This Option may not be
exercised as to fewer than one hundred (100) Shares, unless it is exercised as
to all Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law: (a) by surrender of shares of the Company's Common
Stock that: (1) either (A) have been owned by Optionee for more than six (6)
months and have been paid for within the meaning of Rule 144 under the
Securities Act of 1933 (and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with respect to such
shares) or (B) were obtained by Optionee in the open public market and (2) are
clear of all liens, claims, encumbrances or security interests; (b) by tender of
a cash downpayment equal (at a minimum) to the aggregate par value of the Shares
being acquired and of a full recourse promissory note with an original principal
amount equal to the aggregate Exercise Price minus the downpayment made, having
such terms as may be approved by the Administrator and bearing interest at a
rate sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code.
4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise
of this Option, Optionee must pay or provide for any applicable federal, state
and local withholding obligations of the Company. If the Administrator permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee's
authorized assignee, or Optionee's legal representative, and shall deliver, to
the Optionee or (if the Shares are to be placed into escrow) to the escrow
holder, one or more certificates representing the Shares with the appropriate
legends affixed thereto.
5. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by Optionee or in the event of
Optionee's incapacity, by Optionee's legal representative. The terms of this
Option shall be binding upon the executors, administrators, successors and
assigns of Optionee.
7. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Optionee's Unvested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in the Exercise Agreement (the "Repurchase Option for Unvested Shares") if
Optionee is Terminated for any reason, or no reason, including without
limitation Optionee's death, Disability, voluntary resignation or termination by
the Company with or without Cause. Notwithstanding the foregoing, the Company
shall retain the Repurchase Option for Unvested Shares only as to that number of
Unvested Shares (whether or not exercised) that exceeds the number of shares
which remain exercisable.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of
the Effective Date of the Plan of some of the federal and state tax consequences
of exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.
8.1 Exercise of Option. There may be a regular federal and state income
tax liability upon the exercise of this Option. 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 Shares on the date of
exercise over the Exercise Price. If Optionee is a current or former employee of
the Company, the Company may be required to withhold from Optionee's
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
8.2 Disposition of Shares. The following tax consequences may apply
upon disposition of the Shares. [JOHN MALONE TO GIVE TAX TREATMENT FOR SALES
WITHIN 12 MONTHS AFTER EXERCISE] If the Shares are held for more than twelve
(12) months after the date of the transfer of the Shares pursuant to the
exercise of an Option, any gain realized on disposition of the Shares will be
treated as a long-term capital gain. The maximum federal capital gain tax rate
is twenty percent. The Company may be required to withhold from Optionee's
compensation or collect from the Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income. [JOHN
MALONE TO CONFIRM PRECEDING SENTENCE]
8.3 Section 83(b) Election for Unvested Shares. With respect to
Unvested Shares, which are subject to the Repurchase Option for Unvested Shares,
unless an election is filed by the Optionee with the Internal Revenue Service
(and, if necessary, the proper state taxing authorities), within 30 days of the
purchase of the Unvested Shares, electing pursuant to Code Section 83(b) (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of exercise, there may be a recognition of taxable
income (including, where applicable, alternative minimum taxable income) to the
Optionee, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any
of the rights of a shareholder with respect to any Shares until the Shares are
issued to Optionee.
10. INTERPRETATION. Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or the Company to the
Administrator for review. The resolution of such a dispute by the Administrator
shall be final and binding on the Company and Optionee.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the complete and exclusive statement of
the parties regarding its subject matter and supersedes all prior proposals,
representations, communications, and agreements of the parties, whether oral or
written regarding the grant of stock options or issuances of shares to Optionee.
12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the President of the Company at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated above or to such other address as such
party may designate in writing from time to time to the Company. All notices
shall be deemed to have been given or delivered upon: personal delivery; three
(3) days after deposit in the United States mail by certified or registered mail
(return receipt requested); one (1) business day after deposit with any return
receipt express courier (prepaid); or one (1) business day after transmission by
facsimile, rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO
AGREEMENTS BETWEEN TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY
WITHIN TEXAS. IF ANY PROVISION OF THIS AGREEMENT IS DETERMINED BY A COURT OF LAW
TO BE ILLEGAL OR UNENFORCEABLE, THEN SUCH PROVISION WILL BE ENFORCED TO THE
MAXIMUM EXTENT POSSIBLE AND THE OTHER PROVISIONS WILL REMAIN FULLY EFFECTIVE AND
ENFORCEABLE.
16. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of the
Plan and this Agreement. Optionee has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee acknowledges that there may
be adverse tax consequences upon exercise of this Option or disposition of the
Shares and that Optionee should consult a tax adviser prior to such exercise or
disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Optionee has
executed this Agreement in duplicate as of the Date of Grant.
OPTIONEE
By:_________________________________ ____________________________________
Carlo Pellegrini (signature)
Name: ______________________________
Greg J. Micek, President JVWEB, INC.
<PAGE>
JVWEB, INC.
2000 NON-QUALIFIED STOCK OPTION PLAN
STOCK OPTION EXERCISE AGREEMENT
NO._____________
This Exercise Agreement (this "Exercise Agreement") is made and entered
into as of ______________, 19___ (the "Effective Date") by and between JVWeb,
Inc., a Delaware corporation (the "Company"), and the Purchaser named below (the
"Purchaser"). Capitalized terms not defined herein shall have the meanings
ascribed to them in the Company's 2000 Non-Qualified Stock Option Plan (the
"Plan").
PURCHASER:
SOCIAL SECURITY NUMBER:
ADDRESS:
TOTAL NUMBER OF SHARES:
EXERCISE PRICE PER SHARE:
TOTAL EXERCISE PRICE:
OPTION NO. AND DATE OF GRANT:
1. EXERCISE OF OPTION.
1.1 Exercise. Pursuant to the exercise of that certain option (the
"Option") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above (the "Acquired Shares") of the Company's Common Stock at the
Total Exercise Price set forth above (the "Exercise Price"). As used in this
Exercise Agreement, the term "Acquired Shares" refers to the Acquired Shares
purchased under this Exercise Agreement and includes all securities received (a)
in replacement of the Acquired Shares, (b) as a result of stock dividends or
stock splits with respect to the Acquired Shares, and (c) all securities
received on account of the Acquired Shares in a merger, recapitalization,
reorganization or similar corporate transaction.
1.2 Title to Shares. The exact spelling of the name(s) under which
Purchaser will take title to the
Acquired Shares is: ___________________
___________________________________________. Purchaser desires to take title
to the Acquired Shares as follows:
[_] Individual, as separate property
[_] Husband and wife, as community property
[_] Joint Tenants
[_] Alone or with spouse as trustee(s) of the following trust
(including date):________________________________________
------------------------------------------------------
[_] Other; please specify:__________________
------------------------------------------------------
<PAGE>
1.3 Payment. Purchaser hereby delivers payment of the Exercise
Price in the manner permitted in the Option Agreement as follows (check and
complete as appropriate):
[_] in cash (by check) in the amount of $________________,
receipt of which is acknowledged by the Company;
[_] by tender of a Full Recourse Promissory Note in the principal
amount of $___________________, having such terms as may be
approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483
and 1274 of the Code and secured by a Pledge Agreement
herewith.
[_] by surrender of ___________________ shares of the Company's
Common Stock, which shares have a Fair Market Value equal to
the Exercise Price and: (1) either (A) have been owned by
Optionee for more than six (6) months and have been paid for
within the meaning of Rule 144 under the Securities Act of
1933 (and, if such shares were purchased from the Company
by use of a promissory note, such note has been fully paid
with respect to such shares) or (B) were obtained by Optione0
in the open public market and (2) are clear of all liens,
claims, encumbrances or security interests
2. DELIVERY.
2.1 Deliveries by Purchaser. Purchaser hereby delivers to the Company
(i) this Exercise Agreement, (ii) three (3) copies of a blank Stock Power and
Assignment Separate from Stock Certificate in the form of Exhibit 1 attached
hereto (the "Stock Powers"), executed by Purchaser (and Purchaser's spouse, if
any), (iii) if Purchaser is married, a Consent of Spouse in the form of Exhibit
2 attached hereto (the "Spouse Consent") executed by Purchaser's spouse, (iv)
the Exercise Price and payment or other provision for any applicable tax
obligations by delivery of cash of a Secured Full Recourse Promissory Note in
the form of Exhibit 3 and (v) if a Secured Full Recourse Promissory Note is
being delivered, a Stock Pledge Agreement in the form of Exhibit 5 executed by
Purchaser (the "Pledge Agreement").
2.2 Deliveries by the Company. Upon its receipt of the Exercise Price,
payment or other provision for any applicable tax obligations and all the
documents to be executed and delivered by Purchaser to the Company under Section
2.1, the Company will issue a duly executed stock certificate evidencing the
Acquired Shares in the name of Purchaser, to be placed in escrow as provided in
Section 8 to secure payment of Optionee's obligation to the Company under the
promissory note and until expiration or termination of the Company's Repurchase
Option in Section 6.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to the Company that:
3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the
Plan and the Option Agreement, has read and understands the terms of the Plan,
the Option Agreement and this Exercise Agreement, and agrees to be bound by
their terms and conditions. Purchaser acknowledges that there may be adverse tax
consequences upon exercise of the Option or disposition of the Acquired Shares,
and that Purchaser should consult a tax adviser prior to such exercise or
disposition.
3.2 Access to Information. Purchaser has had access to all information
regarding the Company and its present and prospective business, assets,
liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Acquired Shares, and Purchaser
has had ample opportunity to ask questions of the Company's representatives
concerning such matters and this investment.
3.3 Understanding of Risks. Purchaser is fully aware of: (i) the highly
speculative nature of the investment in the Acquired Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Acquired Shares and the
restrictions on transferability of the Acquired Shares (e.g., that Purchaser may
not be able to sell or dispose of the Acquired Shares or use them as collateral
for loans); (iv) the qualifications and backgrounds of the management of the
Company; and (v) the tax consequences of investment in the Acquired Shares.
Purchaser is capable of evaluating the merits and risks of this investment, has
the ability to protect Purchaser's own interests in this transaction and is
financially capable of bearing a total loss of this investment.
4. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and
acknowledges that, notwithstanding any other provision of the Option Agreement
to the contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act of 1933 and all applicable
state securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws.
5. RESTRICTIONS ON TRANSFERS.
5.1 Restriction on Transfer. Purchaser shall not transfer, assign,
grant a lien or security interest in, pledge, hypothecate, encumber or otherwise
dispose of any of the Acquired Shares which are subject to the Company's
Repurchase Option, except as permitted by this Exercise Agreement.
5.2 Transferee Obligations. Each person (other than the Company) to
whom the Acquired Shares are transferred with the prior express written consent
of the Company must, as a condition precedent to the validity of such transfer,
acknowledge in writing to the Company that such person is bound by the
provisions of this Exercise Agreement and that the transferred Acquired Shares
are subject to the Company's Repurchase Option granted hereunder to the same
extent such Acquired Shares would be so subject if retained by the Purchaser.
6. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Purchaser's Unvested Shares (as
defined in Section 2.2 of the Option Agreement) on the terms and conditions set
forth in this Section (the "Repurchase Option for Unvested Shares") if Purchaser
is Terminated (as defined in the Plan) for any reason, or no reason, including
without limitation Purchaser's death, Disability (as defined in the Plan),
voluntary resignation or termination by the Company with or without Cause.
Notwithstanding the foregoing, the Company shall retain the Repurchase Option
for Unvested Shares only as to that number of Unvested Shares (whether or not
exercised) that exceeds the number of shares which remain exercisable.
6.1 Termination and Termination Date. In case of any dispute as to
whether Purchaser is Terminated, the Committee shall have discretion to
determine whether Purchaser has been Terminated and the effective date of such
Termination (the "Termination Date").
6.2 Exercise of Repurchase Option for Unvested Shares. At any time
within ninety (90) days after the Purchaser's Termination Date, the Company, or
its assignee, may elect to repurchase the Purchaser's Unvested Shares by giving
Purchaser written notice of exercise of the Repurchase Option for Unvested
Shares.
6.3 Calculation of Repurchase Price for Unvested Shares. The Company or
its assignee shall have the option to repurchase from Purchaser (or from
Purchaser's personal representative as the case may be) the Unvested Shares at
the Purchaser's Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in Section
2.2 of the Plan.
6.4 Payment of Repurchase Price. The repurchase price shall be payable,
at the option of the Company or its assignee, by check or by cancellation of all
or a portion of any outstanding indebtedness of Purchaser to the Company or such
assignee, or by any combination thereof. The repurchase price shall be paid
without interest within sixty (60) days after exercise of the Repurchase Option
for Unvested Shares.
6.5 Right of Termination Unaffected. Nothing in this Exercise Agreement
shall be construed to limit or otherwise affect in any manner whatsoever the
right or power of the Company (or any Affiliate) to terminate Purchaser's
employment or other relationship with Company (or the Affiliate) at any time,
for any reason or no reason, with or without Cause.
7. RIGHTS AS SHAREHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Acquired Shares from and after the date that
Acquired Shares are issued to Purchaser until such time as Purchaser disposes of
the Acquired Shares or the Company and/or its assignee(s) exercise(s) the
Repurchase Option. Upon an exercise of the Repurchase Option, Purchaser will
have no further rights as a holder of the Acquired Shares so purchased upon such
exercise, except the right to receive payment for the Acquired Shares so
purchased in accordance with the provisions of this Exercise Agreement, and
Purchaser will promptly surrender the stock certificate(s) evidencing the
Acquired Shares so purchased to the Company for transfer or cancellation.
8. ESCROW. As security for Purchaser's faithful performance of this
Exercise Agreement, Purchaser agrees that all stock certificates evidencing the
Acquired Shares, together with the Stock Powers executed by Purchaser and by
Purchaser's spouse if any (with the date and number of Acquired Shares left
blank), will be delivered to the President of the Company or other designee of
the Company ("Escrow Holder"), who is hereby appointed to hold such
certificate(s) and Stock Powers in escrow and to take all such actions and to
effectuate all such transfers and/or releases of such Acquired Shares as are in
accordance with the terms of this Exercise Agreement. Purchaser and the Company
agree that Escrow Holder will not be liable to any party to this Exercise
Agreement (or to any other party) for any actions or omissions unless Escrow
Holder is grossly negligent or intentionally fraudulent in carrying out the
duties of Escrow Holder under this Exercise Agreement. Escrow Holder may rely
upon any letter, notice or other document executed by any signature purported to
be genuine and may rely on the advice of counsel and obey any order of any court
with respect to the transactions contemplated by this Exercise Agreement. If a
Full Recourse Promissory Note is not given in connection with the payment of the
Exercise Price, upon termination of the Repurchase Option provided, the Acquired
Shares shall be released from escrow. If a Full Recourse Promissory Note is
given in connection with the payment of the Exercise Price, upon termination of
the Repurchase Option provided, the Acquired Shares:
[ ] will be retained in escrow so long as they are subject to the
Pledge Agreement
[ ] will be released from escrow on a pro rata basis as the
original principal amount of Full Recourse Promissory Note is
prepaid.
9. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
9.1 Restrictive Legends and Stop-Transfer Instructions. Purchaser
agrees that, to ensure compliance with the restrictions imposed by this Exercise
Agreement, the Company may place restrictive legends in appropriate forms on the
back of all certificates representing Acquired Share, and the Company may issue
appropriate "stop-transfer" instructions to its transfer agent, if any, and if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
9.2 Refusal to Transfer. The Company will not be required (i) to
transfer on its books any Acquired Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Exercise Agreement or
(ii) to treat as owner of such Acquired Shares, or to accord the right to vote
or pay dividends to any purchaser or other transferee to whom such Acquired
Shares have been so transferred.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
the Plan was adopted by the Board of some of the U.S. Federal and state tax
consequences of exercise of the Option and disposition of the Acquired Shares.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. PURCHASER SHOULD CONSULT A TAX ADVISER BEFORE EXECUTING THIS
OPTION OR DISPOSING OF THE SHARES. PURCHASER UNDERSTANDS THAT PURCHASER MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR
DISPOSITION OF THE SHARES. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED
WITH ANY TAX ADVISER PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE
OR DISPOSITION OF THE SHARES AND THAT PURCHASER IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. IN PARTICULAR, IF THE UNVESTED SHARES ARE SUBJECT TO
REPURCHASE BY THE COMPANY, PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED
WITH PURCHASER'S TAX ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b)
ELECTION WITH THE INTERNAL REVENUE SERVICE.
10.1 Exercise of Option. There may be a regular U.S. Federal income tax
liability and a state income tax liability upon the exercise of the Option.
Purchaser 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 Acquired Shares on the date of exercise over the Exercise Price. If
Purchaser is a current or former employee of the Company, the Company may be
required to withhold from Purchaser's compensation or collect from Purchaser and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
10.2 Disposition of Acquired Shares. The following tax consequences may
apply upon disposition of the Acquired Shares. [JOHN MALONE TO GIVE TAX
TREATMENT FOR SALES WITHIN 12 MONTHS AFTER EXERCISE] If the Acquired Shares are
held for more than twelve (12) months after the date of the transfer of the
Acquired Shares pursuant to the exercise of an Option, any gain realized on
disposition of the Acquired Shares will be treated as a long-term capital gain.
The maximum federal capital gain tax rate is twenty percent. The Company may be
required to withhold from Optionee's compensation or collect from the Optionee
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income. [JOHN MALONE TO CONFIRM PRECEDING SENTENCE]
10.3. Section 83(b) Election for Unvested Shares. With respect to
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Purchaser with the Internal Revenue Service (and, if necessary,
the proper state taxing authorities), within 30 days of the purchase of the
Unvested Shares, electing pursuant to Code Section 83(b) (and similar state tax
provisions, if applicable) to be taxed currently on any difference between the
Exercise Price of the Unvested Shares and their Fair Market Value on the date of
purchase, there may be a recognition of taxable income (including, where
applicable, alternative minimum taxable income) to the Purchaser, measured by
the excess, if any, of the Fair Market Value of the Unvested Shares at the time
they cease to be Unvested Shares, over the Exercise Price of the Unvested
Shares.
11. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of
the Acquired Shares will be subject to and conditioned upon compliance by the
Company and Purchaser with all applicable state and U.S. Federal laws and
regulations and with all applicable requirements of any stock exchange or
automated quotation system on which the Company's Common Stock may be listed or
quoted at the time of such issuance or transfer.
12. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Exercise Agreement, including its rights to repurchase Acquired
Shares under the Repurchase Option. This Exercise Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise
Agreement will be binding upon Purchaser and Purchaser's heirs, executors,
administrators, legal representatives, successors and assigns.
13. GOVERNING LAW; SEVERABILITY. THIS EXERCISE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN TEXAS RESIDENTS ENTERED
INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS. IF ANY PROVISION OF THIS
EXERCISE AGREEMENT IS DETERMINED BY A COURT OF LAW TO BE ILLEGAL OR
UNENFORCEABLE, THEN SUCH PROVISION WILL BE ENFORCED TO THE MAXIMUM EXTENT
POSSIBLE AND THE OTHER PROVISIONS WILL REMAIN FULLY EFFECTIVE AND ENFORCEABLE.
14. NOTICES. Any notice required to be given or delivered to the
Company shall be in writing and addressed to the President of the Company at its
principal corporate offices. Any notice required to be given or delivered to
Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, three (3) days after deposit in the United States mail
by certified or registered mail (return receipt requested), one (1) business day
after its deposit with any return receipt express courier (prepaid), or one (1)
business day after transmission by rapifax or telecopier.
15. FURTHER INSTRUMENTS. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Exercise Agreement.
16. HEADINGS. The captions and headings of this Exercise
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Exercise Agreement. All references herein to
Sections will refer to Sections of this Exercise Agreement.
17. ENTIRE AGREEMENT. The Plan, the Option Agreement and this Exercise
Agreement, together with all of its Exhibits, constitute the entire agreement
and understanding of the parties with respect to the subject matter of this
Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to
be executed in duplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in duplicate as of the Effective Date.
JVWEB, INC. PURCHASER
By:_________________________________ ___________________________________
Greg J. Micek, President Name: ______________________________
<PAGE>
LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate From Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: Copy of Purchaser's Check And/or Secured Full Recourse
Promissory Note
Exhibit 4: Section 83(b) Election
Exhibit 5: Stock Pledge Agreement
<PAGE>
EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. _____ dated as of _______________ _____, ________ (the "Exercise
Agreement"), the undersigned hereby sells, assigns and transfers unto
____________________________________, ___________________ shares of the Common
Stock of JVWeb, Inc., a Delaware corporation (the "Company"), standing in the
undersigned's name on the books of the Company represented by Certificate No(s).
________ delivered herewith, and does hereby irrevocably constitute and appoint
_______________________________________ as the undersigned's attorney-in-fact,
with full power of substitution, to transfer said stock on the books of the
Company. THIS ASSIGNMENT MAY BE USED ONLY AS AUTHORIZED BY THE EXERCISE
AGREEMENT AND ANY EXHIBITS THERETO.
PURCHASER
Dated: _______________ _____, _______ ____________________________________
(Signature)
Name:______________________________
-----------------------------------
(Spouse's Signature, if any)
Spouse's Name) :____________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon a default under Purchaser's Note and to exercise its
"Repurchase Option" set forth in the Exercise Agreement without requiring
additional signatures on the part of the Purchaser or Purchaser's Spouse.
<PAGE>
EXHIBIT 2
SPOUSE CONSENT
The undersigned spouse of Purchaser has read, understands, and hereby
approves the Stock Option Exercise Agreement between Purchaser and the Company
(the "Exercise Agreement"). In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Exercise Agreement, the
undersigned hereby agrees to be irrevocably bound by the Exercise Agreement and
further agrees that any community property interest I may have in the Shares and
any other property pursuant to the Exercise Agreement shall similarly be bound
by the Exercise Agreement. The undersigned hereby appoints Purchaser as my
attorney-in-fact with respect to any amendment or exercise of any rights under
the Exercise Agreement.
Date: _______________ _____, _______ ____________________________
(Signature)
Name:______________________________
Name of Purchaser:_________________
Address:___________________________
-------------------------------
<PAGE>
EXHIBIT 3
SECURED FULL RECOURSE PROMISSORY NOTE
Houston, Texas $__________________ ____________ ___, _____
1. OBLIGATION. In exchange for the issuance to the undersigned
("Purchaser") of ______________________________ shares (the "Shares") of the
Common Stock of JVWeb, Inc., a Delaware corporation (the "Company"), receipt of
which is hereby acknowledged, Purchaser hereby promises to pay to the order of
the Company on or before _______________ _____, _______, at the Company's
principal place of business at 5444 Westheimer, Suite 2080, Houston, Texas
77056, or at such other place as the Company may direct, the principal sum of
____________________ Dollars ($_______________) together with interest
compounded semi-annually on the unpaid principal at the rate of ______________
percent (_____%), which rate is not less than the minimum rate established
pursuant to Section 1274(d) of the Internal Revenue Code of 1986, as amended, on
the earliest date on which there was a binding contract in writing for the
purchase of the Shares; provided, however, that the rate at which interest will
accrue on unpaid principal under this Note will not exceed the highest rate
permitted by applicable law; and provided further that interest on the unpaid
principal shall be due and payable on December 1 of each year.
2. SECURITY. Payment of this Note is secured by a security interest in
the Shares granted to the Company by Purchaser under a Stock Pledge Agreement of
even date herewith between the Company and Purchaser (the "Pledge Agreement").
This Note is being tendered by Purchaser to the Company as part of the Exercise
Price of the Shares pursuant to that certain Stock Option Exercise Agreement
between Purchaser and the Company of even date with this Note (the "Exercise
Agreement").
3. DEFAULT; ACCELERATION OF OBLIGATION. Purchaser will be deemed to be
in default under this Note and the principal sum of this Note, together with all
interest accrued thereon, will immediately become due and payable in full: (a)
upon Purchaser's failure to make any payment when due under this Note; (b) in
the event Purchaser is Terminated (as defined in the Company's 2000
Non-Qualified Stock Option Plan) for any reason; (c) upon any transfer of any of
the Shares (except a transfer to, or expressly permitted in writing by, the
Company); (d) upon the filing by or against Purchaser of any voluntary or
involuntary petition in bankruptcy or any petition for relief under the U.S.
Federal bankruptcy code or any other state or U.S. Federal law for the relief of
debtors; or (e) upon the execution by Purchaser of an assignment for the benefit
of creditors or the appointment of a receiver, custodian, trustee or similar
party to take possession of Purchaser's assets or property.
4. REMEDIES ON DEFAULT. Upon any default of Purchaser under this Note,
the Company will have, in addition to its rights and remedies under this Note
and the Pledge Agreement, full recourse against any real, personal, tangible or
intangible assets of Purchaser, and may pursue any legal or equitable remedies
that are available to it.
5. PREPAYMENT. Prepayment of principal and/or interest due under this
Note may be made at any time without penalty. Unless otherwise agreed in writing
by the Company, all payments will be made in lawful tender of the United States
and will be applied first to the payment of accrued interest, and the remaining
balance of such payment, if any, will then be applied to the payment of
principal. If Purchaser prepays all or a portion of the principal amount of this
Note, the Shares paid for by the portion of principal so paid
[ ] shall continue to be held in pledge under the Pledge
Agreement to serve as independent collateral for the
outstanding portion of this Note
[ ] shall be released from pledge and may be returned to
Purchaser so long as the Company no longer has any right to
repurchase the Shares to be released.
6. GOVERNING LAW; WAIVER. THE VALIDITY, CONSTRUCTION AND
PERFORMANCE OF THIS NOTE WILL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
TEXAS, EXCLUDING THAT BODY OF LAW PERTAINING TO CONFLICTS OF LAW. PURCHASER
HEREBY WAIVES PRESENTMENT, NOTICE OF NON-PAYMENT, NOTICE OF DISHONOR, PROTEST,
DEMAND AND DILIGENCE.
7. ATTORNEYS' FEES. If suit is brought for collection of this
Note, Purchaser agrees to pay all reasonable expenses, including attorneys'
fees, incurred by the holder in connection therewith whether or not such suit
is prosecuted to judgment.
IN WITNESS WHEREOF, Purchaser has executed this Note as of the date and
year first above written.
---------------------------------
(Signature)
Name:______________________________
<PAGE>
EXHIBIT 4
[FOR REGULAR INCOME TAX - NONQUALIFIED OPTIONS] [FOR AMT AND DISQUALIFYING
DISPOSITION PURPOSES - INCENTIVE STOCK OPTION]
ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of
the Internal Revenue Code of 1986, as amended, to include the excess, if any, of
the fair market value of the property described below at the time of transfer
over the amount paid for such property, as compensation for services in the
calculation of: (1) regular gross income; (2) alternative minimum taxable income
or (3) disqualifying disposition gross income, as the case may be.
1. TAXPAYER'S NAME:___________________________________________________
TAXPAYER'S ADDRESS: _______________________________________________
- ------------------------------------------------------------------------
SOCIAL SECURITY NUMBER: __________________________________________
2. The property with respect to which the election is
made is described as follows: ___________________ shares of Common Stock
of JVWeb, Inc., a Delaware corporation (the "Company"), which is Taxpayer's
employer or the corporation for whom the Taxpayer performs services. The
foregoing shares were issued upon exercise of an option.
3. The date on which the shares were transferred pursuant to
the exercise of the option was _______________ ___, ____ and this election
is made for calendar year ________.
4. The shares received upon exercise of the option are subject to the
following restrictions: The Company may repurchase all or a portion of the
shares at the Taxpayer's original purchase price under certain conditions at the
time of Taxpayer's termination of employment or services.
5. The fair market value of the shares (without regard to restrictions
other than restrictions which by their terms will never lapse) was $________ per
share at the time of exercise of the option.
6. The amount paid for such shares upon exercise of the option
was $____________ per share.
7. The Taxpayer has submitted a copy of this statement to the
Company.
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS"),
AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS
AFTER THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH THE
TAXPAYER'S INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE
REVOKED WITHOUT THE CONSENT OF THE IRS.
Dated: ____________ ___, _______ ____________________________________
Taxpayer's Signature
<PAGE>
EXHIBIT 5
STOCK PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Pledge Agreement") is made and entered into as
of _______________ _____, _______ by and between JVWeb, Inc., a Delaware
corporation (the "Company"), and _____________________________ ("Pledgor").
R E C I T A L S
A. In exchange for Pledgor's Secured Full Recourse Promissory Note and
Secured Non-Recourse Promissory Note to the Company of even date herewith (the
"Note"), the Company has issued and sold to Pledgor ____________________ shares
of its Common Stock (the "Shares") pursuant to the terms and conditions of that
Stock Option Exercise Agreement between the Company and Pledgor of even date
herewith (the "Exercise Agreement").
B. Pledgor has agreed that repayment of the Note will be
secured by the pledge of the Shares pursuant to this Pledge Agreement.
NOW, THEREFORE, the parties agree as follows:
1. CREATION OF SECURITY INTEREST. Pursuant to the provisions of Chapter
9 of the Texas Business and Commerce Code, Pledgor hereby grants to the Company,
and the Company hereby accepts, a first and present security interest in the
Shares as collateral to secure the payment of Pledgor's obligation to the
Company under the Note. Pledgor herewith delivers to the Company Common Stock
certificate(s) No(s). _________, representing all the Shares, together with
three stock powers for each certificate in the form attached as an Exhibit to
the Exercise Agreement, duly executed (with the date and number of shares left
blank) by Pledgor and Pledgor's spouse, if any. For purposes of this Pledge
Agreement, the Shares pledged to the Company hereby, together with any
additional collateral pledged pursuant to Sections 5 and 6 hereof, will
hereinafter be collectively referred to as the "Collateral." Pledgor agrees that
the Collateral pledged to the Company will be deposited with and held by the
Escrow Holder (as defined in the Exercise Agreement) and that, notwithstanding
anything to the contrary in the Exercise Agreement, for purposes of carrying out
the provisions of this Pledge Agreement, Escrow Holder will act solely for the
Company as its agent.
2. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants to the Company that Pledgor has good title (both record and beneficial)
to the Collateral, free and clear of all claims, pledges, security interests,
liens or encumbrances of every nature whatsoever, and that Pledgor has the right
to pledge and grant the Company the security interest in the Collateral granted
under this Pledge Agreement. Pledgor further agrees that, until the entire
principal sum and all accrued interest due under the Note has been paid in full,
Purchaser will not, without the Company's prior written consent, (i) sell,
assign or transfer, or attempt to sell, assign or transfer, any of the
Collateral, or (ii) grant or create, or attempt to grant or create, any security
interest, lien, pledge, claim or other encumbrance with respect to any of the
Collateral.
3. RIGHTS ON DEFAULT. In the event of default (as defined in the Note)
by Pledgor under the Note, the Company will have full power to sell, assign and
deliver the whole or any part of the Collateral at any broker's exchange or
elsewhere, at public or private sale, at the option of the Company, in order to
satisfy any part of the obligations of Pledgor now existing or hereinafter
arising under the Note. On any such sale, the Company or its assigns may
purchase all or any part of the Collateral. In addition, at its sole option, the
Company may elect to retain all the Collateral in full satisfaction of Pledgor's
obligation under the Note, in accordance with the provisions and procedures set
forth in Chapter 9 of the Texas Business and Commerce Code.
4. ADDITIONAL REMEDIES. The rights and remedies granted to the Company
herein upon default under the Note will be in addition to all the rights, powers
and remedies of the Company under Chapter 9 of the Texas Business and Commerce
Code and applicable law and such rights, powers and remedies will be exercisable
by the Company with respect to all of the Collateral. Pledgor agrees that the
Company's reasonable expenses of holding the Collateral, preparing it for resale
or other disposition, and selling or otherwise disposing of the Collateral,
including attorneys' fees and other legal expenses, will be deducted from the
proceeds of any sale or other disposition and will be included in the amounts
Pledgor must tender to redeem the Collateral. All rights, powers and remedies of
the Company will be cumulative and not alternative. Any forbearance or failure
or delay by the Company in exercising any right, power or remedy hereunder will
not be deemed to be a waiver of any such right, power or remedy and any single
or partial exercise of any such right, power or remedy hereunder will not
preclude the further exercise thereof.
5. DIVIDENDS; VOTING. All dividends hereinafter declared on or payable
with respect to the Collateral during the term of this pledge (excluding only
ordinary cash dividends, which will be payable to Pledgor so long as Pledgor is
not in default under the Note) will be immediately delivered to the Company to
be held in pledge under this Pledge Agreement. Notwithstanding this Pledge
Agreement, so long as Pledgor owns the Shares and is not in default under the
Note, Pledgor will be entitled to vote any shares comprising the Collateral,
subject to any proxies granted by Pledgor.
6. ADJUSTMENTS. In the event that during the term of this pledge, any
stock dividend, reclassification, readjustment, stock split or other change is
declared or made with respect to the Collateral, or if warrants or any other
rights, options or securities are issued in respect of the Collateral, then all
new, substituted and/or additional shares or other securities issued by reason
of such change or by reason of the exercise of such warrants, rights, options or
securities, will be immediately pledged to the Company to be held under the
terms of this Pledge Agreement in the same manner as the Collateral is held
hereunder.
7. RIGHTS UNDER EXERCISE AGREEMENT. Pledgor understands and agrees that
the Company's rights to repurchase the Collateral under the Exercise Agreement,
if any, will continue for the periods and on the terms and conditions specified
in the Exercise Agreement, whether or not the Note has been paid during such
period of time, and that to the extent that the Note is not paid during such
period of time, the repurchase by the Company of the Collateral may be made by
way of cancellation of all or any part of Pledgor's indebtedness under the Note.
8. REDELIVERY OF COLLATERAL. Upon payment in full of the entire
principal sum and all accrued interest due under the Note, and subject to the
terms and conditions of the Exercise Agreement, the Company will immediately
redeliver the Collateral to Pledgor and this Pledge Agreement will terminate;
provided, however, that all rights of the Company to retain possession of the
Shares pursuant to the Exercise Agreement will survive termination of this
Pledge Agreement.
9. SUCCESSORS AND ASSIGNS. This Pledge Agreement will inure
to the benefit of the respective heirs, personal representatives, successors
and assigns of the parties hereto.
10. GOVERNING LAW; SEVERABILITY. THIS PLEDGE AGREEMENT WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS,
EXCLUDING THAT BODY OF LAW RELATING TO CONFLICTS OF LAW. SHOULD ONE OR MORE OF
THE PROVISIONS OF THIS PLEDGE AGREEMENT BE DETERMINED BY A COURT OF LAW TO BE
ILLEGAL OR UNENFORCEABLE, THE OTHER PROVISIONS NEVERTHELESS WILL REMAIN
EFFECTIVE AND WILL BE ENFORCEABLE.
11. MODIFICATION; ENTIRE AGREEMENT. This Pledge Agreement will not be
amended without the written consent of both parties hereto. This Pledge
Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
related to such subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Pledge
Agreement as of the date and year first above written.
JVWEB, INC. PLEDGOR
By:_________________________________ ___________________________________
Greg J. Micek, President Name: ______________________________
EXHIBIT 23.01 - Consent of Malone & Bailey, PLLC
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of JVWeb, Inc. on Form
SB-2/A, Amendment No. 3 of our report dated October 10, 1999 relating to the
financial statement schedules appearing elsewhere in this Registration
Statement.
We also consent to the reference to us under the heading "Experts".
MALONE & BAILEY, PLLC
Houston, Texas
March 15, 2000
EXHIBIT 99.02 - 2000 Non-Qualified Stock Option Plan
JVWEB, INC.
2000 NON-QUALIFIED STOCK OPTION PLAN
1. NAME AND PURPOSES OF THE PLAN
(a) The plan set forth herein shall be known as "JVWeb, Inc. 2000
Non-Qualified Stock Option Plan" (the "Plan").
(b) The purposes of the Plan are to:
(i) Encourage selected employees, directors and
consultants to improve operations and increase
profits of JVWeb, Inc., a Delaware corporation (the
"Company");
(ii) Encourage selected employees, directors and
consultants to accept or continue employment or
association with the Company or its Affiliates (as
defined below); and
(iii) Increase the interest of selected employees,
directors and consultants in the Company's welfare
through participation in the growth in value of the
common stock of the Company (the "Common Stock").
(c) The options granted pursuant to this Plan are not intended to
qualify as "incentive stock options" under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the provisions of this Plan
need not be construed in a manner consistent with the requirements of that Code
section.
2. ELIGIBLE PERSONS AND CERTAIN DEFINITIONS
Any consultant, non-employee director, or full-time employee of the
Company or of any Affiliate selected by the Administrator (as defined herein) in
its sole discretion is eligible to receive a grant of an option pursuant to this
Plan (an "Option"). The term "Affiliate" as used in the Plan means a parent or
subsidiary corporation as defined in the applicable provisions (currently
Sections 424(e) and (f), respectively) of the Code. The term "employee" includes
an officer or director who is an employee of the Company. The term "consultant"
includes persons employed by, or otherwise affiliated with, a consultant. The
term "Optionee" shall refer to a person in whose favor an Option is granted
pursuant to this Plan. The term "Acquired Shares" shall refer to the shares of
Common Stock acquired by an Optionee pursuant to an exercise of an Option.
3. STOCK SUBJECT TO THIS PLAN
The total number of shares of Common Stock that may be issued under
Options granted pursuant to this Plan shall not exceed 5.0 million. Shares
covered by any Option that expires unexercised shall become available again for
grants under the Plan..
<PAGE>
4. ADMINISTRATION
(a) This Plan shall be administered by the Board of Directors of the
Company (the "Board") or by a committee of at least two Board members to which
administration of the Plan, or of part of the Plan, is delegated (in either
case, the "Administrator").
(b) Subject to the other provisions of this Plan, the Administrator
shall have the authority, in its discretion: (i) to grant Options; (ii) to
determine the Fair Market Value of the Common Stock subject to Options in
accordance with Section 6.11 hereof; (iii) to determine the exercise price of
Options granted; (iv) to determine the persons to whom, and the time or times at
which, Options shall be granted, and the number of shares subject to each
Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind rules
and regulations relating to this Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical), including but
not limited to, the time or times at which Options shall be exercisable; (viii)
with the consent of the Optionee, to modify or amend any Option; (ix) to defer
(with the consent of the Optionee) the exercise date of any Option; (x) to
authorize any person to execute on behalf of the Company any instrument
evidencing the grant of an Option; and (xi) to make all other determinations
deemed necessary or advisable for the administration of this Plan. The
Administrator may delegate nondiscretionary administrative duties to such
employees of the Company as it deems proper.
(c) All questions of interpretation, implementation, and
application of this Plan shall be determined by the Administrator. Such
determinations shall be final and binding on all persons.
(d) With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), if any, transactions
under this Plan are intended to comply with the applicable conditions of Rule
16b-3, or any successor rule thereto. To the extent any provision of this Plan
or action by the Administrator fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Administrator.
Notwithstanding the above, it shall be the responsibility of such persons, not
of the Company or the Administrator, to comply with the requirements of Section
16 of the Exchange Act; and neither the Company nor the Administrator shall be
liable if this Plan or any transaction under this Plan fails to comply with the
applicable conditions of Rule 16b-3 or any successor rule thereto, or if any
such person incurs any liability under Section 16 of the Exchange Act.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
(a) No Options shall be granted under this Plan after ten years from
the date of adoption of this Plan by the Board.
(b) Each Option shall be evidenced by a written stock option agreement
(an "Option Agreement"), in form satisfactory to the Company, executed by the
Company and the person to whom such Option is granted; provided, however, that
the failure by the Company, the Optionee, or both to execute such an agreement
shall not invalidate the granting of an Option, although the exercise of each
Option shall be subject to Section 6.3.
(c) The Administrator may approve the grant of Options under this Plan
to persons who are expected to become employees, directors or consultants of the
Company, but are not employees, directors or consultants at the date of
approval.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to the following
terms and conditions:
6.1 Changes in Capital Structure. Subject to Section 6.2, if the Common
Stock is changed by reason of a stock split, reverse stock split, stock
dividend, or recapitalization, combination or reclassification, appropriate
adjustments shall be made by the Administrator in (a) the number and class of
shares of Common Stock subject to this Plan and each Option outstanding under
this Plan, and (b) the exercise price of each outstanding Option; provided,
however, that the Company shall not be required to issue fractional shares as a
result of any such adjustments. Each such adjustment shall be subject to
approval by the Administrator in its sole discretion.
6.2 Corporate Transactions.
(a) In the event of (i) a dissolution or liquidation of the Company,
(ii) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the Options granted under this
Plan are assumed, converted or replaced by the successor or acquiring
corporation, which assumption, conversion or replacement will be binding on all
Optionees), (iii) a merger in which the Company is the surviving corporation but
after which the shareholders of the Company immediately prior to such merger
(other than any shareholder which merges with the Company in such merger, or
which owns or controls another corporation which merges, with the Company in
such merger) cease to own their shares or other equity interests in the Company,
or (iv) the sale of all or substantially all of the assets of the Company, any
or all outstanding Options may be assumed, converted or replaced by the
successor or acquiring corporation (if any), which assumption, conversion or
replacement will be binding on all Optionees. In the alternative, the successor
or acquiring corporation may substitute equivalent options or provide
substantially similar consideration to Optionees as was provided to shareholders
(after taking into account the existing provisions of the Options). The
successor or acquiring corporation may also issue, in place of outstanding
Acquired Shares, substantially similar shares or other property subject to
repurchase restrictions and other provisions no less favorable to the Optionee
than those which applied to the Acquired Shares immediately prior to such
transaction described in this Section 6.2(a). In the event such successor or
acquiring corporation (if any) does not assume or substitute Options, as
provided above, pursuant to a transaction described in this Section 6.2(a), then
notwithstanding any other provision in this Plan to the contrary, the vesting of
such Options will accelerate and the Options will become exercisable in full
prior to the consummation of such event at such times and on such conditions as
the Administrator determines, and if such Options are not exercised prior to the
consummation of the corporate transaction, they shall terminate upon the
consummation of such corporate transaction.
(b) Subject to any greater rights granted to Optionees under the
foregoing provisions of this Section 6.2, in the event of the occurrence of any
transaction described in Section 6.2(a) hereof, any outstanding Options will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation or sale of assets.
(c) The Company, from time to time, also may substitute or assume
outstanding options granted by another company, whether in connection with an
acquisition of such other company or otherwise, by either (i) granting an Option
under this Plan in substitution of such other company's option, or (ii) assuming
such option as if it had been granted under this Plan if the terms of such
assumed option could be applied to an Option granted under this Plan. Such
substitution or assumption will be permissible if the holder of the substituted
or assumed option would have been eligible to be granted an Option under this
Plan if the other company had applied the rules of this Plan to such grant. In
the event the Company assumes an option granted by another company, the terms
and conditions of such Option will remain unchanged (except that the exercise
price and the number and nature of shares issuable upon exercise of any such
Option may be adjusted appropriately pursuant to Section 424(a) of the Code. In
the event the Company elects to grant a new Option rather than assuming an
existing option, such new Option may be granted with a similarly adjusted
exercise price.
6.3 Time of Option Exercise. Subject to Section 5, Options granted
under this Plan shall be exercisable (a) immediately as of the effective date of
the Option Agreement granting the Option, or (b) in accordance with a vesting
schedule attached to the Option Agreement and signed by Optionee; provided,
however, that the right to exercise an Option must vest at the rate of at least
20% per year over five years from the date the Option was granted. In any case,
no Option shall be exercisable until an Option Agreement in form satisfactory to
the Company is executed by the Company and the Optionee.
6.4 Option Grant Date. Except in the case of advance approvals
described in Section 5(c), the date of grant of an Option under this Plan shall
be the date as of which the Administrator approves the grant.
6.5 Nonassignability of Option Rights. No Option granted under this
Plan shall be assignable or otherwise transferable by the Optionee except by
will or by the laws of descent and distribution. During the life of the
Optionee, an Option shall be exercisable only by the Optionee.
6.6 Payment. Except as provided below, payment in full, in cash, shall
be made for all Common Stock purchased at the time written notice of exercise of
an Option is given to the Company, and proceeds of any payment shall constitute
general funds of the Company. At the time an Option is granted or exercised, the
Administrator, in the exercise of its absolute discretion after considering any
tax or accounting consequences, may authorize any one or more of the following
additional methods of payment:
(a) Acceptance of the Optionee's full recourse promissory note for all
or part of the exercise price, payable on such terms and bearing such interest
rate as determined by the Administrator (but in no event less than the minimum
interest rate specified under the Code at which no additional interest would be
imputed), which promissory note may be either secured or unsecured in such
manner as the Administrator shall approve (including, without limitation, by a
security interest in the Acquired Shares); and
(b) Delivery by the Optionee of Common Stock already owned by the
Optionee for all or part of the exercise price, provided the Fair Market Value
(determined as set forth in Section 6.11) of such Common Stock is equal on the
date of exercise to the exercise price, or such portion thereof as the Optionee
is authorized to pay by delivery of such stock; provided, however, that if an
Optionee has exercised any portion of any Option granted by the Company by
delivery of Common Stock, the Optionee may not, within six months following such
exercise, exercise any Option granted under this Plan by delivery of Common
Stock without the consent of the Administrator.
6.7 Termination.
(a) Subject to earlier termination pursuant to Section 6.2 hereof and
notwithstanding the exercise periods set forth in the related Option Agreement,
exercise of an Option will always be subject to the following:
(i) If an Optionee is Terminated for any reason except death,
Disability or Cause, then an Optionee may exercise such Optionee's
Options, only to the extent that such Options are exercisable on the
Termination Date and such Options must be exercised by an Optionee, if
at all, within three (3) months after the Termination Date (or within
such shorter time period, not less than thirty (30) days after the
Termination Date, or such longer time period not exceeding five (5)
years after the Termination Date as may be determined by the
Administrator), but in any event, no later than the expiration date of
the Options.
(ii) If an Optionee is Terminated because of Optionee's death
or Disability (or an Optionee dies within three (3) months after
Optionee's Termination other than for Cause), then Optionee's Options
may be exercised, only to the extent that such Options are exercisable
by Optionee on the Termination Date and must be exercised by Optionee
(or Optionee's legal representative or authorized assignee), if at all,
within twelve (12) months after the Termination Date (or within such
shorter time period, not less than six (6) months after the Termination
Date, or such longer time period not exceeding five (5) years after the
Termination Date as may be determined by the Administrator), but in any
event no later than the expiration date of the Options.
(iii) If an Optionee is terminated for Cause, then Optionee's
Options shall expire on such Optionee's Termination Date, or at such
later time and on such conditions as are determined by the
Administrator.
(b) "Termination" or "Terminated" means, for purposes of this Plan with
respect to an Optionee, that the Optionee has for any reason ceased to provide
services as an employee, officer, director or consultant to the Company or an
Affiliate. An Optionee will not be deemed to have ceased to provide services in
the case of (i) sick leave, (ii) military leave, or (iii) any other leave of
absence approved by the Administrator, provided that such leave is for a period
of not more than ninety (90) days, unless reinstatement upon the expiration of
such leave is guaranteed by contract or statute or unless provided otherwise
pursuant to formal policy adopted from time to time by the Company and issued
and promulgated in writing. In the case of any Optionee on (i) sick leave, (ii)
military leave or (iii) an approved leave of absence, the Administrator may make
such provisions respecting suspension of vesting of the Option while the
Optionee is on leave from the Company or an Affiliate as the Administrator may
deem appropriate, except that in no event may an Option be exercised after the
expiration of the term set forth in the related Option Agreement. The
Administrator will have sole discretion to determine whether an Optionee has
ceased to provide services and the effective date on which the Optionee ceased
to provide services (the "Termination Date").
(c) "Disability" means a disability, whether temporary or
permanent, partial or total, as determined by the Administrator.
(d) "Cause" means Termination because of (i) any willful material
violation by the Optionee of any law or regulation applicable to the business of
the Company or an Affiliate, the Optionee's conviction for or guilty plea to, a
felony or a crime involving moral turpitude or any willful perpetration by the
Optionee of a common law fraud, (ii) the Optionee's commission of an act of
personal dishonesty which involves a personal profit in connection with the
Company or any other entity having a business relationship with the Company,
(iii) any material breach by the Optionee of any material provision of any
agreement or understanding between the Company or an Affiliate and the Optionee
regarding the terms of the Optionee's service as an employee, director or
consultant to the Company or an Affiliate, including without limitation, the
willful and continued failure or refusal of the Optionee to perform the material
duties required of such Optionee as an employee, director or consultant of the
Company or an Affiliate, other than as a result of having a Disability, or a
breach of any applicable invention assignment and confidentiality agreement or
similar agreement between the Company or an Affiliate and the Optionee, (iv)
Optionee's intentional disregard of the policies of the Company or an Affiliate
so as to cause loss, damage or injury to the property, reputation or employees
of the Company or an Affiliate, or (v) any other misconduct by the Optionee
which is materially injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company or an Affiliate.
6.8 Repurchase of Stock. At the discretion of the Administrator, the
Company may reserve to itself and/or its assignee(s) in the Option Agreement a
right to repurchase Acquired Shares held by a Optionee following such Optionee's
Termination at any time within ninety (90) days after Optionee's Termination
Date (or in the case of securities issued upon exercise of an Option after the
Optionee's Termination Date, within ninety (90) days after the date of such
exercise) for cash and/or cancellation of purchase money indebtedness, at the
Optionee's exercise price for the Acquired Shares, provided, that such right to
repurchase Acquired Shares at the exercise price shall lapse at the rate of at
least twenty percent (20%) per year over five (5) years from the date of grant
of the Option.
6.9 Withholding and Employment Taxes.
(a) Whenever shares of Common Stock are to be issued in satisfaction of
Options granted under this Plan, the Company may require the Optionee to remit
to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. Whenever, under this Plan, payments in
satisfaction of Options are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
(b) When, under applicable tax laws, an Optionee incurs tax liability
in connection with the exercise or vesting of any Option that is subject to tax
withholding and the Optionee is obligated to pay the Company the amount required
to be withheld, the Administrator may in its sole discretion allow the Optionee
to satisfy the minimum withholding tax obligation by electing to have the
Company withhold from the shares to be issued that number of shares having a
Fair Market Value (determined in accordance with Section 6.11 hereof) equal to
the minimum amount required to be withheld, 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 will be made in accordance with the
requirements established by the Administrator and be in writing in a form
acceptable to the Administrator.
6.10 Other Provisions. Each Option granted under this Plan may
contain such other terms, provisions, and conditions not inconsistent with
this Plan as may be determined by the Administrator.
6.11 Determination of Value. For purposes of the Plan, the Fair Market
Value of Common Stock or other securities of the Company shall be determined as
follows:
(a) If the Common Stock is listed on or included in any established
stock exchange, national market system (including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System), or other recognized trading market (including
without limitation the OTC Bulletin Board or the National Quotation Bureau, Inc.
pink sheets), 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,
system or market (or the most prominent thereof) for the date the Fair Market
Value is to be determined (or if there are no sales for such date, then for the
last preceding business day on which there were sales).
(b) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
means between the high bid and low asked prices for the Common Stock on the date
the Fair Market Value is to be determined (or if there are no quoted prices for
the date of grant, then for the last preceding business day on which there were
quoted prices).
(c) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the
Administrator, with reference to the Company's net worth, prospective earning
power, dividend-paying capacity, and other relevant factors, including the
goodwill of the Company, the economic outlook in the Company's industry, the
Company's position in the industry and its management, and the values of stock
of other corporations in the same or a similar line of business.
6.12 Option Term. No Option shall be exercisable more than ten
years after the date of grant, or such lesser period of time as is set forth in
the Option Agreement.
6.13 Exercise Price. Except as otherwise provided in this Section 6.13,
the exercise price of an Option shall equal the Fair Market Value (determined in
accordance with Section 6.11) of the Common Stock subject to the Option on the
date of grant. Notwithstanding the preceding, the exercise price of any Option
granted to any person who owns, directly or by attribution under the Code
currently Section 424(d), Common Stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or of any
Affiliate (a "Ten Percent Stockholder") shall in no event be less than 110% of
the Fair Market Value (determined in accordance with Section 6.11) of the Common
Stock covered by the Option at the time the Option is granted.
6.14 Escrow; Pledge of Shares. To enforce any restrictions on an
Optionee's Acquired Shares (including, without limitation, the right of
repurchase provided for in Section 6.8), the Administrator may require the
Optionee to deposit all certificates representing the Acquired Shares, together
with stock powers or other instruments of transfer approved by the
Administrator, appropriately endorsed in blank, with the Company or an agent
designated by the Company to hold in escrow until such restrictions have lapsed
or terminated, and the Administrator may cause a legend or legends referencing
such restrictions to be placed on the certificates. Any Optionee who is
permitted to execute a promissory note as partial or full consideration for the
purchase of shares of Common Stock under this Plan will be required to pledge
and deposit with the Company all or part of the shares so purchased as
collateral to secure the payment of Optionee's obligation to the Company under
the promissory note; provided, however, that the Administrator may require or
accept other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company will have full recourse against the
Optionee under the promissory note notwithstanding any pledge of the Optionee's
Acquired Shares or other collateral. In connection with any pledge of the
Acquired Shares, an Optionee will be required to execute and deliver a written
pledge agreement in such form as the Administrator will from time to time
approve. Acquired Shares purchased with the promissory note may be released from
the pledge on a pro rata basis as the promissory note is paid at the discretion
of the Administrator.
7. MANNER OF EXERCISE
(a) An Optionee wishing to exercise an Option shall give written notice
to the Company at its principal executive office, to the attention of the
officer of the Company designated by the Administrator, accompanied by payment
of the exercise price as provided in Section 6.6. The date the Company receives
written notice of an exercise hereunder accompanied by payment of the exercise
price will be considered as the date such Option was exercised.
(b) Promptly after receipt of written notice of exercise of an Option,
the Company shall, without stock issue or transfer taxes to the Optionee or
other person entitled to exercise the Option, deliver to the Optionee or (if the
Acquired Shares are to be placed into escrow) to the escrow holder, one or more
certificates for the requisite number of Acquired Shares. An Optionee or
permitted transferee of an Optionee shall not have any privileges as a
shareholder with respect to any shares of Common Stock covered by the Option
until the date of issuance (as evidenced by the appropriate entry on the books
of the Company or a duly authorized transfer agent) of such shares.
8. EMPLOYMENT, DIRECTOR OR CONSULTING RELATIONSHIP
Nothing in this Plan or any Option granted thereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any Optionee's employment, director or consulting arrangement at any
time, nor confer upon any Optionee any right to continue in the employ of, on
the Board of, or consult with, the Company or any of its Affiliates.
9. CONDITIONS UPON ISSUANCE OF SHARES.
Shares of Common Stock shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended.
10. NONEXCLUSIVITY OF THE PLAN.
The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.
11. AMENDMENT OR TERMINATION OF PLAN
The Board may (without the approval of any Optionee or the Company's
shareholders) modify or amend this Plan in any respect; provided, however, that
no modification or amendment of this Plan shall adversely affect any previously
granted Options without the consent of the related Optionee. The Board may, at
any time or from time to time, suspend or terminate this Plan; provided,
however, that no such action shall adversely affect any previously granted
Options without the consent of the related Optionee.
12. EFFECTIVE DATE OF PLAN
This Plan is effective as of August _____, 1999; provided, however,
that Options may be granted and exercised under this Plan only after there has
been compliance with all applicable federal and state securities laws. This Plan
shall remain in effect until terminated by the Board.
<PAGE>
JVWEB, INC.
2000 NON-QUALIFIED STOCK OPTION PLAN
STOCK OPTION AGREEMENT
OPTION NO. ___________
This Stock Option Agreement (this "Agreement") is made and entered into
as of the Date of Grant set forth below (the "Date of Grant") by and between
JVWeb, Inc., a Delaware corporation (the "Company"), and the Optionee named
below ("Optionee"). Capitalized terms not defined herein shall have the meanings
ascribed to them in the Company's 2000 Non-Qualified Stock Option Plan (the
"Plan").
OPTIONEE:
SOCIAL SECURITY NUMBER:
ADDRESS:
TOTAL NUMBER OF OPTION SHARES:
EXERCISE PRICE PER SHARE:
DATE OF GRANT:
FIRST VESTING DATE:
EXPIRATION DATE [unless earlier terminated under section 3 below]:
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Number of Option Shares (the "Shares") at the
Exercise Price Per Share set forth above (the "Exercise Price"), subject to all
of the terms and conditions of this Agreement and the Plan.
2. EXERCISE PERIOD.
2.1 Exercise Period of Option. Unless otherwise provided on a vesting
schedule attached hereto and signed by Optionee, this Option is immediately
exercisable. However, if vesting schedule signed by Optionee is attached hereto,
this Option shall become exercisable in accordance with such vesting schedule.
In all cases, the Shares issued upon exercise of this Option will be subject to
the restrictions on transfer and Repurchase Options set forth in Section 5 and 7
below. Provided Optionee continues to provide services to the Company or an
Affiliate, the Shares issuable upon exercise of this Option (as opposed to the
Option itself) will become vested and free of the repurchase option provided for
in Section 7 hereof with respect to twenty-five percent (25%) of the Shares on
the First Vesting Date set forth above (the "First Vesting Date") and thereafter
at the end of each full succeeding month after the First Vesting Date an
additional 2.08333% of the Shares will become vested until the shares are vested
with respect to 100% of the Shares, provided that if application of the vesting
percentage causes a fractional share, such share shall be rounded down to the
nearest whole share. Notwithstanding any provision in the Plan or this Agreement
to the contrary, Options for Unvested Shares (as defined in Section 2.2 of this
Agreement) will not be exercisable on or after Optionee's Termination Date.
2.2 Vesting of Options. Shares that are vested pursuant to the schedule
set forth in Section 2.1 are "Vested Shares." Shares that are not vested
pursuant to the schedule set forth in Section 2.1 are "Unvested Shares."
Unvested Shares may not be sold or otherwise transferred by Optionee without the
Company's prior written consent.
<PAGE>
2.3 Expiration. This Option shall expire on the Expiration Date set
forth above and must be exercised, if at all, on or before the Expiration Date,
unless earlier terminated under Section 3 below.
3. TERMINATION.
3.1 Termination for Any Reason Except Death, Disability or Cause. If
Optionee is Terminated for any reason, except death, Disability or Cause, this
Option, to the extent (and only to the extent) that it is exercisable by
Optionee on the Termination Date, may be exercised by Optionee, if at all, as to
all or some of the Vested Shares calculated as of the Termination Date, no later
than three (3) months after the Termination Date, but in any event no later than
the Expiration Date.
3.2 Termination Because of Death or Disability. If Optionee is
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause) this Option, to
the extent that it is exercisable by Optionee on the Termination Date, may be
exercised by Optionee (or Optionee's legal representative), if at all, as to all
or some of the Vested Shares calculated as of the Termination Date, no later
than twelve (12) months after the Termination Date, but in any event no later
than the Expiration Date.
3.3 Termination for Cause. If Optionee is Terminated for Cause, then
this Option will expire on Optionee's Termination Date, or at such later time
and on such conditions as are determined by the Administrator.
3.4 Obligation to Employ. Nothing in the Plan or this Agreement shall
confer on Optionee any right to continue in the employ of, or other relationship
with, the Company or any Affiliate, or limit in any way the right of the Company
or any Affiliate to terminate Optionee's employment or other relationship at any
time, with or without Cause.
4. MANNER OF EXERCISE.
4.1 Stock Option Exercise Agreement. To exercise this Option, Optionee
(or in the case of exercise after Optionee's death or incapacity, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
from time to time (the "Exercise Agreement"), which shall set forth, inter alia,
Optionee's election to exercise this Option, the number of Shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then such
person must submit documentation reasonably acceptable to the Company that such
person has the right to exercise this Option.
4.2 Limitations on Exercise. This Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. This Option may not be
exercised as to fewer than one hundred (100) Shares, unless it is exercised as
to all Shares as to which this Option is then exercisable.
4.3 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law: (a) by surrender of shares of the Company's Common
Stock that: (1) either (A) have been owned by Optionee for more than six (6)
months and have been paid for within the meaning of Rule 144 under the
Securities Act of 1933 (and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with respect to such
shares) or (B) were obtained by Optionee in the open public market and (2) are
clear of all liens, claims, encumbrances or security interests; (b) by tender of
a cash downpayment equal (at a minimum) to the aggregate par value of the Shares
being acquired and of a full recourse promissory note with an original principal
amount equal to the aggregate Exercise Price minus the downpayment made, having
such terms as may be approved by the Administrator and bearing interest at a
rate sufficient to avoid imputation of income under Sections 483 and 1274 of the
Code.
4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise
of this Option, Optionee must pay or provide for any applicable federal, state
and local withholding obligations of the Company. If the Administrator permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.
4.5 Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee's
authorized assignee, or Optionee's legal representative, and shall deliver, to
the Optionee or (if the Shares are to be placed into escrow) to the escrow
holder, one or more certificates representing the Shares with the appropriate
legends affixed thereto.
5. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by Optionee or in the event of
Optionee's incapacity, by Optionee's legal representative. The terms of this
Option shall be binding upon the executors, administrators, successors and
assigns of Optionee.
7. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Optionee's Unvested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in the Exercise Agreement (the "Repurchase Option for Unvested Shares") if
Optionee is Terminated for any reason, or no reason, including without
limitation Optionee's death, Disability, voluntary resignation or termination by
the Company with or without Cause. Notwithstanding the foregoing, the Company
shall retain the Repurchase Option for Unvested Shares only as to that number of
Unvested Shares (whether or not exercised) that exceeds the number of shares
which remain exercisable.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of
the Effective Date of the Plan of some of the federal and state tax consequences
of exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.
8.1 Exercise of Option. There may be a regular federal and state income
tax liability upon the exercise of this Option. 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 Shares on the date of
exercise over the Exercise Price. If Optionee is a current or former employee of
the Company, the Company may be required to withhold from Optionee's
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
8.2 Disposition of Shares. The following tax consequences may apply
upon disposition of the Shares. Shares sold within 12 months of acquisition by
option exercise are subject to tax at the Optionee's marginal ordinary income
tax rates. If the Shares are held for more than twelve (12) months after the
date of the transfer of the Shares pursuant to the exercise of an Option, any
gain realized on disposition of the Shares will be treated as a long-term
capital gain. The maximum federal capital gain tax rate is twenty percent. The
Company may be required to withhold from Optionee's compensation or collect from
the Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income. The foregoing is a generalized summary
of current federal law, which may change, and may apply differently in the
Optionee's particular situation. The Company is not responsible for notifying
Optionee should federal law change, and the Company is not responsible for state
income tax consequences, if any. In any event, Optionee should consult with his
or her own tax adviser as to the tax effect, if any, of options grant, vesting,
exercise and sale.
8.3 Section 83(b) Election for Unvested Shares. With respect to
Unvested Shares, which are subject to the Repurchase Option for Unvested Shares,
unless an election is filed by the Optionee with the Internal Revenue Service
(and, if necessary, the proper state taxing authorities), within 30 days of the
purchase of the Unvested Shares, electing pursuant to Code Section 83(b) (and
similar state tax provisions, if applicable) to be taxed currently on any
difference between the Exercise Price of the Unvested Shares and their Fair
Market Value on the date of exercise, there may be a recognition of taxable
income (including, where applicable, alternative minimum taxable income) to the
Optionee, measured by the excess, if any, of the Fair Market Value of the
Unvested Shares at the time they cease to be Unvested Shares, over the Exercise
Price of the Unvested Shares.
9. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any of
the rights of a shareholder with respect to any Shares until the Shares are
issued to Optionee.
10. INTERPRETATION. Any dispute regarding the interpretation
of this Agreement shall be submitted by Optionee or the Company to the
Administrator for review. The resolution of such a dispute by the
Administrator shall be final and binding on the Company and Optionee.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the complete and exclusive statement of
the parties regarding its subject matter and supersedes all prior proposals,
representations, communications, and agreements of the parties, whether oral or
written regarding the grant of stock options or issuances of shares to Optionee.
12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the President of the Company at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated above or to such other address as such
party may designate in writing from time to time to the Company. All notices
shall be deemed to have been given or delivered upon: personal delivery; three
(3) days after deposit in the United States mail by certified or registered mail
(return receipt requested); one (1) business day after deposit with any return
receipt express courier (prepaid); or one (1) business day after transmission by
facsimile, rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement, including its rights to repurchase Shares under the
Repurchase Option. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AS SUCH LAWS ARE APPLIED TO
AGREEMENTS BETWEEN TEXAS RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY
WITHIN TEXAS. IF ANY PROVISION OF THIS AGREEMENT IS DETERMINED BY A COURT OF LAW
TO BE ILLEGAL OR UNENFORCEABLE, THEN SUCH PROVISION WILL BE ENFORCED TO THE
MAXIMUM EXTENT POSSIBLE AND THE OTHER PROVISIONS WILL REMAIN FULLY EFFECTIVE AND
ENFORCEABLE.
16. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of the
Plan and this Agreement. Optionee has read and understands the terms and
provisions thereof, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee acknowledges that there may
be adverse tax consequences upon exercise of this Option or disposition of the
Shares and that Optionee should consult a tax adviser prior to such exercise or
disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Optionee has
executed this Agreement in duplicate as of the Date of Grant.
JVWEB, INC. OPTIONEE
By:_________________________________ ___________________________________
Greg J. Micek, President Name: ______________________________
<PAGE>
JVWEB, INC.
2000 NON-QUALIFIED STOCK OPTION PLAN
STOCK OPTION EXERCISE AGREEMENT
NO._____________
This Exercise Agreement (this "Exercise Agreement") is made and entered
into as of ______________, 19___ (the "Effective Date") by and between JVWeb,
Inc., a Delaware corporation (the "Company"), and the Purchaser named below (the
"Purchaser"). Capitalized terms not defined herein shall have the meanings
ascribed to them in the Company's 2000 Non-Qualified Stock Option Plan (the
"Plan").
PURCHASER:
SOCIAL SECURITY NUMBER:
ADDRESS:
TOTAL NUMBER OF SHARES:
EXERCISE PRICE PER SHARE:
TOTAL EXERCISE PRICE:
OPTION NO. AND DATE OF GRANT:
1. EXERCISE OF OPTION.
1.1 Exercise. Pursuant to the exercise of that certain option (the
"Option") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above (the "Acquired Shares") of the Company's Common Stock at the
Total Exercise Price set forth above (the "Exercise Price"). As used in this
Exercise Agreement, the term "Acquired Shares" refers to the Acquired Shares
purchased under this Exercise Agreement and includes all securities received (a)
in replacement of the Acquired Shares, (b) as a result of stock dividends or
stock splits with respect to the Acquired Shares, and (c) all securities
received on account of the Acquired Shares in a merger, recapitalization,
reorganization or similar corporate transaction.
1.2 Title to Shares. The exact spelling of the name(s) under whic
Purchaser will take title to the Acquired Shares is:
- -------------------------------------------------------
- ------------------------------------------------------------------------------.
Purchaser desires to take title to the Acquired Shares as follows:
[_] Individual, as separate property
[_] Husband and wife, as community property
[_] Joint Tenants
[_] Alone or with spouse as trustee(s) of the
following trust (including
date):________________________________________
------------------------------------------------------
[_] Other; please specify:___________________________________
------------------------------------------------------
<PAGE>
1.3 Payment. Purchaser hereby delivers payment of the Exercise
Price in the manner permitted in the Option Agreement as follows (check and
complete as appropriate):
[_] in cash (by check) in the amount of $________________,
receipt of which is acknowledged by the Company;
[_] by tender of a Full Recourse Promissory Note in the principal
amount of $___________________, having such terms as may be
approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483
and 1274 of the Code and secured by a Pledge Agreement
herewith.
[_] by surrender of _____________________ shares of the Company's
Common Stock, which shares have a Fair Market Value equal to
the Exercise Price and: (1) either (A) have been owned by
Optionee for more than six (6) months and have been paid for
within the meaning of Rule 144 under the Securities Act of
1933 (and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with
respect to such shares) or (B) were obtained by Optionee in
the open public market and (2) are clear of all liens, claims,
encumbrances or security interests
2. DELIVERY.
2.1 Deliveries by Purchaser. Purchaser hereby delivers to the Company
(i) this Exercise Agreement, (ii) three (3) copies of a blank Stock Power and
Assignment Separate from Stock Certificate in the form of Exhibit 1 attached
hereto (the "Stock Powers"), executed by Purchaser (and Purchaser's spouse, if
any), (iii) if Purchaser is married, a Consent of Spouse in the form of Exhibit
2 attached hereto (the "Spouse Consent") executed by Purchaser's spouse, (iv)
the Exercise Price and payment or other provision for any applicable tax
obligations by delivery of cash of a Secured Full Recourse Promissory Note in
the form of Exhibit 3 and (v) if a Secured Full Recourse Promissory Note is
being delivered, a Stock Pledge Agreement in the form of Exhibit 5 executed by
Purchaser (the "Pledge Agreement").
2.2 Deliveries by the Company. Upon its receipt of the Exercise Price,
payment or other provision for any applicable tax obligations and all the
documents to be executed and delivered by Purchaser to the Company under Section
2.1, the Company will issue a duly executed stock certificate evidencing the
Acquired Shares in the name of Purchaser, to be placed in escrow as provided in
Section 8 to secure payment of Optionee's obligation to the Company under the
promissory note and until expiration or termination of the Company's Repurchase
Option in Section 6.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to the Company that:
3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the
Plan and the Option Agreement, has read and understands the terms of the Plan,
the Option Agreement and this Exercise Agreement, and agrees to be bound by
their terms and conditions. Purchaser acknowledges that there may be adverse tax
consequences upon exercise of the Option or disposition of the Acquired Shares,
and that Purchaser should consult a tax adviser prior to such exercise or
disposition.
3.2 Access to Information. Purchaser has had access to all information
regarding the Company and its present and prospective business, assets,
liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Acquired Shares, and Purchaser
has had ample opportunity to ask questions of the Company's representatives
concerning such matters and this investment.
3.3 Understanding of Risks. Purchaser is fully aware of: (i) the highly
speculative nature of the investment in the Acquired Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Acquired Shares and the
restrictions on transferability of the Acquired Shares (e.g., that Purchaser may
not be able to sell or dispose of the Acquired Shares or use them as collateral
for loans); (iv) the qualifications and backgrounds of the management of the
Company; and (v) the tax consequences of investment in the Acquired Shares.
Purchaser is capable of evaluating the merits and risks of this investment, has
the ability to protect Purchaser's own interests in this transaction and is
financially capable of bearing a total loss of this investment.
4. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and
acknowledges that, notwithstanding any other provision of the Option Agreement
to the contrary, the exercise of any rights to purchase any Shares is expressly
conditioned upon compliance with the Securities Act of 1933 and all applicable
state securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws.
5. RESTRICTIONS ON TRANSFERS.
5.1 Restriction on Transfer. Purchaser shall not transfer, assign,
grant a lien or security interest in, pledge, hypothecate, encumber or otherwise
dispose of any of the Acquired Shares which are subject to the Company's
Repurchase Option, except as permitted by this Exercise Agreement.
5.2 Transferee Obligations. Each person (other than the Company) to
whom the Acquired Shares are transferred with the prior express written consent
of the Company must, as a condition precedent to the validity of such transfer,
acknowledge in writing to the Company that such person is bound by the
provisions of this Exercise Agreement and that the transferred Acquired Shares
are subject to the Company's Repurchase Option granted hereunder to the same
extent such Acquired Shares would be so subject if retained by the Purchaser.
6. COMPANY'S REPURCHASE OPTION FOR UNVESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Purchaser's Unvested Shares (as
defined in Section 2.2 of the Option Agreement) on the terms and conditions set
forth in this Section (the "Repurchase Option for Unvested Shares") if Purchaser
is Terminated (as defined in the Plan) for any reason, or no reason, including
without limitation Purchaser's death, Disability (as defined in the Plan),
voluntary resignation or termination by the Company with or without Cause.
Notwithstanding the foregoing, the Company shall retain the Repurchase Option
for Unvested Shares only as to that number of Unvested Shares (whether or not
exercised) that exceeds the number of shares which remain exercisable.
6.1 Termination and Termination Date. In case of any dispute as to
whether Purchaser is Terminated, the Committee shall have discretion to
determine whether Purchaser has been Terminated and the effective date of such
Termination (the "Termination Date").
6.2 Exercise of Repurchase Option for Unvested Shares. At any time
within ninety (90) days after the Purchaser's Termination Date, the Company, or
its assignee, may elect to repurchase the Purchaser's Unvested Shares by giving
Purchaser written notice of exercise of the Repurchase Option for Unvested
Shares.
6.3 Calculation of Repurchase Price for Unvested Shares. The Company or
its assignee shall have the option to repurchase from Purchaser (or from
Purchaser's personal representative as the case may be) the Unvested Shares at
the Purchaser's Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in Section
2.2 of the Plan.
6.4 Payment of Repurchase Price. The repurchase price shall be payable,
at the option of the Company or its assignee, by check or by cancellation of all
or a portion of any outstanding indebtedness of Purchaser to the Company or such
assignee, or by any combination thereof. The repurchase price shall be paid
without interest within sixty (60) days after exercise of the Repurchase Option
for Unvested Shares.
6.5 Right of Termination Unaffected. Nothing in this Exercise Agreement
shall be construed to limit or otherwise affect in any manner whatsoever the
right or power of the Company (or any Affiliate) to terminate Purchaser's
employment or other relationship with Company (or the Affiliate) at any time,
for any reason or no reason, with or without Cause.
7. RIGHTS AS SHAREHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Acquired Shares from and after the date that
Acquired Shares are issued to Purchaser until such time as Purchaser disposes of
the Acquired Shares or the Company and/or its assignee(s) exercise(s) the
Repurchase Option. Upon an exercise of the Repurchase Option, Purchaser will
have no further rights as a holder of the Acquired Shares so purchased upon such
exercise, except the right to receive payment for the Acquired Shares so
purchased in accordance with the provisions of this Exercise Agreement, and
Purchaser will promptly surrender the stock certificate(s) evidencing the
Acquired Shares so purchased to the Company for transfer or cancellation.
8. ESCROW. As security for Purchaser's faithful performance of this
Exercise Agreement, Purchaser agrees that all stock certificates evidencing the
Acquired Shares, together with the Stock Powers executed by Purchaser and by
Purchaser's spouse if any (with the date and number of Acquired Shares left
blank), will be delivered to the President of the Company or other designee of
the Company ("Escrow Holder"), who is hereby appointed to hold such
certificate(s) and Stock Powers in escrow and to take all such actions and to
effectuate all such transfers and/or releases of such Acquired Shares as are in
accordance with the terms of this Exercise Agreement. Purchaser and the Company
agree that Escrow Holder will not be liable to any party to this Exercise
Agreement (or to any other party) for any actions or omissions unless Escrow
Holder is grossly negligent or intentionally fraudulent in carrying out the
duties of Escrow Holder under this Exercise Agreement. Escrow Holder may rely
upon any letter, notice or other document executed by any signature purported to
be genuine and may rely on the advice of counsel and obey any order of any court
with respect to the transactions contemplated by this Exercise Agreement. If a
Full Recourse Promissory Note is not given in connection with the payment of the
Exercise Price, upon termination of the Repurchase Option provided, the Acquired
Shares shall be released from escrow. If a Full Recourse Promissory Note is
given in connection with the payment of the Exercise Price, upon termination of
the Repurchase Option provided, the Acquired Shares:
[ ] will be retained in escrow so long as they are subject to the
Pledge Agreement
[ ] will be released from escrow on a pro rata basis as the
original principal amount of Full Recourse Promissory Note is
prepaid.
9. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
9.1 Restrictive Legends and Stop-Transfer Instructions. Purchaser
agrees that, to ensure compliance with the restrictions imposed by this Exercise
Agreement, the Company may place restrictive legends in appropriate forms on the
back of all certificates representing Acquired Share, and the Company may issue
appropriate "stop-transfer" instructions to its transfer agent, if any, and if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
9.2 Refusal to Transfer. The Company will not be required (i) to
transfer on its books any Acquired Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Exercise Agreement or
(ii) to treat as owner of such Acquired Shares, or to accord the right to vote
or pay dividends to any purchaser or other transferee to whom such Acquired
Shares have been so transferred.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
the Plan was adopted by the Board of some of the U.S. Federal and state tax
consequences of exercise of the Option and disposition of the Acquired Shares.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. PURCHASER SHOULD CONSULT A TAX ADVISER BEFORE EXECUTING THIS
OPTION OR DISPOSING OF THE SHARES. PURCHASER UNDERSTANDS THAT PURCHASER MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR
DISPOSITION OF THE SHARES. PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED
WITH ANY TAX ADVISER PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE
OR DISPOSITION OF THE SHARES AND THAT PURCHASER IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. IN PARTICULAR, IF THE UNVESTED SHARES ARE SUBJECT TO
REPURCHASE BY THE COMPANY, PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED
WITH PURCHASER'S TAX ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b)
ELECTION WITH THE INTERNAL REVENUE SERVICE.
10.1 Exercise of Option. There may be a regular U.S. Federal income tax
liability and a state income tax liability upon the exercise of the Option.
Purchaser 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 Acquired Shares on the date of exercise over the Exercise Price. If
Purchaser is a current or former employee of the Company, the Company may be
required to withhold from Purchaser's compensation or collect from Purchaser and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
10.2 Disposition of Acquired Shares. The following tax consequences may
apply upon disposition of the Acquired Shares. Shares sold within 12 months of
acquisition by option exercise are subject to tax at the Optionee's marginal
ordinary income tax rates. If the Acquired Shares are held for more than twelve
(12) months after the date of the transfer of the Acquired Shares pursuant to
the exercise of an Option, any gain realized on disposition of the Acquired
Shares will be treated as a long-term capital gain. The maximum federal capital
gain tax rate is twenty percent. The Company may be required to withhold from
Optionee's compensation or collect from the Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.
The foregoing is a generalized summary of current federal law, which may change,
and may apply differently in the Optionee's particular situation. The Company is
not responsible for notifying Optionee should federal law change, and the
Company is not responsible for state income tax consequences, if any. In any
event, Optionee should consult with his or her own tax adviser as to the tax
effect, if any, of options grant, vesting, exercise and sale.
10.3. Section 83(b) Election for Unvested Shares. With respect to
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Purchaser with the Internal Revenue Service (and, if necessary,
the proper state taxing authorities), within 30 days of the purchase of the
Unvested Shares, electing pursuant to Code Section 83(b) (and similar state tax
provisions, if applicable) to be taxed currently on any difference between the
Exercise Price of the Unvested Shares and their Fair Market Value on the date of
purchase, there may be a recognition of taxable income (including, where
applicable, alternative minimum taxable income) to the Purchaser, measured by
the excess, if any, of the Fair Market Value of the Unvested Shares at the time
they cease to be Unvested Shares, over the Exercise Price of the Unvested
Shares.
11. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of
the Acquired Shares will be subject to and conditioned upon compliance by the
Company and Purchaser with all applicable state and U.S. Federal laws and
regulations and with all applicable requirements of any stock exchange or
automated quotation system on which the Company's Common Stock may be listed or
quoted at the time of such issuance or transfer.
12. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Exercise Agreement, including its rights to repurchase Acquired
Shares under the Repurchase Option. This Exercise Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise
Agreement will be binding upon Purchaser and Purchaser's heirs, executors,
administrators, legal representatives, successors and assigns.
13. GOVERNING LAW; SEVERABILITY. THIS EXERCISE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
TEXAS AS SUCH LAWS ARE APPLIED TO AGREEMENTS BETWEEN TEXAS RESIDENTS ENTERED
INTO AND TO BE PERFORMED ENTIRELY WITHIN TEXAS. IF ANY PROVISION OF THIS
EXERCISE AGREEMENT IS DETERMINED BY A COURT OF LAW TO BE ILLEGAL OR
UNENFORCEABLE, THEN SUCH PROVISION WILL BE ENFORCED TO THE MAXIMUM EXTENT
POSSIBLE AND THE OTHER PROVISIONS WILL REMAIN FULLY EFFECTIVE AND ENFORCEABLE.
14. NOTICES. Any notice required to be given or delivered to the
Company shall be in writing and addressed to the President of the Company at its
principal corporate offices. Any notice required to be given or delivered to
Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, three (3) days after deposit in the United States mail
by certified or registered mail (return receipt requested), one (1) business day
after its deposit with any return receipt express courier (prepaid), or one (1)
business day after transmission by rapifax or telecopier.
15. FURTHER INSTRUMENTS. he parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Agreement.
16. HEADINGS. The captions and headings of this Exercise Agreement
are included for ease of reference only and will be disregarded in interpreting
or construing this Exercise Agreement. All references herein to Sections will
refer to Sections of this Exercise Agreement.
17. ENTIRE AGREEMENT. The Plan, the Option Agreement and this Exercise
Agreement, together with all of its Exhibits, constitute the entire agreement
and understanding of the parties with respect to the subject matter of this
Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to
be executed in duplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in duplicate as of the Effective Date.
JVWEB, INC. PURCHASER
By:_________________________________ ___________________________________
Greg J. Micek, President Name: ______________________________
<PAGE>
LIST OF EXHIBITS
Exhibit 1: Stock Power and Assignment Separate From Stock Certificate
Exhibit 2: Spouse Consent
Exhibit 3: Copy of Purchaser's Check And/or Secured Full Recourse
Promissory Note
Exhibit 4: Section 83(b) Election
Exhibit 5: Stock Pledge Agreement
<PAGE>
EXHIBIT 1
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. _____ dated as of _______________ _____, ________ (the "Exercise
Agreement"), the undersigned hereby sells, assigns and transfers unto
____________________________________, ___________________ shares of the Common
Stock of JVWeb, Inc., a Delaware corporation (the "Company"), standing in the
undersigned's name on the books of the Company represented by Certificate No(s).
________ delivered herewith, and does hereby irrevocably constitute and appoint
_______________________________________ as the undersigned's attorney-in-fact,
with full power of substitution, to transfer said stock on the books of the
Company. THIS ASSIGNMENT MAY BE USED ONLY AS AUTHORIZED BY THE EXERCISE
AGREEMENT AND ANY EXHIBITS THERETO.
PURCHASER
Dated: _______________ _____, _______ ____________________________________
(Signature)
Name:______________________________
------------------------------------
(Spouse's Signature, if any)
Spouse's Name) :____________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this Stock Power and Assignment is to enable the Company to
acquire the shares upon a default under Purchaser's Note and to exercise its
"Repurchase Option" set forth in the Exercise Agreement without requiring
additional signatures on the part of the Purchaser or Purchaser's Spouse.
<PAGE>
EXHIBIT 2
SPOUSE CONSENT
The undersigned spouse of Purchaser has read, understands, and hereby
approves the Stock Option Exercise Agreement between Purchaser and the Company
(the "Exercise Agreement"). In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Exercise Agreement, the
undersigned hereby agrees to be irrevocably bound by the Exercise Agreement and
further agrees that any community property interest I may have in the Shares and
any other property pursuant to the Exercise Agreement shall similarly be bound
by the Exercise Agreement. The undersigned hereby appoints Purchaser as my
attorney-in-fact with respect to any amendment or exercise of any rights under
the Exercise Agreement.
Date: _______________ _____, _______ ____________________________________
(Signature)
Name:______________________________
Name of Purchaser:__________________
Address:____________________________
------------------------------------
<PAGE>
EXHIBIT 3
SECURED FULL RECOURSE PROMISSORY NOTE
Houston, Texas $__________________
------------ ---, -----
1. OBLIGATION. In exchange for the issuance to the undersigned
("Purchaser") of ______________________________ shares (the "Shares") of the
Common Stock of JVWeb, Inc., a Delaware corporation (the "Company"), receipt of
which is hereby acknowledged, Purchaser hereby promises to pay to the order of
the Company on or before _______________ _____, _______, at the Company's
principal place of business at 5444 Westheimer, Suite 2080, Houston, Texas
77056, or at such other place as the Company may direct, the principal sum of
____________________ Dollars ($_______________) together with interest
compounded semi-annually on the unpaid principal at the rate of ______________
percent (_____%), which rate is not less than the minimum rate established
pursuant to Section 1274(d) of the Internal Revenue Code of 1986, as amended, on
the earliest date on which there was a binding contract in writing for the
purchase of the Shares; provided, however, that the rate at which interest will
accrue on unpaid principal under this Note will not exceed the highest rate
permitted by applicable law; and provided further that interest on the unpaid
principal shall be due and payable on December 1 of each year.
2. SECURITY. Payment of this Note is secured by a security interest in
the Shares granted to the Company by Purchaser under a Stock Pledge Agreement of
even date herewith between the Company and Purchaser (the "Pledge Agreement").
This Note is being tendered by Purchaser to the Company as part of the Exercise
Price of the Shares pursuant to that certain Stock Option Exercise Agreement
between Purchaser and the Company of even date with this Note (the "Exercise
Agreement").
3. DEFAULT; ACCELERATION OF OBLIGATION. Purchaser will be deemed to be
in default under this Note and the principal sum of this Note, together with all
interest accrued thereon, will immediately become due and payable in full: (a)
upon Purchaser's failure to make any payment when due under this Note; (b) in
the event Purchaser is Terminated (as defined in the Company's 2000
Non-Qualified Stock Option Plan) for any reason; (c) upon any transfer of any of
the Shares (except a transfer to, or expressly permitted in writing by, the
Company); (d) upon the filing by or against Purchaser of any voluntary or
involuntary petition in bankruptcy or any petition for relief under the U.S.
Federal bankruptcy code or any other state or U.S. Federal law for the relief of
debtors; or (e) upon the execution by Purchaser of an assignment for the benefit
of creditors or the appointment of a receiver, custodian, trustee or similar
party to take possession of Purchaser's assets or property.
4. REMEDIES ON DEFAULT. Upon any default of Purchaser under this Note,
the Company will have, in addition to its rights and remedies under this Note
and the Pledge Agreement, full recourse against any real, personal, tangible or
intangible assets of Purchaser, and may pursue any legal or equitable remedies
that are available to it.
5. PREPAYMENT. Prepayment of principal and/or interest due under this
Note may be made at any time without penalty. Unless otherwise agreed in writing
by the Company, all payments will be made in lawful tender of the United States
and will be applied first to the payment of accrued interest, and the remaining
balance of such payment, if any, will then be applied to the payment of
principal. If Purchaser prepays all or a portion of the principal amount of this
Note, the Shares paid for by the portion of principal so paid
[ ] shall continue to be held in pledge under the Pledge Agreement
to serve as independent collateral for the outstanding
portion of this Note
[ ] shall be released from pledge and may be returned to
Purchaser so long as the Company no longer has any right to
repurchase the Shares to be released.
6. GOVERNING LAW; WAIVER. THE VALIDITY, CONSTRUCTION AND
PERFORMANCE OF THIS NOTE WILL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
TEXAS, EXCLUDING THAT BODY OF LAW PERTAINING TO CONFLICTS OF LAW. PURCHASER
HEREBY WAIVES PRESENTMENT, NOTICE OF NON-PAYMENT, NOTICE OF DISHONOR, PROTEST,
DEMAND AND DILIGENCE.
7. ATTORNEYS' FEES. If suit is brought for collection of this
Note, Purchaser agrees to pay all reasonable expenses, including attorneys'
fees, incurred by the holder in connection therewith whether or not such suit is
prosecuted to judgment.
IN WITNESS WHEREOF, Purchaser has executed this Note as of the date and
year first above written.
------------------------------------
(Signature)
Name:______________________________
<PAGE>
EXHIBIT 4
[FOR REGULAR INCOME TAX - NONQUALIFIED OPTIONS] [FOR AMT AND DISQUALIFYING
DISPOSITION PURPOSES - INCENTIVE STOCK OPTION]
ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE
The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of
the Internal Revenue Code of 1986, as amended, to include the excess, if any, of
the fair market value of the property described below at the time of transfer
over the amount paid for such property, as compensation for services in the
calculation of: (1) regular gross income; (2) alternative minimum taxable income
or (3) disqualifying disposition gross income, as the case may be.
1. TAXPAYER'S NAME:___________________________________________________
TAXPAYER'S ADDRESS: _______________________________________________
- ------------------------------------------------------------------------
SOCIAL SECURITY NUMBER: __________________________________________
2. The property with respect to which the election is made is
described as follows: ___________________ shares of Common Stock of JVWeb,
Inc., a Delaware corporation (the "Company"), which is Taxpayer's employer
or the corporation for whom the Taxpayer performs services. The foregoing shares
were issued upon exercise of an option.
3. The date on which the shares were transferred pursuant to the
exercise of the option was _______________ ___, ____ and this election is made
for calendar year ________.
4. The shares received upon exercise of the option are subject to the
following restrictions: The Company may repurchase all or a portion of the
shares at the Taxpayer's original purchase price under certain conditions at the
time of Taxpayer's termination of employment or services.
5. The fair market value of the shares (without regard to restrictions
other than restrictions which by their terms will never lapse) was $________ per
share at the time of exercise of the option.
6. The amount paid for such shares upon exercise of the option
was $____________ per share.
7. The Taxpayer has submitted a copy of this statement to the
Company.
THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS"),
AT THE OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS
AFTER THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH THE
TAXPAYER'S INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE
REVOKED WITHOUT THE CONSENT OF THE IRS.
Dated: ____________ ___, _______ ____________________________________
Taxpayer's Signature
<PAGE>
EXHIBIT 5
STOCK PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Pledge Agreement") is made and entered into as
of _______________ _____, _______ by and between JVWeb, Inc., a Delaware
corporation (the "Company"), and _____________________________ ("Pledgor").
R E C I T A L S
A. In exchange for Pledgor's Secured Full Recourse Promissory Note and
Secured Non-Recourse Promissory Note to the Company of even date herewith (the
"Note"), the Company has issued and sold to Pledgor ____________________ shares
of its Common Stock (the "Shares") pursuant to the terms and conditions of that
Stock Option Exercise Agreement between the Company and Pledgor of even date
herewith (the "Exercise Agreement").
B. Pledgor has agreed that repayment of the Note will be
secured by the pledge of the Shares pursuant to this Pledge Agreement.
NOW, THEREFORE, the parties agree as follows:
1. CREATION OF SECURITY INTEREST. Pursuant to the provisions of Chapter
9 of the Texas Business and Commerce Code, Pledgor hereby grants to the Company,
and the Company hereby accepts, a first and present security interest in the
Shares as collateral to secure the payment of Pledgor's obligation to the
Company under the Note. Pledgor herewith delivers to the Company Common Stock
certificate(s) No(s). _________, representing all the Shares, together with
three stock powers for each certificate in the form attached as an Exhibit to
the Exercise Agreement, duly executed (with the date and number of shares left
blank) by Pledgor and Pledgor's spouse, if any. For purposes of this Pledge
Agreement, the Shares pledged to the Company hereby, together with any
additional collateral pledged pursuant to Sections 5 and 6 hereof, will
hereinafter be collectively referred to as the "Collateral." Pledgor agrees that
the Collateral pledged to the Company will be deposited with and held by the
Escrow Holder (as defined in the Exercise Agreement) and that, notwithstanding
anything to the contrary in the Exercise Agreement, for purposes of carrying out
the provisions of this Pledge Agreement, Escrow Holder will act solely for the
Company as its agent.
2. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants to the Company that Pledgor has good title (both record and beneficial)
to the Collateral, free and clear of all claims, pledges, security interests,
liens or encumbrances of every nature whatsoever, and that Pledgor has the right
to pledge and grant the Company the security interest in the Collateral granted
under this Pledge Agreement. Pledgor further agrees that, until the entire
principal sum and all accrued interest due under the Note has been paid in full,
Purchaser will not, without the Company's prior written consent, (i) sell,
assign or transfer, or attempt to sell, assign or transfer, any of the
Collateral, or (ii) grant or create, or attempt to grant or create, any security
interest, lien, pledge, claim or other encumbrance with respect to any of the
Collateral.
3. RIGHTS ON DEFAULT. In the event of default (as defined in the Note)
by Pledgor under the Note, the Company will have full power to sell, assign and
deliver the whole or any part of the Collateral at any broker's exchange or
elsewhere, at public or private sale, at the option of the Company, in order to
satisfy any part of the obligations of Pledgor now existing or hereinafter
arising under the Note. On any such sale, the Company or its assigns may
purchase all or any part of the Collateral. In addition, at its sole option, the
Company may elect to retain all the Collateral in full satisfaction of Pledgor's
obligation under the Note, in accordance with the provisions and procedures set
forth in Chapter 9 of the Texas Business and Commerce Code.
4. ADDITIONAL REMEDIES. The rights and remedies granted to the Company
herein upon default under the Note will be in addition to all the rights, powers
and remedies of the Company under Chapter 9 of the Texas Business and Commerce
Code and applicable law and such rights, powers and remedies will be exercisable
by the Company with respect to all of the Collateral. Pledgor agrees that the
Company's reasonable expenses of holding the Collateral, preparing it for resale
or other disposition, and selling or otherwise disposing of the Collateral,
including attorneys' fees and other legal expenses, will be deducted from the
proceeds of any sale or other disposition and will be included in the amounts
Pledgor must tender to redeem the Collateral. All rights, powers and remedies of
the Company will be cumulative and not alternative. Any forbearance or failure
or delay by the Company in exercising any right, power or remedy hereunder will
not be deemed to be a waiver of any such right, power or remedy and any single
or partial exercise of any such right, power or remedy hereunder will not
preclude the further exercise thereof.
5. DIVIDENDS; VOTING. All dividends hereinafter declared on or payable
with respect to the Collateral during the term of this pledge (excluding only
ordinary cash dividends, which will be payable to Pledgor so long as Pledgor is
not in default under the Note) will be immediately delivered to the Company to
be held in pledge under this Pledge Agreement. Notwithstanding this Pledge
Agreement, so long as Pledgor owns the Shares and is not in default under the
Note, Pledgor will be entitled to vote any shares comprising the Collateral,
subject to any proxies granted by Pledgor.
6. ADJUSTMENTS. In the event that during the term of this pledge, any
stock dividend, reclassification, readjustment, stock split or other change is
declared or made with respect to the Collateral, or if warrants or any other
rights, options or securities are issued in respect of the Collateral, then all
new, substituted and/or additional shares or other securities issued by reason
of such change or by reason of the exercise of such warrants, rights, options or
securities, will be immediately pledged to the Company to be held under the
terms of this Pledge Agreement in the same manner as the Collateral is held
hereunder.
7. RIGHTS UNDER EXERCISE AGREEMENT. Pledgor understands and agrees that
the Company's rights to repurchase the Collateral under the Exercise Agreement,
if any, will continue for the periods and on the terms and conditions specified
in the Exercise Agreement, whether or not the Note has been paid during such
period of time, and that to the extent that the Note is not paid during such
period of time, the repurchase by the Company of the Collateral may be made by
way of cancellation of all or any part of Pledgor's indebtedness under the Note.
8. REDELIVERY OF COLLATERAL. Upon payment in full of the entire
principal sum and all accrued interest due under the Note, and subject to the
terms and conditions of the Exercise Agreement, the Company will immediately
redeliver the Collateral to Pledgor and this Pledge Agreement will terminate;
provided, however, that all rights of the Company to retain possession of the
Shares pursuant to the Exercise Agreement will survive termination of this
Pledge Agreement.
9. SUCCESSORS AND ASSIGNS. This Pledge Agreement will inure
to the benefit of the respective heirs, personal representatives, successors
and assigns of the parties hereto.
10. GOVERNING LAW; SEVERABILITY. THIS PLEDGE AGREEMENT WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS,
EXCLUDING THAT BODY OF LAW RELATING TO CONFLICTS OF LAW. SHOULD ONE OR MORE OF
THE PROVISIONS OF THIS PLEDGE AGREEMENT BE DETERMINED BY A COURT OF LAW TO BE
ILLEGAL OR UNENFORCEABLE, THE OTHER PROVISIONS NEVERTHELESS WILL REMAIN
EFFECTIVE AND WILL BE ENFORCEABLE.
11. MODIFICATION; ENTIRE AGREEMENT. This Pledge Agreement will not be
amended without the written consent of both parties hereto. This Pledge
Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
related to such subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Pledge
Agreement as of the date and year first above written.
JVWEB, INC. PLEDGOR
By:_________________________________ ____________________________________
Greg J. Micek, President Name: ______________________________
