<PAGE> 1
As filed with the Securities and Exchange Commission on _____________, 1999.
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
QUEPASA.COM, INC.
(Exact Name of registrant
as specified in charter)
<TABLE>
<S> <C> <C>
NEVADA 7379 86-0879433
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
ONE ARIZONA CENTER
400 EAST VAN BUREN, FOURTH FLOOR
PHOENIX, ARIZONA 85004
(602) 716-0106
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
JEFFREY S. PETERSON, CHIEF EXECUTIVE OFFICER
QUEPASA.COM, INC.
ONE ARIZONA CENTER
400 EAST VAN BUREN, FOURTH FLOOR
PHOENIX, ARIZONA 85004
(602) 716-0106
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies of all communications to:
<TABLE>
<S> <C> <C>
Gary A. Agron Jeffrey M. Knetsch Joseph P. Richardson
Law Office of Gary A. Agron Brownstein Hyatt Farber Bryan Cave LLP
5445 DTC Parkway & Strickland, P.C. Two North Central Ave., #22000
Suite 520 410 Seventeenth Street Phoenix, AZ 85004
Englewood, CO 80111 Denver , CO 80202 (602) 364-7000
(303) 770-7254 (303) 534-6335 (602) 364-7070 (Fax)
(303) 770-7257 (Fax) (303) 623-1956 (Fax)
</TABLE>
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this registration statement.
<PAGE> 2
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. |_|
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 number of the earlier
effective 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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,
check the following box: |_|
[EXHIBIT INDEX LOCATED ON PAGE _____ OF THIS FILING]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Title of Each Class Amount Proposed Proposed Maximum Amount
of Securities To Be Maximum Price Aggregate of
to be Registered Registered Per Share Offering Price(1) Registration Fee
=========================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 4,600,000 $12.00 $ 55,200,000 $16,284
Shares(2) -------------
- - - - -------------------------------------------------------------------------------------------------------------------------
Common Stock underlying the 400,000 $14.40 $ 5,760,000 $1,699
Representative's Warrants(3) Shares
- - - - -------------------------------------------------------------------------------------------------------------------------
Total..........................................................................................$17,983
=========================================================================================================================
</TABLE>
(1) Estimated solely for computing the amount of the registration fee pursuant
to Rule 457(a) under the Securities Act.
(2) Includes the overallotment option granted to the representative of 600,000
shares.
(3) Pursuant to Rule 416 of the Securities Act of 1933, as amended, the number
of shares of common stock issuable upon exercise of the representative's
warrants is subject to adjustment in accordance with the anti-dilution
provisions of such warrants.
THE REGISTRANT HEREBY AMENDS THE 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> 3
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion dated March 10, 1999
4,000,000 Shares of Common Stock
[QUEPASA!COM LOGO]
Quepasa.com, inc. operates an Internet portal and search engine that
provides users with information and interactive content centered around the
Spanish language. The quepasa!com portal includes a search engine, free e-mail,
Spanish-language news feeds and chat rooms.
We are offering 4,000,000 shares of common stock on a firm commitment
basis at between $10 and $12 per share.
We intend to apply for listing of our common stock on the Nasdaq
National Market under the symbol "PASA."
See "Risk Factors" beginning on page 6 to read about factors you
should consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public offering price: $ $
------------- ------------
Underwriting discounts and commissions: $ $
------------- ------------
Proceeds to quepasa.com, inc.: $ $
------------- ------------
</TABLE>
We have granted the underwriters an option for 45 days to purchase up
to an additional 600,000 shares at the same price indicated above solely to
cover overallotments.
PARADISE VALLEY SECURITIES, INC.
The date of this prospectus is , 1999.
<PAGE> 4
[INSIDE FRONT COVER PAGE: SCREENSHOT OF QUEPASA!COM HOMEPAGE IN SPANISH
LANGUAGE]
<PAGE> 5
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information and financial statements and notes thereto appearing elsewhere in
this prospectus.
OUR BUSINESS
Quepasa!com is a Spanish-language Internet portal and search engine.
Search engines are located on "portal" Internet sites and provide Internet users
with guides to on-line World Wide Web information and content. In addition to
offering search engines, portals draw viewers to their Web sites by providing a
one-stop destination for identifying, selecting and accessing resources,
services, content and information on the Web. Quepasa!com provides users with
information and interactive content centered around the Spanish language.
Because the language preference of many assimilated U.S. Hispanics is English,
we also offer our users the ability to access information and services in the
English language at the preference of the user. The quepasa!com portal includes
a search engine, free e-mail, Spanish-language news feeds and chat rooms. We are
a development stage company having launched the quepasa!com Web site in November
1998 and have not yet generated any revenue. We anticipate generating revenue by
charging fees to advertise products and services on our Web site. We believe
that quepasa!com is the first portal completely dedicated to Spanish-language
Internet users to offer its securities for sale to the public.
OUR MARKET OPPORTUNITY
Our objective is to establish quepasa!com as a leading worldwide
Spanish-language portal and search engine, offering the quepasa!com brand to
Spanish-speaking Internet users residing in the United States, Latin America and
throughout the world. We believe that the Spanish-language Internet market is
presently underserved. Dramatic growth is expected to continue in the U.S.
Hispanic population as well as among U.S. Hispanic Internet users. With respect
to the Spanish-language Internet market:
o Spanish is the world's third most spoken language, used by
approximately 400 million people;
o Twenty-one countries consider Spanish their primary language;
o The U.S. Hispanic population totals 29.6 million people (11% of the
U.S. population) and is expected to grow to 31.4 million and 41.1
million (11.4% and 13.8% of the total U.S. population) in 2000 and
2010, respectively;
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o Total U.S. Hispanic purchasing power exceeded $350 billion in
1997, representing an increase of approximately 66% since 1990;
o Between 1994 and 1998, the percentage of U.S. Hispanic households
that owned computers increased from 13% to 30% (approximately
130% growth in four years); and
o Between 1994 and 1998, the percentage of U.S. Hispanic households
with Internet access grew from 2% to 15% (approximately 650%
growth in four years).
OUR STRATEGY
We are establishing quepasa!com as a leading Spanish-language portal
and search engine by executing a business strategy that includes:
o Developing quepasa!com globally as a leading brand associated
with the Internet for Spanish-language users;
o Significantly increasing user traffic by aggressively advertising
on Spanish-language media outlets and on high-traffic
Spanish-language Web sites;
o Acquiring and developing additional content and features for the
quepasa!com Web site;
o Entering into strategic relationships with business partners who
offer unique technological and distribution capabilities; and
o Generating revenue from the sale of advertising and through
electronic commerce.
OUR STRATEGIC RELATIONSHIPS
Our search engine is powered by Inktomi, a leader in search technology.
We currently advertise our Web site principally through Heftel Broadcasting
Company, the largest Spanish-language radio broadcaster in the U.S. and the
Telemundo Network Group, a U.S. Spanish-language television network jointly
owned by Sony and Liberty Media. In February 1999, we initiated a 60-day
national radio campaign with Heftel and we are currently discussing with Heftel
certain complimentary aspects of our businesses and an equity participation by
Heftel. In March 1999, we launched a nationwide advertising campaign with
Telemundo. Exodus and GTE, two of the largest connectivity companies on the
Internet, provide high-speed connections between Inktomi, quepasa!com and our
users. Our advertising sales are outsourced through 24/7 Media, Inc., a leading
provider of Internet advertising solutions.
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OUR HISTORY
We were incorporated in Nevada in June 1997 under the name Internet
Century, Inc. and changed our name in December 1998 to quepasa.com, inc. to
reflect our decision to operate a Spanish-language portal and search engine.
Our corporate offices are located at One Arizona Center, 400 East Van Buren,
Fourth Floor, Phoenix, Arizona 85004, telephone number (602) 716-0106.
THE OFFERING
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<S> <C>
Securities Offered (1)........................... 4,000,000 shares of common stock.
Common Stock Outstanding Prior to Offering....... 9,075,833 shares of common stock.
Common Stock to be Outstanding
After Offering(2)............................... 13,075,833 shares of common stock.
Use of Proceeds.................................. Marketing and advertising expenses; development and
acquisition costs for additional Web site content and features;
general, administrative and other operating expenses;
technology and equipment purchases; and working capital. See
"Use of Proceeds."
Proposed Nasdaq National
Market Symbol................................... PASA
Risk Factors..................................... Please read the Risk Factors section of this prospectus
because investment in our common stock involves a high
degree of risk and could result in a loss of your entire
investment. See "Risk Factors."
</TABLE>
(1) If the overallotment option granted to the underwriters is exercised in
full, 600,000 additional shares of common stock will be sold, with estimated net
proceeds to be received of $6,138,000 after deducting commissions and expenses.
(2) Excludes an aggregate of 2,463,000 shares of common stock issuable upon
exercise of outstanding stock options and 400,000 shares of common stock
issuable upon exercise of purchase warrants to be issued to the representative
of the underwriters upon completion of the offering. See "Management--1998 Stock
Option Plan" and "Underwriting."
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SUMMARY FINANCIAL INFORMATION
The following tables set forth certain financial information which has been
derived from our audited financial statements for the period from inception,
June 25, 1997, through December 31, 1997, for the year ended December 31, 1998
and cumulative from inception, June 25, 1997, through December 31, 1998:
<TABLE>
<CAPTION>
Period from inception Cumulative from inception
Year Ended (June 25, 1997) though (June 25, 1997) through
Statement of Operations Data December 31, 1998 December 31, 1997 December 31, 1998
- - - - ---------------------------- ----------------- ---------------------- -----------------------
<S> <C> <C> <C>
Product and content
development expenses $ 414,873 $ -- $ 414,873
Sales and marketing expenses 250,419 -- 250,419
Stock-based compensation expense 5,265,364 -- 5,265,364
General and administrative expenses 931,172 3,703 934,875
Net loss $ (6,909,768) $ (2,903) $ (6,912,671)
============= ============ ==============
Weighted average number
of shares outstanding 9,075,833 9,075,833 9,075,833
============= ============ ==============
Net loss per share, basic $ (.76) -- $ (.76)
and diluted ============= ============ ==============
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data
December 31, 1998 Historical Pro Forma(1) As Adjusted(1)(2)
- - - - ------------------ ---------- ------------ -----------------
<S> <C> <C> <C>
Working capital $2,958,000 $4,958,000 $45,278,000
Total assets $4,861,000 $6,861,000 $47,181,000
Total liabilities $1,337,000 $3,337,000 $ 3,337,000
Stockholders' equity $3,524,000 $3,524,000 $43,844,000
</TABLE>
(1) As adjusted to reflect an aggregate of $2,000,000 of loans to us from
an affiliate in March 1999. See "Certain Transactions."
(2) As adjusted to reflect the sale of 4,000,000 shares of common stock
offered hereby at an assumed offering price of $11 per share and the
application of the net proceeds. See "Use of Proceeds" and
"Capitalization."
Unless otherwise indicated, all information in this prospectus assumes
no exercise of the overallotment option granted to the underwriters.
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<PAGE> 9
RISK FACTORS
This offering involves a high degree of risk. You should carefully
consider the risks and uncertainties described below and the other information
in this prospectus before deciding whether to invest in shares of our common
stock. If any of these risks occur, our business, results of operations and
financial condition could be adversely affected. This could cause the trading
price of our common stock to decline, and you might lose part or all of your
investment.
This prospectus also contains certain forward-looking statements that are
based on beliefs and assumptions of our management. Often you can recognize
these statements because we use words such as "believe," "anticipate," "intend,"
"estimate" and "expect" in the statements. Our actual performance in 1999 and
beyond could differ materially from the forward-looking statements contained in
this prospectus. However, we are not obligated to release publicly any revisions
to the forward-looking statements contained in this prospectus.
WE HAVE AN EXTREMELY LIMITED OPERATING HISTORY, EXPECT FUTURE LOSSES AND MAY
NEED MORE CAPITAL.
We were incorporated in June 1997 and have generated no revenue from
our quepasa!com Web site. Accordingly, we have no operating history upon which
an investor can evaluate us, and our prospects are subject to the risks and
uncertainties encountered by companies that operate in the new and rapidly
evolving Internet market.
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As of December 31, 1998, we had an accumulated deficit of approximately
$6,913,000. Our limited operating history and the uncertainty of the Internet
market in which we operate our business make any prediction of our future
results of operations difficult or impossible. We expect to increase
considerably our operating expenses in the future, particularly advertising
expenses to develop and extend our quepasa!com brand and expenses relating to
content and features that we intend to develop, purchase or otherwise acquire
and add to our Web site. We do not expect that our revenue will cover those
expenses. As a result, we will continue to incur significant losses and may need
to raise additional capital. We cannot assure that we will be able to raise
additional capital and we do not know what the terms of such capital raising
would be. Any future sale of our equity securities would dilute the ownership
and control of our stockholders and could be at prices substantially below the
offering price.
OUR TARGET AUDIENCE MAY NOT ACCEPT OUR PRODUCTS AND SERVICES
Our quepasa!com Web site is targeted toward the worldwide
Spanish-speaking population, but we have only recently begun to promote our site
and we cannot give assurances that the population that we have targeted will
accept our products and services or that we will attract sufficient numbers of
repeat users to our Web site to generate any material revenues from the sale of
advertising on our site or from electronic commerce through our site. Because
the market for our products and services is new and evolving, it is difficult to
predict the future growth rate, if any, and the size of the market we have
targeted. If the market develops more slowly than we expect or becomes saturated
with competitors, or if our products and services are not accepted by the
market, our business will be materially and adversely affected.
WE MAY BE UNABLE TO DEVELOP THE QUEPASA!COM BRAND
We intend to spend a significant portion of the net proceeds from this
offering to create and sustain a distinct brand loyalty among our targeted
population of Internet users. We believe that establishing and maintaining the
quepasa!com brand is of critical importance to our efforts to attract and expand
our audience. We also believe that brand recognition will become more important
due to the increasing number of Internet sites. Promotion and enhancement of the
quepasa!com will depend largely on our success in providing high quality
products and services and Web site content that is of interest to the worldwide
Spanish-speaking population. We cannot assure that success. Even if our desired
results are achieved, it is likely that we will expend significant additional
amounts in further developing and maintaining brand loyalty.
WEB-BASED ADVERTISING IS AN UNPROVEN SOURCE OF REVENUE
Although we have not generated advertising revenue to date, we
anticipate that we will derive primarily all of our revenue in the foreseeable
future from the sale of advertisements on our Web pages. At the present time,
Web advertisers generally enter into only short-term advertising contracts.
Because Web site advertising is a new phenomenon, few advertisers have
significant experience with the Web as an advertising medium. Consequently, many
advertisers have not devoted a substantial portion of their advertising
expenditures to Web-based advertising, and may not find Web-based advertising to
be effective for promoting their products and services as compared to
traditional print and
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broadcast media.
No standards have yet been widely accepted for the measurement of the
effectiveness of Web-based advertising, and we can give no assurance that such
standards will be developed or adopted sufficiently to sustain Web-based
advertising as a significant advertising medium. We cannot give assurances that
banner advertising, the predominant revenue producing mode of advertising
currently used on the Web, will be accepted as an effective advertising medium
or that we can effectively transition to any other forms of Web-based
advertising, should they develop. Certain advertising filter software programs
are available that limit or remove advertisments from an Internet user's
desktop. Such software, if generally adopted by users, may materially and
adversely affect Web-based advertising. These factors are largely outside our
control.
OUR BUSINESS DEPENDS UPON THIRD PARTIES
Our business depends upon third parties, including providers of
technology, infrastructure, content and features.
We supplement our Web site directory listings with Web search results
provided by Inktomi under a non-exclusive agreement. We depend upon Inktomi for
ongoing maintenance and technical support to ensure accurate and rapid
presentation of search results to users of our Web site. Termination of our
relationship with Inktomi or Inktomi's failure to renew our agreement upon
expiration could result in substantial additional costs to us in developing or
replacing technology. We also rely upon Exodus and GTE for our Internet and
e-mail connections. Any interruption in the Internet access provided by Exodus
or GTE or any other provider of access could have a material adverse effect on
our business.
We license content, including technology and related databases, from
third parties for portions of our quepasa!com Web site, including news
from Reuters and UPI, weather from WeatherLabs and chat services from Volano.
Any errors, delays or failures experienced in connection with these third party
technologies and services could have a negative effect on our relationship with
users of our Web site, could materially and adversely affect our brand and
our business and could subject us to liability to third parties for business
negligence such as defamation or libel.
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We will try to enter into formal and informal relationships and
arrangements with third parties with the goal of increasing traffic on our Web
site. For example, other Internet portal sites have developed and continue to
try to develop relationships with Web browser providers such as Netscape and
Microsoft, leading Web sites, and computer manufacturers to feature their portal
site as a default portal site or otherwise provide "click-through" features to
the portal site. These arrangements are particularly helpful in directing new
Internet users to particular sites. We have no such arrangements or
relationships in place presently, and can offer no assurances that we will be
successful in securing any such relationships or arrangements in the future.
OUR BUSINESS IS SUBJECT TO THE RISK OF SYSTEM FAILURE
The continued and uninterrupted performance of our hardware and
software is critical to our reputation and our success in attracting traffic to
our Web site. Users of our site and our services, such as our e-mail services,
may become dissatisfied by system failures that may limit our Web site services.
Sustained or repeated system failures could significantly reduce the traffic on
our Web site and may impair our reputation and brand name. Our operations depend
on our ability to protect our computer systems from damage from fire, power
loss, water damage, telecommunications failures, vandalism and other malicious
acts, and similar unexpected adverse events. We may not carry enough business
interruption insurance to compensate for losses that may occur as a result of
any of these events. We also depend upon Internet browsers and Internet service
providers that provide users with access to the Internet and our Web site. Users
may experience difficulties due to system failures unrelated to our systems. Any
disruption in Internet access by Internet service providers and other third
party access providers, or any failure of such providers to handle higher
volumes of user traffic, could materially and adversely effect our business.
WE NEED TO MANAGE OUR GROWTH.
Our recent growth has placed, and is expected to continue to place, a
significant strain on our managerial, operational and financial resources. Any
inability by us to manage growth effectively could have a material adverse
effect on our business. Several executive officers joined us recently. Our
management team has worked together for only a short time, and none of our
executive officers has extensive experience managing a rapidly growing business
enterprise.
OUR BUSINESS AND INDUSTRY ARE SUBJECT TO GOVERNMENTAL REGULATION AND LEGAL
UNCERTAINTIES
There are presently few laws or regulations directly applicable to the
Internet. It is possible that laws and regulations may be adopted with respect
to the Internet, covering issues ranging from user privacy and defamation to
taxation and intellectual property ownership. Any laws or regulations adopted in
the future affecting the Internet could subject us to substantial liability.
Such laws or regulations could also adversely affect the growth of the Internet
generally, and decrease the acceptance of the Internet as a communications and
commercial medium. In addition, the growing use of the Internet has burdened the
existing telecommunications infrastructure. Certain areas with high Internet use
relative to the existing telecommunications structure have experienced
interruptions in phone service leading local telephone carriers to petition
regulators to govern Internet service providers and impose access fees on them.
Such regulations, if adopted in the United States or other places, could
increase significantly the costs of communicating over the Internet, which could
in turn
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decrease the demand for our products and services. The adoption of various
proposals to impose additional taxes on the sale of goods and services through
the Internet could also reduce the demand for Web-based commerce.
WE MAY FACE LIABILITY FOR INFORMATION CONTENT AND COMMERCE-RELATED ACTIVITIES
Because materials may be downloaded by the services that we operate or
facilitate and the materials may subsequently be distributed to others, we could
face claims for errors, defamation, negligence, or copyright or trademark
infringement based on the nature and content of such materials. We could also be
exposed to liability because of the listings that we select and make available
through our Web site, or through content and materials posted by users in chat
room and message board services that we provide. Even to the extent that claims
made against us do not result in liability, we may incur substantial costs in
investigating and defending such claims.
WE FACE INTENSE COMPETITION
The market for Internet products and services and the market for
Internet advertising and electronic commerce arrangements are extremely
competitive, and we expect that competition will continue to intensify. We
believe that the principal competitive factors in these markets are name
recognition, distribution arrangements, functionality, performance, ease of use,
the number of value-added services and features, and the quality of support. Our
primary competitors are other companies providing portal services, especially to
Spanish-language Internet users such as Yahoo!, America Online, StarMedia
Network, Microsoft, Lycos and Ole. Most of our competitors, as well as a number
of potential new competitors, have significantly greater financial, technical
and marketing resources than we do. Our competitors may offer Internet products
and services that are superior to ours or that achieve greater market
acceptance. There can be no assurance that we will be able to compete
successfully against our current or future competitors or that competition will
not otherwise have a material adverse effect on our business.
OUR BUSINESS IS SUBJECT TO RISKS OF TECHNOLOGICAL CHANGE
The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging character of these products and services and
their rapid evolution will require that we continually improve the performance,
features and reliability of our Internet content, particularly in response to
competitive offerings. There can be no assurance that we will be successful in
responding quickly, cost effectively and sufficiently to these developments. In
addition, the widespread adoption of new Internet technologies or standards
could require substantial expenditures by us to modify or adapt our Web site and
services and could fundamentally affect the character, viability and frequency
of Web-based advertising, either of which could have a material adverse
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effect on our business,. In addition, new Internet services or enhancements
offered by us may contain design flaws or other defects that could require
costly modifications or result in a loss of consumer confidence.
FAILURE OF OUR COMPUTER SYSTEM OR THE SYSTEMS OF THIRD PARTIES TO ACHIEVE YEAR
2000 COMPLIANCE COULD ADVERSELY AFFECT OUR BUSINESS
Many currently installed computer systems and software products are
coded to accept only two-digit entries to represent years in the date code
field. Computer systems and products that do not accept four-digit entries will
need to be upgraded or replaced to accept four-digit entries to distinguish
years beginning with 2000 from prior years. We are currently evaluating the Year
2000 issue as it relates to our entire internal computer system as well as
computer systems operated by third parties. We anticipate that we may incur
internal staff costs as well as consulting and other expenses related to making
our computer systems Year 2000 compliant. We will expense these costs as
incurred. In addition, computer systems operated by third parties with which our
systems interface may not continue to properly interface with our systems or be
compliant on a timely basis with Year 2000 requirements. Any failure of our
computer system or the systems of third parties to achieve Year 2000 compliance
could adversely affect our business.
WE MAY BE REQUIRED TO MAKE SIGNIFICANT CASH PAYMENTS UNDER OUR CHIEF EXECUTIVE
OFFICER'S EMPLOYMENT AGREEMENT.
Our employment agreement with Jeffrey S. Peterson, our chief executive
officer, requires us to pay Mr. Peterson between $5 million and $6 million if he
is terminated without cause or if his duties or responsibilities are materially
changed and he terminates his employment for that reason. See
"Management--Executive Compensation."
OUR MANAGEMENT WILL CONTINUE TO CONTROL OUR OPERATIONS; OUR AUTHORIZED PREFERRED
STOCK AND OUR CHIEF EXECUTIVE OFFICER'S EMPLOYMENT AGREEMENT MAY PREVENT A
CHANGE IN OUR CONTROL
Upon completion of the offering, our officers and directors will own or
control through a voting trust approximately 47.7% of our common stock and will,
as a practical matter, continue to be able to elect all of our directors and
control our business. Our Articles of Incorporation authorize the issuance of up
to 5,000,000 shares of preferred stock without our stockholders' approval, which
could impair the voting power or other rights of the holders of the common
stock. The issuance of preferred stock could also be used by our Board of
Directors to prevent a change in control of our Company. The change of duties or
responsibilities provisions of our Chief Executive Officer's employment
agreement could also prevent a change in control of our company. See
"Management--Executive Compensation."
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FUTURE SALES OF OUR COMMON STOCK OR SHARES ISSUABLE UPON EXERCISE OF STOCK
OPTIONS COULD ADVERSELY AFFECT OUR STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN
NEW STOCK OFFERINGS
We currently have 9,075,833 shares of common stock outstanding, of which
2,113,386 shares may be sold, subject to certain volume restrictions,
immediately under Rule 144 of the Securities Act and of which 6,962,447 shares
may be sold from May 1999 through December 1999. Sale of substantial amounts of
common stock, or the perception that sales could occur, could reduce the market
price of the common stock. All of our stockholders have agreed not to sell or
otherwise transfer any of their shares until 180 days from the date of this
prospectus without the prior written consent of the representative of the
underwriters. A total of 2,500,000 shares of common stock have been reserved for
issuance upon the exercise of stock options granted under our 1998 Stock Option
Plan and 400,000 shares have been reserved upon exercise of common stock
purchase warrants to be issued to the representative of the underwriters.
Currently, there are outstanding stock options to acquire 2,463,000 shares of
common stock at exercise prices ranging from $1.00 to $8.00 per share. In
addition, Jeffrey S. Peterson, our Chief Executive Officer, will receive stock
options to purchase up to 2,000,000 shares of common stock at 120% of the public
offering price upon our achieving specified performance goals. See "Management
- - - - -- Executive Compensation." The holders of our stock options and common stock
purchase warrants will have the opportunity to profit from an increase in the
market price of our common stock. The existence of these stock options and
common stock purchase warrants may also affect our ability to obtain other
financing.
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USE OF PROCEEDS
After payment of underwriting commissions and other expenses of the
offering, the net proceeds of the offering are estimated to be $ 40,320,000, or
$ 46,458,000 if the overallotment option is exercised. We expect to use the net
proceeds approximately as follows:
o $ 28,000,000 for marketing and advertising expenses in order to
globally develop the quepasa!com brand;
o $3,250,000 to further develop and acquire additional content and
features for the quepasa!com Web site;
o $5,000,000 for general, administrative and other operating expenses
including the recruitment, training and payment of salaries of new
employees;
o $2,000,000 to purchase additional technology and equipment; and
o $2,000,000 for working capital.
There may be changes in our proposed use of proceeds due to changes in
our business or the Internet industry in general.
Proceeds not immediately needed will be invested in bank certificates
of deposit, treasury bills, insured bank deposits or similar investments.
DIVIDEND POLICY
We have never declared or paid dividends on our common stock and do not
intend to pay dividends on our common stock in the foreseeable future. Instead,
we will retain any earnings to finance the expansion of our business and for
general corporate purposes.
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<PAGE> 17
DILUTION
At December 31, 1998, the net tangible book value of our outstanding
shares of common stock was $2,878,000, or $.32 per common share. "Net tangible
book value" per share represents the total amount of our tangible assets, less
the total amount of our liabilities, divided by the number of shares of common
stock outstanding. Without taking into account any changes in net tangible book
value after December 31, 1998, other than to give effect to the sale of the
shares of common stock offered hereby at an assumed initial public offering
price of $11.00 per share, less underwriting discounts and commissions and
estimated costs of the offering, our net tangible book value at December 31,
1998 would have been $43,198,000 or approximately $3.30 per share. This
represents an immediate increase in net tangible book value of $2.98 per share
of common stock to our existing stockholders and an immediate dilution of $7.70
per share to new investors. "Dilution" per share represents the difference
between the price to be paid by the new stockholders and the net tangible book
value per share of common stock immediately after this offering.
The following table illustrates this per share dilution:
<TABLE>
<S> <C>
Assumed initial public offering price per share $11.00
Net tangible book value per share before
the offering $ .32
Increase in net tangible book value per share
attributable to new investors purchasing
in the offering $ 2.98
-------
Net tangible book value per share after the offering $ 3.30
------
Dilution per share to new investors $ 7.70
======
</TABLE>
The following table sets forth the number of shares of common stock
purchased, the total consideration paid and the average price per share paid by
our existing stockholders as of December 31, 1998 and new investors purchasing
the shares of common stock offered hereby:
<TABLE>
<CAPTION>
Average
Shares Purchased Total Consideration Price
Number Percentage Amount Percentage Per Share
--------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
New investors 4,000,000 30.6% $44,000,000 88.4% $11.00
Existing
stockholders(1) 9,075,833 69.4% $ 5,771,996 11.6% $ .64
---------- ---- ----------- ----
TOTALS 13,075,833 100% $49,771,996 100%
========== ===========
</TABLE>
(1) Excludes shares of common stock issuable upon exercise of stock options
and common stock purchase warrants issued to the representative of the
underwriters. See "Management--1998 Stock Option Plan" and "Underwriting."
14
<PAGE> 18
CAPITALIZATION
The following table sets forth our historical, pro forma and as
adjusted capitalization as of December 31, 1998, after deducting underwriting
discounts and commissions and estimated offering expenses.
<TABLE>
<CAPTION>
Historical December 31, 1998 December 31, 1998
December 31, 1998 Pro Forma (1) As Adjusted(1)(2)
----------------- ----------------- -------------------
<S> <C> <C> <C>
Long-term liabilities $ 710,000 $ 2,710,000 $ 2,710,000
Stockholders' equity
Preferred stock, 5,000,000
no par value shares
authorized, no shares
issued -- -- --
Common stock, 50,000,000,
$.001 par value shares
authorized, 9,075,833 shares
outstanding, 13,075,833
shares outstanding as
adjusted (1) 9,000 9,000 13,000
Additional paid-in capital 10,427,000 10,427,000 50,743,000
Retained earnings (loss) (6,912,000) $ (6,912,000) (6,912,000)
----------- ------------ -------------
Total stockholders' equity $ 3,524,000 $ 3,524,000 $ 43,844,000
=========== ============ =============
Total capitalization $ 4,234,000 $ 6,234,000 $ 46,554,000
=========== ============ =============
</TABLE>
(1) As adjusted to reflect an aggregate of $2,000,000 of loans to us
from an affiliate in March 1999. See "Certain Transactions."
(2) As adjusted to reflect the sale of 4,000,000 shares of common stock
offered hereby at an assumed offering price of $11 per share and the
application of the net proceeds. See "Use of Proceeds."
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<PAGE> 19
SELECTED FINANCIAL DATA
The following tables set forth certain financial information which has
been derived from our audited financial statements for the period from
inception, June 25, 1997, through December 31, 1997, for the year ended
December 31, 1998 and cumulative from inception, June 25, 1997 to December 31,
1998.
<TABLE>
<CAPTION>
Period from Inception Cumulative from Inception
Year Ended (June 25, 1997) through (June 25, 1997) through
Statement of Operations Data December 31, 1998 December 31, 1997 December 31, 1998
- - - - ---------------------------- ----------------- ----------------------- -------------------------
<S> <C> <C> <C>
Product and content
development expenses $ 414,873 $ -- $ 414,873
Sales and marketing expenses 250,419 -- 250,419
Stock-based compensation expense 5,265,364 -- 5,265,364
General and administrative expenses 931,172 3,703 934,875
Net loss $(6,909,768) $ (2,903) $ (6,912,671)
=========== ========== =============
Weighted average number
of shares outstanding 9,075,833 9,075,833 9,075,833
=========== ========== =============
Net loss per share $ (.76) -- $ (.76)
=========== ========== =============
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data
December 31, 1998 Historical Pro Forma(1) As Adjusted(1)(2)
- - - - ------------------ ---------- ------------ -----------------
<S> <C> <C> <C>
Working capital $2,958,000 $4,958,000 $45,278,000
Total assets $4,861,000 $6,861,000 $47,181,000
Total liabilities $1,337,000 $3,337,000 $ 3,337,000
Stockholders' equity $3,524,000 $3,524,000 $43,844,000
</TABLE>
(1) As adjusted to reflect an aggregate of $2,000,000 of loans to us from
an affiliate in March 1999. See "Certain Transactions."
(2) As adjusted to reflect the sale of 4,000,000 shares of common stock
offered hereby at an assumed offering price of $11 per share and the
application of the net proceeds. See "Use of Proceeds."
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<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations for the year ended December 31, 1998 and the period from June 25,
1997 (inception) through December 31, 1997 should be read in conjunction with
our financial statements, the notes related thereto, and the other financial
data included elsewhere in this prospectus.
RESULTS OF OPERATIONS
We are a development stage company and commenced operations on June 25,
1997. Our operations for the period June 25, 1997 through December 31, 1997 were
limited to organizing our company, raising operating capital, hiring initial
employees and drafting our business plan. For this reason our results of
operations for the period ended December 31, 1997 are not comparable to the
results of operations for the year ended December 31, 1998.
In 1998 we hired most of our current management and employees, raised
significant amounts of working capital for development and operations and
launched the quepasa!com Website. We had no significant revenue during the year,
but incurred $6.9 million of operating losses of which $5.3 million represented
a non-cash charge for the issuance of stock based compensation and $1.3 million
represented general and administrative expenses and product and content
development costs.
We expect in the near term to incur significant continuing losses due
to ongoing substantial operating expenses offset by negligible revenue.
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<PAGE> 21
LIQUIDITY AND CAPITAL RESOURCES
Since inception on June 25, 1997, we have received approximately $5.1
million to fund our operations from private placements of common stock
and convertible debt. As of December 31, 1998, we had approximately $2.2 million
in cash.
Net cash used in operations was approximately $2.4 million for the year
ended December 31, 1998. This resulted from the approximately $6.9 million net
loss of which approximately $5.3 million was a non-cash charge for stock
based compensation and the timing of receipt of an approximately $1.5 million
deposit refundable offset by accrued private placement commissions and a stock
subscription refundable of approximately $200,000 and $300,000, respectively.
Net cash used in investing activities was approximately $400,000
consisting of purchases of approximately $360,000 for fixed assets including
technology purchases and $40,000 for payments under a licensing agreement.
We spent approximately $21,000 through March 3, 1999 on leasehold
improvements for a new office facility. We had no other commitments for capital
expenditures as of December 31, 1998. However, as of December 31, 1998, we had
commitments under non-cancelable operating leases for our Arizona and Nevada
offices and office equipment requiring monthly payments of approximately
$160,000 through September 2001. We have an additional commitment to pay
$710,000 pursuant to the terms of the Inktomi licensing agreement through August
2001.
In January and February of 1999, we entered into sponsorship agreements
for television and radio advertising with Telemundo and Heftel, respectively.
The contracts required payments of $800,000 for the television advertising and
$1.6 million for the radio advertising which were paid upon execution of the
agreements.
In March 1999, we received a $2 million loan from The Monolith Limited
Partnership, one of our principal stockholders. The loan bears interest at 12%
per annum through June 1999 and then 14% per annum through maturity in March
2001. Jeffrey S. Peterson, our Chief Executive Officer, has agreed to lend us up
to $3 million as needed for operations. Mr. Peterson's loans will bear interest
at 12% per annum for the first four months and 14% per annum thereafter and
mature 24 months from issuance.
We expect to incur significantly higher costs, particularly product
content and development costs, sales and marketing costs, general and
administrative costs and additional technology and equipment purchase cost in
the future to expand our business. We believe that the proceeds from this
offering, together with our cash on hand and The Monolith Limited Partnership
loan will be sufficient to meet our working capital and capital expenditure
needs for two years. Nevertheless, we may need to raise additional funds to
respond to competitive pressures or to acquire complementary products and
features, businesses or technologies.
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<PAGE> 22
OUR BUSINESS
INTRODUCTION
Quepasa!com is a Spanish-language Internet portal and search engine.
Search engines are located on "portal" Internet sites and provide Internet users
with guides to on-line World Wide Web information and content. In addition to
offering search engines, portals draw viewers to their Web sites by providing a
one-stop destination for identifying, selecting and accessing resources,
services, content and information on the Web. Quepasa!com is targeted to provide
users with information and interactive content centered around the Spanish
language. Because the language preference of many assimilated U.S. Hispanics is
English, we also offer our users the ability to access information and services
in the English language at the preference of the user. The quepasa!com portal
includes a search engine, free e-mail, Spanish-language news feeds and chat
rooms. We are a development stage company having launched the quepasa!com Web
site in November 1998 and have not yet generated any revenue. We anticipate
generating revenue by charging fees to advertise products and services on our
Web site. We believe that quepasa!com is the first portal completely dedicated
to Spanish-language Internet users to offer its securities to the public.
INDUSTRY BACKGROUND
Growth of the Internet and the World Wide Web
The Internet is evolving into a global medium, allowing millions of
individuals throughout the world to communicate, share information and engage in
commerce electronically. The Web is an interactive environment which facilitates
the exchange of information and entertainment among users worldwide. According
to International Data Corporation, the number of people worldwide accessing the
Web will grow from approximately 100 million at year end 1998 to 320 million by
2002. This growth is expected to be driven by the large and growing number of
personal computers installed in homes and offices, the declining prices of
personal computers, the improvements in network infrastructure, the availability
of faster and cheaper Internet access, and the increasing familiarity with and
acceptance of the Internet by businesses and consumers. Web usage is also
expected to continue to grow rapidly due to unique characteristics that
differentiate it from traditional media, such as real-time access to interactive
content, real-time communication capabilities and the absence of geographic or
temporal limitations.
Growth of Internet Advertising and Internet Commerce
With the growth in the number of Internet users and content providers,
the Internet is developing the attributes of a conventional mass medium, where
advertising subsidizes content delivered to users. In fact, technological
advances and the acceptance of the medium by businesses have led to rapid growth
in Internet advertising spending. Tools not available in traditional advertising
media, such as real-time measurement of "click-through" on advertising banners,
further increase the attractiveness of Web advertising by giving advertisers
real-time feedback on advertising campaigns. Forrester Research, Inc. estimates
that spending on Web-based advertising will increase from $1.5 billion in 1998
to more than $15 billion in 2003.
The growing acceptance and use of the Web has created an opportunity
for businesses to conduct commerce over the Internet. International Data
Corporation estimates that transactions on the Internet are expected to increase
from approximately $32 billion in 1998 to more than $425 billion in 2002.
Businesses typically use the Internet to offer standard products and services
that can be easily described with graphics and text and that do not necessarily
require a physical presence for purchase, such as airline tickets, books and
securities transactions. The focus of electronic commerce transactions evolved
from companies facilitating Internet transactions between businesses to, more
recently, companies targeting business-to-consumer transactions. Internet
commerce enables these companies to develop relationships with customers on a
global basis without making significant investments in traditional sales and
distribution infrastructure.
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<PAGE> 23
OUR MARKET IN THE UNITED STATES
We believe that the Spanish-language Internet market in the United
States is characterized by a growing Hispanic population, increasing Hispanic
purchasing power, greater advertising spending on Spanish-language media,
continuing use of the Spanish language by U.S. Hispanics and increasing computer
ownership and Internet usage by Hispanic households.
Hispanic Population Growth and Concentration
A large number of our users are Hispanics, one of the most rapidly
growing segments of the U.S. population. The U.S. Census Bureau estimated the
Hispanic population to be 29.6 million (11.0% of the total U.S. population) in
1998, an increase of approximately 31% from 22.5 million (9.0% of the total U.S.
population) in 1990. The Hispanic population is expected to account for 40% of
the total U.S. population growth between 1995 and 2010 and is expected to grow
to 31.4 million and 41.1 million (11.4% and 13.8% of the total U.S. population)
in 2000 and 2010, respectively. Almost 70% of U.S. Hispanics are under 35,
compared with less than 50% of non-Hispanics. The median age of Hispanics is 26,
compared to 35 for the rest of the population. We believe the relative youth of
the Hispanic population will furnish growth opportunities for products and
services that appeal to a younger market, such as that found on the Internet. In
addition, 70% of all U.S. Hispanics live in 12 metropolitan areas. This
geographic concentration makes U.S. Hispanics an attractive demographic group
for advertisers because it enables them to cost effectively deliver messages to
a highly targeted audience.
Increasing Hispanic Purchasing Power
Over a recent five-year period, U.S. Hispanic purchasing power has
risen at a compound annual growth rate of 7.5%, compared with 4.9% for the rest
of the population. Total Hispanic purchasing power exceeded $350 billion in
1997, an increase of approximately 66% since 1990. U.S. Hispanics are expected
to account for $443 billion (7.0% of U.S. consumer expenditures) by 2000, and
$938 billion (8.9% of U.S. consumer expenditures) by 2010.
Greater Spanish-Language Advertising Spending
According to published sources, $1.7 billion of total advertising
expenditures in the U.S. were directed toward Spanish-language media in 1998,
representing a 21% increase over 1997's total, and the highest year-to-year
percentage increase since 1993. In only five years, total advertising
expenditures in the Hispanic market have more than doubled from $829.7 million.
Continuing Use of the Spanish Language by U.S. Hispanics
According to published sources, approximately 90% of U.S. Hispanics
speak Spanish at home. Moreover, U.S. Hispanics are expected to continue to
speak Spanish because (1) approximately two-thirds of U.S. Hispanic adults were
born outside the U.S.; (2) there continues to be significant Hispanic
immigration into the U.S.; (3) Hispanics generally seek to preserve their
cultural identity; and (4) there is geographic concentration of Hispanics, which
encourages communication in Spanish.
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<PAGE> 24
Increasing Computer Ownership and Internet Usage by Hispanics
A February 1998 study by the Tomas Rivera Policy Institute estimates
that between 1994 and 1998 the percentage of U.S. Hispanic households that owned
computers increased from 13% to 30%, while U.S. Hispanic households with
Internet access grew from 2% to 15% (approximately 650% Internet access growth
in four years). In addition, an independent study indicated that as of 1998
approximately 2.4 million Hispanics owned personal home computers in the top
seven U.S. Hispanic markets, an increase of 58% from 1996.
OUR MARKET OUTSIDE THE UNITED STATES
Spanish is the world's third most spoken language, used by
approximately 400 million people. Twenty-one countries consider Spanish their
primary language and 266 million people worldwide consider Spanish their first
language. Internet usage in Spain is increasing rapidly. For example, a recent
study indicated that approximately 2.3 million Spaniards accessed the Internet
in 1998 and the number is projected to grow to 8.7 million by 2001.
The Spanish-speaking Latin American market is comprised of Mexico,
Central America, parts of South America and the Spanish-speaking countries of
the Caribbean. Factors such as growing competition and investment in
telecommunications markets, favorable demographics and declining prices for
personal computers and Internet access position Latin America as a strong
potential growth market for Internet products and services.
THE QUEPASA!COM STRATEGY
We believe that a branded, multi-featured, Spanish-language Internet
portal and search engine that focuses primarily on the needs of the
Spanish-language market is uniquely positioned to capitalize on the growth of
this market segment. Therefore, our strategy is to establish quepasa!com as a
leading worldwide Spanish-language portal and search engine offering the
quepasa!com brand to Spanish-speaking Internet users residing in the United
States, Latin America and the rest of the world. In order to accomplish this
objective, we intend to continue to focus on building a high volume of traffic
and strong brand recognition of the quepasa!com name. The basis of our strategy
is to provide Spanish-language Internet users with an innovative,
technologically-advanced, content-rich Web portal that creates value for the
user and establishes our platform as an attractive medium for advertisers,
marketers and companies engaged in electronic commerce.
We are establishing quepasa!com as a leading Spanish-language Web
portal and search engine by executing a business strategy that includes:
o Developing quepasa!com globally as a leading brand associated
with the Internet for Spanish-language users
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<PAGE> 25
We believe that establishing and leveraging the quepasa!com brand is
critical to our ultimate success. We also believe that branding and consumer
loyalty on the Internet are dependent upon our ability to differentiate our
services and to enhance our users' experience by continually offering innovative
technology and appealing features and effectively marketing these features to
existing and potential users of our Web site. We intend to improve our technical
expertise to develop innovative new services, as well as enhance and expand
existing services. We also intend to increase brand value through effective
marketing and promotion, increased customer service and the establishment of
strategic alliances.
o Significantly increasing user traffic by aggressively advertising on
Spanish-language media outlets and on high-traffic Spanish-language Web
sites
In February 1999, we initiated a 60-day nationwide radio advertising
campaign with Heftel Broadcasting Corporation, the largest Spanish-language
radio broadcaster in the U.S. In March 1999, we launched a 26-week nationwide
advertising campaign with the Telemundo Network Group, a leading U.S.
Spanish-language television broadcaster.
The goal of our advertising campaigns is to significantly increase
traffic on the quepasa!com Web site which we believe in turn will improve our
ability to attract advertisers to our Web site. We will also seek to increase
our Web site traffic by increasing the number and visibility of entry points to
the quepasa!com Web site through advertising on other high-traffic
Spanish-language Web sites.
o Acquiring and developing additional content and features for the
quepasa!com Web site
In addition to its search engine, quepasa!com provides content and Web
site features for the Spanish-speaking Internet user, including free e-mail,
Spanish-language news feeds, worldwide weather information and chat rooms. In
order to provide such content, we have entered into agreements with content
providers such as Reuters and UPI for Spanish-language news, and WeatherLabs for
worldwide weather information. These arrangements allow us to increase our Web
site content in order to attract and retain Spanish-speaking Internet users and
to solidify our position as an easy-to-use interface for Spanish-language Web
services and information. We intend to add additional content and features by
acquisition, licensing and internal development.
o Entering into strategic relationships with business partners who offer
unique technological and distribution capabilities
We intend to continue to develop strategic relationships with companies
that offer the most advanced Internet technologies. Our search engine is powered
by Inktomi, a leader in Internet search technology. Connectivity services are
provided to us by Exodus and GTE, both leaders in Internet networking services.
We also seek to expand the distribution of the quepasa!com brand through
marketing arrangements with computer hardware manufacturers, software providers,
Internet access providers and commercial on-line services.
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<PAGE> 26
o Generating revenue from the sale of advertising and through electronic
commerce
We have entered into an agreement with 24/7 Media, Inc., a leading
provider of Internet advertising solutions, to outsource our advertising sales
function. When user traffic justifies, we also intend to offer products and
services directly to consumers through the quepasa!com Web site. These products
and services will be targeted toward the distinct tastes and preferences of
Spanish-speaking consumers and may include recorded music, educational software
and books. We may also generate revenue from other electronic commerce retailers
that sell products or services to users through the quepasa!com Web site.
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<PAGE> 27
THE QUEPASA!COM WEB SITE
Services and Content. In November 1998, we launched the quepasa!com Web
site which allows individuals to quickly access content and features which
appeal to Spanish-language Internet users. Although our content is directed
toward Spanish-speaking users, to better serve the assimilated U.S. Hispanic
population, quepasa!com is also offered in English. By combining existing
services with specialized information from leading content providers,
quepasa!com provides subject or category specific content including topical
news, worldwide weather information, free e-mail, chat and search capabilities.
The quepasa!com Web site currently offers a number of categories of
topical interest, including the following:
Arte y Cultura (Art and Culture)
Computadoras y Internet (Computers and Internet)
Economia y Negocios (Economy and Business)
Educacion (Education)
Entretenimiento (Entertainment)
Salud (Health)
Empleos (Jobs)
Noticias y Medios (News and Media)
Politica y Gobierno (Politics and Government)
Regional (Regional)
Ciencia y Techologia (Science and Technology)
Ciencias Sociales (Social Sciences)
Deportes y Recreacion (Sports and Recreation)
Viajes y Turismo (Travel and Tourism)
Search Engine. The quepasa!com search engine helps users find
information on the Web by searching through quepasa!com's index of Web
documents. Our search technology is powered by Inktomi which enables us to
provide customers with a variety of on-line search services.
Personalization Feature. We offer our users the ability to personalize
their quepasa!com home page. Quepasa!com users can create a personal profile to
select and update information of interest by category, such as news headlines,
business, sports scores, weather information and horoscopes. Users can also
arrange the position and location of the content on their quepasa!com home page
to suit their specific tastes and preferences.
Free E-Mail and Chat. Quepasa!com offers free e-mail and a free
customized chat service powered by Volano, a leading provider of chat services.
Through this chat service, users can discuss topics of mutual interest by
participating in ongoing discussions or by creating their own topics for
discussion.
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<PAGE> 28
24 Hour Real-time News and Weather. Quepasa!com offers worldwide news
coverage from Reuters and UPI. Reuters provides us with worldwide editorialized,
topical news covering areas of special interest to Spanish-speaking users (in
Spanish and English), as well as a Spanish-language news feed that we intend to
format and edit internally to provide broad coverage of news that will be of
special interest to Spanish-speaking users. UPI provides real-time, news stories
written in Spanish by pool reporters from around the world. These pool stories
will enable us to supply a broad range of region-specific news items of interest
to Spanish-speaking Internet users. Our users are also able to search a database
of archived news stories from Reuters (over the prior 30-day period) and UPI
(over the prior two-year period but not earlier than December 1998).
Through an agreement with WeatherLabs, we also offer worldwide weather
information, including real time weather reports and forecasts, for 5,000 U.S.
and 2,400 international cities.
MARKETING AND ADVERTISING OF THE QUEPASA!COM SITE
Our marketing goal is to develop the quepasa!com brand globally as a
leading brand associated with the Internet for Spanish-speaking users. In
February 1999, we initiated a 60-day approximately $1,600,000 nationwide radio
advertising campaign with Heftel Broadcasting Corporation, the largest Spanish
radio broadcaster in the United States, with approximately 19 million
Spanish-speaking listeners. Heftel owns and operates 39 stations in 11 of the
top 15 Hispanic markets, including the most-listened to Spanish-language
stations in nine markets. We believe the sponsorship with Heftel will provide us
with an effective platform to communicate our message to our target audience,
because approximately 65% of U.S. Hispanics reside in Heftel's top 15 markets.
The quepasa!com sponsorship with Heftel includes the purchase of air time in the
top Hispanic radio markets, "on-air promos" by radio personalities and prominent
sponsorships of Hispanic community festivals and events involving Heftel radio
stations, such as the Calle Ocho Festival in the Little Havana area of Miami.
Calle Ocho is the largest street festival in the U.S., attended by more than one
million people in 1998.
In March 1999, we launched an approximately $800,000 26-week nationwide
advertising campaign with the Telemundo Network Group. Telemundo, recently
acquired by Sony and Liberty Media, is a leading Spanish-language television
broadcaster that has served the U.S. Hispanic market for over 11 years.
Telemundo's affiliate base, covering 63 television markets, reaches
approximately 85% of all U.S. Hispanic households. Sony and Liberty Media
provide Telemundo with substantial financial resources, strong management and a
vast programming library. Telemundo intends to draw on this library in order to
target a younger, bilingual Hispanic audience. Telemundo's programming includes
shows such as "Cinemundo Primer" (a primetime program featuring popular U.S. and
Latin American movies, many appearing for the first time on Spanish-language
television), "Ocurrio Asi de Noche" (an Emmy award-winning investigative news
magazine), and "Discovery" (offering nature, science, technology and history
programming from the Discovery Channel).
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<PAGE> 29
Our sponsorship arrangement with Telemundo extends from March 1999
through August 1999. We believe that this sponsorship arrangement will
significantly assist us in building brand awareness for quepasa!com within the
emerging Spanish-language Internet market. The goal of the advertising campaign
is to significantly increase traffic on our Web site, which in turn will improve
our ability to attract Web site advertisers.
We also intend to increase our Web site traffic by increasing the
number and visibility of entry points to the quepasa!com Web site through
advertising on other high-traffic Spanish-language Web sites. We will also seek
to develop relationships with on-line services, Internet access providers and
providers of computer hardware and software in order to expose quepasa!com to
other Internet users.
We intend to use a substantial portion of the proceeds of the offering
(approximately $28,000,000) to advertise the quepasa!com Web site on
Spanish-language and English language media. See "Use of Proceeds."
In an effort to increase hits, Web site operators are increasingly
adding content and other features to their sites to encourage users to spend
more time there. We intend to regularly enhance our technological features and
services and update our content in order to encourage consumers to use our Web
site more frequently. To this end, we have launched a flexible, subject-based
format for our services and content to provide consumers with ease of use and
flexibility to customize their quepasa!com site to fit their specific tastes and
preferences. Because customizing these services typically requires some effort
and time on the part of the consumer, we believe that consumers who use these
personalized services are more likely to continue to use quepasa!com and not
change to a competitive service.
ADVERTISING REVENUE
We have had no advertising revenue to date, but we expect to earn a
significant portion of our future revenue from the sale of advertisements placed
on our Web site. In exchange for up to 50% of our advertising revenue, we have
entered into an agreement with 24/7 Media, Inc. to use its best efforts to place
our advertising with customers solicited by 24/7 Media. The agreement may be
terminated by either party by giving the other at least four months' written
notice. 24/7 Media is a leading provider of Internet advertising and on-line
direct marketing solutions with one of the largest Internet sales forces in the
industry. 24/7 Media's clients include AT&T WorldNet, EarthLink and the
Associated Press. In the future, we may elect to develop an internal advertising
staff.
We expect advertisements on the quepasa!com site to be of the banner or
billboard style, which are designed to display additional advertisements as the
consumer clicks through the Web site. From each advertisement screen, users can
hyperlink directly to an advertiser's own Web site, thus enabling the advertiser
to directly interact with a user who has expressed interest in the
advertisement. We believe that since users view advertisements only after they
request a new page, the focus of the user's attention to the advertisement is
likely to be higher than it is in other forms of media. With our subject-based
format, growing number of services and ability to target user interest from an
attractive demographic group with appropriate advertising, we believe we can
increase the effectiveness of advertisements placed on the quepasa!com Web site.
We hope this will permit us to command higher advertising returns than many
other Web sites.
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<PAGE> 30
We also intend to develop innovative approaches for advertisers through
advancements by others in demographic trending and consumer tracking. We seek to
attract the largest possible Web audience in the Spanish-speaking Internet
market, in order to give advertisers the most efficient and effective
advertising placements. We are developing services that encourage consumers to
provide demographic and interest information that can be used to more
effectively target our advertising.
TECHNOLOGY
We believe we can differentiate our services and promote the
quepasa!com brand by developing innovative proprietary technology and
integrating technology licensed from third parties where appropriate. Our
strategy is to develop or obtain technologies that are able to expand with the
growth in content of the Internet. For instance, we recently developed our own
proprietary e-mail service which we believe provides superior functionality,
message volume, data storage and incoming and outgoing file attachment
capabilities than most other free e-mail services.
In July 1998, we entered into a three-year agreement with Inktomi to
power search engine capability for our quepasa!com Web site. Under the terms of
the agreement, we will pay Inktomi a minimum fee of $750,000 over the three-year
period for Inktomi's search engine services. The annual fee could significantly
increase based upon the number of searches performed by Inktomi for our users.
Inktomi's search engine technology enables us to provide a variety of
on-line search services to our customers. Inktomi provides and manages all
hardware, software and operational aspects of its search engine and the
associated database of Internet content. Inktomi also provides us with a
programming interface and software tools to enable us to custom design our
search service user interface. Separating the user interface enables this
portion of the service to reside in a different physical location from the
Inktomi search engine and to run on our choice of computer equipment. In
addition, we can customize our user interface as to look, feel and functionality
and can change the user interface at any time without affecting the operation of
the Inktomi search engine.
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<PAGE> 31
Inktomi's search engine consists of a crawler, an indexer and search
engine servers. The crawler and indexer are software programs that collect and
organize information and store that information on the cluster of search engine
servers. The search engine servers are a collection of workstations that are
linked together as a coupled cluster through the use of Inktomi's software. The
search engine servers provide powerful full-text query operations, including
full Boolean support, phrase and adjacency searching, date restrictions and the
recognition of multimedia files and other embedded objects. Search results are
relevance-ranked using state-of-the-art text indexing methods.
Connectivity services are provided to us by Exodus and GTE. Exodus is
one of the largest providers of connectivity, with a client list that includes
Microsoft Hotmail, Ebay, GeoCities, HotBot and Inktomi. GTE delivers complete
network solutions, dedicated Internet access, high performance Internet hosting,
managed Internet security, network management, systems integration and
Web-based applications development for integrating the Internet into business
operations.
COMPETITION
The market for Internet products, services, advertising and commerce is
intensely competitive, and we expect that competition will continue to
intensify. We believe that the principal competitive factors in these markets
are name recognition, distribution arrangements, functionality, performance,
ease of use, the number of value-added services and features, and quality of
support. Our primary competitors are other companies providing portal services,
especially to the Spanish-language Internet users, such as Yahoo!, America
Online, StarMedia Network, Microsoft (MSN LatinAmerica, MSN Mexico and MSN
Espana), Lycos and Ole.
Other portal competitors include Alta Vista, Excite and Infoseek. In
addition, a number of companies offering Internet products and services,
including our direct competitors, recently began integrating multiple features
within the products and services they offer to users. Integration of Internet
products and services is occurring through development of competing products and
through acquisitions of, or entering into joint ventures and/or licensing
arrangements involving, competitors. For example, the Web browsers offered by
Netscape and Microsoft, which are the two most widely-used browsers and
substantial sources of traffic for us, may incorporate and promote information,
search and retrieval capabilities in future releases or upgrades that could make
it more difficult for Internet viewers to find and use our products and
services.
Microsoft recently announced it intended to license products and
services from Alta Vista and that it will feature and promote Alta Vista
services on the Microsoft Network and other Microsoft on-line properties. We
expect that such search services may be tightly integrated into the Microsoft
operating system, the Internet Explorer browser, and other software
applications, and that Microsoft will promote such services within the Microsoft
Network or through other Microsoft-affiliated end-user services such as MSNBC or
WebTV Networks, Inc.
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<PAGE> 32
Many large media companies have announced that they are contemplating
developing Internet navigation services and are attempting to become "gateway"
sites for Web users. In the event these companies develop such portal sites, we
could lose a substantial portion of our user traffic. Further, entities that
sponsor or maintain high-traffic Web sites or that provide an initial point of
entry for Internet viewers, such as the Regional Bell Operating Companies or
Internet service providers, such as Microsoft and America Online, currently
offer and can be expected to consider further development, acquisition or
licensing of Internet search and navigation functions. These functions may be
competitive with those offered by us. Our competitors could also take actions
that could make it more difficult for viewers to find and use our products and
services. Consolidations, integration and strategic relationships involving
competitors could have a material adverse effect on our business.
In addition to the large multinational portals, we compete with a
number of smaller portals and search engines that provide region-specific
information to users or market to users with specific interests.
Most of our competitors, as well as potential new competitors (such as
Spanish-language media companies, other portals and Internet industry
consolidators), have significantly greater financial, technical and marketing
resources than we do. There can be no assurance that our competitors will not
offer Internet products and services that are superior to ours or that achieve
greater market acceptance. There can be no assurance that we will be able to
compete successfully against current or future competitors or that competition
will not have a material adverse effect on our business.
EMPLOYEES
At March 1, 1999, we had 34 employees, including our six executive
officers.
FACILITIES
We lease approximately 11,500 square feet of space for our executive
offices in Phoenix, Arizona for $21,083 per month pursuant to a sub-lease which
expires in May 1999. We are currently negotiating a new five year lease for
this space with our landlord.
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<PAGE> 33
OUR MANAGEMENT
OFFICERS AND DIRECTORS
Information concerning each of our executive officers and directors is
set forth below:
<TABLE>
<CAPTION>
Name Age Position
- - - - ---- --- --------
<S> <C> <C>
Jeffrey S. Peterson 26 Chairman of the Board
of Directors, Chief
Executive Officer and
President
Michael A. Hubert 33 Chief Operating Officer
and Director
Bryan L. Ross 25 Chief Technical Officer
and Director
Juan C. Galan 33 Chief Financial Officer
Robert J. Taylor 30 Vice President --
Strategy and Operations
Victor H. Roldan 31 Vice President
Lionel Sosa 59 Director
Gregory J. Kolanck 29 Director
</TABLE>
Directors hold office for a period of one year from their election at
the annual meeting of stockholders or until their successors are duly elected
and qualified. Officers are elected by, and serve at the discretion of, the
Board of Directors. Our audit committee consists of Messrs. Hubert and Sosa, and
our compensation committee consists of Messrs. Peterson, Hubert and Sosa. We
intend to increase our Board of Directors to seven individuals following the
offering, four of whom will be independent directors. We also intend to add at
least one independent director to the audit committee as soon as practicable
following the offering, but in no event later than 90 days from this date.
JEFFREY S. PETERSON has served as Chairman of the Board of Directors
and Chief Executive Officer since May 1998 and was our Chief Technology Officer
from July 1997 until May 1998. From January 1997 to June 1997, Mr. Peterson
served as co-owner of NetCentury, an Internet design firm he founded. From July
1995 until December 1996, Mr. Peterson was a General Securities Principal and
Registered Representative with West America Securities Corporation. From
February 1995 to May 1995, he was a General Securities Principal and Registered
Representative with Kensington Securities, Inc. From August 1993 to April 1995,
Mr. Peterson was a self-employed computer consultant
30
<PAGE> 34
for JP Consulting, a computer-based consulting company he founded. Mr. Peterson
is an experienced Modula, Java, and C++ programmer, who has been involved in the
programming and operations of computers and digital communications for over 15
years. He has developed software applications for operating systems and digital
platforms, beginning with Cp/M based systems in the early 1980s to Unix (Sun
Solaris, BSD, Linux, Irix) and Windows NT. Mr. Peterson is bilingual in English
and Spanish.
MICHAEL A. HUBERT joined us in December 1998, became our Chief
Operating Officer in January 1999 and was appointed a director in February 1999.
From May 1998 to November 1998, Mr. Hubert was employed by WGM Corporation, the
General Partner of The Monolith Limited Partnership, a venture capital fund
which is one of our principal stockholders. At Monolith he assisted early stage
businesses in strategy and organizational development. From May 1992 to April
1998, Mr. Hubert was employed by The Barrington Consulting Group, a national
business advisory consulting firm, where he last served as Senior Manager. Mr.
Hubert holds a B.S. degree in Finance from Arizona State University and an
M.B.A. degree from Southern Methodist University.
BRYAN L. ROSS joined us in November, 1998 as Chief Technology Officer
and became a director in March 1999. From July 1998 to November 1998, he was
Director of Software Development for Today.com, Inc., a Web design firm. From
July 1997 to June 1998, he was lead computer programmer for the Kemtah Group, an
Internet consulting firm. From 1994 to 1997, he was a Web Master first at
Bethany College and subsequently at MicroAge, a computer distributor, where he
designed and maintained Interactive Web sites. From 1991 to July 1996, Mr. Ross
was an independent computer consultant in Scotts Valley, California.
JUAN C. GALAN joined us in January 1999 as our Chief Financial Officer.
From April 1997 to January 1999, he was employed by Vistoso Partners LLC, a
Phoenix, Arizona real estate development company, as Controller. From June 1993
to April 1997, Mr. Galan was employed by Nielsen Media Research, formerly a Dun
& Bradstreet company, as Administration Manager-Technology and Business
Services, having joined the company initially as a Senior Financial Analyst.
From March 1992 to June 1993, Mr. Galan was the Controller and Project Manager
for Newport Realty, Inc. in Tampa, Florida. Mr. Galan holds a B.S. degree in
Finance from Western Kentucky University.
ROBERT J. TAYLOR joined us in March 1999 as Vice President of Strategy
and Operations. From August 1995 to March 1999, he was a Senior Consultant for
CSC Index, the management consulting division of Computer Sciences Corporation.
During his tenure with CSC, Mr. Taylor focused his business consulting on
large-scale change initiatives, strategy implementation, new business start-ups
and organizational design for Fortune 500 organizations. From January 1992 to
August 1995, Mr. Taylor held the positions of Production Supervisor and Senior
Industrial Engineer with Michelin Tire Corporation. Mr. Taylor received a
Bachelor of Science degree in Industrial and Systems Engineering from Virginia
Tech University and an M.M.M. degree from the J.L. Kellogg Graduate School of
Management at Northwestern University.
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<PAGE> 35
VICTOR H. ROLDAN joined us in January 1999 as a Vice President. From
October 1997 to January 1999, Mr. Roldan founded and operated Roldan &
Associates, a business consulting firm. From January 1995 to October 1997 he
practiced law in Costa Rica, first for Montero Bejarano & Associates and then
for Alfredo Fournier & Associates. Mr. Roldan holds a B.A. and a degree of Law
from the Francisco Marroquin University, Guatemala and a degree of Law from the
University of Costa Rica, San Jose.
LIONEL SOSA joined us as a director in February 1999 and has been Chief
Executive Officer of Garcia/KJS Advertising Agency since January 1996. From
January 1994 to December 1995 Mr. Sosa was Chairman of DMB&B/Americas, a network
of 23 advertising agencies in the U.S. and Latin America. From June 1980 to
December 1993, he founded and was Chief Executive Officer of Sosa, Bromley,
Aguilar & Associates, an advertising agency. Mr. Sosa is the author of The
American Dream: How Latinos Can Achieve Success in Business and Life. He was
named one of the 100 most influential Hispanics in the U.S. for 1998-99 by
Hispanic Business magazine and was chosen as Adweek magazine's Advertising
Executive of the Year in 1993 and its Marketing Executive of the Year in 1994.
Mr. Sosa is a director of Taco Cabana, a publicly-traded restaurant chain.
GREGORY J. KOLANEK joined us as a director in February 1999. He was
employed by Cisco Systems, Inc. from January 1995 to November 1998, first as a
sales application support engineer, then as a Web Project Production Manager.
Since November 1998 he has been a private investor. From October 1992 to January
1995, he was a Desktop Publishing Specialist for Delco Systems and from July
1990 to July 1994, he was co-founder and keyboardist for the band Dishwalla.
KEY EMPLOYEES
MICHAEL J. OFFENBECHER has served as our Vice President - Technology
since November 1998. He was the Chief Engineer for software development of
InfoPak, Incorporated, a Web design firm, from 1993 to 1997 where he was
responsible for software development projects. From 1997 until November 1998, he
was a Senior Software Engineer for Cyclone Software Corporation in Scottsdale,
Arizona. Mr. Offenbecher earned a Bachelor of Science degree and Electrical
Engineering degree from Kansas State University.
LUIS GARCIA has served as our Vice President - Design and Content since
February 1999. He was a Web developer, Software Engineer and subsequently, Vice
President of Operations for Cybertoons Digital of Milwaukee, Wisconsin from
September 1996 until February 1999. From April 1996 until September 1996, he was
a Web developer for Platinum Creative in Winter Park, Florida. Mr. Garcia
received a B.S. degree in Systems Engineering from the Universidad Metropolitana
in Caracas, Venezuela and subsequently was a programming instructor there from
October 1994 to April 1996.
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<PAGE> 36
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid to our Chief Executive Officer since we were formed in June
1997. No officer has been paid compensation for services in excess of $100,000
per year through December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------------- -------------------------------------------
Name and Other Restricted Shares All
Principal Annual Stock Underlying Other
Position Year Salary Bonus Compensation Award(s) Options Compensation
- - - - --------- ---- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jeffrey S. Peterson, 1998 $31,500 -- -- -- 50,000 $81,500
Chief Executive 1997 -- -- -- -- -- --
Officer and President
</TABLE>
The following executive officers are expected to receive total
compensation in excess of $100,000 for the year ending December 31, 1999. Each
of these executive officers has executed employment agreements expiring on
the dates indicated and providing for the payment of annual salaries and
forgiveness of loans indicated below.
<TABLE>
<CAPTION>
Forgiveness Total Expiration
Name Annual Salary of Loan(3) Compensation(4) Date
- - - - ---- ------------- ----------- --------------- ----------
<S> <C> <C> <C>
Jeffrey S. Peterson(1) $150,000 $100,000 $250,000 11/02
Michael A. Hubert(2) $120,000 $ 35,000 $155,000 12/00
Bryan L. Ross(2) $ 75,000 $ 30,000 $105,000 11/00
Juan C. Galan(2) $100,000 $ 20,000 $120,000 1/02
Victor H. Roldan(2) $ 60,000 $ 5,000 $ 65,000 1/02
Robert J. Taylor(2) $ 80,000 $ 25,000 $105,000 3/02
</TABLE>
(1) Mr. Peterson's employment agreement also provides for (a) the issuance of
1,500,000 stock options exercisable at $8.00 per share and 50,000 stock options
exercisable at $1.50 per share, (b) the possible issuance of 250,000 additional
stock options exerciseable at 120% of the public offering price for each 250,000
e-mail subscribers up to 1,000,000 stock options and 250,000 additional stock
options exerciseable at 120% of the public offering price for each 250,000 chat
subscribers up to 1,000,000 stock options and (c) the payment of $5,000,000 plus
salary for the remainder of the term of the employment agreement if Mr.
Peterson's services are terminated for any reason other than cause or if we
materially change his duties as defined by his employment agreement.
(2) Messrs. Hubert, Ross, Galan, Roldan and Taylor have been granted stock
options to purchase 75,000 shares at $8.00 per share, 115,000 shares at $8.00
per share, 100,000 shares at $8.00 per share, 20,000 shares at $1.00 per share
and 60,000 shares at $8.00 per share, respectively.
(3) We have made loans to each of the executive officers in the amounts shown.
50% of each loan will be forgiven on the six month anniversary of employment and
the balance of the loan will be forgiven on the one year anniversary of
employment, except that 100% of Mr. Hubert's loan will be forgiven on his six
month anniversary of employment.
(4) Does not include car allowances, health insurance, housing allowances and
other non-material compensation.
Our outside directors do not receive any cash compensation for services
as directors, although they are reimbursed for out-of-pocket expenses in
attending Board of Directors' meetings and we intend to issue them stock options
in the future.
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<PAGE> 37
1998 STOCK OPTION PLAN
In November 1998, we adopted a stock option plan (the "Plan") which
provides for the grant of options intended to qualify as "incentive stock
options" or "nonqualified stock options" within the meaning of Section 422 of
the United States Internal Revenue Code of 1986 (the "Code"). Incentive stock
options are issuable only to employees.
The purposes of the Plan are to attract and retain the best available
personnel, to provide additional incentives to our employees and to promote the
success of our business.
We have reserved 2,500,000 shares of common stock for issuance under
the Plan, which is administered by our Board of Directors. Under the Plan, the
Board of Directors determines which individuals will receive options, the time
period during which the options may be partially or fully exercised, the number
of shares of common stock that may be purchased under each option and the option
price. As of the date hereof, options to purchase 2,463,000 shares of common
stock at a weighted average exercise price of $7.43 per share were outstanding
under the Plan and 37,000 shares remained available for future option grants. Of
these options, 1,970,000 have been issued to executive officers and directors at
an average exercise price of $7.75.
The per share exercise price of the common stock subject to options
must not be less than the fair market value of the common stock on the date the
option is granted. Subject to certain exceptions in the case of incentive stock
options, the aggregate fair market value (determined as of the date the option
is granted) of the common stock that any person may purchase in any calendar
year pursuant to the exercise of incentive stock options must not exceed
$100,000. No person who owns, directly or indirectly, at the time of the
granting of an incentive stock option, more than 10% of the total combined
voting power of all classes of our stock is eligible to receive incentive stock
options under the Plan unless the option price is at least 110% of the fair
market value of the common stock subject to the option on the date of grant. The
stock options are subject to anti-dilution provisions in the event of stock
splits, stock dividends and the like.
No incentive stock options are transferable by an optionee other than
by will or the laws of descent and distribution, and during the lifetime of an
optionee, the option is only exercisable by the optionee. The exercise date of
an option granted under the Plan must not be later than ten years from the date
of grant. Any options that expire unexercised or that terminate upon an
optionee's ceasing to be employed by us will become available once again for
issuance. Shares issued upon exercise of an option rank equally with other
shares then outstanding. No options have been exercised under the Plan.
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<PAGE> 38
The following table sets forth certain information regarding grants of
stock options to Jeffrey S. Peterson, the only executive officer who received
stock options for the year ended December 31, 1998. The fair value of the option
grant has been estimated on the date of the grant utilizing the Black-Scholes
option pricing model with the following assumptions: No volatility, ten year
life, risk free rate of return of 6% and a 0% dividend yield.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for Grant Date
Individual Grants Option Term(1) Value
--------------------------------------------- ------------------------ --------------
Number
Of
Securities % of Total
Underlying Options/SARs Exercise Grant
Options/SARs Granted to or Base Grant Date Present
Granted Employees Price Date Expiration Value
------------ ------------ --------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey Peterson 50,000 23% $1.50 November 1998 November 2008 $ 146,000
</TABLE>
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<PAGE> 39
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
holdings of common stock (1) by each person who, as of March 8, 1999, holds of
record or is known by us to hold beneficially or of record, more than 5% of our
common stock, (3) by each executive officer and director, and (2) by all
officers and directors as a group. The address of each person is our address at
One Arizona Center, 400 E. Van Buren, Fourth Floor, Phoenix, Arizona 85004.
<TABLE>
<CAPTION>
Percent Percent
Shares of Class of Class
Name Owned(2) Prior to Offering(2) After Offering
- - - - ---- --------- --------------------- --------------
<S> <C> <C> <C>
Jeffrey S. Peterson(1) 1,436,083 15.7% 10.9%
Michael A. Hubert 347,621 3.8% 2.6%
Bryan L. Ross 115,000 1.3% .9%
Juan C. Galan 20,000 .2% .2%
Robert J. Taylor 25,000 .3% .2%
Victor H. Roldan 20,000 .2% .2%
Lionel Sosa 25,000 .3% .2%
Gregory J. Kolanek 25,000 .3% .2%
Michael D. Silberman 1,048,508 11.5% 8.0%
Kevin Dieball 1,071,434 11.8% 8.2%
The Monolith Limited
Partnership 1,390,715 15.3% 10.6%
All executive officers
and directors as a
group (8 persons) 2,013,704 21.4% 15.0%
---------
</TABLE>
(1) Excludes 4,397,557 shares which Mr. Peterson has the right to vote pursuant
to a voting trust agreement. See "Certain Transactions".
(2) Includes shares of common stock subject to stock options which are
presently exercisable or which may be exercisable within 60 days following
the date of this prospectus ("exercisable options").
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<PAGE> 40
CERTAIN TRANSACTIONS
In May 1998 Jeffrey S. Peterson, our Chairman, Chief Executive Officer
and President, and Michael D. Silberman, a principal stockholder, conveyed an
aggregate of 3,863,106 shares of their common stock to five persons for $.00035
per share. The shares were conveyed at that time to induce these five persons to
provide strategic planning and business development services to us.
In May 1998 we issued a $100,000 promissory note to an investor,
$50,000 of which was subsequently converted into our common stock at $1.00 per
share. In July 1998 we issued a $1 million promissory note to two investors
which was subsequently converted into our common stock at $1.56 per share. In
November and December 1998 we sold 1,259,167 shares of our common stock to a
group of investors for $3.75 per share.
We are paying Garcia/KJS, an advertising agency owned in part by Lionel
Sosa, one of our directors, for advertising services for a monthly retainer fee
of $78,000. We intend to sign an agreement with Garcia/KJS on these terms,
cancelable by either party on 30 days notice.
In March 1999, The Monolith Limited Partnership, a principal
stockholder, loaned us $2,000,000 for working capital. The loan bears interest
at 12% per annum through June 1999 and then 14% per annum through March 2001
when the loan is due.
In March 1999 Jeffrey S. Peterson, our Chief Executive Officer, agreed
to loan us up to $3 million at any time prior to the completion of the offering
to be used for working capital. Any such loans will bear interest at 12% per
annum for four months and then 14% per annum for the next 20 months, at which
time each loan will become due.
In March 1999 Michael D. Silberman, Kevin Dieball and The Monolith
Limited Partnership, all of whom are principal stockholders of our company, and
two other stockholders executed a voting trust agreement covering a total of
4,397,557 shares of our common stock for the benefit of Jeffrey S. Peterson.
Under the terms of the voting trust, Mr. Peterson is entitled to vote all shares
held by the five stockholders until March 31, 2003.
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<PAGE> 41
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue 50,000,000 shares of $.001 par value common
stock, of which 9,075,833 shares are outstanding as of the date of this
prospectus. Each share of common stock is entitled to one vote on all matters
submitted to a vote of the stockholders, and cumulative voting is not permitted.
Upon issuance, shares of common stock are not subject to further assessment or
call. Subject to the prior rights of any series of preferred stock that may be
issued by us in the future, holders of common stock are entitled to receive
ratably such dividends that may be declared by the Board of Directors out of
funds legally available therefor and are entitled to share ratably in all assets
remaining after payment of liabilities in the event of our liquidation,
dissolution or winding up. Holders of common stock have no preemptive rights or
rights to convert their common stock into any other securities. The outstanding
common stock is fully paid and nonassessable.
We have not paid dividends on our common stock since inception and do
not plan to pay dividends in the foreseeable future. Any earnings will be
retained to finance growth.
PREFERRED STOCK
Our Articles of Incorporation authorize the issuance of up to 5,000,000
shares of preferred stock with such rights and preferences as may be determined
from time to time by our Board of Directors. Accordingly, under the Articles of
Incorporation, the Board of Directors may, without stockholder approval, issue
preferred stock with dividend, liquidation, conversion, voting, redemption or
other rights which could adversely affect the voting power or other rights of
the holders of the common stock. The issuance of any shares of preferred stock
having rights superior to those of the common stock may result in a decrease of
the value or market price of the common stock and could further be used by the
Board of Directors as a device to prevent a change in our control. We have no
other anti-takeover provisions in our Articles of Incorporation or Bylaws.
Holders of the preferred stock may have the right to receive dividends, certain
preferences in liquidation and conversion rights.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. Future sales of substantial amounts of common stock in the public market
could adversely affect prevailing market prices. Furthermore, since only a
limited number of shares will be available for sale shortly after this offering
because of certain contractual and legal restrictions on resale (as described
below), sales of substantial amounts of our common stock in the public market
after the restrictions lapse could adversely affect the prevailing market price
and our ability to raise equity capital in the future.
Upon completion of this offering, we will have outstanding 13,075,833
shares of common stock. Of these shares, 4,000,000 shares sold in the offering
(plus any shares issued upon exercise of the underwriters' overallotment
option) will be freely tradable without restriction under the Securities Act,
unless purchased by our "affiliates" as that term is defined in Rule 144 under
the Securities Act (generally, officers, directors or 10% stockholders).
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<PAGE> 42
The remaining 9,075,833 shares outstanding are "restricted securities"
within the meaning of Rule 144 under the Securities Act. Restricted securities
may be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144 of the Securities Act. Sales of
restricted securities in the public market, or the availability of such
securities for sale, could adversely affect the market price of the common
stock.
Our stockholders have entered into lock-up agreements generally
providing that they will not offer, sell, contract to sell, pledge, hypothecate
or grant any option to purchase or otherwise dispose of our common stock or any
securities exercisable for or convertible into our common stock owned by them
for a period of 180 days after the effective date of the registration statement
filed pursuant to this offering without the prior written consent of the
representative of the underwriters. As a result of these contractual
restrictions, notwithstanding possible earlier eligibility for sale under the
provisions of Rule 144, shares subject to lock-up agreements will not be salable
until such agreements expire or are waived by the representative of the
underwriters. Notwithstanding the lock-up agreements, 2,113,386 shares may be
sold, subject to the volume limitations set forth below, immediately under Rule
144 of the Securities Act and the remaining 6,962,447 shares may be sold from
May 1999 through December 1999.
In general, under Rule 144 as currently in effect, and beginning after
the expiration of the lock-up agreements (180 days after the date of
this prospectus), a person (or persons whose shares are aggregated) who has
beneficially owned restricted securities for at least one year would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of: (i) one percent of the number of shares of common stock then
outstanding (which will equal 13,075 shares immediately after the offering); or
(ii) the average weekly trading volume of the common stock during the four
calendar weeks preceding the sale. Sales under Rule 144 are also subject to
certain manner of sale provisions and notice requirements and to the
availability of current public information about us. Under Rule 144(k), a person
who is
39
<PAGE> 43
not deemed to have been our affiliate at any time during the three months
preceding a sale, and who has beneficially owned the shares proposed to be sold
for at least two years, is entitled to sell such shares without complying with
the manner of sale, public information, volume limitation or notice provisions
of Rule 144.
We have granted certain demand and piggy-back registration rights
covering 400,000 shares of common stock underlying the common stock purchase
warrants to be issued to the representative of the underwriters.
TRANSFER AGENT
Corporate Stock Transfer, Inc., Denver, Colorado, is our transfer
agent. The transfer agent's address is 370-17th Street, Suite 2350, Denver,
Colorado 80202-4614, and its telephone number is 303.595.3300.
LIMITATION ON LIABILITY
Our Bylaws provide our directors, officers, employees and agents
substantial protection against personal liability related to actions taken in
their capacity as representatives of the Company. The effect of this provision
is that we may be required to pay reasonably incurred expenses such as
attorney's fees, judgments, penalties, fines and amounts paid in settlements
associated with work related actions, suits or proceedings. We shall pay these
expenses if an independent group, as defined in our Bylaws, determines that the
individuals (1) conducted themselves in good faith, and (2) that they reasonably
believed (a) in the case of conduct in their official capacity with us, that
their conduct was in our best interest, or (b) in all other cases (except
criminal cases), that their conduct was at least not opposed to our best
interest, or (c) in the case of any criminal proceeding, that they had no reason
to believe their conduct was unlawful. Our Bylaws specifically limit the payment
of expenses in connection with a proceeding brought by or in the right of the
Company to reasonable expenses, including attorney's fees.
40
<PAGE> 44
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement dated
__________, 1999 the underwriters named below have agreed to purchase from us
the number of shares of common stock set forth opposite their names below.
<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Paradise Valley Securities, Inc.
Total 4,000,000
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters to purchase and accept delivery of the shares of common stock
offered hereby are subject to approval by their counsel of certain legal matters
and to certain other conditions. The underwriters are obligated to purchase and
accept delivery of all the shares of common stock offered hereby (other than
those shares covered by the overallotment option described below) if any are
purchased.
The underwriters initially propose to offer the shares of common stock
in part directly to the public at the initial public offering price set forth on
the cover page of this prospectus and in part to certain dealers (including the
Underwriters) at such price less a concession not in excess of $_____ per share.
The underwriters may allow, and such dealers may re-allow, to certain other
dealers a concession not in excess of $_____ per share. After the initial
offering of the common stock, the public offering price and other selling terms
may be changed by the representative of the underwriters at any time without
notice. The underwriters do not intend to confirm sales to any accounts over
which they exercise discretionary authority.
41
<PAGE> 45
We have granted to the underwriters an option, exercisable within 45
days after the date of this prospectus, to purchase, from time to time, in whole
or in part, up to an aggregate of __________ additional shares of common stock
at the initial public offering price less underwriting discounts and
commissions. The underwriters may exercise such option solely to cover
overallotments, if any, made in connection with the offering. To the extent
that the underwriters exercise such option, each underwriter will become
obligated, subject to certain conditions, to purchase its pro rata portion of
such additional shares based on such underwriter's percentage underwriting
commitment as indicated above.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the underwriters may be required to make in respect thereof.
Prior to the offering, there has been no established trading market for
the common stock. The initial public offering price for the shares of common
stock offered hereby will be determined by negotiation among us and the
representative of the underwriters. Among the factors to be considered in
determining the initial public offering price will be:
o the history of and the prospects for the industry in which we compete;
o our past and present operations;
o our historical results of operations;
o our prospects for future earnings;
o the recent market prices of securities of generally comparable
companies and
o the general condition of the securities markets at the time of the
offering.
42
<PAGE> 46
Certain persons participating in this offering may engage in
transactions that stabilize, maintain or otherwise affect the price of the
securities, including overallotment, stabilizing and short-covering
transactions in such securities, and the imposition of a penalty bid in
connection with the offering.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
us by the Law Office of Gary A. Agron, Englewood, Colorado. Certain legal
matters in connection with the offering will be passed upon for us by Brownstein
Hyatt Farber & Strickland, P.C., Denver, Colorado and for the Underwriters by
Bryan Cave LLP, Phoenix, Arizona.
EXPERTS
Our financial statements for the year ended December 31, 1998 and for
the period from inception (June 25, 1997) to December 31, 1997, have been
included in this prospectus in reliance on the report of Ehrhardt Keefe Steiner
& Hottman P.C., independent public accountants, as given upon the authority of
said firm as experts in accounting and auditing.
CHANGE OF ACCOUNTANTS
On December 11, 1998 we engaged BDO Seidman, LLP as our independent
public accountant. BDO Seidman, LLP resigned as our independent public
accountant on February 4, 1999 because they were unwilling to be associated with
our financial statements due to the background of one of our employees. We
employed this employee from January 1, 1999 through February 15, 1999 at which
time he resigned. This employee was never appointed as an officer or director of
quepasa.com, inc. He owns 443,450 shares of our common stock and remains an
employee of WGM Corporation, the general partner of The Monolith Limited
Partnership, one of our principal stockholders.
Prior to their resignation, BDO Seidman, LLC had not completed their
audits of any of our financial statements for any period. There were no
disagreements between us and BDO Seidman, LLC on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures which, if not resolved to the satisfaction of BDO Seidman, LLC would
have caused them to make reference to the matter in their report. We allowed BDO
Seidman, LLC to read and make comment on this disclosure.
On February 10, 1999, we engaged Ehrhardt Keefe Steiner & Hottman, P.C.
as our independent public accountants. Prior to their appointment, we did not
consult with them on issues relating to our accounting principles or the type of
audit opinion with respect to our financial statements to be issued by them.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of 1933, as amended, covering
the common stock. As permitted by the rules and regulations of the Commission,
this prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits. For further information with respect to
our company and the common stock, reference is made to the Registration
Statement and the exhibits, which may be examined without charge at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street N.W., Washington, D.C. 20549, copies of which may be obtained from the
Commission upon payment of the prescribed fees.
We will be subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and will file reports, proxy statements and
other information with the Commission. Such reports, proxy
43
<PAGE> 47
statements and other information may be inspected at the public reference
facilities of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of these materials may be obtained at prescribed
rates from the Commission at that address. The reports, proxy statements and
other information can also be inspected at the Commission's regional offices at
7 World Trade Center, Suite 300, New York, New York 10048, at Northwestern
Atrium Center, 500 West Madison, Chicago, Illinois 60621 and on the Commission's
Web site at www.sec.gov.
We will furnish to our stockholders annual reports which will include
audited financial statements. We may also furnish to our stockholders quarterly
financial statements and other reports that may be authorized by our Board of
Directors.
44
<PAGE> 48
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report..............................................F-2
Financial Statements
Balance Sheets....................................................F-3
Statements of Operations..........................................F-4
Statement of Changes in Stockholders' Equity (Deficit)............F-5
Statements of Cash Flows..........................................F-6
Notes to Financial Statements.............................................F-7
</TABLE>
F-1
<PAGE> 49
INDEPENDENT AUDITORS' REPORT
Board of Directors
quepasa.com, inc.
Phoenix, Arizona
We have audited the accompanying balance sheets of quepasa.com, inc. (A
Development Stage Company) as of December 31, 1998 and 1997 and the related
statements of operations, changes in stockholders' equity (deficit) and cash
flows for the year ended December 31, 1998 and from inception (June 25, 1997) to
December 31, 1997 and cumulative from inception to December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of quepasa.com, inc. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years ended December 31, 1998 and from Inception (June 25, 1997) to
December 31, 1997 and cumulative from Inception to December 31, 1998 in
conformity with generally accepted accounting principles.
Ehrhardt Keefe Steiner & Hottman PC
February 17, 1999
Denver, Colorado
F-2
<PAGE> 50
QUEPASA.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
------------------------------
1998 1997
------------ ------------
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 2,199,172 $ 2,582
Deposit receivable 1,533,632 --
Stock subscription receivable (Note 7) 125,000 --
------------ ------------
Total current assets 3,857,804 2,582
------------ ------------
Property and equipment, net of accumulated depreciation of $6,532 (Note 2)
354,620 --
Other assets
License agreements, net of accumulated amortization of $104,165 (Note 3)
645,835 --
Other assets 2,500 --
------------ ------------
Total other assets 648,335 --
------------ ------------
Total assets $ 4,860,759 $ 2,582
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 71,222 $ 5,465
Accrued Commissions (Note 7) 215,233 --
Stock subscription (Note 7) 337,500 --
Current portion of license agreement fees payable (Note 3) 272,500 --
Payroll taxes payable 2,922 --
------------ ------------
Total current liabilities 899,377 5,465
Long-term liabilities
Licensing agreement fees payable (Note 3) 437,500 --
------------ ------------
Total liabilities 1,336,877 5,465
------------ ------------
Commitments and contingencies (Note 6)
Stockholders' equity (deficit) (Notes 4 and 7)
Preferred stock, authorized 5,000,000 shares - none issued or outstanding -- --
Common stock, authorized 50,000,000 shares, $0.001 par value; issued and
outstanding 9,075,833 and 5,680,000 shares, respectively
9,076 5,680
Additional paid-in capital 10,427,477 (5,660)
Deficit accumulated during the development stage (6,912,671) (2,903)
------------ ------------
Total stockholders' equity (deficit) 3,523,882 (2,883)
------------ ------------
$ 4,860,759 $ 2,582
============ ============
</TABLE>
See notes to financial statements.
F-3
<PAGE> 51
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
from
Inception Inception
(June (June
Year Ended 25, 1997) to 25, 1997) to
December 31, December 31, December 31,
1998 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Product and content development expenses $ 414,873 $ $ 414,873
Sales and marketing expenses 250,419 250,419
Stock based compensation expense(7) 5,265,364 -- 5,265,364
General and administrative expenses 931,172 3,703 934,875
------------ ------------ ------------
Total operating expenses 6,861,828 3,703 6,865,531
------------ ------------ ------------
Loss from operations (6,861,828) (3,703) (6,865,531)
Other income (expense)
Interest expense (48,994) -- (48,994)
Other 1,054 800 1,854
------------ ------------ ------------
Net other income (expenses) (47,940) 800 (47,140)
------------ ------------ ------------
Net loss $ (6,909,768) $ (2,903) $ (6,912,671)
============ ============ ============
Net loss per share, basic and diluted $ (.76) $ -- $ (.76)
============ ============ ============
Weighted average number of shares outstanding, basic and diluted
9,075,833 9,075,833 9,075,833
============ ============ ============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 52
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD INCEPTION (JUNE 25, 1997) TO
DECEMBER 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of common stock for cash from
initial capitalization, June 1997 (Note 7) 5,680,000 $ 5,680 $ (5,660) $ -- $ 20
Net loss for the period -- -- -- (2,903) (2,903)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 5,680,000 5,680 (5,660) (2,903) (2,883)
Issuance of common stock and stock based
compensation May 1998 (Note 7) 1,420,000 1,420 4,985,294 -- 4,986,714
Issuance of common stock in conversion of note
payable $1.56 per share) November 1998 (Note 4) 666,666 667 1,039,113 -- 1,039,780
Issuance of common stock in conversion of note
payable ($1.00 per share), November 1998 (Note 4) 50,000 50 49,950 -- 50,000
Issuance of common stock for cash at $3.75 per share,
net of $640,587 of offering costs November and
December 1998 (Note 7) 1,259,167 1,259 4,080,030 -- 4,081,289
Issuance of compensatory stock options to
employees October through December 1998 (Note 7) -- -- 278,750 -- 278,750
Net loss for the year -- -- -- (6,909,768) (6,909,768)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 9,075,833 $ 9,076 $10,427,477 $(6,912,671) $ 3,523,882
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 53
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative from
Inception Inception
Year Ended (June 25, 1997) (June 25, 1997)
December 31, to December 31, to December 31,
1998 1997 1998
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (6,909,768) $ (2,903) $ (6,912,671)
--------------- --------------- ---------------
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities
Depreciation and amortization 110,697 -- 110,697
Stock based compensation 5,265,364 -- 5,265,364
Accrued interest on convertible notes payable 39,780 -- 39,780
Change in assets and liabilities
Deposit receivable (1,533,632) -- (1,533,632)
Deposits (2,500) -- (2,500)
Accounts payable 65,757 5,465 71,222
Accrued commissions 215,233 -- 215,233
Stock subscription 337,500 -- 337,500
Payroll taxes payable 2,922 -- 2,922
--------------- --------------- ---------------
4,501,121 5,465 4,506,586
--------------- --------------- ---------------
Net cash (used in) provided by operating activities
(2,408,647) 2,562 (2,406,085)
--------------- --------------- ---------------
Cash flows from investing activities
Purchase of fixed assets (361,152) -- (361,152)
Payments on license agreement (40,000) -- (40,000)
--------------- --------------- ---------------
Net cash used in investing activities (401,152) -- (401,152)
--------------- --------------- ---------------
Cash flows from financing activities
Net proceeds from private placements 3,956,289 -- 3,956,289
Proceeds from convertible notes payable 1,100,000 -- 1,100,000
Proceeds from issuance of common stock 100 20 120
Payments on notes payable (50,000) -- (50,000)
--------------- --------------- ---------------
Net cash provided by financing activities 5,006,389 20 5,006,409
--------------- --------------- ---------------
Net increase in cash and cash equivalents 2,196,590 2,582 2,199,172
Cash and cash equivalents, beginning of period 2,582 -- 2,582
--------------- --------------- ---------------
Cash and cash equivalents, end of period $ 2,199,172 $ 2,582 $ 2,201,754
=============== =============== ===============
</TABLE>
Supplemental disclosure of cash flow information:
Cash paid for interest was $48,994 for the year ended December 31,
1998 and $0 from Inception (June 25, 1997) to December 31, 1997.
Supplemental schedule of non-cash investing and financing activities:
During 1998, the Company entered into a licensing agreement requiring
total future payments of $750,000 (Note 3).
During 1998, convertible notes totaling $1,050,000 were converted into
common stock.
See notes to financial statements.
F-6
<PAGE> 54
QUEPASA.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
quepasa.com, inc. (the Company), a Nevada Corporation, was incorporated in June
1997. The Company is a Spanish Language Internet portal and search engine. The
portal offers a number of services such as news, chat and free e-mail. The
Company's portal draws viewers to their Web sites by providing a one-stop
destination for identifying, selecting and accessing resources, services,
content and information on the Web. The Company is targeted to provide users
with information and interactive content centered around the Spanish language.
The Company is a development-stage company that has not had any significant
revenue since inception. The Company realized a net loss of approximately $6.9
million including a $5.3 million non-cash charge for stock-based compensation
during the year ended December 31, 1998 and there is no assurance that the
Company will generate revenue or earn profit in the future.
During 1998, the Company changed its name from Internet Century, Inc. to
quepasa.com, inc.
Stock Split
In October 1998, the Company's Board of Directors authorized a 284 for one stock
split. The financial statements have been presented as if the split had occurred
at inception.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and investments with original
maturities of three months or less.
Deposit Receivable
Accounts receivable at December 31, 1998 represents refunds due from a media
company for advances paid by the Company under an advertising agreement which
was canceled prior to advertising services being rendered. The receivable was
paid subsequent to December 31, 1998.
Property and Equipment
Property and equipment are recorded at cost. Depreciation and amortization
expense is generally provided on a straight-line basis using estimated useful
lives of three to five years.
License Agreement
The Company entered into a licensing agreement pursuant to which the Company
licenses an internet-based search engine. The minimum annual royalty has been
capitalized and is being amortized over three years, which is the minimum term
of the agreement (Note 3).
F-7
<PAGE> 55
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
Advertising revenues are expected to be derived principally from short-term
advertising contracts. Revenues are generally recognized ratably over the term
of the agreement, provided that the Company does not have any significant
remaining obligations and collection of the resulting receivable is probable. To
the extent that Web site impression deliveries are falling short of the
guarantees, the Company would defer recognition of the corresponding revenues.
Income Taxes
The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statements
and tax basis of assets and liabilities using the enacted tax rates in effect
for the year in which the differences are expected to reverse. The measurement
of deferred tax assets is reduced, if necessary, by the amount of any tax
benefits that, based on available evidence, are not expected to be realized.
Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128") and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the
provisions of SFAS 128 and SAB 98, basic and diluted net loss per share is
computed by dividing the net loss available to common stockholders for the
period by the weighted average number of common shares outstanding for the
period. The calculation of basic and diluted net loss per share excludes shares
of common stock issuable upon exercise of employee stock options as the effect
of the exercise would be antidilutive.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
Advertising Costs
Advertising costs are expensed as incurred in accordance with Statement of
Position 93-7, "Reporting on Advertising Costs". Advertising costs for the year
ended December 31, 1998 and for the period from Inception (June 25, 1997) to
December 31, 1997 and totaled $132,377 and $0, respectively.
F-8
<PAGE> 56
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Product and Content Development
Product and content development costs, including Web-site development costs,
are charged to expense as incurred.
Fair Value of Financial Instruments
The carrying amount of the Company's financial instruments, which principally
include cash, deposit receivable, accounts payable and accrued expenses,
approximate fair value due to the relatively short maturity of the financial
instruments.
The fair value of the Company's debt instruments are based on the amount of
future cash flows associated with cash instrument using the Company's borrowing
rate. At December 31, 1998 and December 31, 1997, the carrying value of all
financial instruments was not materially different from fair values.
Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which is
effective for financial statements issued for all fiscal quarters of fiscal
years beginning after June 15, 1999. This statement requires companies to
recognize all derivative contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain conditions are not
met a derivative may be specifically designated as a hedge, the objective of
which is to match the timing of gain or loss recognition on the hedging
derivative with the recognition (i) the changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk or (ii) the earnings
effect of the hedged forecasted transaction. For a derivative not designated as
a hedging instrument, the gain or loss is recognized in income in the period of
change. Historically, the Company has not entered into derivative contracts to
hedge existing risks or for speculative purposes. Accordingly, the Company does
not expect adoption of the new standards on January 1, 2000 to effect its
financial statements.
NOTE 2 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
----------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Computer equipment and software $ 344,948 $ --
Furniture, fixtures and equipment 16,204 --
-------------- --------------
361,152 --
Less accumulated depreciation and amortization (6,532) --
-------------- --------------
Property and equipment $ 354,620 $ --
============== ==============
</TABLE>
F-9
<PAGE> 57
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - LICENSE AGREEMENT
On July 21, 1998, the Company entered an Information Services Agreement (the
"Agreement") with Inktomi Corporation ("Inktomi") whereby Inktomi will provide
certain services, including but not limited to, search services enabling the
Company to access Inktomi database of internet websites. The agreement requires
quarterly payments ranging from $60,000 to $75,000 and expires in August 2001.
The total service fees payable may increase based upon actual use of Inktomi
services. The license was capitalized and is being amortized on a straight-line
basis over the term of the agreement of three years.
Minimum payments under the licensing agreement are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1999 $ 272,500
2000 250,000
2001 187,500
------------
$ 710,000
============
</TABLE>
NOTE 4 - NOTES PAYABLE
Convertible Note Payable
In May 1998, the Company issued $100,000 of convertible debt. The convertible
debt accrued interest at 12% per annum and was scheduled to mature on the
earlier of May 31, 2000 or the closing date of the Company's initial public
offering, if any. The Company had the right to convert unpaid note principal
plus any accrued interest into 100,000 shares of common stock at any time
during the term of the Note.
In November 1998, the Company converted $50,000 of the note into 50,000 shares
of the Company's common stock and repaid the balance of $50,000.
In July 1998, the Company issued $1,000,000 of convertible debt. The
convertible debt accrued interest at 12% per annum and was payable on the
earlier of May 31, 2000 or at the closing date of the Company's initial public
offering, if any. The Company had the right to convert unpaid principal plus
any accrued interest into 666,666 shares of common stock at any time during the
term of the notes.
In November 1998, the notes and accrued interest of $39,780 were converted into
666,666 shares of the Company's common stock.
F-10
<PAGE> 58
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES
No provision for federal and state income taxes has been recorded as the
Company has incurred net operating losses through December 31, 1998. The
following table sets forth the primary components of deferred tax assets:
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Net operating loss carryforwards $ 6,910,000 $ 3,000
Nondeductible expenses (5,265,000) --
-------------- -------------
Gross deferred tax assets 1,645,000 3,000
Valuation allowance (1,645,000) (3,000)
-------------- -------------
$ -- $ --
============== =============
</TABLE>
At December 31, 1998 and 1997, the Company fully reserved its deferred tax
assets. The Company believes sufficient uncertainty exists regarding the
reliability of tax assets such that a full valuation allowance is appropriate.
At December 31, 1998, the Company had approximately $1,645,000 of federal net
operating loss carryforwards for tax reporting purposes available to offset
future taxable income. These carryforwards expire in 2013. The Company has
approximately $1,645,000 of state net operating loss carryforwards for tax
reporting purposes which expire in 2003.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company signed a three year lease agreement for an office located in Las
Vegas, Nevada commencing August 15, 1998. The monthly lease payments range from
$1,670 to $1,770. The lease expires August 14, 2001.
The Company signed a three year lease agreement for office equipment commencing
in August 1998. The monthly rent payment is $328 and the lease expires in
September of 2001.
Future minimum rental payments under non-cancelable operating and equipment
leases are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
------------------------
<S> <C>
1999 $ 20,240
2000 20,847
2001 14,168
--------------
$ 55,255
==============
</TABLE>
F-11
<PAGE> 59
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
Operating Leases (continued)
Facilities and equipment leases expense for the year ended December 31, 1998
and for the period from Inception (June 25, 1997) to December 31, 1997 was
$45,068 and $0, respectively.
Employment Agreements
The Company has employment agreements with many of its employees and all of its
executive officers. The agreements provide for base salary and bonus provisions.
The chief executive officer's agreement provides for a $5,000,000 payment upon
termination without cause.
NOTE 7 - STOCKHOLDERS' EQUITY
Upon incorporation on June 25, 1997, the Company issued 20,800 shares
(post-split) of common stock for $20 to the Chief Executive Officer and the
other founder of the Company.
Employee Compensatory Stock and Stock Options
During May of 1998, the Company issued 1,420,000 shares of common stock and the
original stockholders of the Company transferred existing shares to several
employees and one advisor. The fair market value of the common stock on the
date of these issuances were determined to be $1.00 based on the issuance of
convertible debt in May of 1998 which was convertible into common stock at
$1.00 per share. Approximately $5 million in compensation expense is reflected
in the December 31, 1998 financial statements as a result of these
transactions.
Throughout 1998, the Company issued options to purchase common stock to several
employees. Compensation expense of approximately $279,000 was recognized based
on the difference between the exercise price and fair value of the stock in
accordance with APB No. 25 of the options on the date of grant.
Private Placements
During November and December of 1998, the Company issued 1,259,167 shares of
common stock in a private placement for cash at $3.75 per share. The Company
received proceeds of $4,081,289 net of related costs of $640,587. In January
1999, $125,000 of the proceeds were received and are reflected as stock
subscription receivable. Of the related costs, $215,233 were paid in January
1999.
During December 1998, the Company received excess proceeds of $337,500 with
respect to these private placements which were refunded in January 1999.
F-12
<PAGE> 60
TENTATIVE AND PRELIMINARY
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
Stock Option Plan
In October 1998, the Company adopted a Stock Option Plan (the "Plan") which
provides for the granting of options to officers, directors, and consultants.
2,500,000 shares of common stock have been restricted under the plan for the
granting of options. The Plan will be in effect until November 1, 2009, unless
extended by the Company's stockholders. The options are exercisable to purchase
stock for a period of ten years from the date of grant.
Incentive Stock Options granted pursuant to this Plan may not have an option
price that is less than the fair market value of the stock on the date the
option is granted. Incentive stock options granted to significant stockholder
shall have an option price of not less than 110% of the fair market value of
the stock on the date of the grant. Options granted under the plan vest one
third at the end of each of the three years of service following the grant
date. The Board of Directors of the Company may waive the vesting requirements
at its discretion.
All stock options issued under the Plan have an exercise price not less than the
fair market value of the Company's common stock on the date of grant, and in
accordance with accounting for such options utilizing the intrinsic value
method. As of December 31, 1998, 215,000 options had been issued under the Plan.
Stock Options
Had compensation cost for stock-based compensation been determined based on the
fair value on the grant date consistent with the method of SFAS 123, the
Company's net income and earnings per share for the year ended December 31,
1998 and for the period from Inception (June 25, 1997) to December 31, 1997
would have been reduced to the pro forma amounts presented below:
<TABLE>
<CAPTION>
Cumulative
Inception From Inception
(June 25, (June 25,
Year Ended 1997) to 1997) to
December 31, December 31, December 31,
1998 1997 1998
------------- ------------- --------------
<S> <C> <C> <C>
Net loss (6,912,671)
As reported $ (6,909,768) $ 2,903 (7,127,671)
Pro forma $ (7,124,768) $ 2,903
Basic and diluted loss per share
As reported (.76) -- (.76)
Pro forma (.79) -- (.79)
</TABLE>
F-13
<PAGE> 61
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)
Stock Options (continued)
The fair value of option grants is estimated on the date of grants utilizing
the Black-Scholes option pricing model with the following assumptions for 1998:
expected life of 10 years, no volatility, risk-free interest rates of 6%, and a
0% dividend yield.
Summarized information relating to stock options at December 31, 1998 is as
follows:
<TABLE>
<CAPTION>
Outstanding and Exercisable
Weighted Average
Exercise ---------------------------
Price Per Exercise
Share Shares Price
----------- --------- --------
<S> <C> <C>
$ 1.00-3.75 215,000 $ 2.45
=========== ========= ========
</TABLE>
NOTE 8 - SUBSEQUENT EVENTS
Proposed Public Offering
On January 15, 1999, the Company entered into a letter-of-intent with an
investment banker relating to a proposed initial public offering of shares of
common stock of the Company.
The initial public offering is expected to consist of the sale of 4,000,000
shares of common stock, plus an option for the underwriters to sell an
additional 600,000 shares to cover overallotments. The Company has also
authorized the issuance of 400,000 warrants to purchase common stock at a
maximum of $14.40 per share. In conjunction with the proposed offering, the
underwriter's are expected to receive compensation equal to the maximum
allowable under the Corporate Finance Rule of the National Association of
Securities Dealers, Inc. for comparable size offerings.
Advertising Contracts
In January 1999, the Company entered a 26-week sponsorship agreement with a
Spanish language television broadcaster. Based on the terms of the agreement,
the Company will receive media spots in exchange for approximately $800,000.
In February 1999, the Company entered a contract for an 8-week nationwide
advertising campaign with a Spanish language radio broadcaster located in the
United States. The contract calls for an initial payment of $1.6 million and
subsequent monthly payments for broadcasting as incurred.
In February 1999, the Company entered into an advertising agreement with an
entity partially owned by a Director of the Company. The agreement provides for
advertising services for a flat fee of $78,000 per month and is cancelable by
either party with 30 days written notice.
F-14
<PAGE> 62
QUEPASA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - SUBSEQUENT EVENTS (CONTINUED)
Options Granted
In January 1999, the Company granted 1,500,000 stock options to purchase common
stock to the Chief Executive Officer. The options are exercisable at $8.00,
vest immediately and have a term of 10 years.
In January 1999, the Chief Executive Officer was also granted the right to earn
stock options to purchase up to 2,000,000 shares of common stock tied to
certain performance goals. For every 250,000 subscribers to the Company's
e-mail service, the Chief Executive Officer will be granted 100,000 stock
options exercisable at 120% of the stock price at the time of issuance. For
every 250,000 subscribers to the Company's chat room service, the Chief
Executive Officer will be granted 100,000 stock options exercisable at 120% of
the stock price at the time of issuance. Each of these performance goals
specify a maximum of 1,000,000 options to be granted.
In January 1999, the Company granted 55,000 options to employees with an
exercise price of $1.00. Based on the fair market value of the Company's common
stock on the date of grant, approximately $385,000 of compensation expense will
be recorded on the date of the transaction. Additionally, 883,000 options were
granted to employees with an exercise price of $8.00 which was determined to be
the fair value on the date of grant.
Loans from Related Parties (unaudited)
In March of 1999, the Company received a $2 million loan from a stockholder of
the Company. The note bears interest at 12% per annum through June 1999 and then
14% per annum through maturity. Additionally, the Chief Executive Officer has
agreed to lend the Company up to $3 million as needed for operations. Any
amounts loaned will bear interest at 12% per annum for four months and 14% per
annum for the next 20 months and mature 24 months from issuance.
F-15
<PAGE> 63
[INSIDE BACK COVER PAGE - SCREEN SHOT OF quepasa.com's
E-MAIL AND CHAT SERVICE]
<PAGE> 64
===============================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER
THAN CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
OFFERING DESCRIBED HEREIN, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER
TO BUY, THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN OUR AFFAIRS SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
Page
Prospectus Summary....................................2
Risk Factors..........................................6
Use of Proceeds......................................17
Dividend Policy......................................17
Dilution.............................................18
Capitalization.......................................19
Selected Financial Data..............................20
Management's Discussion and
Analysis of Financial Condition
and Results of Operations..........................21
Our Business.........................................22
Our Management.......................................34
Principal Stockholders...............................40
Certain Transactions.................................41
Description of Securities............................42
Underwriting.........................................46
Legal Matters........................................48
Experts..............................................48
Change in Accountants................................48
Additional Information...............................48
Financial Statements................................F-1
UNTIL __________, 1999 (25 DAYS AFTER THE DATE OF THIS
PROSPECTUS), 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 OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
4,000,000 SHARES
quepasa!com, inc. [Logo]
COMMON STOCK
---------------
PROSPECTUS
---------------
PARADISE VALLEY
SECURITIES, INC.
_____________, 1999
================================================================================
<PAGE> 65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1)
<TABLE>
<S> <C>
SEC Registration Statement ................................$ 17,983
NASD Filing Fee............................................$ 6,596
Blue Sky Filing Fees.......................................$ 2,500
Blue Sky Legal Fees........................................$ 5,000
Printing Expenses..........................................$ 100,000
Legal Fees and Expenses....................................$ 300,000
Accounting Fees............................................$ 100,000
Transfer Agent Fees........................................$ 25,000
Nasdaq Application Fee.....................................$ 25,000
Miscellaneous Expenses.....................................$ 18,421
---------
Total.............................................$ 600,000
=========
</TABLE>
(1) All expenses, except the SEC registration fee and NASD filing fee, are
estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ARTICLE TWELFTH OF THE REGISTRANT'S AMENDED ARTICLES OF INCORPORATION PROVIDE
AS FOLLOWS:
"The liability of the directors of the Corporation for monetary damages for
breach of fiduciary duty is eliminated to the fullest extent provided by Nevada
law.
Directors and officers of the Corporation shall be indemnified by the
Corporation against any liability to the fullest extent provided by Nevada
law."
II-1
<PAGE> 66
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the last three years, the Registrant sold the following
securities which were not registered under the Securities Act, as amended.
<TABLE>
<CAPTION>
Name Date Number of Shares Price Per Share
- - - - ---- ---- ---------------- ---------------
<S> <C> <C> <C>
JEFFREY PETERSON Jun-97 2,840,000 $.0000035
JENNIFER FERLAINO Jun-97 2,840,000 $.0000035
MICHAEL SILBERMAN May-98 1,420,000 $0.0001
ENVER ZAKY(1) Nov-98 50,000 $1.00
MITCHELL PIERCE(2) Nov-98 333,333 $1.56
TIM PRING(2) Nov-98 333,333 $1.56
LOUIS GRUBB Nov-98 66,667 $3.75
DANIEL LOUIS GRUBB Nov-98 66,667 $3.75
BRADLEY T. PRING Nov-98 106,667 $3.75
MARSHALL CHESROWN Nov-98 100,000 $3.75
JOHN PRING Nov-98 26,667 $3.75
JOHN ELWAY Nov-98 133,333 $3.75
FELIX SABATES Nov-98 66,666 $3.75
MAYER SHIRAZIPOUR Nov-98 100,000 $3.75
MITCHELL PIERCE Dec-98 103,333 $3.75
AL MONJAZEB Dec-98 30,000 $3.75
ANTHONY BILY Dec-98 53,333 $3.75
LAURENCE R. DAVIS Dec-98 20,000 $3.75
D.A. HUSCHKE Dec-98 26,667 $3.75
FREDRICK KAEFER Dec-98 27,000 $3.75
MICHAEL MAYNARD Dec-98 40,000 $3.75
JOHN MCGRATH Dec-98 20,000 $3.75
JAMES PETERSON Dec-98 20,000 $3.75
PETER A. PFER Dec-99 27,000 $3.75
LYLE REIGEL Dec-98 52,700 $3.75
CHESTER SAWKO Dec-98 20,000 $3.75
RICK SCHEER Dec-98 31,800 $3.75
JOE SEIWERT III Dec-98 20,000 $3.75
DAVID SOLANA Dec-98 26,667 $3.75
MIARTIN SOUSA Dec-98 20,000 $3.75
KEITH STONE Dec-98 27,000 $3.75
DONALD STRATE Dec-98 27,000 $3.75
---------
Total 9,075,833
</TABLE>
(1) Conversion of a promissory note issued by the Registrant in May 1998.
(2) Conversion of a promissory note issued by the Registrant in July 1998.
II-2
<PAGE> 67
With respect to the sales made, the Registrant relied on Section 4(2)
and Regulation D Rule 506 of the Securities Act of 1933, as amended (the
"Securities Act"). No advertising or general solicitation was employed in
offering the securities. The securities were offered to a limited number of
persons all of whom were business associates of the Registrant or its executive
officers and directors, and the transfer thereof was appropriately restricted by
the Registrant. All persons were accredited investors as that term is defined in
Rule 501 of Regulation D under the Securities Act and were capable of analyzing
the merits and risks of their investment and who acknowledged in writing that
they were acquiring the securities for investment and not with a view toward
distribution or resale and understood the speculative nature of their
investment.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Exhibit No. Title
----------- ------
<S> <C>
1.01 Form of Underwriting Agreement (to be filed by amendment)
1.02 Form of Representative's Warrant (to be filed by amendment)
3.01 Articles of Incorporation of the Registrant, as amended
3.02 Bylaws of the Registrant
5.01 Opinion of Gary A. Agron, regarding legality of the common stock (includes Consent)
(to be filed by amendment)
10.01 Agreement with Inktomi Corporation
10.02 Agreements with UPI
10.03 Agreement with Reuters NewMedia, Inc., as amended
10.04 Office Lease (Arizona) (to be filed by amendment)
10.05 Employment Agreement with Mr. Peterson, as amended
10.06 Employment Agreement with Mr. Silberman, as amended
10.07 Employment Agreement with Mr. Galan
10.08 Employment Agreement with Mr. Ross
10.09 Employment Agreement with Mr. Offenbecher
10.10 Employment Agreement with Mr. Roldan
10.11 Employment Agreement with Mr. Garcia (Luis)
10.12 Agreement with WeatherLabs, Inc.
10.13 Agreement with Heftel Broadcasting Company
10.14 Agreement with GTE Internetworking, Inc.
10.15 Agreement with Exodus Communications, Inc.
10.16 Agreement with Telemundo Network Group, Inc.
10.17 Agreement with 24/7 Media, Inc.
10.18 Employment Agreement with Mr. Hubert, as amended
10.19 Office Lease (Nevada)
10.20 1998 Stock Option Plan, as amended and forms of Option Agreements
10.21 Monolith Promissory Notes
10.22 Agreement with Garcia/KJS (to be filed by amendment)
10.23 Employment Agreement with Mr. Taylor
10.24 Voting Trust Agreement (to be filed by amendment)
10.25 Jeffrey S. Peterson Loan Agreement
16.01 Letter from BDO Seidman, LLP
23.05 Consent of Gary A. Agron (See 5.01, above)
23.06 Consent of Ehrhardt, Keefe, Steiner & Hottman, P.C.
</TABLE>
II-3
<PAGE> 68
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes:
(a) That insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant 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. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of 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.
(b) That subject to the terms and conditions of Section 13(a)
of the Securities Exchange Act of 1934, it will file with the
Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted
pursuant to authority conferred in that section.
(c) That any post-effective amendment filed will comply with
the applicable forms, rules and regulations of the Commission in effect
at the time such post-effective amendment is filed.
(d) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
II-4
<PAGE> 69
(e) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(f) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(g) To provide to the Underwriter at the closing specified in
the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit
prompt delivery to each purchaser.
II-5
<PAGE> 70
SIGNATURES
Pursuant to the requirements of the Securities Act, as amended, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Phoenix,
state of Arizona, on March 10, 1999.
quepasa.com, inc.
By: /s/ Jeffrey S. Peterson
--------------------------------------------
Jeffrey S. Peterson, Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
registration statement has been signed below by the following persons on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jeffrey S. Peterson
- - - - ---------------------------- President, Chief Executive March 10, 1999
Jeffrey S. Peterson Officer and Chairman of the
Board of Directors
/s/ Michael A. Hubert
- - - - ---------------------------- Chief Operating Officer March 10, 1999
Michael A. Hubert and Director
/s/ Bryan L. Ross
- - - - ---------------------------- Chief Technical Officer March 10, 1999
Bryan L. Ross and Director
/s/ Juan C. Galan
- - - - ---------------------------- Chief Financial Officer March 10, 1999
Juan C. Galan (Principal Accounting Officer)
/s/ Robert J. Taylor
- - - - ---------------------------- Vice President - March 10, 1999
Robert J. Taylor Strategy and Operations
and Director
/s/ Lionel Sosa
- - - - ---------------------------- Director March 10, 1999
Lionel Sosa
/s/ Gregory J. Kolanek
- - - - ---------------------------- Director March 10, 1999
Gregory J. Kolanek
</TABLE>
<PAGE> 71
QUEPASA.COM,INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Title
----------- -----
<S> <C>
1.01 Form of Underwriting Agreement (to be filed by amendment)
1.02 Form of Representative's Warrant (to be filed by amendment)
3.01 Articles of Incorporation of the Registrant, as amended
3.02 Bylaws of the Registrant
5.01 Opinion of Gary A. Agron, regarding legality of the common stock (includes Consent)
(to be filed by amendment)
10.01 Agreement with Inktomi Corporation
10.02 Agreements with UPI
10.03 Agreement with Reuters NewMedia Inc., as amended
10.04 Office Lease (Arizona) (to be filed by amendment)
10.05 Employment Agreement with Mr. Peterson, as amended
10.06 Employment Agreement with Mr. Silberman, as amended
10.07 Employment Agreement with Mr. Galan
10.08 Employment Agreement with Mr. Ross
10.09 Employment Agreement with Mr. Offenbecher
10.10 Employment Agreement with Mr. Roldan
10.11 Employment Agreement with Mr. Garcia (Luis)
10.12 Agreement with WeatherLabs, Inc.
10.13 Agreement with Heftel Broadcasting Company
10.14 Agreement with GTE Internetworking, Inc.
10.15 Agreement with Exodus Communications, Inc.
10.16 Agreement with Telemundo Network Group, Inc.
10.17 Agreement with 24/7 Media, Inc.
10.18 Employment Agreement with Mr. Hubert, as amended
10.19 Office Lease (Nevada)
10.20 1998 Stock Option Plan, as amended and forms of Option
Agreements
10.21 Monolith Promissory Notes
10.22 Agreement with Garcia/KJS (to be filed by amendment)
10.23 Employment Agreement with Mr. Taylor
10.24 Voting Trust Agreement (to be filed by amendment)
10.25 Jeffrey S. Peterson Loan Agreement
16.01 Letter from BDO Seidman, LLP
23.05 Consent of Gary A. Agron (See 5.01, above)
23.06 Consent of Ehrhardt, Keefe, Steiner & Hottman, P.C.
</TABLE>
<PAGE> 1
EXHIBIT 3.01
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 25 1997
NO. C13600-97
-------------
/s/ DEAN HELLER
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
INTERNET CENTURY, INC.
FIRST. The name of the corporation is:
INTERNET CENTURY, INC.
SECOND. Its registered office in the State of Nevada is located at
2533 North Carson Street, Carson City, Nevada 89706 that this Corporation may
maintain an office, or offices, in such other place within or without the State
of Nevada as may be from time to time designated by the Board of Directors, or
by the By-Laws of said Corporation, and that this Corporation may conduct all
Corporation business of every kind and nature, including the holding of all
meetings of Directors and Stockholders, outside the State of Nevada as well as
within the State of Nevada
THIRD. The objects for which this Corporation is formed are: To
engage in any lawful activity, including, but not limited to the following:
(A) Shall have such rights, privileges and powers as may be conferred
upon corporations by any existing law.
(B) May at any time exercise such rights, privileges and powers, when not
inconsistent with the purposes and objects for which this corporation is
organized.
1
<PAGE> 2
(C) Shall have power to have succession by its corporate name for the
period limited in its certificate or articles of incorporation, and when no
period is limited, perpetually, or until dissolved and its affairs wound up
according to law.
(D) Shall have power to sue and be sued in any court of law or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and convey real and personal
estate and to mortgage or lease any such real and personal estate with its
franchises. The power to hold real and personal estate shall include the power
to take the same by devise or bequest in the State of Nevada, or in any other
state, territory or country.
(G) Shall have power to appoint such officers and agents as the affairs
of the corporation shall require, and to allow them suitable compensation.
(H) Shall have power to make By-Laws not inconsistent with the
constitution or laws of the United States, or of the State of Nevada, for the
management, regulation and government of its affairs and property, the transfer
of its stock, the transaction of its business, and the calling and holding of
meetings of its stockholders.
(I) Shall have power to wind up and dissolve itself, or be wound up or
dissolved.
(J) Shall have power to adopt and use a common seal or stamp, and alter
the same at pleasure. The use of a seal or stamp by the corporation on any
corporate documents is not necessary. The corporation may use a seal or stamp,
if it desires, but such use or nonuse shall not in any way affect the legality
of the document.
(K) Shall have power to borrow money and contract debts when necessary
for the transaction of its business, or for the exercise of its corporate
rights, privileges or franchises,
2
<PAGE> 3
or for any other lawful purpose of its incorporation; to issue bonds, promissory
notes, bills of exchange, debentures, and other obligations and evidences of
indebtedness, payable at a specified time or times, or payable upon the
happening of a specified event or events, whether secured by mortgage, pledge or
otherwise, or unsecured, for money borrowed, or in payment for property
purchased, or acquired, or for any other lawful object.
(L) Shall have power to guarantee, purchase, hold, sell, assign,
transfer, mortgage, pledge or otherwise dispose of the shares of the capital
stock of, or any bonds, securities or evidences of the indebtedness created by,
any other corporation or corporations of the State of Nevada, or any other state
or government, and, while owners of such stock, bonds, securities or evidences
of indebtedness, to exercise all the rights, powers and privileges of ownership,
including the right to vote, if any.
(M) Shall have power to purchase, hold, sell and transfer shares of its
own capital stock, and use therefor its capital, capital surplus, surplus, or
other property or fund.
(N) Shall have power to conduct business, have one or more offices, and
hold, purchase, mortgage and convey real and personal property in the State of
Nevada, and in any of the several states, territories, possessions and
dependencies of the United States, the District of Columbia, and any foreign
countries.
(O) Shall have power to do all and everything necessary and proper for
the accomplishment of the objects enumerated in its certificate or articles of
incorporation, or any amendment thereof, or necessary or incidental to the
protection and benefit of the corporation, and, in general, to carry on any
lawful business necessary or incidental to the attainment of the
3
<PAGE> 4
objects of the corporation, whether or not such business is similar in nature to
the objects set forth in the certificate or articles of incorporation of the
corporation, or any amendment thereof.
(P) Shall have power to make donations for the public welfare or for
charitable, scientific or educational purposes.
(Q) Shall have power to enter into partnerships, general or limited, or
joint ventures, in connection with any lawful activities, as may be allowed by
law.
FOURTH. That the total number of common stock authorized that may
be issued by the Corporation is TWENTY FIVE THOUSAND (25,000) shares of stock
without nominal par value and no other class of stock shall be authorized. Said
shares may be issued by the corporation from time to time for such
considerations as may be fixed by the Board of Directors.
FIFTH. The governing board of this corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the By-Laws of this
Corporation, providing that the number of directors shall not be reduced to
fewer than one (1).
The name and post office address of the first board of Directors shall be
one (1) in number and listed as follows:
<TABLE>
<CAPTION>
NAME POST OFFICE ADDRESS
---- -------------------
<S> <C>
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
</TABLE>
SIXTH. The capital stock, after the amount of the subscription
price, or par value, has been paid in, shall not be subject to assessment to pay
the debts of the corporation.
4
<PAGE> 5
SEVENTH. The name and post office address of the Incorporator
signing the Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
---- -------------------
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
EIGHTH. The resident agent for this corporation shall be:
LAUGHLIN ASSOCIATES, INC.
The address of said agent, and, the registered or statutory address of this
corporation in the state of Nevada, shall be:
2533 North Carson Street
Carson City, Nevada 89706
NINTH. The corporation is to have perpetual existence.
TENTH. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized:
Subject to the By-Laws, if any, adopted by the Stockholders, to
make, alter or amend the By-Laws of the Corporation.
To fix the amount to be reserved as working capital over and above
its capital stock paid in: to authorize and cause to be executed, mortgages and
liens upon the real and personal property of this Corporation.
By resolution passed by a majority of the whole Board, to designate one
(1) or more committees, each committee to consist of one or more of the
Directors of the Corporation.
5
<PAGE> 6
which, to the extent provided in the resolution, or in the By-Laws of the
Corporation, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation. Such committee,
or committees, shall have such name, or names, as may be stated in the By-Laws
of the Corporation, or as may be determined from time to time by resolution
adopted by the Board of Directors.
When and as authorized by the affirmative vote of the Stockholders
holding stock entitling them to exercise at least a majority of the voting power
given at a Stockholders meeting called for that purpose, or when authorized by
the written consent of the holders of at least a majority of the voting stock
issued and outstanding, the Board of Directors shall have power and authority at
any meeting to sell, lease or exchange all of the property and assets of the
Corporation, including its good will and its corporate franchises, upon such
terms and conditions as its board of Directors deems expedient and for the best
interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a matter of right to
subscribe for or receive additional shares of any class of stock of the
Corporation, whether now or hereafter authorized, or any bonds, debentures or
securities convertible into stock, but such additional shares of stock or other
securities convertible into stock may be issued or disposed of by the Board of
Directors to such persons and on such terms as in its discretion it shall deem
advisable.
TWELFTH. No director or officer of the Corporation shall be
personally liable to the Corporation or any of its stockholders for damages for
breach of fiduciary duty as a director or officer involving any act or omission
of any such director or officer; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director or
6
<PAGE> 7
officer (i) for acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of
this Article by the stockholders of the Corporation shall be prospective only,
and shall not adversely affect any limitation on the personal liability of a
director or officer of the Corporation for acts or omissions prior to such
repeal or modification.
THIRTEENTH. This Corporation reserves the right to amend, alter,
change or repeal any provision contained in the Articles of Incorporation, in
the manner now or hereafter prescribed by statute, or by the Articles of
Incorporation, and all rights conferred upon Stockholders herein are granted
subject to this reservation.
7
<PAGE> 8
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG. 26, 1998
NO. C13600-97
/s/ DEAN HELLER
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
INTERNET CENTURY, INC.
The undersigned, Jennifer Ferlaino, as President and Secretary of
Internet Century, Inc., a Nevada corporation does hereby certify:
That the Board of Directors and the Shareholders of said corporation by
unanimous written consent effective July 15, 1998, adopted resolutions to amend
the original Articles of Incorporation as follows:
Article FOURTH is hereby amended to read as follows:
"The aggregate number of shares of Common Stock which the
corporation shall have authority to issue is 10,000,000 shares with par
value of $.001 per share. The shares of this class of Common Stock
shall have unlimited voting rights and shall constitute the sole voting
group of the Corporation, except to the extent any additional voting
group or groups may hereafter be established in accordance with the
Nevada Revised Statutes. The shares of this class shall also be
entitled to receive the net assets of the corporation upon dissolution.
Cumulative voting shall not be permitted in the election of directors
or otherwise. Preemptive rights to purchase additional shares of stock
are denied.
The Corporation shall have the authority to issue 5,000,000
shares of Preferred Stock with par value of $.001 per share, which may
be issued in one or more series at the discretion of the board of
directors. In establishing a series, the board of directors shall give
to it a distinctive designation so as to distinguish it form the share
of all other series and classes, shall fix the number of shares in such
series, and the preferences, rights and restrictions thereof. All
shares of any one series shall be alike in every particular except as
otherwise provided by these Articles of Incorporation or the Nevada
Revised Statutes."
Article TWELFTH is hereby amended to read as follows:
"The liability of the directors of the Corporation for monetary
damages for breach of fiduciary duty is eliminated to the fullest extent
provided by Nevada law.
Directors and officers of the Corporation shall be indemnified by the
Corporation against any liability to the fullest extent provided by Nevada law."
The number of shares of the corporation outstanding and entitled to vote
on amendments to the Articles of Incorporation is 25,000; that the said change
and amendments have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ JENNIFER L. FERLAINO
---------------------------------------
President and Secretary
State of Arizona )
)Section
County of Maricopa )
On August 24, 1998, personally appeared before me, a Notary Public,
Jennifer L. Ferlaino,
- - - - ---------------------------------------------- who acknowledged that they
Name of Persons Appearing and Signing Document
executed the above instrument.
/s/ Lucy J. Vesterby
--------------------------------------
Signature of Notary
[Notary Seal]
<PAGE> 9
EXHIBIT 3.01
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
INTERNET CENTURY, INC.
The undersigned, Jeffrey Peterson, as President and Jennifer Ferlaino
as Secretary of Internet Century, Inc., a Nevada corporation does hereby
certify:
That the Board of Directors of said corporation by unanimous written
consent effective December 2, 1998, adopted a resolution to amend the Articles
of Incorporation as follows:
Article FIRST is hereby amended to read as follows:
"The name of the corporation is: quepasa.com, inc."
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 8,483,333; that the
said change and amendment has been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Jeffrey Peterson
-------------------------------------
Jeffrey Peterson, President
/s/ Jennifer Ferlaino
-------------------------------------
Jennifer Ferlaino, Secretary
State of Arizona )
) ss.
County of Maricopa )
On December 15, 1998, personally appeared before me, a Notary
Public Jeffrey Peterson and Jennifer Ferlaino, who acknowledged that
they executed the above instrument.
/s/ Sharon A. Olson
-------------------------------------
Signature of Notary
(Notary Stamp or Seal)
<PAGE> 10
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
QUEPASA.COM, INC.
The undersigned, Jeffrey Peterson, as President and Jennifer Ferlaino
as Secretary of quepasa.com, inc., a Nevada corporation does hereby certify:
That the Board of Directors of said corporation by unanimous written
consent effective January 29, 1999, adopted a resolution to amend the Articles
of Incorporation as follows:
Article FOURTH is hereby amended to read as follows:
"The aggregate number of shares of Common Stock which the
corporation shall have authority to issue is 50,000,000 shares with par
value of $.001 per share, which may be issued in one or more series at
the discretion of the board of directors. In establishing a series, the
board of directors shall give to it a distinctive designation so as to
distinguish it from the shares of all other series and classes, shall
fix the number of shares in such series, and the voting powers,
designations, limitations, restrictions and relative rights of each
such series thereof. All shares of any one series shall be alike in
every particular except as otherwise provided by these Articles of
Incorporation or the Nevada Revised Statutes. The shares of Common
Stock shall constitute the sole voting group of the Corporation, except
to the extent any additional voting group or groups may hereafter be
established in accordance with the Nevada Revised Statutes. The shares
of this class shall also be entitled to receive the net assets of the
corporation upon dissolution. Cumulative voting shall not be permitted
in the election of directors or otherwise. Preemptive rights to
purchase additional shares of stock are denied."
The corporation shall have the authority to issue 5,000,000
shares of Preferred Stock with par value of $.001 per share, which may
be issued in one or more series at the discretion of the board of
directors. In establishing a series, the board of directors shall give
to it a distinctive designation so as to distinguish it from the shares
of all other series and classes, shall fix the number of shares in such
series, and the preferences, rights and restrictions thereof. All
shares of any one series shall be alike in every particular except as
otherwise provided by these Articles of Incorporation or the Nevada
Revised Statutes."
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 9,075,833; that the
said change and amendment has been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Jeffrey Peterson
-----------------------------------
Jeffrey Peterson, President
/s/ Jennifer Ferlaino
-----------------------------------
Jennifer Ferlaino, Secretary
State of Arizona )
) ss.
County of Maricopa )
------------------------------
On March 8, 1999 , personally appeared before
_______________________________________
me, a Notary Public Jeffrey Peterson and Jennifer Ferlaino
_____________________________________________________, who
Name of Persons Appearing and Signing Document
acknowledged that they executed the above instrument.
/s/ Danielle Miller
-----------------------------------
Signature of Notary
(Notary Stamp or Seal)
<PAGE> 1
EXHIBIT 3.02
BYLAWS
OF
INTERNET CENTURY, INC.
A NEVADA CORPORATION
<PAGE> 2
BYLAWS
Table of Contents
ARTICLE PAGE
I. Offices....................................................... 1
II. Shareholders.................................................. 1
III. Board of Directors............................................ 8
IV. Officers and Agents........................................... 12
V. Stock......................................................... 15
VI. Indemnification of Certain Persons............................ 17
VII. Provision of Insurance........................................ 20
VIII. Miscellaneous................................................. 20
Effective: May 21, 1998
<PAGE> 3
BYLAWS
OF
INTERNET CENTURY, INC.
ARTICLE I
OFFICES
The principal office of the corporation shall be designated from time
to time by the corporation and may be within or outside of Nevada.
The corporation may have such other offices, either within or outside
Nevada, as the board of directors may designate or as the business of the
corporation may require from time to time.
The registered office of the corporation required by the Nevada General
Corporation Law to be maintained in Nevada may be, but need not be, identical
with the principal office, and the address of the registered office may be
changed from time to time by the board of directors.
ARTICLE II
SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held during the month of May of each year on a date and at a time fixed by
the board of directors of the corporation (or by the president in the absence of
action by the board of directors), beginning with the year 1999, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the election of directors is not held on the day fixed as
provided herein for any annual meeting of the shareholders, or any adjournment
thereof, the board of directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as it may conveniently be held.
A shareholder may apply to the district court in the county in Nevada
where the corporation's principal office is located or, if the corporation has
no principal office in Nevada, to the district court of the county in which the
corporation's registered office is located to seek an order that a shareholder
meeting be held (i) if an annual meeting was not held within six months after
the close of the corporation's most recently ended fiscal year or fifteen months
after its last annual meeting, whichever is earlier, or (ii) if the shareholder
participated in a proper call of or proper demand for a special meeting and
notice of the special meeting was not given within thirty days after the date of
the call or the date the last of the demands necessary to require calling of the
meeting was received by the corporation pursuant to Nevada corporate law, or the
special meeting was not held in accordance with the notice.
Section 2. SPECIAL MEETINGS. Unless otherwise prescribed by statute,
special meetings of the shareholders may be called for any purpose by the
president or by the board of directors. The president shall call a special
meeting of the shareholders if the corporation receives one or more written
demands for the meeting, stating the purpose or purposes for which it is to be
held,
<PAGE> 4
signed and dated by holders of shares representing at least ten percent of all
the votes entitled to be cast on any issue proposed to be considered at the
meeting.
Section 3. PLACE OF MEETING. The board of directors may designate any
place, either within or outside Nevada, as the place for any annual meeting or
any special meeting called by the board of directors. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate any place,
either within or outside Nevada, as the place for such meeting. If no
designation is made, or if a special meeting is called other than by the board,
the place of meeting shall be the principal office of the corporation.
Section 4. NOTICE OF MEETING. Written notice stating the place, date,
and hour of the meeting shall be given not less than ten nor more than sixty
days before the date of the meeting, except that (i) if the number of authorized
shares is to be increased, at least thirty days' notice shall be given, or (ii)
any other longer notice period is required by the Nevada General Corporation
Law. The secretary shall be required to give such notice only to shareholders
entitled to vote at the meeting except as otherwise required by the Nevada
General Corporation Law.
Notice of a special meeting shall include a description of the purpose
or purposes of the meeting. Notice of an annual meeting need not include a
description of the purpose or purposes of the meeting except the purpose or
purposes shall be stated with respect to (i) an amendment to the articles of
incorporation of the corporation, (ii) a merger or share exchange in which the
corporation is a party and, with respect to a share exchange, in which the
corporation's shares will be acquired, (iii) a sale, lease, exchange or other
disposition, other than in the usual and regular course of business, of all or
substantially all of the property of the corporation or of another entity which
this corporation controls, in each case with or without the goodwill, (iv) a
dissolution of the corporation, (v) restatement of the articles of
incorporation, or (vi) any other purpose for which a statement of purpose is
required by the Nevada General Corporation Law. Notice shall be given personally
or by mail, private carrier, telegraph, teletype, electronically transmitted
facsimile or other form of wire or wireless communication by or at the direction
of the president, the secretary, or the officer or persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed and if
in a comprehensible form, such notice shall be deemed to be given and effective
when deposited in the United States mail, properly addressed to the shareholder
at his address as it appears in the corporation's current record of
shareholders, with first class postage prepaid. If notice is given other than by
mail, and provided that such notice is in a comprehensible form, the notice is
given and effective on the date actually received by the shareholder.
If requested by the person or persons lawfully calling such meeting,
the secretary shall give notice thereof at corporate expense. No notice need be
sent to any shareholder if three successive notices mailed to the last known
address of such shareholder have been returned as undeliverable until such time
as another address for such shareholder is made known to the corporation by such
shareholder. In order to be entitled to receive notice of any meeting, a
shareholder shall advise
2
<PAGE> 5
the corporation in writing of any change in such shareholder's mailing address
as shown on the corporation's books and records.
When a meeting is adjourned to another date, time or place, notice need
not be given of the new date, time or place if the new date, time or place of
such meeting is announced before adjournment at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact any
business which may have been transacted at the original meeting. If the
adjournment is for more than 120 days, or if a new record date is fixed for the
adjourned meeting, a new notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting as of the new record date.
A shareholder may waive notice of a meeting before or after the time
and date of the meeting by a writing signed by such shareholder. Such waiver
shall be delivered to the corporation for filing with the corporate records, but
this delivery and filing shall not be conditions to the effectiveness of the
waiver. Further, by attending a meeting either in person or by proxy, a
shareholder waives objection to lack of notice or defective notice of the
meeting unless the shareholder objects at the beginning of the meeting to the
holding of the meeting or the transaction of business at the meeting because of
lack of notice or defective notice. By attending the meeting, the shareholder
also waives any objection to consideration at the meeting of a particular matter
not within the purpose or purposes described in the meeting notice unless the
shareholder objects to considering the matter when it is presented.
Section 5. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to (i) notice of or vote at any meeting of shareholders or
any adjournment thereof, (ii) receive distributions or share dividends, (iii)
demand a special meeting, or (iv) make a determination of shareholders for any
other proper purpose, the board of directors may fix a future date as the record
date for any such determination of shareholders, such date in any case to be not
more than seventy days, and, in case of a meeting of shareholders, not less than
ten days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed by the
directors, the record date shall be the day before the notice of the meeting is
given to shareholders, or the date on which the resolution of the board of
directors providing for a distribution is adopted, as the case may be. When a
determination of shareholders entitled to vote at any meeting of shareholders is
made as provided in this section, such determination shall apply to any
adjournment thereof unless the board of directors fixes a new record date, which
it must do if the meeting is adjourned to a date more than 120 days after the
date fixed for the original meeting. Unless otherwise specified when the record
date is fixed, the time of day for such determination shall be as of the
corporation's close of business on the record date.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be given
notice of action so taken shall be the date a writing upon which the action is
taken is first received by the corporation. The record date for
3
<PAGE> 6
determining shareholders entitled to demand a special meeting shall be the date
of the earliest of any of the demands pursuant to which the meeting is called.
Section 6. VOTING LISTS. After a record date is fixed for a
shareholders' meeting, the secretary shall make, at the earlier of ten days
before such meeting or two business days after notice of the meeting has been
given, a complete list of the shareholders entitled to be given notice of such
meeting or any adjournment thereof. The list shall be arranged by voting groups
and within each voting group by class or series of shares, shall be in
alphabetical order within each class or series, and shall show the address of
and the number of shares of each class or series held by each shareholder. For
the period beginning the earlier of ten days prior to the meeting or two
business days after notice of the meeting is given and continuing through the
meeting and any adjournment thereof, this list shall be kept on file at the
principal office of the corporation, or at a place (which shall be identified in
the notice) in the city where the meeting will be held. Such list shall be
available for inspection on written demand by any shareholder (including for the
purpose of this Section 6 any holder of voting trust certificates) or his agent
or attorney during regular business hours and during the period available for
inspection. The original stock transfer books shall be prima facie evidence as
to who are the shareholders entitled to examine such list or transfer books or
to vote at any meeting of shareholders.
Any shareholder, his agent or attorney may copy the list during regular
business hours and during the period it is available for inspection, provided
(i) the shareholder has been a shareholder for at least three months immediately
preceding the demand or holds at least five percent of all outstanding shares of
any class of shares as of the date of the demand, (ii) the demand is made in
good faith and for a purpose reasonably related to the demanding shareholder's
interest as a shareholder, (iii) the shareholder describes with reasonable
particularity the purpose and the records the shareholder desires to inspect,
(iv) the records are directly connected with the described purpose, and (v) the
shareholder pays a reasonable charge covering the costs of labor and material
for such copies, not to exceed the estimated cost of production and
reproduction.
Section 7. RECOGNITION PROCEDURE FOR BENEFICIAL OWNERS. The board of
directors may adopt by resolution a procedure whereby a shareholder of the
corporation may certify in writing to the corporation that all or a portion of
the shares registered in the name of such shareholder are held for the account
of a specified person or persons. The resolution may set forth (i) the types of
nominees to which it applies, (ii) the rights or privileges that the corporation
will recognize in a beneficial owner, which may include rights and privileges
other than voting, (iii) the form of certification and the information to be
contained therein, (iv) if the certification is with respect to a record date,
the time within which the certification must be received by the corporation, (v)
the period for which the nominee's use of the procedure is effective, and (vi)
such other provisions with respect to the procedure as the board deems necessary
or desirable. Upon receipt by the corporation of a certificate complying with
the procedure established by the board of directors, the persons specified in
the certification shall be deemed, for the purpose or purposes set forth in the
certification, to be the registered holders of the number of shares specified in
place of the shareholder making the certification.
4
<PAGE> 7
Section 8. QUORUM AND MANNER OF ACTING. A majority of the votes
entitled to be cast on a matter by a voting group represented in person or by
proxy, shall constitute a quorum of that voting group for action on the matter.
If less than a majority of such votes are represented at a meeting, a majority
of the votes so represented may adjourn the meeting from time to time without
further notice, for a period not to exceed 120 days for any one adjournment. If
a quorum is present at such adjourned meeting, any business may be transacted
which might have been transacted at the meeting as originally noticed. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, unless the meeting is adjourned and a
new record date is set for the adjourned meeting.
If a quorum exists, action on a matter other than the election of
directors by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast within the voting group opposing
the action, unless the vote of a greater number or voting by classes is required
by law or the articles of incorporation.
Section 9. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy by signing an appointment form or similar writing, either
personally or by his duly authorized attorney-in-fact. A shareholder may also
appoint a proxy by transmitting or authorizing the transmission of a telegram,
teletype, or other electronic transmission providing a written statement of the
appointment to the proxy, a proxy solicitor, proxy support service organization,
or other person duly authorized by the proxy to receive appointments as agent
for the proxy, or to the corporation. The transmitted appointment shall set
forth or be transmitted with written evidence from which it can be determined
that the shareholder transmitted or authorized the transmission of the
appointment. The proxy appointment form or similar writing shall be filed with
the secretary of the corporation before or at the time of the meeting. The
appointment of a proxy is effective when received by the corporation and is
valid for eleven months unless a different period is expressly provided in the
appointment form or similar writing.
Any complete copy, including an electronically transmitted facsimile,
of an appointment of a proxy may be substituted for or used in lieu of the
original appointment for any purpose for which the original appointment could be
used.
Revocation of a proxy does not affect the right of the corporation to
accept the proxy's authority unless (i) the corporation had notice that the
appointment was coupled with an interest and notice that such interest is
extinguished is received by the secretary or other officer or agent authorized
to tabulate votes before the proxy exercises his authority under the
appointment, or (ii) other notice of the revocation of the appointment is
received by the secretary or other officer or agent authorized to tabulate votes
before the proxy exercises his authority under the appointment. Other notice of
revocation may, in the discretion of the corporation, be deemed to include the
appearance at a shareholders' meeting of the shareholder who granted the proxy
and his voting in person on any matter subject to a vote at such meeting.
5
<PAGE> 8
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
The corporation shall not be required to recognize an appointment made
irrevocable if it has received a writing revoking the appointment signed by the
shareholder (including a shareholder who is a successor to the shareholder who
granted the proxy) either personally or by his attorney-in-fact, notwithstanding
that the revocation may be a breach of an obligation of the shareholder to
another person not to revoke the appointment.
Subject to Section 11 and any express limitation on the proxy's
authority appearing on the appointment form, the corporation is entitled to
accept the proxy's vote or other action as that of the shareholder making the
appointment.
Section 10. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote, except in the election of directors, and
each fractional share shall be entitled to a corresponding fractional vote on
each matter submitted to a vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or classes are limited
or denied by the articles of incorporation as permitted by the Nevada Business
Corporation Code. Cumulative voting shall not be permitted in the election of
directors or for any other purpose. Each record holder of stock shall be
entitled to vote in the election of directors and shall have as many votes for
each of the shares owned by him as there are directors to be elected and for
whose election he has the right to vote.
At each election of directors, that number of candidates equaling the
number of directors to be elected, having the highest number of votes cast in
favor of their election, shall be elected to the board of directors.
Except as otherwise ordered by a court of competent jurisdiction upon a
finding that the purpose of this Section would not be violated in the
circumstances presented to the court, the shares of the corporation are not
entitled to be voted if they are owned, directly or indirectly, by a second
corporation, domestic or foreign, and the first corporation owns, directly or
indirectly, a majority of the shares entitled to vote for directors of the
second corporation except to the extent the second corporation holds the shares
in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem the shares
has been deposited with a bank, trust company or other financial institution
under an irrevocable obligation to pay the holders the redemption price on
surrender of the shares.
Section 11. CORPORATION'S ACCEPTANCE OF VOTES. If the name signed on
a vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a
6
<PAGE> 9
shareholder, the corporation, if acting in good faith, is entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment revocation and
give it effect as the act of the shareholder. If the name signed on a vote,
consent, waiver, proxy appointment or proxy appointment revocation does not
correspond to the name of a shareholder, the corporation, if acting in good
faith, is nevertheless entitled to accept the vote, consent, waiver, proxy
appointment or proxy appointment revocation and to give it effect as the act of
the shareholder if:
(i) the shareholder is an entity and the name signed purports to
be that of an officer or agent of the entity;
(ii) the name signed purports to be that of an administrator,
executor, guardian or conservator representing the shareholder
and, if the corporation requests, evidence of fiduciary status
acceptable to the corporation has been presented with respect
to the vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(iii) the name signed purports to be that of a receiver or trustee
in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the
corporation has been presented with respect to the vote,
consent, waiver, proxy appointment or proxy appointment
revocation;
(iv) the name signed purports to be that of a pledgee, beneficial
owner or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation
of the signatory's authority to sign for the shareholder has
been presented with respect to the vote, consent, waiver,
proxy appointment or proxy appointment revocation;
(v) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at
least one of the co-tenants or fiduciaries, and the person
signing appears to be acting on behalf of all the co-tenants
or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy appointment
or proxy appointment revocation is otherwise proper under
rules established by the corporation that are not inconsistent
with this Section 11.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other officer or
agent authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
Neither the corporation nor its officers nor any agent who accepts or
rejects a vote, consent, waiver, proxy appointment or proxy appointment
revocation in good faith and in
7
<PAGE> 10
accordance with the standards of this Section is liable in damages for the
consequences of the acceptance or rejection.
Section 12. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a written consent (or counterparts thereof) that sets forth the
action so taken is signed by all of the shareholders entitled to vote with
respect to the subject matter thereof and received by the corporation. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders and may be stated as such in any document. Action taken under this
Section 12 is effective as of the date the last writing necessary to effect the
action is received by the corporation, unless all of the writings specify a
different effective date, in which case such specified date shall be the
effective date for such action. If any shareholder revokes his consent as
provided for herein prior to what would otherwise be the effective date, the
action proposed in the consent shall be invalid. The record date for determining
shareholders entitled to take action without a meeting is the date the
corporation first receives a writing upon which the action is taken.
Any shareholder who has signed a writing describing and consenting to
action taken pursuant to this Section 12 may revoke such consent by a writing
signed by the shareholder describing the action and stating that the
shareholder's prior consent thereto is revoked, if such writing is received by
the corporation before the effectiveness of the action.
Section 13. MEETINGS BY TELECOMMUNICATION. Any or all of the
shareholders may participate in an annual or special shareholders' meeting by,
or the meeting may be conducted through the use of, any means of communication
by which all persons participating in the meeting may hear each other during the
meeting. A shareholder participating in a meeting by this means is deemed to be
present in person at the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the corporation shall
be managed under the direction of, its board of directors, except as otherwise
provided in the Nevada General Corporation Law or the articles of incorporation.
Section 2. NUMBER, QUALIFICATIONS AND TENURE. The number of directors
of the corporation shall be fixed from time to time by the board of directors,
within a range of no less than one or more than nine, but no decrease in the
number of directors shall have the effect of shortening the term of any
incumbent director. A director shall be a natural person who is eighteen years
of age or older. A director need not be a resident of Nevada or a shareholder of
the corporation.
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Directors shall be elected at each annual meeting of shareholders. Each
director shall hold office until the next annual meeting of shareholders
following his election and thereafter until his successor shall have been
elected and qualified. Directors shall be removed in the manner provided by the
Nevada General Corporation Law. Any director may be removed by the shareholders
of the voting group that elected the director, with or without cause, at a
meeting called for that purpose. The notice of the meeting shall state that the
purpose or one of the purposes of the meeting is removal of the director. A
director may be removed only if the number of votes cast in favor of removal
exceeds the number of votes cast against removal.
Section 3. VACANCIES. Any director may resign at any time by giving
written notice to the secretary. Such resignation shall take effect at the time
the notice is received by the secretary unless the notice specifies a later
effective date. Unless otherwise specified in the notice of resignation, the
corporation's acceptance of such resignation shall not be necessary to make it
effective. Any vacancy on the board of directors may be filled by the
affirmative vote of a majority of the shareholders at a special meeting called
for that purpose or by the board of directors. If the directors remaining in
office constitute fewer than a quorum of the board, the directors may fill the
vacancy by the affirmative vote of a majority of all the directors remaining in
office. If elected by the directors, the director shall hold office until the
next annual shareholders' meeting at which directors are elected. If elected by
the shareholders, the director shall hold office for the unexpired term of his
predecessor in office; except that, if the director's predecessor was elected by
the directors to fill a vacancy, the director elected by the shareholders shall
hold office for the unexpired term of the last predecessor elected by the
shareholders.
Section 4. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without notice immediately after and at the same place
as the annual meeting of shareholders. The board of directors may provide by
resolution the time and place, either within or outside Nevada, for the holding
of additional regular meetings without other notice.
Section 5. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by or at the request of the president or any one (1) of the
directors. The person or persons authorized to call special meetings of the
board of directors may fix any place, either within or outside Nevada, as the
place for holding any special meeting of the board of directors called by them.
Section 6. NOTICE. Notice of the date, time and place of any special
meeting shall be given to each director at least two days prior to the meeting
by written notice either personally delivered or mailed to each director at his
business address, or by notice transmitted by private courier, telegraph, telex,
electronically transmitted facsimile or other form of wire or wireless
communication. If mailed, such notice shall be deemed to be given and to be
effective on the earlier of (i) five days after such notice is deposited in the
United States mail, properly addressed, with first class postage prepaid, or
(ii) the date shown on the return receipt, if mailed by registered or certified
mail return receipt requested, provided that the return receipt is signed by the
director to whom the notice is addressed. If notice is given by telex,
electronically transmitted facsimile or other similar form of wire or wireless
communication, such notice shall be deemed to be given
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and to be effective when sent, and with respect to a telegram, such notice shall
be deemed to be given and to be effective when the telegram is delivered to the
telegraph company. If a director has designated in writing one or more
reasonable addresses or facsimile numbers for delivery of notice to him, notice
sent by mail, telegraph, telex, electronically transmitted facsimile or other
form of wire or wireless communication shall not be deemed to have been given or
to be effective unless sent to such addresses or facsimile numbers, as the case
may be.
A director may waive notice of a meeting before or after the time and
date of the meeting by a writing signed by such director. Such waiver shall be
delivered to the secretary for filing with the corporate records, but such
delivery and filing shall not be conditions to the effectiveness of the waiver.
Further, a director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless at the beginning of the meeting, or
promptly upon his later arrival, the director objects to holding the meeting or
transacting business at the meeting because of lack of notice or defective
notice and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
Section 7. QUORUM. A majority of the number of directors fixed by the
board of directors pursuant to Article III, Section 2 or, if no number is fixed,
a majority of the number in office immediately before the meeting begins, shall
constitute a quorum for the transaction of business at any meeting of the board
of directors.
Section 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
Section 9. COMPENSATION. By resolution of the board of directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings, a fixed sum for attendance at each meeting, a stated
salary as director, or such other compensation as the corporation and the
director may reasonably agree upon. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
Section 10. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors or committee of the board at
which action on any corporate matter is taken shall be presumed to have assented
to all action taken at the meeting unless (i) the director objects at the
beginning of the meeting, or promptly upon his arrival, to the holding of the
meeting or the transaction of business at the meeting and does not thereafter
vote for or assent to any action taken at the meeting, (ii) the director
contemporaneously requests that his dissent or abstention as to any specific
action taken be entered in the minutes of the meeting, or (iii) the director
causes written notice of his dissent or abstention as to any specific action to
be received by the presiding officer of the meeting before its adjournment or by
the secretary promptly after the adjournment of the meeting. A director may
dissent to a specific action at a meeting, while assenting to others. The right
to dissent to a specific action taken at a meeting of the board of
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directors or a committee of the board shall not be available to a director who
voted in favor of such action.
Section 11. COMMITTEES. By resolution adopted by a majority of all the
directors in office when the action is taken, the board of directors may
designate from among its members an executive committee and one or more other
committees, and appoint one or more members of the board of directors to serve
on them. To the extent provided in the resolution, each committee shall have all
the authority of the board of directors, except that no such committee shall
have the authority to (i) authorize distributions, (ii) approve or propose to
shareholders actions or proposals required by the Nevada General Corporation Law
to be approved by shareholders, (iii) fill vacancies on the board of directors
or any committee thereof, (iv) amend articles of incorporation, (v) adopt, amend
or repeal the bylaws, (vi) approve a plan of merger not requiring shareholder
approval, (vii) authorize or approve the reacquisition of shares unless pursuant
to a formula or method prescribed by the board of directors, or (viii) authorize
or approve the issuance or sale of shares, or contract for the sale of shares or
determine the designations and relative rights, preferences and limitations of a
class or series of shares, except that the board of directors may authorize a
committee or officer to do so within limits specifically prescribed by the board
of directors. The committee shall then have full power within the limits set by
the board of directors to adopt any final resolution setting forth all
preferences, limitations and relative rights of such class or series and to
authorize an amendment of the articles of incorporation stating the preferences,
limitations and relative rights of a class or series for filing with the
Secretary of State under the Nevada General Corporation Law.
Sections 4, 5, 6, 7, 8 or 12 of Article III, which govern meetings,
notice, waiver of notice, quorum, voting requirements and action without a
meeting of the board of directors, shall apply to committees and their members
appointed under this Section 11.
Neither the designation of any such committee, the delegation of
authority to such committee, nor any action by such committee pursuant to its
authority shall alone constitute compliance by any member of the board of
directors or a member of the committee in question with his responsibility to
conform to the standard of care set forth in Article III, Section 14 of these
bylaws.
Section 12. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at a meeting of the directors or any committee designated
by the board of directors may be taken without a meeting if a written consent
(or counterparts thereof) that sets forth the action so taken is signed by all
of the directors entitled to vote with respect to the action taken. Such consent
shall have the same force and effect as a unanimous vote of the directors or
committee members and may be stated as such in any document. Unless the consent
specifies a different effective time or date, action taken under this Section 12
is effective at the time or date the last director signs a writing describing
the action taken, unless, before such time, any director has revoked his consent
by a writing signed by the director and received by the president or the
secretary of the corporation.
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Section 13. TELEPHONIC MEETINGS. The board of directors may permit any
director (or any member of a committee designated by the board) to participate
in a regular or special meeting of the board of directors or a committee thereof
through the use of any means of communication by which all directors
participating in the meeting can hear each other during the meeting. A director
participating in a meeting in this manner is deemed to be present in person at
the meeting.
Section 14. STANDARD OF CARE. A director shall perform his duties as a
director, including without limitation his duties as a member of any committee
of the board, in good faith, in a manner he reasonably believes to be in the
best interests of the corporation, and with the care an ordinarily prudent
person in a like position would exercise under similar circumstances. In
performing his duties, a director shall be entitled to rely on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by the persons herein
designated. However, he shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause such reliance
to be unwarranted. A director shall not be liable to the corporation or its
shareholders for any action he takes or omits to take as a director if, in
connection with such action or omission, he performs his duties in compliance
with this Section 14.
The designated persons on whom a director is entitled to rely are (i)
one or more officers or employees of the corporation whom the director
reasonably believes to be reliable and competent in the matters presented, (ii)
legal counsel, public accountant, or other person as to matters which the
director reasonably believes to be within such person's professional or expert
competence, or (iii) a committee of the board of directors on which the director
does not serve if the director reasonably believes the committee merits
confidence.
ARTICLE IV
OFFICERS AND AGENTS
Section 1. GENERAL. The officers of the corporation shall be a
president, a secretary and a treasurer, and may also include one or more vice
presidents, each of which officer shall be appointed by the board of directors
and shall be a natural person eighteen years of age or older. One person may
hold more than one office. The board of directors or an officer or officers so
authorized by the board may appoint such other officers, assistant officers,
committees and agents, including a chairman of the board, assistant secretaries
and assistant treasurers, as they may consider necessary. Except as expressly
prescribed by these bylaws, the board of directors or the officer or officers
authorized by the board shall from time to time determine the procedure for the
appointment of officers, their authority and duties and their compensation,
provided that the board of directors may change the authority, duties and
compensation of any officer who is not appointed by the board.
Section 2. APPOINTMENT AND TERM OF OFFICE. The officers of the
corporation to be appointed by the board of directors shall be appointed at each
annual meeting of the board held after each annual meeting of the shareholders.
If the appointment of officers is not made at such
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meeting or if an officer or officers are to be appointed by another officer or
officers of the corporation, such appointments shall be made as determined by
the board of directors or the appointing person or persons. Each officer shall
hold office until the first of the following occurs: his successor shall have
been duly appointed and qualified, his death, his resignation, or his removal in
the manner provided in Section 3.
Section 3. RESIGNATION AND REMOVAL. An officer may resign at any time
by giving written notice of resignation to the president, secretary or other
person who appoints such officer. The resignation is effective when the notice
is received by the corporation unless the notice specifies a later effective
date.
Any officer or agent may be removed at any time with or without cause
by the board of directors or an officer or officers authorized by the board.
Such removal does not affect the contract rights, if any, of the corporation or
of the person so removed. The appointment of an officer or agent shall not in
itself create contract rights.
Section 4. VACANCIES. A vacancy in any office, however occurring, may
be filled by the board of directors, or by the officer or officers authorized by
the board, for the unexpired portion of the officer's term. If an officer
resigns and his resignation is made effective at a later date, the board of
directors, or officer or officers authorized by the board, may permit the
officer to remain in office until the effective date and may fill the pending
vacancy before the effective date if the board of directors or officer or
officers authorized by the board provide that the successor shall not take
office until the effective date. In the alternative, the board of directors, or
officer or officers authorized by the board of directors, may remove the officer
at any time before the effective date and may fill the resulting vacancy.
Section 5. PRESIDENT. The president shall preside at all meetings of
shareholders and all meetings of the board of directors unless the board of
directors has appointed a chairman, vice chairman, or other officer of the board
and has authorized such person to preside at meetings of the board of directors.
Subject to the direction and supervision of the board of directors, the
president shall be the chief executive officer of the corporation, and shall
have general and active control of its affairs and business and general
supervision of its officers, agents and employees. Unless otherwise directed by
the board of directors, the president shall attend in person or by substitute
appointed by him, or shall execute on behalf of the corporation written
instruments appointing a proxy or proxies to represent the corporation, at all
meetings of the stockholders of any other corporation in which the corporation
holds any stock. On behalf of the corporation, the president may in person or by
substitute or by proxy execute written waivers of notice and consents with
respect to any such meetings. At all such meetings and otherwise, the president,
in person or by substitute or proxy, may vote the stock held by the corporation,
execute written consents and other instruments with respect to such stock, and
exercise any and all rights and powers incident to the ownership of said stock,
subject to the instructions, if any, of the board of directors. The president
shall have custody of the treasurer's bond, if any. The president shall have
such additional authority and duties as are appropriate and customary for the
office of
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president and chief executive officer, except as the same may be expanded or
limited by the board of directors from time to time.
Section 6. VICE PRESIDENTS. The vice presidents shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the board of directors. In the absence of the president, the
vice president, if any (or, if more than one, the vice presidents in the order
designated by the board of directors, or if the board makes no such designation,
then the vice president designated by the president, or if neither the board nor
the president makes any such designation, the senior vice president as
determined by first election to that office), shall have the powers and perform
the duties of the president.
Section 7. SECRETARY. The secretary shall (i) prepare and maintain as
permanent records the minutes of the proceedings of the shareholders and the
board of directors, a record of all actions taken by the shareholders or board
of directors without a meeting, a record of all actions taken by a committee of
the board of directors in place of the board of directors on behalf of the
corporation, and a record of all waivers of notice of meetings of shareholders
and of the board of directors or any committee thereof, (ii) see that all
notices are duly given in accordance with the provisions of these bylaws and as
required by law, (iii) serve as custodian of the corporate records and of the
seal of the corporation and affix the seal to all documents when authorized by
the board of directors, (iv) keep at the corporation's registered office or
principal place of business a record containing the names and addresses of all
shareholders in a form that permits preparation of a list of shareholders
arranged by voting group and by class or series of shares within each voting
group, that is alphabetical within each class or series and that shows the
address of, and the number of shares of each class or series held by, each
shareholder, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar, (v) maintain at the corporation's
principal office the originals or copies of the corporation's articles of
incorporation, bylaws, minutes of all shareholders' meetings and records of all
action taken by shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders as a group or
to the holders of any class or series of shares as a group, a list of the names
and business addresses of the current directors and officers, a copy of the
corporation's most recent corporate report filed with the Secretary of State,
and financial statements showing in reasonable detail the corporation's assets
and liabilities and results of operations for the last three years, (vi) have
general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent, (vii) authenticate records of the corporation,
and (viii) in general, perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the
president or by the board of directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision by the secretary. The
directors and/or shareholders may however respectively designate a person other
than the secretary or assistant secretary to keep the minutes of their
respective meetings.
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Any books, records, or minutes of the corporation may be in written
form or in any form capable of being converted into written form within a
reasonable time.
Section 8. TREASURER. The treasurer shall be the principal financial
officer of the corporation, shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
corporation and shall deposit the same in accordance with the instructions of
the board of directors. Subject to the limits imposed by the board of directors,
he shall receive and give receipts and acquittances for money paid in on account
of the corporation, and shall pay out of the corporation's funds on hand all
bills, payrolls and other just debts of the corporation of whatever nature upon
maturity. He shall perform all other duties incident to the office of the
treasurer and, upon request of the board, shall make such reports to it as may
be required at any time. He shall, if required by the board, give the
corporation a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his duties and for
the restoration to the corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation. He shall have such other powers and perform such other
duties as may from time to time be prescribed by the board of directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account as
required by the Nevada General Corporation Law, prepare and file all local,
state and federal tax returns, prescribe and maintain an adequate system of
internal audit and prepare and furnish to the president and the board of
directors statements of account showing the financial position of the
corporation and the results of its operations.
ARTICLE V
STOCK
Section 1. CERTIFICATES. The board of directors shall be authorized to
issue any of its classes of shares with or without certificates. The fact that
the shares are not represented by certificates shall have no effect on the
rights and obligations of shareholders. If the shares arerepresented by
certificates, such shares shall be represented by consecutively numbered
certificates signed, either manually or by facsimile, in the name of the
corporation by the president. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, such certificate may
nonetheless be issued by the corporation with the same effect as if he were such
officer at the date of its issue. All certificates shall be consecutively
numbered, and the names of the owners, the number of shares, and the date of
issue shall be entered on the books of the corporation. Each certificate
representing shares shall state upon its face:
(i) That the corporation is organized under the laws of Nevada;
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(ii) The name of the person to whom issued;
(iii) The number and class of the shares and the designation of the
series, if any, that the certificate represents;
(iv) The par value, if any, of each share represented by the
certificate;
(v) Any restrictions imposed by the corporation upon the transfer
of the shares represented by the certificate.
If shares are not represented by certificates, within a reasonable time
following the issue or transfer of such shares, the corporation shall send the
shareholder a complete written statement of all of the information required to
be provided to holders of uncertificated shares by the Nevada General
Corporation Law.
Section 2. CONSIDERATION FOR SHARES. Certificated or uncertificated
shares shall not be issued until the shares represented thereby are fully paid.
The board of directors may authorize the issuance of shares for consideration
consisting of any tangible or intangible property or benefit to the corporation,
including cash, promissory notes, services performed or other securities of the
corporation. Future services shall not constitute payment or partial payment for
shares of the corporation. The promissory note of a subscriber or an affiliate
of a subscriber shall not constitute payment or partial payment for shares of
the corporation unless the note is negotiable and is secured by collateral,
other than the shares being purchased, having a fair market value at least equal
to the principal amount of the note. For purposes of this Section 2, "promissory
note" means a negotiable instrument on which there is an obligation to pay
independent of collateral and does not include a non-recourse note.
Section 3. LOST CERTIFICATES. In case of the alleged loss, destruction
or mutilation of a certificate of stock, the board of directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as the board may prescribe. The board of directors may in
its discretion require an affidavit of lost certificate and/or a bond in such
form and amount and with such surety as it may determine before issuing a new
certificate.
Section 4. TRANSFER OF SHARES. Upon surrender to the corporation or to
a transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and receipt of such documentary stamps as may be required by law and
evidence of compliance with all applicable securities laws and other
restrictions, the corporation shall issue a new certificate to the person
entitled thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock books of the corporation which shall be kept at
its principal office or by the person and at the place designated by the board
of directors.
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Except as otherwise expressly provided in Article II, Sections 7 and
11, and except for the assertion of dissenters' rights to the extent provided in
Article 113 of the Nevada General Corporation Law, the corporation shall be
entitled to treat the registered holder of any shares of the corporation as the
owner thereof for all purposes, and the corporation shall not be bound to
recognize any equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any person other than the registered
holder, including without limitation any purchaser, assignee or transferee of
such shares or rights deriving from such shares, unless and until such other
person becomes the registered holder of such shares, whether or not the
corporation shall have either actual or constructive notice of the claimed
interest of such other person.
Section 5. TRANSFER AGENT, REGISTRARS AND PAYING AGENTS. The board may
at its discretion appoint one or more transfer agents, registrars and agents for
making payment upon any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either within or outside
Nevada. They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VI
INDEMNIFICATION OF CERTAIN PERSONS
Section 1. INDEMNIFICATION. For purposes of Article VI, a "Proper
Person" means any person (including the estate or personal representative of a
director) who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, and whether formal or informal, by
reason of the fact that he is or was a director, officer, employee, fiduciary or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, fiduciary or agent of any
foreign or domestic profit or nonprofit corporation or of any partnership, joint
venture, trust, profit or nonprofit unincorporated association, limited
liability company, or other enterprise or employee benefit plan. The corporation
shall indemnify any Proper Person against reasonably incurred expenses
(including attorneys' fees), judgments, penalties, fines (including any excise
tax assessed with respect to an employee benefit plan) and amounts paid in
settlement reasonably incurred by him in connection with such action, suit or
proceeding if it is determined by the groups set forth in Section 4 of this
Article that he conducted himself in good faith and that he reasonably believed
(i) in the case of conduct in his official capacity with the corporation, that
his conduct was in the corporation's best interests, or (ii) in all other cases
(except criminal cases), that his conduct was at least not opposed to the
corporation's best interests, or (iii) in the case of any criminal proceeding,
that he had no reasonable cause to believe his conduct was unlawful. Official
capacity means, when used with respect to a director, the office of director
and, when used with respect to any other Proper Person, the office in a
corporation held by the officer or the employment, fiduciary or agency
relationship undertaken by the employee, fiduciary, or agent on behalf of the
corporation. Official capacity does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
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A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that satisfies the
requirement in (ii) of this Section 1. A director's conduct with respect to an
employee benefit plan for a purpose that the director did not reasonably believe
to be in the interests of the participants in or beneficiaries of the plan shall
be deemed not to satisfy the requirement of this section that he conduct himself
in good faith.
No indemnification shall be made under this Article VI to a Proper
Person with respect to any claim, issue or matter in connection with a
proceeding by or in the right of a corporation in which the Proper Person was
adjudged liable to the corporation or in connection with any proceeding charging
that the Proper Person derived an improper personal benefit, whether or not
involving action in an official capacity, in which he was adjudged liable on the
basis that he derived an improper personal benefit. Further, indemnification
under this section in connection with a proceeding brought by or in the right of
the corporation shall be limited to reasonable expenses, including attorneys'
fees, incurred in connection with the proceeding.
Section 2. RIGHT TO INDEMNIFICATION. The corporation shall indemnify
any Proper Person who was wholly successful, on the merits or otherwise, in
defense of any action, suit, or proceeding as to which he was entitled to
indemnification under Section 1 of this Article VI against expenses (including
attorneys' fees) reasonably incurred by him in connection with the proceeding
without the necessity of any action by the corporation other than the
determination in good faith that the defense has been wholly successful.
Section 3. EFFECT OF TERMINATION OF ACTION. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent shall not of itself create a
presumption that the person seeking indemnification did not meet the standards
of conduct described in Section 1 of this Article VI. Entry of a judgment by
consent as part of a settlement shall not be deemed an adjudication of
liability, as described in Section 2 of this Article VI.
Section 4. GROUPS AUTHORIZED TO MAKE INDEMNIFICATION DETERMINATION.
Except where there is a right to indemnification as set forth in Sections 1 or 2
of this Article or where indemnification is ordered by a court in Section 5, any
indemnification shall be made by the corporation only as determined in the
specific case by a proper group that indemnification of the Proper Person is
permissible under the circumstances because he has met the applicable standards
of conduct set forth in Section 1 of this Article. This determination shall be
made by the board of directors by a majority vote of those present at a meeting
at which a quorum is present, which quorum shall consist of directors not
parties to the proceeding ("Quorum"). If a Quorum cannot be obtained, the
determination shall be made by a majority vote of a committee of the board of
directors designated by the board, which committee shall consist of two or more
directors not parties to the proceeding, except that directors who are parties
to the proceeding may participate in the designation of directors for the
committee. If a Quorum of the board of directors cannot be obtained and the
committee cannot be established, or even if a Quorum is obtained or the
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committee is designated and a majority of the directors constituting such Quorum
or committee so directs, the determination shall be made by (i) independent
legal counsel selected by a vote of the board of directors or the committee in
the manner specified in this Section 4 or, if a Quorum of the full board of
directors cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full board
(including directors who are parties to the action) or (ii) a vote of the
shareholders.
Authorization of indemnification and advance of expenses shall be made
in the same manner as the determination that indemnification or advance of
expenses is permissible except that, if the determination that indemnification
or advance of expenses is permissible is made by independent legal counsel,
authorization of indemnification and advance of expenses shall be made by the
body that selected such counsel.
Section 5. COURT-ORDERED INDEMNIFICATION. Any Proper Person may apply
for indemnification to the court conducting the proceeding or to another court
of competent jurisdiction for mandatory indemnification under Section 2 of this
Article, including indemnification for reasonable expenses incurred to obtain
court-ordered indemnification. If a court determines that the Proper Person is
entitled to indemnification under Section 2 of this Article, the court shall
order indemnification, including the Proper Person's reasonable expenses
incurred to obtain court-ordered indemnification. If the court determines that
such Proper Person is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances, whether or not he met the standards of
conduct set forth in Section 1 of this Article or was adjudged liable in the
proceeding, the court may order such indemnification as the court deems proper
except that if the Proper Person has been adjudged liable, indemnification shall
be limited to reasonable expenses incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered indemnification.
Section 6. ADVANCE OF EXPENSES. Reasonable expenses (including
attorneys' fees) incurred in defending an action, suit or proceeding as
described in Section 1 may be paid by the corporation to any Proper Person in
advance of the final disposition of such action, suit or proceeding upon receipt
of (i) a written affirmation of such Proper Person's good faith belief that he
has met the standards of conduct prescribed by Section 1 of this Article VI,
(ii) a written undertaking, executed personally or on the Proper Person's
behalf, to repay such advances if it is ultimately determined that he did not
meet the prescribed standards of conduct (the undertaking shall be an unlimited
general obligation of the Proper Person but need not be secured and may be
accepted without reference to financial ability to make repayment), and (iii) a
determination is made by the proper group (as described in Section 4 of this
Article VI) that the facts as then known to the group would not preclude
indemnification. Determination and authorization of payments shall be made in
the same manner specified in Section 4 of this Article VI.
Section 7. ADDITIONAL INDEMNIFICATION TO CERTAIN PERSONS OTHER THAN
DIRECTORS. In addition to the indemnification provided to officers, employees,
fiduciaries or agents because of their status as Proper Persons under this
Article, the corporation may also indemnify and advance
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expenses to them if they are not directors of the corporation to a greater
extent than is provided in these bylaws, if not inconsistent with public policy,
and if provided for by general or specific action of its board of directors or
shareholders or by contract.
Section 8. WITNESS EXPENSES. The sections of this Article VI do not
limit the corporation's authority to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a proceeding at a time
when he has not been made or named as a defendant or respondent in the
proceeding.
Section 9. REPORT TO SHAREHOLDERS. Any indemnification of or advance of
expenses to a director in accordance with this Article VI, if arising out of a
proceeding by or on behalf of the corporation, shall be reported in writing to
the shareholders with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
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ARTICLE VII
Section 1. PROVISION OF INSURANCE. By action of the board of directors,
notwithstanding any interest of the directors in the action, the corporation may
purchase and maintain insurance, in such scope and amounts as the board of
directors deems appropriate, on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of the corporation, or who, while a
director, officer, employee, fiduciary or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary or agent of any other foreign or domestic profit or
nonprofit corporation or of any partnership, joint venture, trust, profit or
nonprofit unincorporated association, limited liability company, other
enterprise or employee benefit plan, against any liability asserted against, or
incurred by, him in that capacity or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liability under the provisions of Article VI or applicable law. Any such
insurance may be procured from any insurance company designated by the board of
directors of the corporation, whether such insurance company is formed under the
laws of Nevada or any other jurisdiction of the United States or elsewhere,
including any insurance company in which the corporation has an equity interest
or any other interest, through stock ownership or otherwise.
ARTICLE VIII
MISCELLANEOUS
Section 1. SEAL. The board of directors may adopt a corporate seal,
which shall contain the name of the corporation and the words, "Seal, Nevada."
Section 2. FISCAL YEAR. The fiscal year of the corporation shall be as
established by the board of directors.
Section 3. AMENDMENTS. The board of directors shall have power, to the
maximum extent permitted by the Nevada General Corporation Law, to make, amend
and repeal the bylaws of the corporation at any regular or special meeting of
the board unless the shareholders, in making, amending or repealing a particular
bylaw, expressly provide that the directors may not amend or repeal such bylaw.
The shareholders also shall have the power to make, amend or repeal the bylaws
of the corporation at any annual meeting or at any special meeting called for
that purpose.
Section 4. RECEIPT OF NOTICES BY THE CORPORATION. Notices, shareholder
writings consenting to action, and other documents or writings shall be deemed
to have been received by the corporation when they are actually received: (1) at
the registered office of the corporation in Nevada; (2) at the principal office
of the corporation (as that office is designated in the most recent document
filed by the corporation with the secretary of state for Nevada designating a
principal office) addressed to the attention of the secretary of the
corporation; (3) by the secretary of the corporation wherever the secretary may
be found; or (4) by any other person authorized from time to time by the board
of directors or the president to receive such writings, wherever such person is
found.
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Section 5. GENDER. The masculine gender is used in these bylaws as a
matter of convenience only and shall be interpreted to include the feminine and
neuter genders as the circumstances indicate.
Section 6. CONFLICTS. In the event of any irreconcilable conflict
between these bylaws and either the corporation's articles of incorporation or
applicable law, the latter shall control.
Section 7. DEFINITIONS. Except as otherwise specifically provided in
these bylaws, all terms used in these bylaws shall have the same definition as
in the Nevada General Corporation Law.
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AMENDMENT
TO
BYLAWS
By resolution of the Board of Directors of quepasa.com, Inc. (the
"Company") dated January 22, 1999, the first sentence of Section 4 of Article II
of the Company's Bylaws are hereby amended to read as follows: "written notice
stating the place, date, and hour of the meeting shall be given not less than
ten nor more than sixty days before the date of the meeting, except if any other
longer period is required by the Nevada General Corporation Law."
Any and all other terms and conditions of the Company's 1998 Stock
Option Plan not amended or modified as stated above remain the same and in full
force and effect.
The foregoing is effective as of January 22, 1999.
quepasa.com, inc.
By: /s/ Jennifer Ferlaino
-------------------------------
Jennifer Ferlaino, Secretary
<PAGE> 1
EXHIBIT 10.01
EXECUTION COPY
INFORMATION SERVICES AGREEMENT
This Information Services Agreement ("Agreement") is entered into as of July
21, 1998 (the "Effective Date"), by and between Inktomi Corporation, a Delaware
corporation with its principal place of business at 1900 South Norfolk Street,
Suite 310, San Mateo, California, 94403 ("Inktomi") and Internet Century, Inc.,
a Nevada corporation with its principal place of business at 2533 N. Carson
Street, Suite 3232, Carson City, NV, 89706 ("Customer").
RECITALS
A. Inktomi provides services utilizing certain technology for searching
and indexing the Internet (the "Inktomi Search Engine," as more fully defined
below).
B. Customer wishes Inktomi to provide search engine services using the
Inktomi Search Engine in accordance with the terms and conditions of this
Agreement.
AGREEMENT
In consideration of the foregoing and the mutual promises contained herein
the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms will
have the indicated meanings:
1.1. "Database" means Inktomi's full text index database of Web pages
accessible by end users of the Site at any given time.
1.2. "Initial Search Page" means the first Web page, accessible on the
Site, which enables end-users of the Site to initiate and send search queries to
the Inktomi Search Engine.
1.3. "Inktomi Data Protocol" means the written specification on how an
Interface communicates and interacts with the Inktomi Search Engine.
1.4. "Inktomi Search Engine" means Inktomi's current Search Engine as
of the Effective Date, inclusive of the Database, as the same may be (i) updated
as provided on Exhibit A and (ii) otherwise updated, upgraded, modified,
changed, or enhanced by Inktomi from time to time at its sole discretion. The
Inktomi Search Engine does not and will not include features, options and
modules developed and customized specifically for third parties and provided to
such third parties on an exclusive basis, or features, options, modules and
future products which Inktomi licenses or provides separately.
<PAGE> 2
1.5. "Inktomi Technology" means the Inktomi Search Engine, the Inktomi
Data Protocol, the Interface Construction Tools and all other computer
software, technology and/or documentation which is supplied by Inktomi for use
in or in connection with delivery of the Services, including without limitation
all source code and object code therefor and all algorithms, ideas and
Intellectual Property Rights therein.
1.6. "Intellectual Property Rights" means any and all rights existing
from time to time under patent law, copyright law, semiconductor chip protection
law, moral rights law, trade secret law, trademark law, unfair competition law,
publicity rights law, privacy rights law, and any and all other proprietary
rights, and any and all applications, renewals, extensions and restorations
thereof, now or hereafter in force and effect worldwide.
1.7. "Interface" means the editorial and graphical content and design
of the Web pages served to end users of the Site, including without limitation
the Initial Search Page, all Results Pages, instruction pages, frequently asked
questions pages and any Site end user terms and guidelines.
1.8. "Interface Construction Tools" means all software tools, if any,
in object code form, provided by Inktomi to assist Customer to build the
Interface to the Inktomi Search Engine, including without limitation Inktomi's
application server currently known as Forge.
1.9. "Results Pages" means all Web pages displaying search results
presented to end-users directly as a result of accessing the query mechanisms of
the Inktomi Search Engine or indirectly through a cache controlled or influenced
by Customer.
1.10. A "Results Set" means a set of results consisting of between zero
and one hundred records presented to an end user of the Customer online service
(either directly from the Inktomi Search Engine or indirectly through a cache
controlled or influenced by Customer) in response to a search query.
1.11. "Search Engine" means computer software which crawls the
Internet, downloads and analyzes text and other data, sorts and organizes the
data, creates an index of accessible data, and, after receiving a particular
search request (in the form of a word query), locates material accessible in the
database, and presents the results of the search.
1.12. "Site" means a single Web site established and maintained by
Customer through which end-users may access the Inktomi Search Engine and run
searches against the Database.
1.13. "Services" means the Internet search engine services to be
provided by Inktomi for Customer under this Agreement, as more fully described
on Exhibit A.
1.14. "Term" shall have the meaning indicated in Section 10.
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1.15. "Web" means the so-called World Wide Web, containing, inter alia,
pages written in hypertext markup language (HTML) and/or any similar successor
technology.
1.16. "Web page" means a document on the Internet which may be viewed
in its entirety without leaving the applicable distinct URL address.
1.17. "Web site" means a collection of inter-related Web pages.
2. Provision of Services; Site Implementation.
2.1. Services and Site Implementation. Subject to the terms and
conditions of this Agreement, Inktomi shall provide the Services to Customer for
use in the Site, such services to be provided substantially in accordance with
the functionality specifications, performance criteria and limitations specified
on Exhibit A. Inktomi, at its own expense, shall provide all data transmission
capacity (bandwidth), disk storage, server capacity and other hardware and
software required to run the Inktomi Search Engine and maintain the Database.
Customer, at its own expense, shall create the Interface to the Inktomi Search
Engine for the Site, and shall provide all disk storage, server capacity and
other hardware and software required to run and maintain the Site and the
Interface, and to serve advertisements on the Interface. Inktomi shall provide
reasonable assistance (through telephone, e-mail, the Web, or fax) to Customer
during regular business hours regarding development of the Interface and
integration of the same with the Inktomi Search Engine. Customer, at its own
expense, shall provide all data transmission capacity (bandwidth) required to
connect to and receive information from the Inktomi Search Engine. Customer may
only provide search services based the Services to end users of the Site, and
shall have no right to distribute or resell or provide services based on the
Services to other service providers.
2.2. Test Cluster. During the development period for the Interface,
Customer shall only have access through the Inktomi Data Protocol to a
non-production version of the Inktomi Search Engine (the "Test Cluster"). Upon
completion of the Interface and all desired testing against the Test Cluster,
Customer shall present the Interface to Inktomi for review and testing against
the production version of the Inktomi Search Engine. Inktomi shall promptly
notify Customer of any problems or issues discovered by Inktomi regarding the
Interface. Once cleared by Inktomi, Inktomi shall provide access to Customer to
the production version of the Inktomi Search Engine. Customer may run reasonable
tests against the Test Cluster and the production version of the Inktomi Search
Engine, provided however that Customer may not conduct any load testing (prior
to commercial launch of its search service) without the prior consent of
Inktomi. Load testing as used herein means the generation and delivery of more
than five queries per second.
2.3. Inktomi Data Protocol. Promptly following execution of this
Agreement, Inktomi shall provide the Inktomi Data Protocol and the Interface
Construction Tools to Customer. Inktomi grants to Customer a nontransferable,
nonexclusive license during the Term to use the Inktomi Data Protocol and the
Interface Construction Tools solely to create and maintain the Interface to the
Inktomi Search Engine for the Site.
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2.4. Other Services. Upon request, and provided that Customer is
current with service fees due under this Agreement, Inktomi may provide
additional services beyond the services set forth herein. Any such additional
service shall be mutually agreed by the parties and set forth in written work
authorizations signed by both parties, shall be provided at Inktomi's then
applicable consulting rates and charges, and shall be deemed rendered pursuant
to and in accordance with the terms of this Agreement. Work authorizations
issued under this Agreement shall be sequentially numbered.
2.5. Inktomi Technology. As between Customer and Inktomi, Customer
acknowledges that Inktomi owns all right, title and interest in and to the
Inktomi Technology (except for any software licensed by third parties to
Inktomi), and that Customer shall not acquire any right, title, and interest in
or to the Inktomi Technology, except as expressly set forth in this Agreement.
Customer shall not modify, adapt, translate, prepare derivative works from,
decompile, reverse engineer, disassemble or otherwise attempt to derive source
code from any Inktomi software or documentation. Customer will not remove,
obscure, or alter Inktomi's copyright notice, trademarks, or other proprietary
rights notices affixed to or contained within any Inktomi software or
documentation.
2.6. Interface. As between Inktomi and Customer, Inktomi acknowledges
that Customer owns all right, title and interest, including without limitation
all Intellectual Property Rights, in and to the Interface (except for any
software licensed by third parties to Customer and except for editorial content
regarding the use and functionality of the Inktomi Search Engine provided by
Inktomi to Customer for incorporation into the Site, which content shall be and
remain Inktomi Technology), and that Inktomi shall not acquire any right, title
or interest in or to the Interface, except as expressly set forth in this
Agreement.
2.7. Nonexclusive Services. Customer understands that Inktomi will
provide the Services on a nonexclusive basis. Customer acknowledges that Inktomi
has customized and provided, and will continue to customize and provide, its
software and technology to other parties for use in connection with a variety of
applications, including search engine applications. Nothing in this Agreement
will be deemed to limit or restrict Inktomi from customizing and providing its
software and technology to other parties for any purpose, including in
connection with search engine applications, or in any way affect the rights
granted to such other parties. Inktomi reserves the right to notify other
customers of the signing of this Agreement, but agrees not to provide such
notice earlier than two weeks before a public announcement by Customer of its
business relationship with Inktomi or two weeks before commercial launch of its
search service, whichever is later.
3. Attribution; Trademark License; House Ads.
3.1. Attribution. The Initial Search Page and all Results Pages shall
conspicuously display an icon to be provided by Inktomi (the "Inktomi Icon")
that indicates that Inktomi's technology is being used. The Inktomi Icon shall
measure at least 50 x 160 pixels and shall provide a link to Inktomi's Web site
located at www.inktomi.com. The Inktomi Icon shall
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be visible "above the fold" (that is, visible when the applicable Web page is
loaded by a browser displaying an active region of 650x320 pixels).
3.2. Trademark License. Inktomi hereby grants Customer a
nontransferable, nonexclusive license under Inktomi's trademarks during the Term
to display the Inktomi Icon on the Site. Customer hereby grants to Inktomi a
nontransferable, nonexclusive license under Customer's trademarks during the
Term to advertise that Customer is using Inktomi's services. Each party will
submit all materials of any kind containing the other party's trademarks to the
other party before release to the public for inspection, and such other party
will have the right to approve such material prior to its distribution. Except
as set forth in this Section, nothing in this Agreement shall grant or shall be
deemed to grant to one party any right, title or interest in or to the other
party's trademarks. All use of Customer trademarks by Inktomi shall inure to the
benefit of Customer, and all use of Inktomi trademarks by Customer shall inure
to the benefit of Inktomi. At no time during or after the term of this Agreement
shall one party challenge or assist others to challenge the trademarks of the
other party (except to the extent such restriction is prohibited by applicable
law) or the registration thereof or attempt to register any trademarks, marks or
trade names confusingly similar to those of the other party.
3.3. House Ads. To the extent there is unsold advertising inventory on
the Site during the Term, Inktomi may run advertisements on the Site on a
rotating basis (or, if available, based on key words), provided however that
Inktomi may not use more than ten percent (10%) of the unsold Site inventory in
any one month without Customer's prior approval. Any such unpaid house ads
delivered to Customer on behalf of Inktomi shall be subject to Customer's
standard online advertising terms and conditions.
4. Warranties and Disclaimer.
4.1. Inktomi Warranties. Inktomi warrants that (i) it has full power
and authority to enter into this Agreement, (ii) it has not previously and will
not grant any rights in the Inktomi Technology to any third party that are
inconsistent with the rights granted to Customer hereunder, and (iii) throughout
the Term, the Inktomi Technology and the Services provided for Customer shall be
free of material errors and defects and shall perform substantially in
accordance with the performance criteria set forth on Exhibit A. Inktomi does
not warrant that the Services will meet all of Customer's requirements or that
performance of the Services will be uninterrupted or error-free. INKTOMI MAKES
NO OTHER WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE,
INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR USE, AND NONINFRINGEMENT.
4.2. Inktomi Obligations. Inktomi's sole obligation under the foregoing
warranties is to use its reasonable best efforts to correct any portion of the
Inktomi Technology or its business practices that does not meet the foregoing
warranties within a reasonable period of time, and if Inktomi fails to do so,
then Customer shall have the right to immediately terminate this Agreement and
receive as a sole remedy a refund of all amounts paid by Customer applicable to
Services to be rendered following the date of such termination.
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4.3. Customer Warranties. Customer warrants that (i) has full power and
authority to enter into this Agreement, (ii) it will seek all necessary
governmental approvals required to effectuate this Agreement, and (iii) it shall
perform the online services provided by Customer through the Site in accordance
with all federal, state and local laws, including all professional registration
requirements related thereto. CUSTOMER MAKES NO OTHER WARRANTIES OF ANY KIND,
WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND
NONINFRINIGEMENT.
5. End-User Support. Customer, at its own expense shall provide first
level customer support services to end-users of the Site. Inktomi, at its own
expense, shall provide second level technical support services to Customer
regarding the operation of the Inktomi Search Engine. Such support services will
be provided as set forth on Exhibit B.
6. Payments.
6.1. Service Fees. Customer shall pay Inktomi service fees in the
amount and on terms specified on Exhibit C attached hereto. In addition,
Customer shall grant Inktomi a fully vested option exercisable for a period of
three years from the Effective Date to purchase shares of the Common Stock of
Customer. The option shall be in standard venture capital form and shall contain
a net exercise feature and customary representations and warranties of the
parties. Customer shall issue the option to Inktomi within thirty (30) days
following the Effective Date. Inktomi and Customer shall confer in good faith
promptly following the Effective Date to determine the total number of shares
subject to the option and the exercise price per share under the option.
6.2. Records. Customer shall keep complete and accurate records
pertaining to the number of Results Sets served from a cache controlled or
maintained by Customer. Such records shall be maintained for a two-year period
following the year in which any payments pertaining to such revenue were due.
Inktomi shall have the right to examine Customer's records from time to time but
no more than once every six (6) months to determine the correctness of any
payment made under this Agreement. Such examination shall be conducted at
reasonable times during Customer's normal business hours and upon at least ten
(10) business days' advance notice and in a manner so as not to interfere
unreasonably with the conduct of Customer's business. If any such examination
indicates that Customer has underpaid by more than five percent (5%) of the
aggregate payments due for the period subject to such examination, Customer
shall reimburse Inktomi for reasonable costs of such examination.
6.3. Taxes. Customer shall be responsible for all sales taxes and other
similar taxes imposed by any federal, state or local governmental entity on the
transactions contemplated by this Agreement, excluding taxes based upon
Inktomi's net income. When Inktomi has the legal obligation to pay or collect
such taxes, the appropriate amount shall be invoiced to and paid by Customer
unless Customer provides Inktomi with a valid tax exemption certificate
authorized by the appropriate taxing authority.
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6.4. Payment. All fees quoted and payments made hereunder shall be in
U.S. Dollars. Customer shall pay all amounts due under this Agreement to
Inktomi at the address indicated at the beginning of this Agreement or such
other location as Inktomi designated in writing.
7. Confidentiality.
7.1. Definition of Confidential Information. All information and
documents disclosed or produced by either party in the course of this Agreement
which are disclosed in written form and identified by a marking thereon as
proprietary, or oral information which is defined at the time of disclosure and
confirmed in writing within ten (10) business days of its disclosure, shall be
deemed the "Confidential Information" of the disclosing party. Notwithstanding
the above, the parties agree that any information (in any form, whether in
tangible or intangible) relating to the Inktomi Search Engine, the Inktomi
Technology, the Inktomi Data Protocol, the Interface Construction Tools is
considered Confidential Information of Inktomi.
7.2. Treatment of Confidential Information. Each party agrees to
protect the other party's Confidential Information in the same manner as such
party protects its own Confidential Information of substantially similar
proprietary value, but in no case less than reasonable care. Each party agrees
that it will use the Confidential Information of the other party only for the
purposes of this Agreement and that it will not divulge, transfer, sell,
license, lease, or otherwise disclose or release any such information or
documents to third parties, with the exception of (i) its employees or
subcontractors who require access to such for purposes of carrying out such
party's obligation hereunder and (ii) persons who are employed as auditors by a
public accounting firm or by a federal or state agency. Each party will use
reasonable efforts to advise any person obtaining Confidential Information that
such information is proprietary and to obtain a written agreement obligating
such person to maintain the confidentiality of any Confidential Information
belonging to the party or its suppliers.
7.3. No Other Confidential Information. Neither party shall have any
obligation under this Section 7 for information of the other party which the
receiving party can substantiate with documentary evidence that has been or is
(i) developed by the receiving party independently and without the benefit of
information disclosed hereunder by the disclosing party; (ii) lawfully obtained
by the receiving party from a third party without restriction and without breach
of this Agreement; (iii) publicly available without breach of this Agreement;
(iv) disclosed without restriction by the disclosing party to a third party; or
(v) known to the receiving party prior to its receipt from the disclosing party.
8. Indemnification.
8.1. Inktomi Indemnification. Inktomi shall defend and/or settle, and
pay damages awarded pursuant to, any third party claim brought against Customer
alleging the Inktomi Search Engine improperly includes any third party
copyrighted subject matter, third
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party patented subject matter or third party trade secrets; provided that
Customer promptly notifies Inktomi in writing of any such claim and promptly
tenders the control of the defense and settlement of any such claim to Inktomi
at Inktomi's expense and with Inktomi's choice of counsel. Customer shall
cooperate with Inktomi, at Inktomi's expense, in defending or settling such
claim and Customer may join in defense with counsel of its choice at its own
expense. Inktomi shall not reimburse Customer for any expenses incurred by
Customer without the prior written approval of Inktomi.
8.2. Customer Indemnification. Customer shall defend and/or settle, and
pay damages awarded pursuant to, any third party claim brought against Inktomi
(i) related to the services provided by Customer through the Site or
representations, claims or statements pertaining thereto, and (ii) which, if
true, would constitute a breach of any warranty, representation or covenant made
by Customer under Section 4.3 of this Agreement; provided that Inktomi promptly
notifies Customer in writing of any such claim and promptly tenders the control
of the defense and settlement of any such claim to Customer at Customer's
expense and with Customer's choice of counsel. Inktomi shall cooperate with
Customer, at Customer's expense, in defending or settling such claim and
Inktomi may join in defense with counsel of its choice at its own expense.
Customer shall not reimburse Inktomi for any expenses incurred by Inktomi
without the prior written approval of Customer.
9. Limitation of Liability. EXCEPT FOR AMOUNTS INKTOMI MAY BE REQUIRED TO
PAY UNDER SECTION 8.1 ABOVE, IN NO EVENT WILL THE LIABILITY OF INKTOMI AND ITS
LICENSORS AND SUPPLIERS ARISING OUT OF THIS AGREEMENT EXCEED THE NET AMOUNT
INKTOMI HAS ACTUALLY RECEIVED FROM CUSTOMER UNDER THIS AGREEMENT. INKTOMI AND
ITS LICENSORS AND SUPPLIERS SHALL NOT BE LIABLE FOR ANY LOST PROFITS OR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING DAMAGES FOR LOST DATA, HOWEVER
CAUSED AND UNDER ANY THEORY OF LIABILITY, INCLUDING BUT NOT LIMITED TO CONTRACT,
PRODUCTS LIABILITY, STRICT LIABILITY AND NEGLIGENCE, AND WHETHER OR NOT IT WAS
OR SHOULD HAVE BEEN AWARE OR ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
10. Term and Termination.
10.1. Term. The term of this Agreement (the "Term") shall commence on
the Effective Date and shall continue in force for a period of three years
thereafter, unless earlier terminated as provided herein.
10.2. Termination for Breach. Either party may suspend performance
and/or terminate this Agreement if the other party materially breaches any term
or condition of this Agreement and fails to cure that breach within thirty (30)
days after receiving written notice of the breach.
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10.3. Termination due to Warranty. Customer may terminate this
Agreement in accordance with the provisions of Section 4.2.
10.4. Termination due to Insolvency. Either party may suspend
performance and/or terminate this Agreement if the other party becomes insolvent
or makes any assignment for the benefit of creditors or similar transfer
evidencing insolvency, or suffers or permits the commencement of any form of
insolvency or receivership proceeding, or has any petition under bankruptcy law
filed against it, which petition is not dismissed within sixty (60) days of such
filing, or has a trustee or receiver appointed for its business or assets or any
party thereof.
10.5. Effect of Termination. Upon the termination of this Agreement for
any reason (i) all license rights granted herein shall terminate, (ii) Customer
shall immediately pay to Inktomi all amounts due and outstanding as of the date
of such termination and (iii) each party shall return to the other party, or
destroy and certify the destruction of, all Confidential Information of the
other party.
10.6. Survival. In the event of any termination or expiration of this
Agreement for any reason, Sections 1, 2.5, 2.6, 4, 6, 7, 8, 9, 10 and 11 shall
survive termination. Neither party shall be liable to the other party for
damages of any sort resulting solely from terminating this Agreement in
accordance with its terms.
10.7. Remedies. Each party acknowledges that its breach of the
confidentiality or service/license restrictions contained herein may cause
irreparable harm to the other party, the extent of which would be difficult to
ascertain. Accordingly, each party agrees that, in addition to any other
remedies to which the other party may be legally entitled, such party shall have
the right to seek immediately injunctive relief in the event of a breach of such
sections by the other party or any of its officers, employees, consultants or
other agents.
11. Miscellaneous.
11.1. Capacity. Each party warrants that it has full power to enter
into and perform this Agreement, and the person signing this Agreement on either
party's behalf has been duly authorized and empowered to enter in such
agreement. Each party further acknowledges that it has read this Agreement,
understands it and agrees to be bound by it. Each party acknowledges that such
party has not been induced to enter into such agreements by any representations
or statements, oral or written, not expressly contained herein or expressly
incorporated by reference.
11.2. Notice. Any notice required for or permitted by this Agreement
shall be in writing and shall be delivered as follows with notice deemed given
as indicated: (i) by personal delivery when delivered personally, (ii) by
overnight courier upon written verification of receipt, (iii) by telecopy or
facsimile transmission when confirmed by telecopier or facsimile transmission
report, or (iv) by certified or registered mail, return receipt requested, upon
verification of receipt. All notices must be sent to the addresses first
described above or to such
9
<PAGE> 10
other address that the receiving party may have provided for the purpose of
notice in accordance with this Section.
11.3. Assignment. Neither party may assign its rights or delegate its
obligations under this Agreement without the other party's prior written
consent, except to the surviving entity in a merger or consolidation in which it
participates or to a purchaser of all or substantially all of its assets, so
long as such surviving entity or purchaser shall expressly assume in writing the
performance of all of the terms of this Agreement.
11.4. No Third Party Beneficiaries. All rights and obligations of the
parties hereunder are personal to them. This Agreement is not intended to
benefit, nor shall it be deemed to give rise to, any rights in any third party.
11.5. Governing Law. This Agreement will be governed and construed, to
the extent applicable, in accordance with United States law, and otherwise, in
accordance with California law, without regard to conflict of law principles.
Any dispute or claim arising out of or in connection with this Agreement shall
be finally settled by binding arbitration in San Mateo County, California under
the Commercial Rules of the American Arbitration Association by one arbitrator
appointed in accordance with said rules. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
11.6. Independent Contractors. The parties are independent contractors.
Neither party shall be deemed to be an employee, agent, partner or legal
representative of the other for any purpose and neither shall have any right,
power or authority to create any obligation or responsibility on behalf of the
other.
11.7. Force Majeure. Neither party shall be liable hereunder by reason
of any failure or delay in the performance of its obligations hereunder (except
for the payment of money) on account of strikes, shortages, riots, insurrection,
fires, flood, storm, explosions, earthquakes, telecommunications outages, acts
of God, war, governmental action, or any other cause which is beyond the
reasonable control of such party.
11.8. Compliance with Law. Each party shall be responsible for
compliance with all applicable laws, rules and regulations, if any, related to
the performance of its obligations under this Agreement.
11.9. Waiver. The failure of either party to require performance by the
other party of any provision shall not affect the full right to require such
performance at any time thereafter; nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of the provision
itself.
11.10. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be contrary to law, such provision shall be
changed and interpreted so as to best accomplish the objectives of the original
provision to the fullest extent allowed by law and the remaining provisions of
this Agreement shall remain in full force and effect.
10
<PAGE> 11
11.11. Headings. The section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe
or describe the scope or extent of such paragraph, or in any way affect such
agreements.
11.12. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be considered an original, but all
of which together will constitute one and the same instrument.
11.13. Entire Agreement. This Agreement, and the Exhibits hereto,
constitute the entire agreement between the parties with respect to the subject
matter hereof. This Agreement supersedes, and the terms of this Agreement
govern, any other prior or collateral agreements with respect to the subject
matter hereof. Any amendments to this Agreement must be in writing and executed
by an officer of the parties.
IN WITNESS WHEREOF, the parties have caused this Information Services
Agreement to be signed by their duly authorized representatives.
CUSTOMER INKTOMI CORPORATION
By: /s/ JEFFREY PETERSON By: /s/ JERRY KENNELLY
---------------------------- -----------------------------
Name: Jeffrey Peterson Name: Jerry Kennelly
--------------------------- ---------------------------
Title: Chief Financial Officer Title: CFO
-------------------------- --------------------------
11
<PAGE> 12
EXHIBIT A
SERVICES
Basic Services:
Inktomi will use the Inktomi Search Engine to crawl the Internet,
download and analyze text and other data, sort and organize the data, create an
index of accessible data, and, after receiving a particular search request from
an end user (in the form of a word query), locate material accessible in the
Database, and present the results of the search to the end user. The
functionality specifications and performance criteria applicable to such
services are as follows:
Functionality specifications:
Inktomi will operate the Inktomi Search Engine so as to enable end users of
the Site to run queries against the Database with the following functionality.
Implementation of any of the following features will be at the discretion of the
Customer.
o Inktomi will provide a minimum 54 million document searchable Web index
for all queries and will provide a minimum 110 million document
searchable Web index database that may be accessed by up to 20% of daily
queries
o Ability to search by keyword, file type, domain (up to three levels),
document title, modification dates, document contents, depth and
metaword
o Ability to search by full text and phrase, and search with Boolean
operators (including AND, NOT and OR)
o Search on included object, covering the following objects: Acrobat,
Java applets, active x controls, audio, plugins, Flash, form, frame,
image, script, Shockwave, table, video and vrml
o Search on included file type, by file extension
o Search on specific script language, covering Javascript and Vbscript
o Limit search to pages containing links to a specified domain
o Limit search to words in the HTML "title" field
o Grammatical stemming
o Search by language
o Case sensitivity support
o Pornography filtration
o Ability to selectively control the size of each Results Set (0-10
records, 11-20 records, 21-30 records, 31-50 records, 51-75 records,
76-100 records)
<PAGE> 13
Performance Criteria
o Size of Database - Minimum 54 million documents for all queries
and a minimum of 110 documents that may be
accessed for up to 20% of daily queries
o Database Freshness - Objective is minimum 17 updates per year
(approximately every 3 weeks, may vary
depending on operational circumstances)
o Uptime/Downtime - Minimum 99% uptime (1% downtime) over monthly
windows. Downtime = any 1 minute period in
which Inktomi Technology processes no requests.
o Query/Response Speed - Average speed <= 750 milliseconds
Once a month, Inktomi will provide standard crawl and uptime reports to
Customer.
<PAGE> 14
EXHIBIT B
SUPPORT GUIDELINES
1. DEFINITIONS.
(a) Hours of Operation. Inktomi Technical Support Hours of Operation are
Monday to Friday 9:00 a.m. - 5:00 p.m. Pacific Time. Inktomi may, at
its reasonable discretion, change the Hours of Operation with
reasonable notice to Customer.
(b) Problem. Any error, bug, or malfunction that makes any feature of
the Inktomi Search Engine perform unpredictably or to otherwise
become intermittently unavailable, or that causes the Inktomi Search
Engine to have a material degradation in response time performance.
(c) Severe Problem. Any error, bug, or malfunction that causes the
Inktomi Search Engine to become inaccessible to Customer and its
Site end users, or that causes any feature of the Inktomi Search
Engine to become continuously unavailable.
(d) Enhancement Request. A request by Customer to incorporate a new
feature or enhance an existing feature of the Inktomi Search Engine.
(e) Fix. A correction, fix, alteration or work around that solves a
Problem or a Severe Problem.
2. Contact points.
(a) Customer Technical Support Personnel. Customer will designate no
more than three Customer employees as qualified to contact Inktomi
for technical support.
(b) Inktomi Technical Support Personnel. Inktomi will ensure that its
Technical Support Personnel are adequately trained to provide
technical support to Customer. Inktomi will provide Customer with a
web interface or an email address (the "Support Address"), as well
as an email pager address (the "Support Pager") for contacting the
Inktomi Technical Support Personnel no later than one week prior to
the Launch Date. Inktomi will also provide Customer with contact
information for executive escalation personnel no later than one
week prior to the Launch Date. Inktomi may change its designated
Technical Support Personnel and executive escalation personnel at
its discretion with reasonable notice to Customer.
<PAGE> 15
3. Support procedures.
(a) All Problems reported by Customer Technical Support Personnel to
Inktomi must be submitted via web site or email to the Support
Address.
(b) If Customer believes it is reporting a Severe Problem, Customer will
accompany its email request with a page via the Support Pager.
(c) Upon receiving a report from Customer, Inktomi will determine
whether the request is a Problem, a Severe Problem, or an
Enhancement Request. Inktomi will respond to the request and use
reasonable commercial efforts to provide a Fix as described in the
support table set forth below.
(d) Inktomi will use commercially reasonable efforts to inform Customer
Technical Support Personnel of Fixes.
4. Support levels.
(a) Customer will provide technical support to end users of the Sites
who email or otherwise contact Customer directly with questions
about the Sites. Customer will use its commercially reasonable
efforts to Fix any Problems without escalation to Inktomi.
(b) Inktomi will provide the following technical support solely to
Customer Technical Support Personnel:
<TABLE>
<CAPTION>
================================================================================================
RECEIPT OF TYPE OF EMAIL TARGET RESPONSE TARGET FIX TIME AND REPORTING
EMAIL REQUEST REQUEST TIME FROM
EMAIL RECEIPT
- - - - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
During Hours Problem Within one Commercially reasonable best efforts
of Operation business day with weekly status reports to Customer
or other times
- - - - ------------------------------------------------------------------------------------------------
During Hours Severe Within two Commercially reasonable best efforts
of Operation Problem hours with daily status reports to Customer
- - - - ------------------------------------------------------------------------------------------------
During other Severe Within four Commercially reasonable best efforts
times Problem hours with daily status reports to Customer
- - - - ------------------------------------------------------------------------------------------------
During Hours Enhancement Within five At Inktomi's discretion
of Operation Requests business days
or others
times
================================================================================================
</TABLE>
<PAGE> 16
(c) In the event Inktomi does not respond to Customer within the target
response time from email receipt set forth above, then Customer may
contact the following Inktomi executive escalation personnel in order:
Ken Lutz - Director of Technical Operations
Alex Edelstein - General Manager, Search Business Unit
Dick Pierce - Vice President Marketing
Dave Peterschmidt - CEO
<PAGE> 17
EXHIBIT C
SERVICES
Customer shall pay Inktomi monthly service fees equal to the Total Results
Sets Served charge for such month. The Total Results Sets Served charge for each
month equals:
(1) the total number of Results Sets served during the month divided by the
total number of days in such month ("Average Daily Results Sets
Served"),
(2) multiplied and added in accordance with the following graduated
schedule
For the first 1 million Average Daily
Results Sets Served $0.0044 per Results Sets Served
For the next 2 million Average Daily
Results Sets Served $0.00418 per Results Sets Served
For the next 4 million Average Daily
Results Sets Served $0.00396 per Results Sets Served
For the next 8 million Average Daily
Results Sets Served $0.00374 per Results Sets Served
For the next 16 million Average Daily
Results Sets Served $0.00352 per Results Sets Served
For all subsequent Average Daily
Results Served $0.0033 per Results Sets Served,
(3) multiplied by the total number of days in such month,
(4) plus an amount for each Results Sets served during the month containing
more than ten records as follows:
<TABLE>
<CAPTION>
Size of Results Set Incremental pricing
------------------- -------------------
<S> <C>
11-20 records $0.00022 per Results Set served (5%)
21-30 records $0.00055 per Results Set served (12.5%)
31-50 records $0.00132 per Results Set served (30%)
51-75 records $0.00264 per Results Set served (60%)
76-100 records $0.0044 per Results Set served (100%)
</TABLE>
Monthly service fees shall be paid in arrears within thirty (30) calendar
days following the end of each month.
The total service fees payable by Customer shall not be less than $250,000
per year. For the first year under the Agreement, this minimum shall be paid as
follows: $40,000 shall be paid on October 1, 1998, $60,000 shall be paid on
January 31, 1999, $75,000 shall be paid on April 30, 1999
<PAGE> 18
and $75,000 shall be paid on July 31, 1999. For subsequent years, the annual
minimum shall be paid in four equal installments of $62,500 on October 31,
January 31, April 30 and July 31. All such minimum payments shall be credited
against monthly service fees otherwise due and payable.
The service fees set forth above are for all services provided by Inktomi as
set forth on Exhibit A. In the event Inktomi and Customer mutually agree to
modify the specifications on Exhibit A (include without limitation the size of
the available database), additional charges may apply.
<PAGE> 1
EXHIBIT 10.02
[UPI WORLDWIDE NEWS, INC. LETTERHEAD]
SUBSCRIPTION AGREEMENT
SUBSCRIBER INFORMATION
Internet Century, Inc.
Corporate Name
400 E. Van Buren, One Arizona Center, Suite 545
Address
Phoenix AZ 85004
City State Zip Code
================================================================================
1. PRODUCT(S): Subject to compliance by Subscriber with all of the terms of this
Agreement, UPI grants to subscriber the non-exclusive right and privilege to
use the "Product(s)" described in the Schedule below. These "Product(s)" are
to be used for news and informational purposes only. Subscriber agrees that
the "Product(s)" are to be used at the following "User's Location" only and
by the named "Organization" only, except for the immediate distribution to
Subscriber's readers, listeners, or viewers:
User Location: Same as above
Address: E-Mail [email protected]
-----------------------------
City State Zip Code
Jeff Peterson 602-716-0100
Contact Name Telephone Number
2. PRODUCT INSTALLATION TARGET DATE:
3. TERM: This Agreement shall continue for 24 months, commencing on actual
initiation of service, Paragraph 2 notwithstanding.
4. RATE: Subscriber agrees to pay UPI a "Total Monthly Rate" of $750 based upon
the following Schedule: A royalty of 35% is payable to UPI on all ad banners
adjacent to UPI content.
PRODUCT(S), EQUIPMENT, DELIVERY, SOFTWARE MONTHLY RATE $750.00 + ROYALTY
US & World News & Spotlights
Delivery ftp PULL
I hereby certify that I have read and agree to be bound by all terms and
conditions of this agreement. Upon the signing or upon the first receipt of
the Product(s), whichever occurs first, this agreement goes into effect and
binds both parties and/or their successors and assigns. Made this 15th day of
November, 1998, in Washington, DC.
/s/ Jeffrey Peterson PRESIDENT 11-11-98
- - - - -------------------------------------- ------------- --------
AUTHORIZED SIGNATURE FOR SUBSCRIBER TITLE DATE
/s/ Anthony Jay CFO 11-12-98
- - - - -------------------------------------- ------------- --------
ACCEPTED BY (AUTHORIZED UPI SIGNATURE) TITLE DATE
<PAGE> 2
5. DELIVERY: UPI shall deliver the Product(s) by the appropriate UPI
delivery system.
6. USE: Subscriber shall not use or permit the use of the Product(s) in
any way that compromises the integrity thereof or which infringes any
copyrights or proprietary interests. Subscriber shall respect all
[illegible] pledges on [illegible] [illegible] and shall carry
copyright and UPI credit lines. The Product(s) shall be used only by
the Subscriber on terminals of the Subscriber and only in accordance
with the terms of this agreement. No material distribution is allowed.
Subscriber may receive, convert, accumulate, manage and maintain up to
120 days of historical information accumulated from UPI.
7. ASSIGNMENT: This Agreement may be assigned by UPI at any time. The sale
or transfer of Subscriber's business or licence(s) shall not relieve
Subscriber from its obligations under this Agreement. This Agreement
may not be assigned by Subscriber without the prior written consent of
UPI. An executed copy of such assumption shall be sent by certified
mail to UPI at the address stated above. Prior written consent to such
assignment shall not release Subscriber from obligations and
liabilities to UPI which have accrued hereunder as of the date of such
assignment.
8. UPI EQUIPMENT: Throughout the term of this Agreement, Subscriber shall
protect any UPI equipment which may be in its possession. At the
termination of this Agreement, Subscriber shall return such equipment
to UPI in as good condition as when received, ordinary wear excepted.
Failure by Subscriber to comply with this Paragraph shall entitle UPI
to charge Subscriber for the cost of repair or replacement of the UPI
equipment.
9. SEPARATE EQUIPMENT AND WORK CHARGES: Upon reasonable notice from
Subscriber, UPI shall install, relocate, and/or reinstall services in
existing or relocated premises of the User's Location, and
Subscriber shall pay to UPI the full one-time costs of such work,
said costs to include, but not be limited to, any charges from
third-parties incurred by UPI in completion of such. Subscriber shall
have the option of performing such relocations of service itself,
provided reasonable written advance notification is provided to UPI.
Notice from Subscriber to UPI to relocate service to a new User's
Location shall be construed as a modification of the User's Location as
defined in Paragraph 1 of this Agreement and shall become an integral
part of the Agreement.
10. SUBSCRIBER PAYMENTS: UPI shall invoice the Subscriber in advance of
each month, and Subscriber shall, on or before the first day of each
month, pay UPI in advance the Monthly Rates including terminal fees for
such month. Subscriber will provide to UPI a current detailed list of
terminal locations and all necessary information to document the
amount of the terminal fees. If such documentation is not received
within 14 days of payment due date, UPI may suspend delivery of
the Product(s) until such documentation is provided, or terminate
delivery of the Product(s). Suspension of delivery will not relieve
Subscriber of his obligations under this Agreement.
11. DEFAULT OF SUBSCRIBER: The following events shall be a default
("Default") of Subscriber under this Agreement: (a) Subscriber neglects
or fails, in whole or in part, to observe any of its obligations to
UPI, including, but not limited to, making all timely payments due
under this Agreement; (b) Subscriber assigns this Agreement or any of
its rights hereunder (except as permitted under the terms of Paragraph
7); or (c) a receiver, trustee in bankruptcy or similar officer is
appointed to take charge of all or a part of Subscriber's property.
12. REMEDIES UPON DEFAULT: Upon the occurrence of a Default, UPI may
terminate delivery of the Product(s) and recover from Subscriber (a)
any payments due hereunder; (b) the total of Subscriber's then current
monthly rate ("Current Monthly Rate," as defined below in this
Paragraph 12) multiplied by the number of months between termination of
delivery and the date of expiration of the then current Term (as Term
is defined in Paragraph 3) less savings UPI realizes by canceling
delivery of the Product(s) to Subscriber; (c) all costs and expenses of
collection, including reasonable attorneys' fees; and (d) any and all
damages available under law. The term "Current Monthly Rate" as used
herein shall include not only the Monthly Rate(s) payable at the time
delivery of the Product(s) is terminated, but also the Monthly Rate(s)
which from time to time would have become payable had delivery thereof
not been terminated, and in the calculation set forth above in
Subparagraph (b), each such charge shall be multiplied by the number of
months for which it would have been made payable. Should Subscriber
fail to pay any rates or fees when due, then UPI shall have the right
to invoice Subscriber for a late payment charge equal to the lesser of
1.5% per month or the lawful maximum rate on the unpaid balance from
the date due until the date paid.
13. INDEMNITY: UPI SHALL NOT IN ANY EVENT BE LIABLE TO SUBSCRIBER FOR ANY
LOSS, EXPENSE, OR DAMAGES, INCLUDING BUT NOT LIMITED TO SPECIAL,
INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES, AND ANY LOSS OF BUSINESS
OR PROFITS, WHETHER OR NOT FORESEEABLE, ARISING OUT OF OR IN CONNECTION
WITH THE PRODUCT(S), ANY FAILURE TO DELIVER OR DISTRIBUTE THE
PRODUCT(S), OR ANY INTERRUPTION IN DELIVERY OR DISTRIBUTION THEREOF.
Subscriber shall indemnify and hold UPI harmless against any claim,
damage, loss, liability or expense arising out of Subscriber's use of
the Product(s) contrary to this agreement or instructions by UPI. The
obligations of Subscriber under this Paragraph shall continue
notwithstanding any termination of this Agreement.
14. CONTRACT DURATION AND CANCELLATION: Upon completion of the Term in
Paragraph 3 of the Agreement, Subscriber or UPI may cancel by providing
written notice to the second party by certified mail at least 30 days
before the effective date of cancellation. Said notice of cancellation
shall be mailed to the addresses set forth above or to such other
address as either party hereto may designate by written notice to the
other, given in accordance with this Paragraph 14. In the absence of
said notice of cancellation, Subscriber's service shall continue for a
further term of one year, until either party delivers to the other
written notice of termination not less than thirty days prior to the
end of the then-current term.
15. OTHER AGREEMENTS: Oral representations or agreements not embodied in
this Agreement are not binding, and this Agreement may not be changed
or terminated orally. This Agreement supersedes and abrogates, as of
its effective date, any preceding agreement between the parties
relating to the Product(s) and terminates and cancels all
obligations and liabilities which may exist thereunder, except
Subscriber's obligation to pay for Product(s) rendered under such
agreement prior to the effective date of this Agreement or commencement
of delivery of the Product(s) provided for herein, whichever is later.
16. TIME IS OF THE ESSENCE: With respect to all payments required under
this Agreement, time is of the essence.
17. WAIVER: UPI's waiver of any breach of this Agreement or of any Default
hereunder shall not be construed as a waiver of any future breach or
Default. Any waiver by UPI must be in writing and signed by a duly
authorized representative of UPI. Failure by UPI to enforce any
provision of this Agreement, for whatever reason, shall not affect the
validity of UPI's right of subsequent enforcement of that or any other
provision of this Agreement. UPI's acceptance of any full or partial
payment due hereunder during the continuance of any breach or Default
shall not constitute a waiver of such Default or breach.
18. ACCEPTANCE BY UPI: This Agreement shall not be effective until
accepted and executed by UPI's office located in Washington, DC,
provided however, in the event UPI elects to provide Product(s) to
Subscriber prior to such execution of the Agreement by UPI. Subscriber
shall pay UPI for all such Product(s) it receives at the rate specified
in the rate Schedule of this Agreement. Subject to the provisions of
Paragraph 7 this Agreement shall bind each party's successors and
assigns.
19. GOVERNING LAW: The parties agree that this Agreement is entered into in
the District of Columbia. This Agreement shall be governed by and
construed in accordance with the laws of the District of Columbia. The
parties to this Agreement consent and agree to be subject to the
jurisdiction of any court of record in the District of Columbia for the
adjudication or resolution of any money or right in connection with
this Agreement, and agree that venue in such jurisdiction is proper.
20. CONFIDENTIALITY: The terms of this Agreement are confidential and
neither party shall disclose the contents herein to any third party.
This confidentiality shall survive termination of the Agreement.
Please Initial Here /s/ JP
-------------
<PAGE> 3
[UPI WORLDWIDE NEWS, INC. LETTERHEAD]
SUBSCRIPTION AGREEMENT
SUBSCRIBER INFORMATION
Internet Century, Inc.
Corporate Name
414 S. Mill Ave., Suite 202
Address
Tempe, AZ 85281
City State Zip Code
- - - - ----------------------------------------------------------------------------
1. PRODUCT(S): Subject to compliance by subscriber with all of the terms of this
Agreement, UPI grants to subscriber the non-exclusive right and privilege to
use the "Product(s)" described in the Schedule below. These "Products(s)" are
to be used for news and informational purposes only. Subscriber agrees that
the "Product(s)" are to be used at the following "Usar's Location" only and
by the named "Organization" only, except for the immediate distribution to
Subscriber's readers, listeners, or viewers:
User Location: Same as above
Address: E-Mail: [email protected]
City State Zip Code
Jeff Peterson 800-354-2008
Contact Name Telephone Number
2. PRODUCT INSTALLATION TARGET DATE:
3. TERM: This Agreement shall continue for 24 months, commencing on actual
initiation of service. Paragraph 2 notwithstanding.
4. RATE: Subscriber agrees to pay UPI a "Total Monthly Rate" of $750 based upon
the following Schedule: A royalty of 35% is payable to UPI on all ad banners
adjacent to UPI content. PRODUCT(S), EQUIPMENT, DELIVERY, SOFTWARE, MONTHLY
RATE: $750.00
Spanish News with accents
Delivery ftp PULL
- - - - -------------------------------------------------------------------------------
I hereby certify that I have read and agree to be bound by all terms and
conditions of this agreement. Upon the signing or upon the first receipt of the
Product(s), whichever comes first, this agreement goes into effect and binds
both parties and/or their successors and assigns. Made this 6th day of
October, 1998, in Washington, D.C.
- - - - -------------------------------------------------------------------------------
/s/ Jeffrey Peterson C.E.O. 10-6-98
- - - - ------------------------------ ---------------- --------
Authorized Signature for Subscriber Title Date
/s/ Amado Izaguirre Sales Director 10-8-98
- - - - ------------------------------ -------------------- --------
Accepted by Authorized UPI Signature Title Date
initials: [AJ] 10/8/98
<PAGE> 4
5. DELIVERY: UPI shall deliver the Product(s) by the appropriate UPI
delivery system.
6. USE: Subscriber shall not use or permit the use of the Product(s) in
any way that compromises the integrity thereof or which infringes any
copyrights or proprietary interests. Subscriber shall respect all
[illegible] pledges on [illegible] [illegible] and shall carry
copyright and UPI credit lines. The Product(s) shall be used only by
the Subscriber on terminals of the Subscriber and only in accordance
with the terms of this agreement. No material distribution is allowed.
Subscriber may receive, convert, accumulate, manage and maintain up to
120 days of historical information accumulated from UPI.
7. ASSIGNMENT: This Agreement may be assigned by UPI at any time. The sale
or transfer of Subscriber's business or licence(s) shall not relieve
Subscriber from its obligations under this Agreement. This Agreement
may not be assigned by Subscriber without the prior written consent of
UPI. An executed copy of such assumption shall be sent by certified
mail to UPI at the address stated above. Prior written consent to such
assignment shall not release Subscriber from obligations and
liabilities to UPI which have accrued hereunder as of the date of such
assignment.
8. UPI EQUIPMENT: Throughout the term of this Agreement, Subscriber shall
protect any UPI equipment which may be in its possession. At the
termination of this Agreement, Subscriber shall return such equipment
to UPI in as good condition as when received, ordinary wear excepted.
Failure by Subscriber to comply with this Paragraph shall entitle UPI
to charge Subscriber for the cost of repair or replacement of the UPI
equipment.
9. SEPARATE EQUIPMENT AND WORK CHARGES: Upon reasonable notice from
Subscriber, UPI shall install, relocate, and/or reinstall services in
existing or relocated premises of the User's Location, and
Subscriber shall pay to UPI the full one-time costs of such work,
said costs to include, but not be limited to, any charges from
third-parties incurred by UPI in completion of such. Subscriber shall
have the option of performing such relocations of service itself,
provided reasonable written advance notification is provided to UPI.
Notice from Subscriber to UPI to relocate service to a new User's
Location shall be construed as a modification of the User's Location as
defined in Paragraph 1 of this Agreement and shall become an integral
part of the Agreement.
10. SUBSCRIBER PAYMENTS: UPI shall invoice the Subscriber in advance of
each month, and Subscriber shall, on or before the first day of each
month, pay UPI in advance the Monthly Rates including terminal fees for
such month. Subscriber will provide to UPI a current detailed list of
terminal locations and all necessary information to document the
amount of the terminal fees. If such documentation is not received
within 14 days of payment due date, UPI may suspend delivery of
the Product(s) until such documentation is provided, or terminate
delivery of the Product(s). Suspension of delivery will not relieve
Subscriber of his obligations under this Agreement.
11. DEFAULT OF SUBSCRIBER: The following events shall be a default
("Default") of Subscriber under this Agreement: (a) Subscriber neglects
or fails, in whole or in part, to observe any of its obligations to
UPI, including, but not limited to, making all timely payments due
under this Agreement; (b) Subscriber assigns this Agreement or any of
its rights hereunder (except as permitted under the terms of Paragraph
7); or (c) a receiver, trustee in bankruptcy or similar officer is
appointed to take charge of all or a part of Subscriber's property.
12. REMEDIES UPON DEFAULT: Upon the occurrence of a Default, UPI may
terminate delivery of the Product(s) and recover from Subscriber (a)
any payments due hereunder; (b) the total of Subscriber's then current
monthly rate ("Current Monthly Rate," as defined below in this
Paragraph 12) multiplied by the number of months between termination of
delivery and the date of expiration of the then current Term (as Term
is defined in Paragraph 3) less savings UPI realizes by canceling
delivery of the Product(s) to Subscriber; (c) all costs and expenses of
collection, including reasonable attorneys' fees; and (d) any and all
damages available under law. The term "Current Monthly Rate" as used
herein shall include not only the Monthly Rate(s) payable at the time
delivery of the Product(s) is terminated, but also the Monthly Rate(s)
which from time to time would have become payable had delivery thereof
not been terminated, and in the calculation set forth above in
Subparagraph (b), each such charge shall be multiplied by the number of
months for which it would have been made payable. Should Subscriber
fail to pay any rates or fees when due, then UPI shall have the right
to invoice Subscriber for a late payment charge equal to the lesser of
1.5% per month or the lawful maximum rate on the unpaid balance from
the date due until the date paid.
13. INDEMNITY: UPI SHALL NOT IN ANY EVENT BE LIABLE TO SUBSCRIBER FOR ANY
LOSS, EXPENSE, OR DAMAGES, INCLUDING BUT NOT LIMITED TO SPECIAL,
INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES, AND ANY LOSS OF BUSINESS
OR PROFITS, WHETHER OR NOT FORESEEABLE, ARISING OUT OF OR IN CONNECTION
WITH THE PRODUCT(S), ANY FAILURE TO DELIVER OR DISTRIBUTE THE
PRODUCT(S), OR ANY INTERRUPTION IN DELIVERY OR DISTRIBUTION THEREOF.
Subscriber shall indemnify and hold UPI harmless against any claim,
damage, loss, liability or expense arising out of Subscriber's use of
the Product(s) contrary to this agreement or instructions by UPI. The
obligations of Subscriber under this Paragraph shall continue
notwithstanding any termination of this Agreement.
14. CONTRACT DURATION AND CANCELLATION: Upon completion of the Term in
Paragraph 3 of the Agreement, Subscriber or UPI may cancel by providing
written notice to the second party by certified mail at least 30 days
before the effective date of cancellation. Said notice of cancellation
shall be mailed to the addresses set forth above or to such other
address as either party hereto may designate by written notice to the
other, given in accordance with this Paragraph 14. In the absence of
said notice of cancellation, Subscriber's service shall continue for a
further term of one year, until either party delivers to the other
written notice of termination not less than thirty days prior to the
end of the then-current term.
15. OTHER AGREEMENTS: Oral representations or agreements not embodied in
this Agreement are not binding, and this Agreement may not be changed
or terminated orally. This Agreement supersedes and abrogates, as of
its effective date, any preceding agreement between the parties
relating to the Product(s) and terminates and cancels all
obligations and liabilities which may exist thereunder, except
Subscriber's obligation to pay for Product(s) rendered under such
agreement prior to the effective date of this Agreement or commencement
of delivery of the Product(s) provided for herein, whichever is later.
16. TIME IS OF THE ESSENCE: With respect to all payments required under
this Agreement, time is of the essence.
17. WAIVER: UPI's waiver of any breach of this Agreement or of any Default
hereunder shall not be construed as a waiver of any future breach or
Default. Any waiver by UPI must be in writing and signed by a duly
authorized representative of UPI. Failure by UPI to enforce any
provision of this Agreement, for whatever reason, shall not affect the
validity of UPI's right of subsequent enforcement of that or any other
provision of this Agreement. UPI's acceptance of any full or partial
payment due hereunder during the continuance of any breach or Default
shall not constitute a waiver of such Default or breach.
18. ACCEPTANCE BY UPI: This Agreement shall not be effective until
accepted and executed by UPI's office located in Washington, DC,
provided however, in the event UPI elects to provide Product(s) to
Subscriber prior to such execution of the Agreement by UPI. Subscriber
shall pay UPI for all such Product(s) it receives at the rate specified
in the rate Schedule of this Agreement. Subject to the provisions of
Paragraph 7 this Agreement shall bind each party's successors and
assigns.
19. GOVERNING LAW: The parties agree that this Agreement is entered into in
the District of Columbia. This Agreement shall be governed by and
construed in accordance with the laws of the District of Columbia. The
parties to this Agreement consent and agree to be subject to the
jurisdiction of any court of record in the District of Columbia for the
adjudication or resolution of any money or right in connection with
this Agreement, and agree that venue in such jurisdiction is proper.
20. CONFIDENTIALITY: The terms of this Agreement are confidential and
neither party shall disclose the contents herein to any third party.
This confidentiality shall survive termination of the Agreement.
Please Initial Here /s/ JP
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EXHIBIT 10.03
CONFIDENTIAL
CONTRACT NO. __________
DISTRIBUTOR: INTERNET CENTURY, INC.
REUTERS NEWMEDIA INC.
INTERNET SERVICES TERMS AND CONDITIONS
1. TERM
1.1. The Agreement will take effect on the Effective Date, and, unless
terminated earlier as permitted hereunder, will terminate twenty-six (26)
months from the first day of the month immediately following the Effective
Date (the "Term").
2. REUTERS SERVICES
2.1. Provision of Services. Reuters will provide Distributor with access to the
Reuters Services at Distributor's Installation Address in accordance with
all of the terms and conditions of this Agreement. The text, data,
graphics, moving and still images and sound recordings contained in the
Reuters Services, and any portion thereof, shall hereinafter be referred
to, individually and collectively, as the "Reuters Content".
2.2. Withdrawal of Service. Reuters may cancel all or part of any Reuters
Service if: (a) the Reuters Service becomes the subject of a claim that
such service infringes the rights of any third person or that Reuters
otherwise does not have the right to permit others to use it; (b) the
Reuters Service becomes illegal or contrary to any applicable law or
regulation; or (c) Reuters for any reason discontinues the Reuters Service
(or part thereof) as a Reuters product offering. If Reuters cancels all or
part of any Reuters Service, Reuters only obligations to Distributor will
be to notify Distributor reasonably promptly and to refund, pro rata, any
fees paid in advance for the affected Reuters Service. Except as set forth
in this subsection 2.2, such cancellation shall not give rise to a right
of Distributor to cancel the affected Reuters Service or terminate the
Agreement. In the event, pursuant to this subsection 2.2, Reuters cancels:
(a) a whole Reuters Service, Distributor may terminate this Agreement if
Distributor is receiving only one Reuters Service at the time; (b) part of
a Reuters Service, Distributor may cancel the affected Reuters Service if
Reuters cancellation substantially frustrates Distributor's purpose in
subscribing to such service. In each case, Distributor shall pay any fees
and charges due at the time of termination.
3. USE OF REUTERS CONTENT
3.1. License. Reuters hereby, grants to Distributor during the Term the
worldwide, non-exclusive non-transferable right, subject to the terms and
conditions of this Agreement, to distribute the Reuters Content solely by
displaying it on Distributor's Internet Service, and to make such internal
copies as are necessary to create that display. Except as set forth herein,
no other use, copying, display or distribution, in any form, of the Reuters
Content, in whole or in part, by Distributor is permitted without the prior
written consent of Reuters.
3.2. Limitations and Restrictions. Unless otherwise stated in this Agreement,
Distributor shall display the Reuters Content verbatim as received and may
not edit, modify or translate the Reuters Content in any way; provided that
Distributor shall be permitted to: (a) modify the layout of the Reuters
Content to fit within the layout of Distributor's Internet Service; and (b)
extract headlines from the Reuters Content for display in accordance with
Sec. 3.1 hereof, provided that each such headline shall contain a hypertext
link to the corresponding story as displayed on Distributor's Internet
Service. Distributor shall not re-write or otherwise use any portion of the
Reuters Content to create original content for publication. By way of
example, but not limitation, Distributor shall not use the Reuters Content
as source (factual background) material to create content for publication
without Reuters prior written consent. The rights granted to Distributor
herein shall be subject to the additional limitations and restrictions, if
any, specified in this Agreement.
3.3. Editorial Control. Reuters reserves to itself complete editorial freedom in
the form and content of the Reuters Content and may alter the same from
time to time, such alterations including retracting and canceling stories
(which, for clarity, shall not constitute a cancellation of part of a
Reuters Service as described in Sec. 2.2 hereof) and publishing
corrections. Distributor shall comply with any editorial codes contained in
the Reuters Content, including mandatory delay codes, or any other
reasonable limitations or restrictions placed by Reuters or its third party
content providers on the use, display or distribution of any Reuters
Content. Reuters shall inform Distributor of the meaning of any such codes.
3.4. Release of Content. Distributor will display Reuters Content promptly after
the later of (a) the time the Reuters Content is received at Distributor's
Installation Address; or (b) the end of any applicable delay period. In no
event may any applicable delay period. In no event may Distributor display
Reuters Content received more than 18 hours earlier in any section
entitled "Today's News", "Current", or any title of similar import.
3.5. Storage. Distributor may not store or authorize any person to store the
Reuters Content in any medium for more than seven (7) days without the
prior written consent of Reuters. Distributor acknowledges that Reuters may
impose additional fees if it grants permission to extend such storage
period.
4. SOFTWARE (if applicable - see Order Form)
4.1 License. Reuters grants to Distributor during the Term a non-exclusive,
non-transferable right to use the Software at Distributor's Installation
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Address solely for the purpose of accessing the Reuters Content.
Distributor may not sub-license, assign, copy (except for back-up
purposes), distribute, modify, merge, transfer, decompile or reverse
engineer the Software except to the extent permitted in writing by Reuters
or to the extent this restriction is not permitted by applicable law.
5. USE OF EQUIPMENT (if applicable - see Order Form)
5.1 Installation. Reuters or its nominees will supply and install the
Equipment at Distributor's Installation Address so that Distributor may
access the Reuters Content. Reuters may, at any time and upon thirty (30)
days' written notice (or upon less notice if reasonably necessary), replace
the Equipment with other equipment (which will then be deemed to form part
of the Equipment) or replace the means of transmission of the Reuters
Services with another means of transmission.
5.2 Distributor Obligations. Distributor will, at its own cost and expense,
obtain any and all consents, rights of access, easements, governmental
approvals, building permits, zoning authorizations, or other rights or
authorizations necessary for the installation and use of the Equipment.
Distributor will not move the Equipment from its location as installed
without the prior written consent and supervision of Reuters, nor will
Distributor allow the Equipment to become subject to any claims, liens or
encumbrances. Distributor will not allow any person other than Reuters
or its nominees to maintain and/or repair the Reuters Equipment.
Distributor will provide, at his own cost and expense, all connections
from its own computer systems to the Equipment, and will be solely
responsible for all transmission and communication of the Reuters Content
from the Equipment to Distributor's computer systems. All such connections
will be in accordance with applicable standards, including those of
Underwriters Laboratories, Inc.
5.3 Insurance and Damage. Distributor will provide risk insurance coverage
sufficient to protect the Equipment. Distributor will be responsible for
any damages caused to or by the Equipment from any cause whatsoever
including but not limited to unexplained disappearance or theft, or in
connection with its use, maintenance or repair, unless such loss or damage
is attributable to any act or omission of Reuters.
5.4 Upgrades. Distributor acknowledges and agrees that, from time to time, it
may be necessary for it, at its own cost and expense, to upgrade its
hardware and/or software in order to maintain compatibility with
modifications to any part of the Reuters Services and the means of
accessing the same. In the event that the cost to maintain such
compatibility would have a material effect on Distributor's capacity to
perform hereunder, at Reuter election, Reuters may pay for such upgrades
or grant Distributor the right to terminate this Agreement on Sixty (60)
days' notice subject only to payment of any fees and charges owed at such
time.
6. SUPPORT
6.1 Extent of Support. Reuters or its nominees will, at Reuters cost and
expense, use reasonable efforts to maintain the Software and Equipment in
standard operating condition. Reuters shall not have any obligation to
provide support that is required because of: (a) accident, negligence or
misuse not attributable to Reuters; (b) failure of an operating
environment or causes other than ordinary use; (c) attempts made to
repair, service or modify the Software or Equipment by Persons other than
the personnel of Reuters or its nominees; (d) use of non-current versions
of the Software and/or Equipment where current versions have been made
available to Distributor; or (e) use of software or hardware not supplied
by Reuters. In the event Reuters provides support for any of the
foregoing reasons (i.e., (a)-(e)), Distributor will pay for Reuters time
and materials at Reuters then-current rates. Distributor will allow
Reuters or its nominees access to Distributor's Installation Address, and
any other applicable location, at all reasonable times, with reasonable
prior notice, in order to install, inspect, maintain, repair, replace or
remove all or part of the software and/or Equipment.
7. CREDIT AND BRANDING
7.1 Notices. Distributor will not remove or conceal any copyright or other
proprietary notice or any credit-line or date-line included in the Reuters
Services. Distributor will insert on any page that contains any Reuters
Content, and in close proximity to the Reuters Content, the following
notice: "Copyright [insert current year] Reuters Limited. Click Here for
Limitations and Restrictions on Use." Such notice (and any "Teaser Notice"
as set forth below) shall contain a hypertext link to the following
notice, which shall appear in a legal notice are on Distributor's Internet
Service: "Reuters content is the intellectual property of Reuters Limited.
Any copying, republication or redistribution of Reuters content, including
by caching, framing or similar means, is expressly prohibited without the
prior written consent or Reuters. Reuters shall not be liable for any
errors or delays in content, or for any actions taken in reliance thereon."
Reuters reserves the right to alter these notices from time to time.
Notwithstanding the foregoing, if the only Reuters Content on a page is
three or fewer headlines per Reuters Service, Distributor shall be
permitted to substitute "Reuters Headlines", or a similar Reuters
identifier mutually agreed by the parties ("Teaser Notice"), for the
copyright notice first set forth above.
7.2 Reuters Branding. Reuters will provide Distributor with a graphics file
containing the Reuters logo ("Logo"). Distributor shall insert the Logo at
the top of any page containing any Reuters Content, except a page whose
only Reuters Content is three or fewer headlines per Reuters Service, in a
size not smaller than 164 X 41 pixels square. Reuters reserves the right
to replace this Logo with another graphic identifying the Reuters
Services. If Distributor is receiving the
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Reuters/Variety service, the Logo may include the Variety logo.
7.3 Use of Reuters Marks. Except as specifically authorized in this
Section 7, Distributor shall not use the Reuters name or any Reuters
trademarks without Reuters prior written consent. Distributor may not
make any statement (whether oral or in writing) in any external
advertising, marketing or promotion materials regarding Reuters or the
Reuters Services without the prior written consent of Reuters, provided
that materials that are substantially identical to those previously
approved need not be submitted for re-approval.
7.4 Linking and Framing. Distributor may not solicit or encourage other
internet sites or on-line services to frame, or hypertext link directly
to, the Reuters Content on Distributor's Internet Service without the
prior written consent of Reuters. To the extent technologically feasible
and commercially reasonable. Distributor shall not permit any third party
internet site or on-line service to frame Distributor's Internet Service
such that any Reuters Content appears on the same screen as such third
party's internet site or on-line service. To the extent that it is not
technologically feasible or commercially reasonable to prevent such
framing, upon Reuters request and at Reuters expense, Distributor shall
cooperate with Reuters in causing such third party to cease and desist
from such framing.
7.5 No Co-Branding. Distributor may not co-brand pages containing any Reuters
Content. For purposes of this subsection 7.5 to "co-brand" means to
display the name, logo, trademark or other identifier of another entity
(except for Reuters) in such a manner as to give the viewer the
impression that such other entity is a publisher or distributor of the
content. This section is not intended to prohibit conventional
advertising or sponsorships that do not create such impression.
7.6 Misleading Advertising. Distributor will not include any advertising on
pages containing Reuters content that falsely imply that the advertiser
is associated with Reuters or the Reuters Content.
8. INTELLECTUAL PROPERTY
8.1 Rights of Reuters. The Reuters Services and Reuters name and trademarks
are the valuable intellectual property of Reuters Limited. All rights
with respect to the Reuters Services and Reuters name and trademarks,
whether now existing or which may hereafter come into existence, which
are not expressly granted to Distributor herein are reserved to Reuters
Limited. Any goodwill generated through Distributor's use of the Reuters
name and trademarks shall inure solely to the benefit of Reuters Limited.
8.2 Distributor's Obligations. Distributor will promptly notify Reuters of
any infringement or threatened infringement of any right of Reuters of
which Distributor becomes aware and will provide reasonable assistance to
Reuters, at Reuters expense, in connection therewith.
9. FEES, CHARGES AND REPORTING
9.1 Monthly Fees. In consideration of the rights granted to Distributor in
this Agreement, Distributor will pay Reuters all fees and charges set
forth on the Order Form and any schedules thereto ("Fees"). All Fees
shall be paid within 30 days of receipt of an invoice for the same from
Reuters. Unless otherwise agreed, billing shall commence when Reuters
permissions Distributor to receive the Reuters Services.
9.2 Late Payments. All amounts owed hereunder not paid when due and payable
will bear interest from the date such amounts are due and payable at the
greater of (a) 1.5 percent per month and (b) the maximum allowable rate
of interest in the State of New York for transactions between
sophisticated commercial entities.
9.3 Taxes. In addition to the amounts set forth above, Distributor will pay
to Reuters or to the relevant taxing authority, as appropriate, any
applicable sales, use goods and services, value added or other taxes
payable under this Agreement (other than taxes levied or imposed on
Reuters income). In all cases, the amounts due under this Agreement will
be paid by Distributor to Reuters in full without any right of set-off or
deduction.
9.4 CPI Increase. During each year of the Term and any renewal term of this
Agreement, Reuters reserves the right to increase the Fees by the yearly
percentage increase in the Consumer Price Index for all urban consumers
as issued by the Bureau of Labor Statistics of the U.S. Department of
Labor in the New York/New Jersey Metropolitan area ("CPI"), reported
each September (as measured by the increase in the CPI from September of
the previous year to August of the present year). Reuters will notify
Distributor of any such increase in Fees for the following year by
October 1 of the prior year, and such percentage increase will become
effective as of January 1st of the following year.
9.5 Reporting. In addition to any other report required hereunder, each month
during the Term Distributor shall submit to Reuters a statement
("Statement") containing an accurate count of the total number of page
views of pages containing any Reuters Content served by Distributor's
Internet Service in the prior month. Such count shall include the number
of hits to any proxy cache where such pages are stored and Distributor
hereby agrees to use commercially reasonable means to count the number of
such proxy cache hits. Distributor shall set forth in its Statement a
description of the means used to count proxy cache hits.
10. CONFIDENTIALITY
10.1 Definition. "Confidential Information" means any information regarding
the terms of this Agreement and any information, in whatever form,
regarding the business or operations of Reuters or Distributor that the
disclosing party designates as confidential at the time of disclosure;
provided that Confidential Information shall not include information
which: (a) at or prior to the time of disclosure by the disclosing party
was known to the receiving party through lawful means; (b) at or after
the time of disclosure by the disclosing party becomes generally
available to the public through no act or omission on the receiving
party's part; (c) is developed by the receiving
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party independent of any Confidential Information it receives from the
disclosing party; or (d) the receiving party receives from a third
person free to make such disclosure without breach of any legal
obligation.
10.2 Obligations. The receiving party acknowledges the confidential nature
of the disclosing party's Confidential Information and agrees that it
shall not disclose the disclosing party's Confidential Information to
any other person, or use any Confidential Information for any purpose
other than as contemplated hereby, without the prior written consent of
the disclosing party. Each party hereto agrees to take reasonable
precautions (no less rigorous than the receiving party takes with
respect to its own comparable Confidential Information) to prevent
unauthorized or inadvertent disclosure of the other party's
Confidential Information. Notwithstanding the foregoing, a receiving
party may disclose Confidential Information of a disclosing party
pursuant to any statute, regulation, order, subpoena or document
discovery request, provided that prior written notice of such
disclosure is furnished to the disclosing party as soon as practicable
in order to afford the disclosing party an opportunity to seek, at its
own expense, a protective order (it being agreed that if the disclosing
party is unable to obtain or does not seek a protective order and the
receiving party is legally compelled to disclose such information,
disclosure of such information may be made without liability).
11. LIMITATION OF LIABILITY
11.1 Acts of God. Neither party will be liable for any failure to perform any
obligation hereunder, or from any delay in the performance thereof, due
to causes beyond its control, including industrial disputes of whatever
nature, acts of God, public enemy, acts of government, failure of
telecommunications, fire or other casualty.
11.2 Special Damages. Under no circumstances will either party be liable for
any indirect, incidental, special or consequential damages with respect
to the subject matter hereof, including lost profits, regardless of
whether such damages could have been foreseen or prevented by either
party.
11.3 Aggregate Liability. Except for the parties' obligations under Section
13, in no event will the aggregate liability of either party to the
other party or to any third party for damages, direct or otherwise,
arising out of or in connection with this Agreement exceed the total
value of the Fees payable to Reuters during the Term regardless of the
cause or form of action; provided, however, that the foregoing
limitation on liability shall not apply to any violation by Distributor
of the provisions of Sections 3 and 7 hereof.
12. REPRESENTATIONS AND WARRANTIES
12.1 General. Each party hereto represents and warrants that: (a) it has the
full right and power to enter into and fully perform this Agreement in
accordance with its terms; and (b) the execution, delivery and
performance of this Agreement will not violate rights granted by such
party to any third party or violate the provisions of any agreement to
which it is a party.
12.2 EXCLUSION OF WARRANTIES. REUTERS SHALL NOT BE LIABLE FOR ANY DAMAGES
SUFFERED OR INCURRED BY DISTRIBUTOR OR ANY THIRD PERSON ARISING OUT OF
ANY FAULTS, INTERRUPTIONS OR DELAYS IN THE REUTERS SERVICES AND ANY
INACCURACIES, ERRORS OR OMISSIONS IN THE REUTERS CONTENT. EXCEPT AS
EXPRESSLY STATED IN THIS AGREEMENT, THERE ARE NO WARRANTIES, CONDITIONS,
GUARANTIES OR REPRESENTATIONS (as used in this subsection,
"WARRANTIES") AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, IN LAW OR IN FACT, ORAL OR
IN WRITING. ALL SOFTWARE IS LICENSED "AS IS", WITHOUT ANY WARRANTIES.
EACH PARTY HEREBY ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY WARRANTY
MADE BY THE OTHER EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT.
13. INDEMNIFICATION
13.1 Indemnification by Distributor. Distributor will indemnify and hold
Reuters harmless from and against any and all liabilities, damages,
awards, settlements, losses, claims and expenses, including reasonable
attorneys fees and costs of investigation ("Damages"), due to any claim
by a third party relating to or arising out of Distributor's Internet
Service or any other activities of Distributor, including infringement
of any third person's intellectual property rights, except Damages
arising solely out of Distributor's use of the Reuters Content,
unmodified, in accordance with this Agreement.
13.2 Indemnification by Reuters. Reuters will indemnify and hold Distributor
harmless from and against any and all Damages due to any claims by a
third party that the Reuters Content or the Software infringes any third
party's intellectual property rights, provided that: (i) the relevant
claim does not arise from any modification to the Reuters Content or
Software made by Distributor or any person receiving the Reuters Content
through Distributor; (ii) the relevant claim does not concern Reuters
Content that Reuters notified Distributor should not be used; (iii) the
relevant claim is not based upon content obtained by Reuters from a
third party; and (iv) with respect to the Software, Reuters obligation
to indemnify Distributor shall not apply to any claims for infringement
of patent rights.
13.3 Notice and Participation. A party seeking indemnification pursuant to
this Section 13 (an "Indemnified Party") from or against the assertion
of any claim by a third party will give prompt notice to the party from
whom indemnification is sought (the "Indemnifying Party"); provided
however, that failure to give prompt notice will not relieve the
Indemnifying Party of any liability hereunder (except to the extent the
Indemnifying Party has suffered actual material prejudice by such
failure). The Indemnifying Party and the Indemnified Party will
cooperate in the defense or prosecution of any third party claims.
14. TERMINATION
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14.1 Termination by Either Party. In addition to any other remedy available at
law or in equity, either party may terminate this Agreement immediately,
without further obligation to the other party, in the event of any breach
of this Agreement by the other party that is not remedied within 30 days'
written notice of such breach; provided that Reuters may terminate this
Agreement for any breach of Sections 3 or 7 that is not remedied within 5
days' notice of such breach.
14.2 Termination by Reuters. In additional to the right of termination set forth
in Sec. 14.1, Reuters shall have the right to terminate this agreement
immediately in the event of: (a) any sale, lease or other transfer of all
or substantially all of the assets of Distributor to any entity; (b) any
change in control of Distributor (whether by merger, stock transfer or
otherwise); or (c) Distributor's making an assignment for the benefit of
its creditors, the filing of a voluntary or involuntary petition under the
reorganization or arrangement provisions of the United States Bankruptcy
Code, or under the provisions of any law of like import in connection with
the other party, or the appointment of a trustee or receiver for
Distributor or its property.
14.3 Obligations Upon Termination. Promptly upon termination of this Agreement
for any reason, Distributor will: (a) delete or destroy any Reuters Content
stored pursuant to Section 3.5 or otherwise in its possession, custody or
control; (b) pay all fees accrued pursuant to this Agreement; and (c)
allow Reuters or its nominees to access Distributor's Installation Address
to remove the Equipment and Software.
15. GENERAL
15.1 Similar Agreements. Nothing will be deemed to limit or restrict either
party from entering into similar agreements with any other Person or from
offering services similar to the other party's.
15.2 Press Releases. Neither party will issue any external press statement
regarding the availability of the Reuters Services on Distributor's
Internet Site unless (a) it has received the express written consent of the
other party, which will not be unreasonably withheld; or (b) it is required
to do so by Law.
15.3 Controlling Law. This Agreement will be deemed to have been executed and
delivered in the State of New York and it will be governed by and construed
in accordance with the laws of New York.
15.4 Notices. Except as otherwise provided herein, whenever any notice, request,
consent, approval or other communication shall be given by one party hereto
to the other, such communication shall be in writing and shall be delivered
by registered or certified mail, return receipt requested, addressed as
follows:
To Reuters:
Reuters NewMedia Inc.
1750 Presidents Street
Reston, Virginia 20190
(703) 471-2222 (Facsimile)
Attn: Senior Vice President - Sales
To Distributor:
See Contact Person on Order Form
Notices shall be effective on the date received.
15.6 Assignments. This Agreement will be binding upon and inure to the benefit
of the parties, their respective personal representatives, and permitted
successors and assigns. Distributor may not assign or otherwise transfer
any of its rights or delegate any of its duties under this Agreement
without the prior written consent of Reuters. Reuters reserves the right,
at its sole discretion, to assign or transfer any of its rights and
delegate any of its duties hereunder, in whole or in part, to any direct or
indirect subsidiary of Reuters Limited.
15.7 Relationship Between the Parties. There is no joint venture, partnership,
agency or fiduciary relationship existing between the parties and the
parties do not intend to create any such relationship by this Agreement.
15.8 Amendments, Waivers. This Agreement may not be amended, modified or
superseded, unless expressly agreed to in writing by both parties. No
provision of this Agreement may be waived except by an instrument in
writing executed by the party against whom the waiver is to be effective.
The failure of either party at any time or times to require full
performance of any provision hereof will in no manner affect the right of
such party at a later time to enforce the same.
15.9 Severability. If any provision or term of this Agreement, not being of a
fundamental nature, is held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remainder of this Agreement
will not be affected.
15.10 Survival. The provisions of Sections 3, 9, 10, 11, 12, 13, and 15 of this
Agreement will survive the termination of this Agreement.
ADDENDUM TO TERMS AND CONDITIONS
1.1 Distributor is permitted to store the Reuters Content for up to 30 days
/s/ MH
---------------
DISTR. INITIALS
<PAGE> 6
CONFIDENTIAL
CONTRACT NO.__________
REUTERS NEWMEDIA, INC.
INTERNET SERVICES ORDER FORM
<TABLE>
<S> <C> <C> <C>
INTERNET CENTURY, INC. NEVADA
- - - - -----------------------------------------------------------------------------------------------------
Name of Legal Entity Subscribing to Services ("Distributor") State/Country of Incorporation
1. ARIZONA CENTER, SUITE 545 PHOENIX AZ. 85004
- - - - -----------------------------------------------------------------------------------------------------
Distributor's Principal Street Address City State Zip Code
MR. MICHAEL HUBERT 602-716-0100 602-716-0200
- - - - -----------------------------------------------------------------------------------------------------
Distributor's Contact Person Phone Fax E-Mail
(must be at above address)
SAME
- - - - -----------------------------------------------------------------------------------------------------
Distributor's Billing Contact Name Street Address City State Zip Code
SAME
- - - - -----------------------------------------------------------------------------------------------------
Address Where Distributor Will Receive Services ("Distributor's Installation Address")
Description and URL of Distributor's Internet Service(s) ("Distributor's Internet Service"): AN
INTERNET SITE WHICH PROVIDES NEWS AND INFORMATION ABOUT LATIN AMERICA AND IS AVAILABLE AT THE URL
WWW.QUEPASA.COM
- - - - -----------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTOR SUBSCRIBES TO THE FOLLOWING SERVICES ("REUTERS SERVICES")
<TABLE>
<CAPTION>
- - - - --------------------------------------------------------------------------------
REUTERS SERVICE FEE (per month)
- - - - --------------------------------------------------------------------------------
<S> <C>
- - - - --------------------------------------------------------------------------------
REUTERS ONLINE SPANISH REPORT - A selection of top stories $5,000.00
in Spanish, including the following topics: general news,
business, and sports.
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
EXTENDED ARCHIVE FEE $1,000.00
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
TOTAL MONTHLY SERVICE FEES ("SERVICE FEES") $6,000.00
- - - - --------------------------------------------------------------------------------
</TABLE>
1
<PAGE> 7
CONFIDENTIAL
Contract No. REUTERS NEWMEDIA, INC.
-----------------------
Distributor: Internet Century, Inc. INTERNET SERVICES ORDER FORM - P.2
EQUIPMENT PROVIDED TO RECEIVE REUTERS SERVICES ("Equipment"): None
- - - - -------------------------------------------------------------------------------
SOFTWARE PROVIDED TO RECEIVE REUTERS SERVICES ("Software"): Winds
- - - - -------------------------------------------------------------------------------
ADDITIONAL FEES AND CHARGES
INSTALLATION CHARGE: None
COMMUNICATIONS CHARGE (per month): $75.00
SOFTWARE FEE (per month): $75.00
SECURITY DEPOSIT: A security deposit ("Security Deposit") in the amount of $0
will be paid by the Distributor upon the execution hereof. This Security
Deposit may be used, applied or retained by Reuters, in whole or in part, to
the extent required for the payment of any fees or charges payable hereunder as
to which the Distributor is in default, or for any sum which Reuters may expend
or may be required to expend by reason of the Distributor's default hereunder.
The balance of the Security Deposit, if any, will be returned to the
Distributor upon the termination of this Agreement after the return of the
Equipment and Software, if any, to Reuters.
OTHER FEES: $1,000.00 per month for 30 day archive right
BY SIGNING BELOW, DISTRIBUTOR AGREES TO SUBSCRIBE TO THE REUTERS SERVICES
SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH ON THIS REUTERS NEWMEDIA
INTERNET SERVICES ORDER FORM ("ORDER FORM"), THE ATTACHED REUTERS NEWMEDIA, INC.
INTERNET SERVICES TERMS AND CONDITIONS ("TERMS AND CONDITIONS"), AND ALL
ADDENDA, AMENDMENTS AND SCHEDULES THERETO. THE ORDER FORM AND TERMS AND
CONDITIONS, INCLUDING ALL ADDENDA, AMENDMENTS AND SCHEDULES THERETO, SHALL
HEREINAFTER COLLECTIVELY BE REFERRED TO AS THE "AGREEMENT," AND SHALL TOGETHER
FORM THE ENTIRE AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER
HEREOF.
REUTERS NEWMEDIA INC. INTERNET CENTURY, INC.
("Reuters") ("Distributor")
By: Andrew Nibley By: /s/ MICHAEL A. HUBERT
-------------------------- -----------------------------
Title: President Title: COO
----------------------- ---------------------------
Date: 2/4/99 Date: 1-20-99
------------------------ ----------------------------
("Effective Date")
2
<PAGE> 8
CONFIDENTIAL
CONTRACT NO. -------------- REUTERS NEWMEDIA, INC.
DISTRIBUTOR: INTERNET CENTURY, INC. INTERNET SERVICES ORDER FORM
FEE SCHEDULE (ROYALTY)
1. Monthly Reuters Royalty. Distributor shall pay to Reuters a royalty ("Reuters
Royalty") each month equal to fifty (50) percent of Distributor's Net
Advertising Revenue for the prior month, where:
"Distributor's Net Advertising Revenue" means Distributor's gross revenues from
the sale of Advertising Space (as defined below) on Reuters Qualifying Pages (as
defined below) less any sales commissions or other fees paid to third person
advertising agents directly relating to sales on such pages, such commissions
and fees not to exceed in the aggregate thirty-five (35) percent of
Distributor's gross revenues from such sales. In the event that Distributor
barters or otherwise does not charge for Advertising Space, Distributor will
apply the fair market value of such space for purposes of computing
Distributor's Net Advertising Revenue.
"Reuters Qualifying Page" means any page that contains any Reuters Content, as
that term is defined in the Terms and Conditions, except a page whose only
Reuters Content is up to three (3) headlines per Reuters Service, unless such
headlines are the only substantive content on the page.
"Advertising Space" means, with respect to a page, the total area designated by
Distributor for advertising or promotion, including sponsorships.
1.1 Reuters Royalty Additional Terms: Distributor shall pay the greater
of (i) the service fee plus the extended archive fee or (ii) the
royalty
2. Reporting. Distributor shall keep such books and records as are necessary to
verify the amounts owed to Reuters under this Agreement. Distributor will
provide with each Reuters Royalty payment: (a) a report in the form attached
hereto, signed by an authorized representative of Distributor, setting forth the
manner in which the Reuters Royalty was calculated and certain relevant
advertising statistics for Distributor's Internet Service ("Monthly Reuters
Royalty Report"); and (b) the relevant portions of any third person reports used
in the preparation of the Monthly Reuters Royalty Report, including, where
applicable, any advertising "rep" or booking firm reports and any third person
tracking service reports.
3. Advertising Sales. Distributor shall: (a) use reasonable commercial efforts
in collecting receivable in connection with sales of Advertising Space; (b) use
reasonable commercial efforts to sell Advertising Space on Reuters Qualifying
Pages that are at least equal to the efforts it employs to sell Advertising
Space on all other pages; (c) ensure that the sell-out rate and commercial
inventory of Advertising Space on Reuters Qualifying Pages are comparable to
the sell-out rate and commercial inventory for Distributor's Internet service
as a whole; (d) sell Advertising Space on Reuters Qualifying Pages at a rate
comparable to that being charged for other pages on Distributor's Internet
Service; (c) make unsold Advertising Space on Reuters Qualifying Pages
available to Reuters to place advertising relating Reuters or its affiliates at
no cost to Reuters.
4. Audit Rights. Once a year during the term of this Agreement and the first
year thereafter, Reuters, at its expense and upon 10 days' notice to
Distributor, will have the right to examine Distributor's relevant books and
records in order to verify the figures reported in any report or statement
required hereunder and the amounts owed to Reuters pursuant to this Agreement.
Such books and records will be made available at the place where these records
are kept in the ordinary course of business. Reuters shall have the right to
make two (2) copies of such relevant books and records for the sole purpose of
carrying out its examination, subject to Distributor's right to redact, prior
to copying, any sensitive information not relevant to the examination. If, as a
result of such examination, Reuters determines that Distributor mis-reported
any figure or underpaid any amount, Reuters will promptly furnish to
Distributor a copy of the results of its audit setting forth the discrepancy,
and showing, in reasonable detail, the bases upon which the same was
determined. Distributor will remit to Reuters a sum equal to the amount of any
underpayment within 30 days after notification of the discrepancy. If such
discrepancy is greater than 10% of the total amount reported by Distributor for
the period audited, then Distributor will reimburse Reuters for the cost of the
examination.
/s/ MH
---------------
DISTR. INITIALS
<PAGE> 9
AMENDMENT TO
INTERNET SERVICES AGREEMENT
BETWEEN REUTERS NEWMEDIA INC.
AND INTERNET CENTURY, INC.
This Amendment, dated February 12, 1999 amends the January 20, 1999
Agreement by and between REUTERS NEWMEDIA INC. and INTERNET CENTURY, INC. (the
"Agreement"). Capitalized terms not defined herein shall have the same meaning
as set forth in the Agreement. The parties hereby agree to amend the Agreement
as follows:
1. The Reuters Spanish Language Service is hereby added to the Reuters Services
provided to Internet Century, Inc. ("Distributor") under the Agreement.
Distributor shall have the right to display the Spanish Language Service
solely in accordance with the terms and conditions of the Agreement (as
amended hereby), provided that Distributor shall not display more than
fifteen (15) stories or headlines on a single page.
2. Distributor hereby agrees to pay to Reuters an additional monthly fee of
$3,000.00 for the Spanish Language Service.
3. Except as specifically set forth herein, all terms and conditions of the
Agreement shall remain in full force and effect.
REUTERS NEWMEDIA INC. INTERNET CENTURY, INC.
By: /s/ Andrew Nibley By: /s/ Michael Hubert
-------------------- --------------------
Title: President Title: COO
----------------- -----------------
Date: Date: 2/12/99
------------------ ------------------
<PAGE> 10
AMENDMENT TO
INTERNET SERVICES AGREEMENT
BETWEEN REUTERS NEWMEDIA INC.
AND INTERNET CENTURY, INC.
This Amendment, dated February 22, 1999 amends the January 20, 1999
Agreement by and between REUTERS NEWMEDIA INC. and INTERNET CENTURY, INC. (the
"Agreement"). Capitalized terms not defined herein shall have the same
meaning as set forth in the Agreement. The parties hereby agree to amend the
Agreement as follows:
1. The Reuters Online Reports is hereby added to the Reuters Services provided
to Internet Century, Inc. ("Distributor") under the Agreement. Distributor
shall have the right to display the Online Reports solely in accordance with
the terms and conditions of the Agreement (as amended hereby).
2. Distributor hereby agrees to pay to Reuters an additional monthly fee of
$8,400.00 for the Reuters Online Reports.
3. Except as specifically set forth herein, all terms and conditions of the
Agreement shall remain in full force and effect.
REUTERS NEWMEDIA INC. INTERNET CENTURY, INC.
By: /s/ Andrew Nibley By: /s/ Michael A. Hubert
------------------ ---------------------
Title: President Title: C.O.O.
--------------- ------------------
Date: Date: 2/22/99
---------------- -------------------
<PAGE> 1
EXHIBIT 10.05
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 1st
day of November, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation
(the "Company") and JEFFREY S. PETERSON ("Peterson").
WHEREAS, the Company desires to employ Peterson as provided herein;
and,
WHEREAS, Peterson desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Peterson and Peterson hereby
accepts employment with the Company as its President and Chief Executive Officer
upon the terms and conditions hereinafter set forth. Peterson's employment shall
not be deemed an "at will" employment.
2. DUTIES. Peterson will serve the Company as its President and its
Chief Executive Officer and will faithfully and diligently perform the services
and functions relating to such office and position or otherwise reasonably
incident to such office and position, provided that all such services and
functions will be reasonable and within Peterson's areas of expertise.
Peterson's specific duties shall include those related to (i) all phases of the
Company's overall operations, (ii) coordination of the Company's overall
operations and strategic planning and (iii) such other duties as the Company may
reasonably direct. Peterson will, during the term of this Agreement (or any
extension thereof), devote his time, attention and skills and best efforts as a
full time employee to the promotion of the business of the Company.
3. TERM. This Agreement and Peterson's employment shall commence on the
1st day of November, 1998, (the "Effective Date") and shall continue for a term
of seven (7) years ("Initial Term") unless terminated earlier in accordance with
this Agreement. The term of this Agreement may be extended by agreement of the
Company and Peterson.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the effective date hereof, Peterson
will be paid a base salary of One Hundred Thousand dollars ($100,000) per year
payable in accordance with the then current payroll policies of the Company or
as otherwise agreed to by the parties (the "Salary"). At any time and from time
to time, the Salary may be increased if so determined by the board of directors
of the Company after a review of Peterson's performance of this duties
hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Peterson;
b. The "Total Disability" (as hereinafter defined) of Peterson;
c. Written notice to Peterson from the Company of termination for
"Cause" (as hereinafter defined);
<PAGE> 2
d. The voluntary termination of this Agreement by Peterson upon
thirty (30) days prior written notice;
e. The later of seven (7) years from the Effective Date of this
Agreement or the date to which this Agreement is extended in
accordance with Section 3 above; or
For purposes of Section 5(b), the term "Total Disability" means
physical or mental disability, or both, determined to be (or reasonably expected
to be, based upon then available medical information) of not less than twelve
(12) months duration or more where Peterson is unable to reasonably perform the
duties he was performing for the Company immediately prior to such disability.
The determination shall rest upon the opinion of the physician regularly
attending Peterson. If the Company disagrees with said physician's opinion, the
Company may engage at their own expense a physician to examine the Peterson, and
Peterson hereby consents to such examination and to waive, if applicable any
privilege between the physician and Peterson that may arise as a result of said
examination. If after conferring, the two physicians cannot concur on a final
opinion, they shall choose a third consulting physician whose opinion shall
control. The expense of the third consulting physician shall be borne equally by
the Peterson and the Company.
For purposes of Section 5(c), "Cause" means (i) Peterson has failed to
substantially perform his duties as reasonably determined by the chief executive
officer of the Company or the Board of Directors of the Company, (ii) Peterson
engages in poor performance that is not cured within thirty (30) days after
counseling by the Company, (iii) Peterson has failed to comply with the
reasonable directives and policies of the Board of Directors of the Company or
of the chief executive officer of the Company, or (iv) Peterson breaches his
fiduciary duty to the Company or commits any dishonest, unethical, fraudulent,
or felonious act in respect to Peterson's duties to the Company.
6. STOCK OPTIONS. Contingent upon Peterson being employed by the
Company, Peterson shall be granted options to purchase up to 50,000 shares of
the Company's common stock (post 284 for 1 forward stock split) at $1.50 per
share pursuant to the Company's 1998 Stock Option Plan to be vested and
exercisable in accordance with the terms of the 1998 Stock Option Plan, except
that the options shall vest immediately on the Effective Date and the exercise
of such options shall not be contingent upon Peterson being employed by the
Company. Further, the Company agrees to register the options and the underlying
shares on Form S-8 within 90 days of the effective date of any initial public
offering of the Company's securities.
7. TERMINATION PAYMENT. It is agreed that (i) if Peterson's employment
by the Company is terminated without "Cause", (ii) if his duties and
responsibilities are materially changed by the Company and Peterson voluntarily
terminates his employment due to such change in duties or responsibilities, or
(iii) if Peterson's employment terminates due to Total Disability, the Company
shall pay Peterson severance of $200,000 immediately upon the occurrence of
either 7(i), (ii) or (iii) above, together with the amount due for the remaining
portion of the term of this Agreement. If Peterson's employment terminates due
to death, the Company will be obligated to only pay to Peterson's estate any
amounts accrued under this Agreement together with $200,000. It is agreed that
the Company may purchase a disability income insurance policy and/or a life
insurance policy to pay all or part of the amounts due upon termination of
Peterson's employment due to either Total Disability or death, respectively, and
that Peterson agrees to cooperate in the obtaining of such insurance.
2
<PAGE> 3
8. BENEFITS. Peterson shall be entitled to receive any benefits,
including health insurance, life insurance, automobile allowance, vacation time,
etc., which are offered to other Company executives.
9. EXPENSES. Peterson is authorized to incur reasonable expenses for
promoting the business of the Company, including expenses for entertainment,
travel and similar items. The Company shall reimburse Peterson for all such
expenses on the presentation by Peterson of itemized accounts of such
expenditures in accordance with guidelines set forth by the Internal Revenue
Service.
10. NON-COMPETITION AND CONFIDENTIALITY.
a. Peterson agrees that during the term of this Agreement, Peterson
will not (1) enter into any agreement with or directly or
indirectly solicit or attempt to solicit Peterson or other
representatives of the Company (the "Company") for the purpose of
causing them to leave the Company to take employment with any
other business entity, or (2) compete, directly or indirectly,
with the Company in any way and that Peterson will not act as an
officer, director, employee, consultant, shareholder, lender or
agent of any entity engaged in any business of the same nature
as, or in competition with, the business in which the Company is
now engaged except for the ownership of less than five percent
(5%) of the outstanding capital stock of a publicly traded
Internet service provider company.
b. For purposes of Section 10a, restrictions regarding competition
by Peterson shall only apply to competing businesses or entities
that operate in the continental United States.
c. In the event of the breach of the covenants contained in this
Section 10, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or equity
for injunctive relief in addition to any other relief which the
Company may have under the law, this Agreement or any other
agreement executed in connection herewith. In connection with the
bringing of any legal or equitable action for the enforcement of
this Agreement, the Company shall be entitled to recover, whether
the Company seeks equitable relief, and regardless of what relief
is afforded, such reasonable attorneys' fees and expenses as the
Company may incur in prosecution of the Company's claim for
breach hereof.
d. It is hereby agreed that the provisions of this Section 10 are
separate and independent from the other provisions of this
Agreement, that these provisions are specifically enforceable by
the Company notwithstanding any claim by Peterson that the
Company has violated or breached this Agreement or any claim that
Peterson is entitled to any offset or compensation.
e. To induce the Company to enter into this Agreement, Peterson
represents and warrants to the Company that Section 10 of this
Agreement is enforceable by the Company in accordance with its
terms.
11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
3
<PAGE> 4
12. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: Internet Century, Inc.
400 E. Van Buren, Suite 545
Phoenix, AZ 85004
If to Peterson: Jeffrey S. Peterson
400 E. Van Buren, Suite 545
Phoenix, AZ 85004
Notices delivered personally will be deemed communicated as of actual
receipt, notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
14. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
15. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
16. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
17. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
INTERNET CENTURY, INC.,
a Nevada corporation
By: /s/ Michael D. Silberman
----------------------------------------------
Michael D. Silberman, Chief Operating Officer
PETERSON:
/s/ Jeffrey S. Peterson
----------------------------------------------
Jeffrey S. Peterson
5
<PAGE> 6
AMENDMENT OF EMPLOYMENT AGREEMENT
This Amendment of Employment Agreement is entered into as of the 20th
day of January, 1999, by and between quepasa.com, inc., a Nevada corporation
(the "Employer"), and Jeffrey S. Peterson (the "Employee").
Explanatory Statements
A. Employer and Employee entered into an Employment Agreement dated as
of November 1, 1998 (the "Employment Agreement") whereby the Employer employed
the Employee.
B. The Employer and Employee desire to amend and modify certain terms
and conditions of the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Employment Agreement is hereby amended and
modified as follows:
1. Section numbered 4, "Compensation" is amended to provide that the
base salary of Employee shall be One Hundred Fifty Thousand dollars ($150,000)
per year.
2. Section numbered 6, "Stock Options" is hereby amended to read as
follows:
"Contingent upon Peterson being employed by the Company,
Peterson shall be granted options to purchase up to 1,550,000
shares of the Company's common stock (post 284 for 1 forward
stock split which was effective November 1, 1998) pursuant to
the Company's 1998 Stock Option Plan to be vested and
exercisable in accordance with the terms of the 1998 Stock
Option Plan, except that 50,000 options shall be exercisable
at $1.50 per share and vest immediately on the Effective Date
with the remaining 1,500,000 options to be exercisable at
$8.00 per share and with the options for 1,500,000 shares to
vest immediately upon shareholder approval of an increase in
the number of shares of the Company's Common Stock made
available and reserved under the Company's 1998 Stock Option
Plan to 2,500,000 shares. The exercise of all options
hereunder shall not be contingent upon Peterson being employed
by the Company. Further, the Company agrees to register the
options and the underlying shares on Form S-8 within 90 days
of the effective date of any initial public offering of the
Company's securities".
3. The first sentence of Section numbered 7, "Termination Payment" is
hereby amended to read as follows:
"It is agreed that (i) if Peterson's employment by the Company
is terminated without "Cause", (ii) if his duties and
responsibilities are materially changed by the
<PAGE> 7
Company and Peterson voluntarily terminates his employment due
to such change in duties or responsibilities, (iii) there is a
change in the control of the Company or (iv) if Peterson's
employment terminates due to Total Disability, the Company
shall pay Peterson severance of $5,000,000 immediately upon
the occurrence of either 7(i), (ii), (iii) or (iv) above,
together with the amount due for the remaining portion of the
term of this Agreement".
4. Section numbered 10, "Non-Competition Confidentiality" is deleted in
its entirety and replaced with the following:
"10. INCENTIVE STOCK OPTION BONUSES. So long as Peterson is
employed by the Company, Peterson shall be entitled to
incentive stock option bonuses as follows:
a. E-Mail Service. For each 250,000 subscribers that join the
Company's E-Mail service, Peterson shall be granted options to
purchase up to an additional 100,000 shares of the Company's
Common Stock at 120% of the current fair market value of such
Shares of Common Stock. The maximum number of shares for which
Peterson shall be granted an option based upon the number of
subscribers to the Company's E-Mail shall be 1,000,000 shares.
b. Chat Room Services. For each 250,000 subscribers that join
the Company's Chat Room Service, Peterson shall be granted
options to purchase up to an additional 100,000 shares of the
Company's Common Stock at 120% of the current fair market
value of such Shares of Common Stock. The maximum number of
shares for which Peterson shall be granted an option based
upon the number of subscribers to the Company's Chat Room
shall be 1,000,000 shares.
5. A new Section numbered 11 shall be added which reads as follows:
"11. BONUS STOCK. It is acknowledged that the Company is in
the process of authorizing "Series B Convertible Common Stock"
which shall have the same rights as all other shares of the
Company's Common Stock except that each one (1) share of the
Series B Convertible Common Stock shall have the same votes as
ten thousand (10,000) shares of all other Company Common Stock
and the Series B Convertible Common Stock shall automatically
convert to shares of the Company's remaining Common Stock on
the basis of one share for one share three (3) years from the
date of issuance of such Series B Convertible Common Stock. As
part consideration for executing this Agreement, the Company
hereby agrees to issue ten thousand (10,000) shares of its
$.001 par value Series B Convertible Common Stock to Peterson
upon the Company obtaining the appropriate corporate approvals
for the establishment and issuance of such Series B
Convertible Common Stock."
2
<PAGE> 8
6. Section numbered 12, "Notices" is amended by changing the
notification addresses to read as follows:
"If to the Company: quepasa.com, inc.
400 E. Van Buren, Suite 400
Phoenix, AZ 85004
If to Silberman: Jeffrey S. Peterson
400 E. Van Buren, Suite 400
Phoenix, AZ 85004"
7. Section numbers 11 through 18 shall be re-numbered 12 through 19,
respectively.
8. Any and all other terms and conditions of the Employment Agreement
not amended or modified herein shall remain the same and in full force and
effect.
Employer:
QUEPASA.COM, INC.
By: /s/ Michael D. Silberman
---------------------------------------------
Michael D. Silberman, Chief Financial Officer
Employee:
/s/ Jeffrey S. Peterson
---------------------------------------------
Jeffrey S. Peterson
3
<PAGE> 9
SECOND AMENDMENT OF EMPLOYMENT AGREEMENT
This Second Amendment of Employment Agreement is entered into as of the
9th day of March, 1999, by and between quepasa.com, inc., a Nevada corporation
(the "Company"), and JEFFREY S. PETERSON ("Peterson").
Explanatory Statements
----------------------
A. The Company and Peterson entered into an Employment Agreement dated
November 1, 1998 and an Amendment of Employment Agreement dated January 20,
1999 (together, the "Employment Agreement").
B. The Company and Peterson desire to amend and modify certain terms and
conditions of the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Employment Agreement is hereby amended and modified
as follows:
1. Section numbered 3, "Term" is hereby amended to read as follows:
"3. TERM. This Agreement and Peterson's employment shall commence on
the 1st day of November, 1998 (the "Effective Date") and shall
continue for a term of four years ("Initial Term") unless terminated
earlier in accordance with this Agreement. The term of this
Agreement may be extended by agreement of the Company and Peterson."
2. Section numbered 4, "Compensation" is hereby amended to read as follows:
"4. COMPENSATION. As compensation for services rendered to the Company
under this Agreement commencing on the Effective Date hereof,
Peterson will be paid a base salary of One Hundred Fifty Thousand
Dollars ($150,000) per year payable in accordance with the then
current payroll policies of the Company or as otherwise agreed to by
the parties (the "Salary"). At any time and from time to time, the
Salary may be increased if so determined by the Compensation
Committee or the Board of Directors of the Company after a review of
Peterson's performance of his duties hereunder."
3. Subsection (e) of Section numbered 5, "Termination" is hereby amended
to read as follows:
"e. The later of four years from the Effective Date of this Agreement
or the date to which this Agreement is extended in accordance with
Section 3 above."
4. Section numbered 6, "Stock Options" is hereby amended to read as
follows:
"6. STOCK OPTIONS. Contingent upon Peterson being employed by the
Company, Peterson shall be granted options to purchase up to
1,550,000 shares of the Company's common stock (post 284 for 1
forward stock split which was effective November 1, 1998) pursuant
to the Company's 1998 Stock Option Plan to be vested and exercisable
in accordance with the terms of the 1998 Stock Option Plan, except
that 50,000 options shall be exercisable at $1.50 per share and vest
immediately on the Effective Date with the remaining 1,500,000
options to be exercisable at $8.00 per share and vest immediately
upon shareholder approval of an increase in the number of shares of
the Company's common stock made available and reserved under the
Company's 1998 Stock Option Plan to 2,500,000 shares. Further,
the Company agrees to register the options and the underlying shares
granted hereunder on Form S-8 within 180
1
<PAGE> 10
days of the effective date of any initial public offering of the
Company's securities."
5. The first paragraph of Section numbered 7, "Termination Payment" is hereby
amended to read as follows:
"7. TERMINATION PAYMENT. It is agreed that (i) if Peterson's employment by
the Company is terminated without "Cause" or (ii) if his duties and
responsibilities are materially changed by the Company and Peterson
voluntarily terminates his employment due to such change in duties or
responsibilities, the Company shall pay Peterson severance of
$5,000,000 immediately upon the occurrence of either 7(i) or (ii)
above, together with the amount due for the remaining portion of the
term of this Agreement. If Peterson's employment terminates due to
"Total Disability", the Company will be obligated to only pay Peterson
the sum of $150,000."
6. Section numbered 9, "Expenses" is hereby amended to read as follows:
"9. EXPENSES. Peterson is authorized to incur reasonable expenses for
promoting the business of the Company, including expenses for
entertainment, travel and similar items. The Company shall reimburse
Peterson for all such expenses on the presentation by Peterson of
itemized accounts of such expenditures in accordance with guidelines
set forth by the Company and the Internal Revenue Service."
7. Section 11, "Bonus Stock" shall be eliminated in its entirety.
8. Sections 12 through 19 shall be re-numbered 11 through 18, respectively.
9. Any and all other terms and conditions of the Employment Agreement not
amended or modified herein shall remain the same and in full force and effect.
The Company:
quepasa.com, inc.
By:/s/ Michael A. Hubert
--------------------------
Name: Michael A. Hubert
Title: Chief Operating Officer
Peterson:
/s/ Jeffrey S. Peterson
--------------------------
Jeffrey S. Peterson
2
<PAGE> 1
EXHIBIT 10.06
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 15th
day of October, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation
(the "Company") and MICHAEL D. SILBERMAN ("Silberman").
WHEREAS, the Company desires to employ Silberman as provided herein;
and,
WHEREAS, Silberman desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Silberman and Silberman
hereby accepts employment with the Company as its Chief Financial Officer and
Chief Operating Officer upon the terms and conditions hereinafter set forth.
Silberman's employment shall not be deemed an "at will" employment.
2. DUTIES. Silberman will serve the Company as its Chief Financial
Officer and its Chief Operating Officer and will faithfully and diligently
perform the services and functions relating to such office and position or
otherwise reasonably incident to such office and position, provided that all
such services and functions will be reasonable and within Silberman's areas of
expertise. Silberman's specific duties shall include those related to (i) all
phases of the Company's finances, (ii) coordination of the Company's daily
operations and strategic planning and (iii) such other duties as the Company may
reasonably direct. Silberman will, during the term of this Agreement (or any
extension thereof), devote his time, attention and skills and best efforts as a
full time employee to the promotion of the business of the Company.
3. TERM. This Agreement and Silberman's employment shall commence on
the 15th day of October, 1998, (the "Effective Date") and shall continue for a
term of seven (7) years ("Initial Term") unless terminated earlier in accordance
with this Agreement. The term of this Agreement may be extended by agreement of
the Company and Silberman.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the effective date hereof, Silberman
will be paid a base salary of Eighty Thousand dollars ($80,000) per year payable
in accordance with the then current payroll policies of the Company or as
otherwise agreed to by the parties (the "Salary"). At any time and from time to
time, the Salary may be increased if so determined by the board of directors of
the Company after a review of Silberman's performance of this duties hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Silberman;
b. The "Total Disability" (as hereinafter defined) of Silberman;
<PAGE> 2
c. Written notice to Silberman from the Company of termination
for "Cause" (as hereinafter defined);
d. The voluntary termination of this Agreement by Silberman upon
thirty (30) days prior written notice;
e. The later of seven (7) years from the Effective Date of this
Agreement or the date to which this Agreement is extended in
accordance with Section 3 above; or
For purposes of Section 5(b), the term "Total Disability" means
physical or mental disability, or both, determined to be (or reasonably expected
to be, based upon then available medical information) of not less than twelve
(12) months duration or more where Silberman is unable to reasonably perform the
duties he was performing for the Company immediately prior to such disability.
The determination shall rest upon the opinion of the physician regularly
attending Silberman. If the Company disagrees with said physician's opinion, the
Company may engage at their own expense a physician to examine the Silberman,
and Silberman hereby consents to such examination and to waive, if applicable
any privilege between the physician and Silberman that may arise as a result of
said examination. If after conferring, the two physicians cannot concur on a
final opinion, they shall choose a third consulting physician whose opinion
shall control. The expense of the third consulting physician shall be borne
equally by the Silberman and the Company.
For purposes of Section 5(c), "Cause" means (i) Silberman has failed to
substantially perform his duties as reasonably determined by the chief executive
officer of the Company or the Board of Directors of the Company, (ii) Silberman
engages in poor performance that is not cured within thirty (30) days after
counseling by the Company, (iii) Silberman has failed to comply with the
reasonable directives and policies of the Board of Directors of the Company or
of the chief executive officer of the Company, or (iv) Silberman breaches his
fiduciary duty to the Company or commits any dishonest, unethical, fraudulent,
or felonious act in respect to Silberman's duties to the Company.
6. STOCK OPTIONS. Contingent upon Silberman being employed by the
Company, Silberman shall be granted options to purchase up to 25,000 shares of
the Company's common stock (post 284 for 1 forward stock split) at $1.50 per
share pursuant to the Company's 1998 Stock Option Plan to be vested and
exercisable in accordance with the terms of the 1998 Stock Option Plan, except
that the options shall vest immediately on the Effective Date and the exercise
of such options shall not be contingent upon Silberman being employed by the
Company. Further, the Company agrees to register the options and the underlying
shares on Form S-8 within 90 days of the effective date of any initial public
offering of the Company's securities.
7. TERMINATION PAYMENT. It is agreed that (i) if Silberman's employment
by the Company is terminated without "Cause", (ii) if his duties and
responsibilities are materially changed by the Company and Silberman voluntarily
terminates his employment due to such change in duties or responsibilities, or
(iii) if Silberman's employment terminates due to Total Disability, the Company
shall pay Silberman severance of $200,000 immediately upon the occurrence of
either 7(i), (ii) or (iii) above, together with the amount due for the remaining
portion of the term of this Agreement. If Silberman's employment terminates due
to death, the Company will be obligated to only pay to Silberman's estate any
amounts accrued under this Agreement together with $200,000. It is agreed that
the Company may purchase a disability income insurance policy and/or a life
insurance policy to pay all or part of the amounts due upon
2
<PAGE> 3
termination of Silberman's employment due to either Total Disability or death,
respectively, and that Silberman agrees to cooperate in the obtaining of such
insurance.
8. LOAN. The Company will loan to Silberman up to One Hundred Fifty
Thousand dollars ($150,000) with Twenty Five Thousand Dollars ($25,000) to be
loaned and disbursed on the Effective Date and the remaining One Hundred Twenty
Five Thousand ($125,000) to be loaned and disbursed on the closing of any
portion of the Company's private placement offering of its securities to raise
between $1,750,000 and $3,000,000. All amounts shall be evidenced by a
promissory note with interest each year of the term of the note to be variable
and at the prime rate charged by Norwest Bank or its successor at the close of
business on the Effective Date and on the anniversary date of each year
thereafter and with all principal and accrued but unpaid interest due seven (7)
years from the loan (the "Loan"). The Company agrees that if Silberman is
employed by the Company two years from the Effective Date or his employment has
been previously terminated by the company without "Cause" as that term is
defined in Section 5 above, then all loan amounts including principal and
accrued but unpaid interest shall be forgiven by the Company and the Note
evidencing such loan shall be canceled.
9. BENEFITS. Silberman shall be entitled to receive any benefits,
including health insurance, life insurance, automobile allowance, vacation time,
etc., which are offered to other Company executives.
10. EXPENSES. Silberman is authorized to incur reasonable expenses for
promoting the business of the Company, including expenses for entertainment,
travel and similar items. The Company shall reimburse Silberman for all such
expenses on the presentation by Silberman of itemized accounts of such
expenditures in accordance with guidelines set forth by the Internal Revenue
Service.
11. NON-COMPETITION AND CONFIDENTIALITY.
a. Silberman agrees that during the term of this Agreement,
Silberman will not (1) enter into any agreement with or
directly or indirectly solicit or attempt to solicit
Silberman or other representatives of the Company (the
"Company") for the purpose of causing them to leave the
Company to take employment with any other business entity,
or (2) compete, directly or indirectly, with the Company in
any way and that Silberman will not act as an officer,
director, employee, consultant, shareholder, lender or agent
of any entity engaged in any business of the same nature as,
or in competition with, the business in which the Company is
now engaged except for the ownership of less than five
percent (5%) of the outstanding capital stock of a publicly
traded Internet service provider company.
b. For purposes of Section 11a, restrictions regarding
competition by Silberman shall only apply to competing
businesses or entities that operate in the continental
United States.
c. In the event of the breach of the covenants contained in
this Section 11, it is understood that damages will be
difficult to ascertain and the Company may petition a court
of law or equity for injunctive relief in addition to any
other relief which the Company may have under the law, this
Agreement or any other agreement executed in connection
herewith. In connection with the bringing of any legal or
equitable action for the enforcement of this Agreement, the
Company shall be entitled to
3
<PAGE> 4
recover, whether the Company seeks equitable relief, and
regardless of what relief is afforded, such reasonable
attorneys' fees and expenses as the Company may incur in
prosecution of the Company's claim for breach hereof.
d. It is hereby agreed that the provisions of this Section 11
are separate and independent from the other provisions of
this Agreement, that these provisions are specifically
enforceable by the Company notwithstanding any claim by
Silberman that the Company has violated or breached this
Agreement or any claim that Silberman is entitled to any
offset or compensation.
e. To induce the Company to enter into this Agreement,
Silberman represents and warrants to the Company that
Section 11 of this Agreement is enforceable by the Company
in accordance with its terms.
12. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
13. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: Internet Century, Inc.
414 S. Mill Avenue, Suite 202
Tempe, AZ 85281
Attn: Jeffrey L. Peterson
If to Silberman: Michael D. Silberman
414 South Mill Avenue, Suite 202
Tempe, AZ 85281
Notices delivered personally will be deemed communicated as of actual
receipt, notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
14. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
15. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
4
<PAGE> 5
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
16. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
17. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
18. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
INTERNET CENTURY, INC.,
a Nevada corporation
By: /s/ Jeffrey Peterson
------------------------------------------
Jeffrey Peterson, Chief Executive Officer
SILBERMAN:
/s/ Michael D. Silberman
------------------------------------------
Michael D. Silberman
5
<PAGE> 6
AMENDMENT OF EMPLOYMENT AGREEMENT
This Amendment of Employment Agreement is entered into as of the 21st
day Of January, 1999, by and between quepasa.com, inc., a Nevada corporation
(the "Employer"), and Michael D. Silberman (the "Employee").
Explanatory Statements
A. Employer and Employee entered into an Employment Agreement dated as
of October 15, 1998 (the "Employment Agreement") whereby the Employer employed
the Employee.
B. The Employer and Employee desire to amend and modify certain terms
and conditions of the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Employment Agreement is hereby amended and
modified as follows:
1. Section numbered 1, "Employment" is amended to read as
follows:
"The Company hereby employs Silberman and Silberman hereby
accepts employment with the Company as its Operations
Coordinator upon the terms and conditions hereinafter set
forth. Silberman's employment shall not be deemed an "at will"
employment".
2. Section numbered 2, "Duties" is hereby amended to read as
follows:
"Silberman will serve the Company as its Operation's
Coordinator and will faithfully and diligently perform the
services and functions relating to such office and position or
otherwise reasonably incident to such office and position,
provided that all such services and functions will be
reasonable and within Silberman's areas of expertise.
Silberman's specific duties shall include those related to (i)
coordinating all phases of the Company's finances, (ii)
coordination of the Company's daily operations and strategic
planning and (iii) such other duties as the Company may
reasonably direct. Silberman will, during the term of this
Agreement (or any extension thereof), devote his time,
attention and skills and best efforts as a full time employee
to the promotion of the business of the Company".
3. Section numbered 3, "Term" is hereby amended by the addition
of the following at the end of such section:
"This Agreement and Silberman's employment shall commence on
the 15th day of October, 1998, (the "Effective Date") and
shall continue for a term of seven (7) years ("Initial Term")
unless terminated earlier in accordance with this Agreement.
The term of this Agreement may be extended by agreement of the
Company and Silberman. Notwithstanding
<PAGE> 7
the foregoing, unless otherwise terminated pursuant to this
Agreement, for a period of ten (10) years, the term of this
Agreement shall automatically renew each year for one (1)
additional year on the yearly anniversary date of the
Effective Date".
4. The first sentence of Section numbered 7, "Termination
Payment" is hereby amended to read as follows:
"It is agreed that (i) if Silberman's employment by the
Company is terminated without "Cause", (ii) if his duties and
responsibilities are materially changed by the Company and
Silberman voluntarily terminates his employment due to such
change in duties or responsibilities, or (iii) if Silberman's
employment terminates due to Total Disability, the Company
shall pay Silberman severance of $200,000 immediately upon the
occurrence of either 7(i), (ii) or (iii) above, together with
one hundred fifty percent (150%) of the amount due for the
remaining portion of the term of this Agreement".
5. Section numbered 13, "Notices" is amended by changing the
notification address to read as follows:
"If to the Company: quepasa.com, inc.
400 E. Van Buren, Suite 400
Phoenix, AZ 85004
If to Silberman: Michael D. Silberman
400 E. Van Buren, Suite 400
Phoenix, AZ 85004"
6. Any and all other terms and conditions of the Employment
Agreement not amended or modified herein shall remain the same and in full force
and effect.
Employer:
QUEPASA.COM, INC.
By: /s/ Jeffrey Peterson
------------------------------------------
Jeffrey Peterson, Chief Executive Officer
Employee:
/s/ Michael D. Silberman
------------------------------------------
Michael D. Silberman
2
<PAGE> 8
AMENDMENT OF EMPLOYMENT AGREEMENT
This Amendment of Employment Agreement is entered into as of the 21st day
of, Jan., 1999 by and between QUEPASA.COM,INC., a Nevada corporation (the
"Employer"), and MICHAEL D. SILBERMAN (the "Employee").
Explanatory Statements
A. Employer and Employee entered into an Employment Agreement dated as of
October 15, 1998 (the "Employment Agreement") whereby the Employer employed the
Employee.
B. The Employer and Employee desire to amend and modify certain terms and
conditions of the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Employment Agreement is hereby amended and modified
as follows:
1. Section numbered 1, "Employment" is amended to read as follows:
"The Company hereby employs Silberman and Silberman hereby accepts
employment with the Company as its Operations Coordinator upon the
terms and conditions hereinafter set forth. Silberman's employment
shall not be deemed an "at will" employment. It is acknowledged, and
agreed to that Silberman resides in California and that he discharges
the majority of his responsibilities as set forth in (2) below of this
amendment from California. Further there are no requirements that
Silberman be on corporate headquarter premises at any time to discharge
any or all of his duties.".
2. Section numbered 2, "Duties" is hereby amended to read as follows:
"Silberman will serve the Company as its Operations Coordinator and
will faithfully and diligently perform the services and functions
relating to such office and position or otherwise reasonably incident
to such office and position, provided that all such services and
functions will be reasonable and within Silberman's areas of expertise.
Silberman's specific duties shall include those related to;
(i) troubleshooting as a beta tester, the Company's website and
links,
(ii) assisting management in the coordination of the Company's
operations and strategic planning, and
(iii) such other duties as the Company may reasonably direct. Silberman
will, during the term of this Agreement (or any extension
thereof), devote his time, attention and skills and best efforts
as a full time employee to the promotion of the business of the
Company.".
1
<PAGE> 9
4. The first sentence of Section numbered 7, "Termination Payment" is
hereby amended to read as follows:
"It is agreed that
(i) if Silberman's employment by the Company is terminated without
"Cause",
(ii) if his duties and responsibilities are materially changed by
the Company and Silberman voluntarily terminates his
employment due to such change in duties or responsibilities,
(iii) if Silberman's employment terminates due to Total Disability,
(iv) the Company shall forgive Mr. Silberman's $150,000 forgivable
loan in full.
5. Section numbered 13, "Notices" is amended by changing the notification
address to read as follows:
"If to the Company: quepasa.com, inc.
One Arizona Center
400 E. Van Buren, 4th Floor
Phoenix, AZ 85004
If to Silberman: Michael D. Silberman
6. Any and all other terms and conditions of the Employment Agreement not
amended or modified herein shall remain the same and in full force and effect.
Employer: Employee:
Quepasa.com, inc.
By: /s/ Jeffrey S. Peterson By: /s/ Michael D. Silberman
------------------------------- -------------------------------------
Jeffrey S. Peterson Michael D. Silberman
President and CEO
2
<PAGE> 1
EXHIBIT 10.07
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 29th
day of January, 1999, by and among QUEPASA.COM, INC., a Nevada corporation (the
"Company") and JUAN GALAN ("Galan").
WHEREAS, the Company desires to employ Galan as provided herein; and,
WHEREAS, Galan desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Galan and Galan hereby
accepts employment with the Company as Chief Financial Officer and as Vice
President of Finance upon the terms and conditions hereinafter set forth.
2. DUTIES. Galan will serve the Company as Chief Financial Officer and
as Vice President of Finance and will faithfully and diligently perform the
services and functions relating to such positions or otherwise reasonably
incident to such position, provided that all such services and functions will
be reasonable and within Galan's area of expertise. Galan's specific duties
shall include those related to (i) coordinating all financial matters,
(ii) financial management, (iii) accounting, (iv) budgeting, (v) cash
management, and (vi) such other duties as the Company may reasonably direct.
Galan will, during the term of this Agreement (or any extension thereof),
devote his time, attention and skills and best efforts as a full time employee
to the promotion of the business of the Company.
3. TERM. This Agreement and Galan's employment shall commence on the
29th day of January, 1999, (the "Effective Date") and shall continue for a term
of three years ("Initial Term") unless terminated earlier in accordance with
this Agreement. The term of this Agreement may be extended by agreement of the
Company and Galan.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date hereof, Galan
will be paid a base salary of One Hundred Thousand dollars ($100,000) per year,
payable monthly, in arrears, in two monthly installments or in accordance with
the then current payroll policies of the Company or as otherwise agreed to by
the parties (the "Salary"). At any time and from time to time, the Salary may
be increased if so determined by the Company's board of directors after a
review of Galan's performance of his duties hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Galan;
b. The "Total Disability" (as herein defined) of Galan;
c. Written notice to Galan from the Company of termination for "Cause"
(as hereinafter defined);
d. The voluntary termination of this Agreement by either party upon sixty
(60) days' prior written notice;
<PAGE> 2
e. The later of three (3) years from the Effective Date of this Agreement or
the date to which this Agreement is extended in accordance with Section 3
above; or
f. Written notice to Galan from the Company for any reason without "Cause".
For purposes of Section 5b, the term "Total Disability" means physical or
mental disability, or both, determined to be (or reasonably expected to be,
based upon then available medical information) of not less than twelve (12)
months duration or more. The determination shall rest upon the opinion of the
physician regularly attending Galan. If the Company disagrees with said
physician's opinion, the Company may engage at their own expense a physician to
examine the Galan, and Galan hereby consents to such examination and to waive,
if applicable any privilege between the physician and Galan that may arise as a
result of said examination. If after conferring, the two physicians cannot
concur on a final opinion, they shall choose a third consulting physician whose
opinion shall control. The expense of the third consulting physician shall be
borne equally by the Galan and the Company.
For purposes of Section 5c, "Cause" means (i) Galan has failed to
substantially perform his duties as reasonably determined by any Officer of the
Company or the Board of Directors of the Company, (ii) Galan engages in poor
performance that is not cured within thirty (30) days after counseling by the
Company, (iii) Galan has failed to comply with the reasonable directives and
policies of the Board of Directors of the Company or of any Officer of the
Company, or (iv) Galan breaches his fiduciary duty to the Company or commits any
dishonest, unethical, fraudulent, or felonious act in respect to Galan's duties
to the Company.
6. BENEFITS. Galan shall be entitled to participate in any Company
benefits as they become available, if at all, including group medical and dental
insurance, life insurance, incentive compensation, deferred compensation, stock
option plans or other Company programs or plans. At reasonable times and upon
prior Company approval, Galan shall be entitled to three weeks paid vacation per
calendar year for each year employed during the term of this Agreement.
7. STOCK OPTIONS. Specifically subject to Section 10c and contingent upon
Galan being employed by the Company, Galan shall be granted options to purchase
100,000 shares of the Company's Common Stock (the "Stock Options") exercisable
at $8.00 per share, with 20,000 Stock Options to vest upon the Effective Date
and with the remaining 80,000 Stock Options to vest and be exercisable over the
three (3) year period from the Effective Date in accordance with Section 7.3(b)
of the Company's 1998 Stock Option Plan. In the event of any termination of
Galan's employment, any Stock Options that have not previously vested shall
immediately terminate. In addition, all Stock Options to be granted herein
shall be exercisable, except as otherwise set forth herein, in accordance with
the Company's 1998 Stock Option Plan and subject to Section 10c below.
8. LOAN. The Company will loan to Galan Twenty Thousand dollars ($20,000)
to be loaned and disbursed on the Effective Date. All amounts loaned will be
evidenced by a promissory note with interest at 10% per annum and with all
principal and accrued but unpaid interest due one (1) year from the Effective
Date if not sooner paid. The Company agrees that if Galan has been employed by
the Company for six continuous months from the Effective Date, 50% of the
principal balance and accrued but unpaid interest shall be forgiven and, if
Galan has been employed by the Company for a total of twelve continuous months
of employment by the Company, then the remaining principal balance and accrued,
but unpaid interest shall be forgiven by the Company and the Note evidencing
such loan shall be canceled.
-2-
<PAGE> 3
9. BUSINESS EXPENSES. Upon submission of proper documentation, the
Company shall pay or reimburse Galan for all reasonable and necessary office,
telephone, travel and other expenses, which are incurred by Galan in the
pursuit of Galan's duties on behalf of the Company.
10. NON-COMPETITION AND CONFIDENTIALITY.
a. Non-Competition. The Company and Galan acknowledge and agree that
Galan's services are of a special and unusual character which have a unique
value to the Company, the loss of which cannot be adequately compensated by
damages in an action at law and if used in competition with the Company, could
cause serious harm to the Company. Accordingly, Galan agrees that during the
term of this Agreement and for a period of two (2) years after the termination
of this employment by the Company, irrespective of the reason for such
termination, Galan will not (1) enter into any agreement with or directly or
indirectly solicit or attempt to solicit any employee or other representatives
of the Company (the "Company") for the purpose of causing them to leave the
Company to take employment with any other business entity, or (2) compete,
directly or indirectly, with the Company in any way and that Galan will not act
as an officer, director, employee, consultant, shareholder, lender or agent of
any entity engaged in any business of the same nature as, or in competition
with, the business in which the Company is now engaged, was engaged during
Galan's employment or is engaged at the time of Galan's termination of
employment, except for the ownership of less than five percent (5%) of the
outstanding capital stock of a publicly traded company.
b. Confidentiality.
(1) Galan acknowledges that in Galan's employment hereunder, Galan
will be making use of, acquiring and adding to the Company's trade secrets and
its confidential and proprietary information of a special and unique nature and
value relating to such matters as, but not limited to, the Company's business
operations, internal structure, financial affairs, programs, software systems,
procedures, manuals, confidential reports, lists of clients and prospective
clients and sales and marketing methods, as well as the amount, nature and type
of services, equipment and methods used and preferred by the Company's clients
and the fees paid by such clients, all of which shall be deemed to be
confidential information. Galan acknowledges that such confidential information
has been and will continue to be of central importance to the business of the
Company and that disclosure of it to or its use by others could cause
substantial loss to the Company. In consideration of employment by the Company,
Galan agrees that during the Initial Term and any renewal term of this
Agreement and upon and after leaving the employ of the Company for any reason
whatsoever, Galan shall not, for any purpose whatsoever, directly or
indirectly, divulge or disclose to any person or entity any of such
confidential information which was obtained by Galan as a result of the Galan's
employment with the Company or any trade secrets of the Company, but shall hold
all of the same confidential and inviolate.
(2) All contracts, agreements, financial books, records, instruments
and documents; client lists; memoranda; data; reports; programs; software,
tapes; Rolodexes; telephone and address books; letters; research; card decks;
listings; programming; and any other instruments, records or documents relating
or pertaining to clients serviced by the Company or Galan, the services
rendered by Galan, or the business of the Company (collectively, the "Records")
shall at all times be and remain the property of the Company. Upon termination
of this Agreement and Galan's employment under this Agreement for any reason
whatsoever, Galan shall return to the Company all Records (whether furnished by
the Company or prepared by Galan), and Galan shall neither make nor retain any
copies of any of such Records after such termination.
-3-
<PAGE> 4
(3) All inventions and other creations, whether or not patentable or
copyrightable, and all ideas, reports and other creative works, including,
without limitation, computer programs, manuals and related materials, made or
conceived in whole or in part by Galan while employed by the Company and within
one year thereafter, which relate in any manner whatsoever to the business,
existing or proposed, of the Company or any other business or research or
development effort in which the Company or any of its subsidiaries or
affiliates engages during Galan's employment by the Company will be disclosed
promptly by Galan to the Company and shall be the sole and exclusive property
of the Company. All copyrightable works created by Galan and covered by this
Section 10b(3) shall be deemed to be works for hire. Galan shall cooperate with
the Company in patenting or copyrighting all such inventions, ideas, reports
and other creative works, shall execute, acknowledge, seal and deliver all
documents tendered by the Company to evidence its ownership thereof through the
world, and shall cooperate with the Company obtaining, defending and enforcing
its rights therein.
c. Certain Claims Upon Termination. Galan understands that if within
one year prior to the termination of Galan's employment with the Company, Galan
has either (i) committed an act of theft, dishonesty, gross dereliction of
duty, fraud, embezzlement, misappropriation, or breach of fiduciary duty
against the Company or any other act of comparable misconduct against the
Company; or (ii) breached any of his obligations under this Agreement, then the
Company shall have the right to purchase any or all shares of Common Stock of
the Company owned by Galan at the time of such termination for a purchase price
equal to the amount that Galan paid for such shares, together with interest
thereon at a rate of ten percent (10%) per annum. If the Company desires to
exercise such right, it shall notify Galan within 60 days after the date of
such termination and Galan shall tender the shares being purchased by the
Company at the time and place designated in such notice from the Company upon
receipt of the purchase price for such shares. If Galan fails to tender such
shares, the shares shall be deemed to be canceled as of the date the Company
tenders payment of the purchase price thereof.
d. Enforceability. In the event of the breach of the covenants by either
party contained in this Section 10, it is understood that damages will be
difficult to ascertain and the Company may petition a court of law or equity
for injunctive relief in addition to any other relief which the Company may
have under the law, this Agreement or any other agreement executed in
connection herewith. In connection with the bringing of any legal or equitable
action for the enforcement of this Agreement, the Company shall be entitled to
recover, whether the Company seeks equitable relief, and regardless of what
relief is afforded, such reasonable attorneys' fees and expenses as the Company
may incur in prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 10 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the Company notwithstanding any
claim by Galan that the Company has violated or breached this Agreement or any
claim that Galan is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Galan represents and
warrants to the Company that Section 10 of this Agreement is enforceable by the
Company in accordance with its terms.
The parties hereto agree that to the extent that any provision or portion
of Section 10 of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to
the extent necessary in order that any such provision or portion thereof shall
be legally enforceable to the fullest extent permitted by applicable law; and
the parties hereto do further agree that any court of
-4-
<PAGE> 5
competent jurisdiction shall, and the parties hereto do hereby expressly
authorize, request and empower any court of competent jurisdiction to, enforce
any such provision or portion thereof or to modify any such provision or
portion thereof in order that any such provision or portion thereof shall be
enforced by such court to the fullest extent permitted by applicable law.
11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
12. NOTICES. Any notices, consents, demands, request, approvals and other
communications to be given under this Agreement by either party to the other
will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: quepasa.com, inc.
One Arizona Center
400 East Van Buren, Suite 400
Phoenix, AZ 85004
If to Galan: Juan Galan
Notices delivered personally will be deemed communicated as of actual receipt,
notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
14. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
15. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the
State of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
16. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
-5-
<PAGE> 6
17. GENDER AND NUMBER. When the context requires, the gender of all words
used herein will include the masculine, feminine and neuter, and the number of
all words will include the singular and plural.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
THE COMPANY:
quepasa.com, inc., a Nevada corporation
By: /s/ Jeffrey Peterson
-----------------------------------
Jeffrey Peterson, Chief Executive Officer
GALAN:
/s/ Juan Galan
--------------------------------
Juan Galan
-6-
<PAGE> 1
EXHIBIT 10.08
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 9th
day of November, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation
(the "Company") and BRYAN ROSS ("Ross").
WHEREAS, the Company desires to employ Ross as provided herein; and,
WHEREAS, Ross desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Ross and Ross hereby accepts
employment with the Company as its Chief Technical Officer upon the terms and
conditions hereinafter set forth.
2. DUTIES. Ross will serve the Company as its Chief Technical Officer
and will faithfully and diligently perform the services and functions relating
to such position or otherwise reasonably incident to such position, provided
that all such services and functions will be reasonable and within Ross's area
of expertise. Ross's specific duties shall include overseeing applications'
development and such other duties as the Company may reasonably direct. Ross
will, during the term of this Agreement (or any extension thereof), devote his
time, attention and skills and best efforts as a full time employee to the
promotion of the business of the Company.
3. TERM. This Agreement and Ross's employment shall commence on the 9th
day of November, 1998, (the "Effective Date") and shall continue for a term of
two years ("Initial Term") unless terminated earlier in accordance with this
Agreement. The term of this Agreement may be extended by agreement of the
Company and Ross.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date hereof, Ross will
be paid a base salary of Seventy Five Thousand dollars ($75,000) per year,
payable in accordance with the then current payroll policies of the Company or
as otherwise agreed to by the parties (the "Salary"). At any time and from time
to time, the Salary may be increased if so determined by the Company's board of
directors after a review of Ross's performance of his duties hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Ross;
b. The "Total Disability" (as hereinafter defined) of Ross;
c. Written notice to Ross from the Company of termination for
"Cause" (as hereinafter defined);
d. The voluntary termination of this Agreement by Ross upon
thirty (30) days prior written notice;
<PAGE> 2
e. The later of two (2) years from the Effective Date of this
Agreement or the date to which this Agreement is extended in
accordance with Section 3 above; or
f. Written notice to Ross from the Company for any reason without
"Cause".
For purposes of Section 5b, the term "Total Disability" means physical
or mental disability, or both, determined to be (or reasonably expected to be,
based upon then available medical information) of not less than twelve (12)
months duration or more. The determination shall rest upon the opinion of the
physician regularly attending Ross. If the Company disagrees with said
physician's opinion, the Company may engage at their own expense a physician to
examine the Ross, and Ross hereby consents to such examination and to waive, if
applicable any privilege between the physician and Ross that may arise as a
result of said examination. If after conferring, the two physicians cannot
concur on a final opinion, they shall choose a third consulting physician whose
opinion shall control. The expense of the third consulting physician shall be
borne equally by the Ross and the Company.
For purposes of Section 5c, "Cause" means (i) Ross has failed to
substantially perform his duties as reasonably determined by any Officer of the
Company or the Board of Directors of the Company, (ii) Ross engages in poor
performance that is not cured within thirty (30) days after counseling by the
Company, (iii) Ross has failed to comply with the reasonable directives and
policies of the Board of Directors of the Company or of any Officer of the
Company, or (iv) Ross breaches his fiduciary duty to the Company or commits any
dishonest, unethical, fraudulent, or felonious act in respect to Ross's duties
to the Company.
6. BENEFITS. Ross shall be entitled to receive any benefits, including
health insurance, life insurance, vacation time, etc., which are normal and
customary Company benefits for a like position.
7. LOAN. The Company will loan to Ross up to Thirty Thousand dollars
($30,000) with Fifteen Thousand dollars ($15,000) to be loaned and disbursed on
the Effective Date and the remaining Fifteen Thousand ($15,000) to be loaned and
disbursed thirty (30) days from the Effective Date. All amounts loaned will be
evidenced by a promissory note with interest at 10% per annum and with all
principal and accrued but unpaid interest due one (1) year from the Effective
Date if not sooner paid. The Company agrees that if Ross has been employed by
the Company for six continuous months from the Effective Date, 50% of the
principal balance and accrued but unpaid interest shall be forgiven and, if Ross
has been employed by the Company for an additional six continuous months for a
total of twelve continuous months of employment by the Company, then the
remaining principal balance and accrued, but unpaid interest shall be forgiven
by the Company and the Note evidencing such loan shall be canceled.
8. STOCK BONUS. It is acknowledged that during the initial term of this
Agreement, the Company may complete an initial public offering of its
securities. The Company agrees to reserve 50,000 shares of its Common Stock (the
"Shares") for issuance to Ross in accordance with the terms of this Section 8,
and, as an inducement for Ross's continued employment by the Company, agrees to
issue such Shares to Ross as follows:
a. 25,000 shares to be issued six (6) months from the closing
of the IPO (the "Initial Issuance Date") so long as Ross has been continually
employed by the Company from the Effective Date until the Initial Issuance Date.
-2-
<PAGE> 3
b. The remaining 25,000 Shares to be issued one (1) year from
the Closing of the IPO (the "Second Issuance Date") so long as Ross has been
continually employed by the Company from the Effective Date until the Second
Issuance Date.
Prior to the issuance of the Shares, Ross shall execute a Subscription
Agreement and Letter of Investment Intent substantially the form as set forth in
Exhibit A attached hereto and made a part hereof.
9. NON-COMPETITION AND CONFIDENTIALITY.
a. Non-Competition. Ross agrees that during the term of this Agreement,
Ross will not (1) enter into any agreement with or directly or indirectly
solicit or attempt to solicit any employee or other representatives of the
Company (the "Company") for the purpose of causing them to leave the Company to
take employment with any other business entity, or (2) compete, directly or
indirectly, with the Company in any way and that Ross will not act as an
officer, director, employee, consultant, shareholder, lender or agent of any
entity engaged in any business of the same nature as, or in competition with,
the business in which the Company is now engaged except for the ownership of
less than five percent (5%) of the outstanding capital stock of a publicly
traded company. Restrictions regarding competition by Ross shall only apply to
competing businesses or entities that operate in the continental United States.
b. Confidentiality.
(1) Ross acknowledges that in Ross's employment hereunder,
Ross will be making use of, acquiring and adding to the Company's trade secrets
and its confidential and proprietary information of a special and unique nature
and value relating to such matters as, but not limited to, the Company's
business operations, internal structure, financial affairs, programs, software
systems, procedures, manuals, confidential reports, lists of clients and
prospective clients and sales and marketing methods, as well as the amount,
nature and type of services, equipment and methods used and preferred by the
Company's clients and the fees paid by such clients, all of which shall be
deemed to be confidential information. Ross acknowledges that such confidential
information has been and will continue to be of central importance to the
business of the Company and that disclosure of it to or its use by others could
cause substantial loss to the Company. In consideration of employment by the
Company, Ross agrees that during the Initial Term and any renewal term of this
Agreement and upon and after leaving the employ of the Company for any reason
whatsoever, Ross shall not, for any purpose whatsoever, directly or indirectly,
divulge or disclose to any person or entity any of such confidential information
which was obtained by Ross as a result of the Ross's employment with the Company
or any trade secrets of the Company, but shall hold all of the same confidential
and inviolate.
(2) All contracts, agreements, financial books, records,
instruments and documents; client lists; memoranda; data; reports; programs;
software, tapes; Rolodexes; telephone and address books; letters; research; card
decks; listings; programming; and any other instruments, records or documents
relating or pertaining to clients serviced by the Company or Ross, the services
rendered by Ross, or the business of the Company (collectively, the "Records")
shall at all times be and remain the property of the Company. Upon termination
of this Agreement and Ross's employment under this Agreement for any reason
whatsoever, Ross shall return to the Company all Records (whether furnished by
the Company or prepared by Ross, and Ross shall neither make nor retain any
copies of any of such Records after such termination.
-3-
<PAGE> 4
(3) All inventions and other creations, whether or not
patentable or copyrightable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by Ross while employed by the Company and
within one year thereafter, which relate in any manner whatsoever to the
business, existing or proposed, of the Company or any other business or research
or development effort in which the Company or any of its subsidiaries or
affiliates engages during Ross's employment by the Company will be disclosed
promptly by Ross to the Company and shall be the sole and exclusive property of
the Company. All copyrightable works created by Ross and covered by this Section
9b(3) shall be deemed to be works for hire. Ross shall cooperate with the
Company in patenting or copyrighting all such inventions, ideas, reports and
other creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof through the world, and
shall cooperate with the Company obtaining, defending and enforcing its rights
therein.
c. Enforceability. In the event of the breach of the covenants
contained in this Section 9, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or equity for injunctive
relief in addition to any other relief which the Company may have under the law,
this Agreement or any other agreement executed in connection herewith. In
connection with the bringing of any legal or equitable action for the
enforcement of this Agreement, the Company shall be entitled to recover, whether
the Company seeks equitable relief, and regardless of what relief is afforded,
such reasonable attorneys' fees and expenses as the Company may incur in
prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 9 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the Company notwithstanding any claim
by Ross that the Company has violated or breached this Agreement or any claim
that Ross is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Ross represents and
warrants to the Company that Section 9 of this Agreement is enforceable by the
Company in accordance with its terms.
10. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
11. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: Internet Century, Inc.
One Arizona Center
400 East Van Buren, Suite 545
Phoenix, AZ 85004
If to Ross: Bryan Ross
1515 S. Extension #1088
Mesa, AZ 85210
-4-
<PAGE> 5
Notices delivered personally will be deemed communicated as of actual receipt,
notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
12. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
13. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
14. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
15. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
16. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
INTERNET CENTURY, INC., a Nevada corporation
By: /s/ Michael D. Silberman
----------------------------------------------
Michael D. Silberman, Chief Financial Officer
ROSS:
/s/ Bryan Ross
----------------------------------------------
Bryan Ross
-6-
<PAGE> 6
AMENDMENT OF EMPLOYMENT AGREEMENT
This Amendment of Employment Agreement is entered into as of the 17th
day of February, 1999, by and between quepasa.com, inc., a Nevada corporation
(the "Employer"), and Bryan Ross (the "Employee").
Explanatory Statements
A. Employer and Employee entered into an Employment Agreement dated as
of November 9, 1998 (the "Employment Agreement") whereby the Employer employed
the Employee.
B. The Employer and Employee desire to amend and modify certain terms
and conditions of the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Employment Agreement is hereby amended and
modified as follows:
1. Section numbered 8, "Stock Bonus" is deleted in its entirety and a
new Section numbered 8 is inserted in its place to read as follows:
"8. STOCK OPTIONS. Specifically subject to Section 8a and 8b
below and Section 10c Ross shall be granted options to purchase 150,000
shares of the Company's Common Stock (the "Shares") exercisable at
$8.00 per share to vest and be exercisable immediately and otherwise in
accordance with the Company's 1998 Stock Option Plan and in accordance
with the following and Section 10c below:
(a) If Ross' employment is terminated for any reason other
than "for Cause" as defined herein, then the unexercised options shall
be exercisable for a period of either (i) forty-five (45) days from the
termination of Ross' employment or (ii) the end of the initial term of
this Agreement or any extension thereof; whichever period is later.
(b) If Ross' employment by the Company is terminated "for
Cause" as defined in this Agreement, then all unexercised options
granted to Ross shall immediately terminate and not be exercisable upon
notice of Ross' termination of employment "for Cause."
Ross acknowledges that the Company is in the process of
completing an initial public offering ("IPO") of its securities and
that as part of the IPO, Ross may be required to lock up the Shares for
a period of six months from the effective date of the IPO. Accordingly,
Ross agrees the Shares will be subject to any lock up agreement
required in regard to the IPO and will execute any agreement to
evidence such lock up of Shares."
2. Section numbered 9, Subsection a "Non-competition" is hereby amended
to read as follows:
"a. Non-Competition. The Company and Ross acknowledge and
agree that Ross' services are of a special and unusual character which
have a unique value to the Company, the loss of which cannot be
adequately compensated by damages in an action at law and if used in
competition with
<PAGE> 7
the Company, could cause serious harm to the Company. Accordingly, Ross
agrees that during the term of this Agreement and for a period of two
(2) years after the termination of this employment by the Company,
irrespective of the reason for such termination, Ross will not (1)
enter into any agreement with or directly or indirectly solicit or
attempt to solicit any employee or other representatives of the Company
(the "Company") for the purpose of causing them to leave the Company to
take employment with any other business entity, or (2) compete,
directly or indirectly, with the Company in any way and that Ross will
not act as an officer, director, employee, consultant, shareholder,
lender or agent of any entity engaged in any business of the same
nature as, or in competition with, the business in which the Company is
now engaged, was engaged during Ross' employment or is engaged at the
time of Ross' termination of employment, except for the ownership of
less than five percent (5%) of the outstanding capital stock of a
publicly traded company."
3. Section numbered 9, "NON-COMPETITION AND CONFIDENTIALITY" is hereby
amended by the addition of a new subsection c to read as follows:
"c. Certain Claims Upon Termination. Ross understands that if
within one year prior to the termination of Ross employment with the
Company, Ross has either (i) committed an act of theft, dishonesty,
gross dereliction of duty, fraud, embezzlement, misappropriation, or
breach of fiduciary duty against the Company or any other act of
comparable misconduct against the Company; or (ii) breached any of his
obligations under this Agreement, then the Company shall have the right
to purchase any or all shares of Common Stock of the Company owned by
Ross at the time of such termination for a purchase price equal to the
amount that Ross paid for such shares, together with interest thereon
at a rate of ten percent (10%) per annum. If the Company desires to
exercise such right, it shall notify Ross within 60 days after the date
of such termination and Ross shall tender the shares being purchased by
the Company at the time and place designated in such notice from the
Company upon receipt of the purchase price for such shares. If Ross
fails to tender such shares, the shares shall be deemed to be canceled
as of the date the Company tenders payment of the purchase price
thereof."
4. Section numbered 9, Subsection c "Enforceability " is hereby amended
to be Section numbered 9, Subsection d and is amended by the addition of the
following at the end of such Subsection:
"The parties hereto agree that to the extent that any
provision or portion of Section 9 of this Agreement shall be held,
found or deemed to be unreasonable, unlawful or unenforceable by a
court of competent jurisdiction, then any such provision or portion
thereof shall be deemed to be modified to the extent necessary in order
that any such provision or portion thereof shall be legally enforceable
to the fullest extent permitted by applicable law; and the parties
hereto do further agree that any court of competent jurisdiction shall,
and the parties hereto do hereby expressly authorize, request and
empower any court of competent jurisdiction to, enforce any such
provision or portion thereof or to modify any such provision or portion
thereof in order that any such provision or portion thereof shall be
enforced by such court to the fullest extent permitted by applicable
law."
5. Section numbered 11, "NOTICES" is amended by changing the
notification address of the Company to read as follows:
"If to the Company: quepasa.com, inc.
One Arizona Center
400 E. Van Buren, Suite 400
Phoenix, AZ 85004"
<PAGE> 8
6. Any and all other terms and conditions of the Employment Agreement
not amended or modified herein shall remain the same and in full force and
effect.
Employer:
QUEPASA.COM, INC.
By: /s/ Jeffrey Peterson
------------------------------------------
Jeffrey Peterson, Chief Executive Officer
Employee:
/s/ Bryan Ross
------------------------------------------
Bryan Ross
3
<PAGE> 1
EXHIBIT 10.09
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 9th
day of November, 1998, by and among INTERNET CENTURY, INC., a Nevada corporation
(the "Company") and MICHAEL OFFENBECHER ("Offenbecher").
WHEREAS, the Company desires to employ Offenbecher as provided herein;
and,
WHEREAS, Offenbecher desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Offenbecher and Offenbecher
hereby accepts employment with the Company as a Programer upon the terms and
conditions hereinafter set forth.
2. DUTIES. Offenbecher will serve the Company as a Programer and will
faithfully and diligently perform the services and functions relating to such
position or otherwise reasonably incident to such position, provided that all
such services and functions will be reasonable and within Offenbecher's area of
expertise. Offenbecher's specific duties shall include those related to those of
a Programer and such other duties as the Company may reasonably direct.
Offenbecher will, during the term of this Agreement (or any extension thereof),
devote his time, attention and skills and best efforts as a full time employee
to the promotion of the business of the Company.
3. TERM. This Agreement and Offenbecher's employment shall commence on
the 9th day of November, 1998, (the "Effective Date") and shall continue for a
term of two years ("Initial Term") unless terminated earlier in accordance with
this Agreement. The term of this Agreement may be extended by agreement of the
Company and Offenbecher.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date hereof,
Offenbecher will be paid a base salary of Sixty Five Thousand dollars ($65,000)
per year, payable in accordance with the then current payroll policies of the
Company or as otherwise agreed to by the parties (the "Salary"). At any time and
from time to time, the Salary may be increased if so determined by the Company's
board of directors after a review of Offenbecher's performance of his duties
hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Offenbecher;
b. The "Total Disability" (as hereinafter defined) of
Offenbecher;
c. Written notice to Offenbecher from the Company of termination
for "Cause" (as hereinafter defined);
d. The voluntary termination of this Agreement by Offenbecher
upon thirty (30) days prior written notice;
<PAGE> 2
e. The later of two (2) years from the Effective Date of this
Agreement or the date to which this Agreement is extended in
accordance with Section 3 above; or
f. Written notice to Offenbecher from the Company for any reason
without "Cause".
For purposes of Section 5b, the term "Total Disability" means physical
or mental disability, or both, determined to be (or reasonably expected to be,
based upon then available medical information) of not less than twelve (12)
months duration or more. The determination shall rest upon the opinion of the
physician regularly attending Offenbecher. If the Company disagrees with said
physician's opinion, the Company may engage at their own expense a physician to
examine the Offenbecher, and Offenbecher hereby consents to such examination and
to waive, if applicable any privilege between the physician and Offenbecher that
may arise as a result of said examination. If after conferring, the two
physicians cannot concur on a final opinion, they shall choose a third
consulting physician whose opinion shall control. The expense of the third
consulting physician shall be borne equally by the Offenbecher and the Company.
For purposes of Section 5c, "Cause" means (i) Offenbecher has failed to
substantially perform his duties as reasonably determined by any Officer of the
Company or the Board of Directors of the Company, (ii) Offenbecher engages in
poor performance that is not cured within thirty (30) days after counseling by
the Company, (iii) Offenbecher has failed to comply with the reasonable
directives and policies of the Board of Directors of the Company or of any
Officer of the Company, or (iv) Offenbecher breaches his fiduciary duty to the
Company or commits any dishonest, unethical, fraudulent, or felonious act in
respect to Offenbecher's duties to the Company.
6. BENEFITS. Offenbecher shall be entitled to receive any benefits,
including health insurance, life insurance, vacation time, etc., which are
normal and customary Company benefits for a like position.
7. LOAN. The Company will loan to Offenbecher up to Five Thousand
dollars ($5,000) with Two Thousand Five Hundred Dollars ($2,500) to be loaned
and disbursed on the Effective Date and the remaining Two Thousand Five Hundred
($2,500) to be loaned and disbursed thirty (30) days from the Effective Date.
All amounts loaned will be evidenced by a promissory note with interest at 10%
per annum and with all principal and accrued but unpaid interest due one (1)
year from the Effective Date if not sooner paid. The Company agrees that if
Offenbecher has been employed by the Company for six continuous months from the
Effective Date, 50% of the principal balance and accrued but unpaid interest
shall be forgiven and, if Offenbecher has been employed by the Company for an
additional six continuous months for a total of twelve continuous months of
employment by the Company, then the remaining principal balance and accrued, but
unpaid interest shall be forgiven by the Company and the Note evidencing such
loan shall be canceled.
8. NON-COMPETITION AND CONFIDENTIALITY.
a. Non-Competition. Offenbecher agrees that during the term of this
Agreement, Offenbecher will not (1) enter into any agreement with or directly or
indirectly solicit or attempt to solicit any employee or other representatives
of the Company (the "Company") for the purpose of causing them to leave the
Company to take employment with any other business entity, or (2) compete,
directly or indirectly, with the Company in any way and that Offenbecher will
not act as an officer, director, employee, consultant, shareholder, lender or
agent of any entity engaged in any business of the same nature as, or in
competition with, the business in which the Company is now engaged except for
the ownership of less than five percent
-2-
<PAGE> 3
(5%) of the outstanding capital stock of a publicly traded company. Restrictions
regarding competition by Offenbecher shall only apply to competing businesses or
entities that operate in the continental United States.
b. Confidentiality.
(1) Offenbecher acknowledges that in Offenbecher's employment
hereunder, Offenbecher will be making use of, acquiring and adding to the
Company's trade secrets and its confidential and proprietary information of a
special and unique nature and value relating to such matters as, but not limited
to, the Company's business operations, internal structure, financial affairs,
programs, software systems, procedures, manuals, confidential reports, lists of
clients and prospective clients and sales and marketing methods, as well as the
amount, nature and type of services, equipment and methods used and preferred by
the Company's clients and the fees paid by such clients, all of which shall be
deemed to be confidential information. Offenbecher acknowledges that such
confidential information has been and will continue to be of central importance
to the business of the Company and that disclosure of it to or its use by others
could cause substantial loss to the Company. In consideration of employment by
the Company, Offenbecher agrees that during the Initial Term and any renewal
term of this Agreement and upon and after leaving the employ of the Company for
any reason whatsoever, Offenbecher shall not, for any purpose whatsoever,
directly or indirectly, divulge or disclose to any person or entity any of such
confidential information which was obtained by Offenbecher as a result of the
Offenbecher's employment with the Company or any trade secrets of the Company,
but shall hold all of the same confidential and inviolate.
(2) All contracts, agreements, financial books, records,
instruments and documents; client lists; memoranda; data; reports; programs;
software, tapes; Rolodexes; telephone and address books; letters; research; card
decks; listings; programming; and any other instruments, records or documents
relating or pertaining to clients serviced by the Company or Offenbecher, the
services rendered by Offenbecher, or the business of the Company (collectively,
the "Records") shall at all times be and remain the property of the Company.
Upon termination of this Agreement and Offenbecher's employment under this
Agreement for any reason whatsoever, Offenbecher shall return to the Company all
Records (whether furnished by the Company or prepared by Offenbecher, and
Offenbecher shall neither make nor retain any copies of any of such Records
after such termination.
(3) All inventions and other creations, whether or not
patentable or copyrightable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by Offenbecher while employed by the
Company and within one year thereafter, which relate in any manner whatsoever to
the business, existing or proposed, of the Company or any other business or
research or development effort in which the Company or any of its subsidiaries
or affiliates engages during Offenbecher's employment by the Company will be
disclosed promptly by Offenbecher to the Company and shall be the sole and
exclusive property of the Company. All copyrightable works created by
Offenbecher and covered by this Section 8b(3) shall be deemed to be works for
hire. Offenbecher shall cooperate with the Company in patenting or copyrighting
all such inventions, ideas, reports and other creative works, shall execute,
acknowledge, seal and deliver all documents tendered by the Company to evidence
its ownership thereof through the world, and shall cooperate with the Company
obtaining, defending and enforcing its rights therein.
c. Enforceability. In the event of the breach of the covenants
contained in this Section 8, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or
-3-
<PAGE> 4
equity for injunctive relief in addition to any other relief which the Company
may have under the law, this Agreement or any other agreement executed in
connection herewith. In connection with the bringing of any legal or equitable
action for the enforcement of this Agreement, the Company shall be entitled to
recover, whether the Company seeks equitable relief, and regardless of what
relief is afforded, such reasonable attorneys' fees and expenses as the Company
may incur in prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 8 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the Company notwithstanding any claim
by Offenbecher that the Company has violated or breached this Agreement or any
claim that Offenbecher is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Offenbecher
represents and warrants to the Company that Section 8 of this Agreement is
enforceable by the Company in accordance with its terms.
9. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
10. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: Internet Century, Inc.
One Arizona Center
400 East Van Buren, Suite 545
Phoenix, AZ 85004
If to Offenbecher: Michael Offenbecher
1202 E. Seahorse Lane
Gilbert, AZ 85234
Notices delivered personally will be deemed communicated as of actual receipt,
notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
11. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
12. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
-4-
<PAGE> 5
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
13. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
14. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
15. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
INTERNET CENTURY, INC., a Nevada corporation
By: /s/ Michael D. Silberman
---------------------------------------------
Michael D. Silberman, Chief Financial Officer
OFFENBECHER:
/s/ Michael Offenbecher
---------------------------------------------
Michael Offenbecher
-5-
<PAGE> 1
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 11th
day of January, 1999, by and among quepasa.com, inc., a Nevada corporation (the
"Company") and VICTOR ROLDAN ("Roldan").
WHEREAS, the Company desires to employ Roldan as provided herein; and,
WHEREAS, Roldan desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Roldan and Roldan hereby
accepts employment with the Company as Vice President - Legal Affairs upon the
terms and conditions hereinafter set forth.
2. DUTIES. Roldan will serve the Company as Vice President - Legal
Affairs and will faithfully and diligently perform the services and functions
relating to such position or otherwise reasonably incident to such position,
provided that all such services and functions will be reasonable and within
Roldan's area of expertise. Roldan's specific duties shall include those related
to (i) coordinating legal matters, (ii) negotiating contracts with companies
commonly known as Univision, Galavision, Telemuendo and Sony, or their
subsidiaries or affiliates, and (iii) and such other duties as the Company may
reasonably direct. Roldan will, during the term of this Agreement (or any
extension thereof), devote his time, attention and skills and best efforts as a
full time employee to the promotion of the business of the Company.
3. TERM. This Agreement and Roldan's employment shall commence on the
11th day of January, 1999, (the "Effective Date") and shall continue for a term
of three years ("Initial Term") unless terminated earlier in accordance with
this Agreement. The term of this Agreement may be extended by agreement of the
Company and Roldan.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date hereof, Roldan
will be paid a base salary of Sixty Thousand dollars ($60,000) per year, payable
in accordance with the then current payroll policies of the Company or as
otherwise agreed to by the parties (the "Salary"). At any time and from time to
time, the Salary may be increased if so determined by the Company's board of
directors after a review of Roldan's performance of his duties hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Roldan;
b. The "Total Disability" (as hereinafter defined) of Roldan;
c. Written notice to Roldan from the Company of termination for
"Cause" (as hereinafter defined);
<PAGE> 2
d. The voluntary termination of this Agreement by Roldan upon
thirty (30) days prior written notice;
e. The later of three (3) years from the Effective Date of this
Agreement or the date to which this Agreement is extended in
accordance with Section 3 above; or
f. Written notice to Roldan from the Company for any reason
without "Cause".
For purposes of Section 5b, the term "Total Disability" means physical
or mental disability, or both, determined to be (or reasonably expected to be,
based upon then available medical information) of not less than twelve (12)
months duration or more. The determination shall rest upon the opinion of the
physician regularly attending Roldan. If the Company disagrees with said
physician's opinion, the Company may engage at their own expense a physician to
examine the Roldan, and Roldan hereby consents to such examination and to waive,
if applicable any privilege between the physician and Roldan that may arise as a
result of said examination. If after conferring, the two physicians cannot
concur on a final opinion, they shall choose a third consulting physician whose
opinion shall control. The expense of the third consulting physician shall be
borne equally by the Roldan and the Company.
For purposes of Section 5c, "Cause" means (i) Roldan has failed to
substantially perform his duties as reasonably determined by any Officer of the
Company or the Board of Directors of the Company, (ii) Roldan engages in poor
performance that is not cured within thirty (30) days after counseling by the
Company, (iii) Roldan has failed to comply with the reasonable directives and
policies of the Board of Directors of the Company or of any Officer of the
Company, or (iv) Roldan breaches his fiduciary duty to the Company or commits
any dishonest, unethical, fraudulent, or felonious act in respect to Roldan's
duties to the Company.
6. BENEFITS. Roldan shall be entitled to receive any benefits,
including health insurance, life insurance, vacation time, etc., which are
normal and customary Company benefits for a like position. In addition, for the
first six (6) months of the term of this Agreement, the Company shall pay the
rental for the current apartment used by Roldan at 200 E. Fillmore, Apartment
219, Phoenix, Arizona 85004. In addition, for four (4) months from the Effective
Date, the Company agrees to reimburse Roldan for airfare expense in coach class
between Phoenix, Arizona and Santa Barbara, California no more than once per
week.
7. LOAN. The Company will loan to Roldan Five Thousand dollars ($5,000)
to be loaned and disbursed on the Effective Date. All amounts loaned will be
evidenced by a promissory note with interest at 10% per annum and with all
principal and accrued but unpaid interest due one (1) year from the Effective
Date if not sooner paid. The Company agrees that if Roldan has been employed by
the Company for six continuous months from the Effective Date, 50% of the
principal balance and accrued but unpaid interest shall be forgiven and, if
Roldan has been employed by the Company for a total of twelve continuous months
of employment by the Company, then the remaining principal balance and accrued,
but unpaid interest shall be forgiven by the Company and the Note evidencing
such loan shall be canceled.
8. STOCK OPTIONS. Specifically subject to Section 8a and 8b below and
contingent upon Roldan being employed by the Company, Roldan shall be granted
options to purchase 20,000 shares of the Company's Common Stock exercisable at
$1.00 per share (the "Stock Options"), pursuant to and in accordance with the
following:
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<PAGE> 3
(a) If Roldan's employment is terminated for any reason other than "for
Cause" as defined herein, then the unexercised options shall be exercisable for
a period of either (i) forty-five (45) days from the termination of Roldan's
employment or (ii) the end of the initial term of this Agreement or any
extension thereof; whichever period of later.
(b) If Roldan's employment by the Company is terminated "for Cause" as
defined in this Agreement, then all unexercised options granted to Roldan shall
immediately terminate and not be exercisable upon notice of Roldan's termination
of employment "for Cause."
9. NON-COMPETITION AND CONFIDENTIALITY.
a. Non-Competition. Roldan agrees that during the term of this
Agreement, Roldan will not (1) enter into any agreement with or directly or
indirectly solicit or attempt to solicit any employee or other representatives
of the Company (the "Company") for the purpose of causing them to leave the
Company to take employment with any other business entity, or (2) compete,
directly or indirectly, with the Company in any way and that Roldan will not act
as an officer, director, employee, consultant, shareholder, lender or agent of
any entity engaged in any business of the same nature as, or in competition
with, the business in which the Company is now engaged except for the ownership
of less than five percent (5%) of the outstanding capital stock of a publicly
traded company. Restrictions regarding competition by Roldan shall only apply to
competing businesses or entities that operate in the continental United States.
b. Confidentiality.
(1) Roldan acknowledges that in Roldan's employment hereunder,
Roldan will be making use of, acquiring and adding to the Company's trade
secrets and its confidential and proprietary information of a special and unique
nature and value relating to such matters as, but not limited to, the Company's
business operations, internal structure, financial affairs, programs, software
systems, procedures, manuals, confidential reports, lists of clients and
prospective clients and sales and marketing methods, as well as the amount,
nature and type of services, equipment and methods used and preferred by the
Company's clients and the fees paid by such clients, all of which shall be
deemed to be confidential information. Roldan acknowledges that such
confidential information has been and will continue to be of central importance
to the business of the Company and that disclosure of it to or its use by others
could cause substantial loss to the Company. In consideration of employment by
the Company, Roldan agrees that during the Initial Term and any renewal term of
this Agreement and upon and after leaving the employ of the Company for any
reason whatsoever, Roldan shall not, for any purpose whatsoever, directly or
indirectly, divulge or disclose to any person or entity any of such confidential
information which was obtained by Roldan as a result of the Roldan's employment
with the Company or any trade secrets of the Company, but shall hold all of the
same confidential and inviolate.
(2) All contracts, agreements, financial books, records,
instruments and documents; client lists; memoranda; data; reports; programs;
software, tapes; Rolodexes; telephone and address books; letters; research; card
decks; listings; programming; and any other instruments, records or documents
relating or pertaining to clients serviced by the Company or Roldan, the
services rendered by Roldan, or the business of the Company (collectively, the
"Records") shall at all times be and remain the property of the Company. Upon
termination of this Agreement and Roldan's employment under this Agreement for
any reason whatsoever, Roldan shall return to the Company all Records (whether
furnished by the
-3-
<PAGE> 4
Company or prepared by Roldan), and Roldan shall neither make nor retain any
copies of any of such Records after such termination.
(3) All inventions and other creations, whether or not
patentable or copyrightable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by Roldan while employed by the Company
and within one year thereafter, which relate in any manner whatsoever to the
business, existing or proposed, of the Company or any other business or research
or development effort in which the Company or any of its subsidiaries or
affiliates engages during Roldan's employment by the Company will be disclosed
promptly by Roldan to the Company and shall be the sole and exclusive property
of the Company. All copyrightable works created by Roldan and covered by this
Section 9b(3) shall be deemed to be works for hire. Roldan shall cooperate with
the Company in patenting or copyrighting all such inventions, ideas, reports and
other creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof through the world, and
shall cooperate with the Company obtaining, defending and enforcing its rights
therein.
c. Enforceability. In the event of the breach of the covenants
contained in this Section 9, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or equity for injunctive
relief in addition to any other relief which the Company may have under the law,
this Agreement or any other agreement executed in connection herewith. In
connection with the bringing of any legal or equitable action for the
enforcement of this Agreement, the Company shall be entitled to recover, whether
the Company seeks equitable relief, and regardless of what relief is afforded,
such reasonable attorneys' fees and expenses as the Company may incur in
prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 9 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the Company notwithstanding any claim
by Roldan that the Company has violated or breached this Agreement or any claim
that Roldan is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Roldan represents
and warrants to the Company that Section 9 of this Agreement is enforceable by
the Company in accordance with its terms.
10. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
11. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: quepasa.com, inc.
One Arizona Center
400 East Van Buren, Suite 545
Phoenix, AZ 85004
If to Roldan: Victor Roldan
200 E. Fillmore, Apt. 219
Phoenix, AZ 85004
-4-
<PAGE> 5
Notices delivered personally will be deemed communicated as of actual receipt,
notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
12. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
13. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
14. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
15. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
16. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
quepasa.com, inc., a Nevada corporation
By: /s/ Jeffrey Peterson
-----------------------------------------
Jeffrey Peterson, Chief Executive Officer
ROLDAN:
/s/ Victor Roldan
-----------------------------------------
Victor Roldan
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<PAGE> 1
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 20th
day of January, 1999, by and among quepasa.com, inc., a Nevada corporation (the
"Company") and Luis Emiro Garcia ("Garcia").
WHEREAS, the Company desires to employ Garcia as provided herein; and,
WHEREAS, Garcia desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Garcia and Garcia hereby
accepts employment with the Company as Vice President of Content and Design upon
the terms and conditions hereinafter set forth.
2. DUTIES. Garcia will serve the Company as Vice President of Content
and Design and will faithfully and diligently perform the services and functions
relating to such positions or otherwise reasonably incident to such position,
provided that all such services and functions will be reasonable and within
Garcia's area of expertise. Garcia's specific duties shall include those related
to coordinating the design and content of the Company's products to increase
their appeal to the Spanish speaking community and such other duties as the
Company may reasonably direct. Garcia will, during the term of this Agreement
(or any extension thereof), devote his time, attention and skills and best
efforts as a full time employee to the promotion of the business of the Company.
3. TERM. This Agreement and Garcia's employment shall commence on the
15th day of February, 1999, (the "Effective Date") and shall continue for a term
of two years ("Initial Term") unless terminated earlier in accordance with this
Agreement. The term of this Agreement may be extended by agreement of the
Company and Garcia.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date hereof, Garcia
will be paid a base salary of Seventy Five Thousand dollars ($75,000) per year,
payable in accordance with the then current payroll policies of the Company or
as otherwise agreed to by the parties (the "Salary"). At any time and from time
to time, the Salary may be increased if so determined by the Company's board of
directors after a review of Garcia's performance of his duties hereunder. After
six months of continuous employment by the Company, the Company will review
Garcia's performance and Garcia, based upon such review, shall have the
opportunity to negotiate an increase of his salary and/or a bonus in the form of
cash and/or stock.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events:
a. The death of Garcia;
b. The "Total Disability" (as hereinafter defined) of Garcia;
c. Written notice to Garcia from the Company of termination for
"Cause" (as hereinafter
<PAGE> 2
defined);
d. The voluntary termination of this Agreement by either party
upon sixty (60) days prior written notice;
e. The later of two (2) years from the Effective Date of this
Agreement or the date to which this Agreement is extended in
accordance with Section 3 above; or
f. Written notice to Garcia from the Company for any reason
without "Cause".
For purposes of Section 5b, the term "Total Disability" means physical
or mental disability, or both, determined to be (or reasonably expected to be,
based upon then available medical information) of not less than twelve (12)
months duration or more. The determination shall rest upon the opinion of the
physician regularly attending Garcia. If the Company disagrees with said
physician's opinion, the Company may engage at their own expense a physician to
examine the Garcia, and Garcia hereby consents to such examination and to waive,
if applicable any privilege between the physician and Garcia that may arise as a
result of said examination. If after conferring, the two physicians cannot
concur on a final opinion, they shall choose a third consulting physician whose
opinion shall control. The expense of the third consulting physician shall be
borne equally by the Garcia and the Company.
For purposes of Section 5c, "Cause" means (i) Garcia has failed to
substantially perform his duties as reasonably determined by any Officer of the
Company or the Board of Directors of the Company, (ii) Garcia engages in poor
performance that is not cured within thirty (30) days after counseling by the
Company, (iii) Garcia has failed to comply with the reasonable directives and
policies of the Board of Directors of the Company or of any Officer of the
Company, (iv) the U.S. Government or an agency thereof determines that Garcia is
not eligible to work within the United States, or (v) Garcia breaches his
fiduciary duty to the Company or commits any dishonest, unethical, fraudulent,
or felonious act in respect to Garcia's duties to the Company.
6. BENEFITS. Garcia shall be entitled to participate in any Company
benefits as they become available, if at all, and which are normal and customary
Company benefits for a like position, including life insurance, incentive
compensation, deferred compensation, stock option plans or other Company
programs or plans. In addition, Garcia shall be entitled to the following
benefits:
(a) full coverage health insurance to be paid by the Company with
a maximum premium not to exceed $350 per month;
(b) at reasonable times and upon prior Company approval, Garcia
shall be entitled to two weeks paid vacation per calendar year
for each year employed during the term of this Agreement;
(c) the Company will contribute and reimburse Garcia up to $5,000
for moving expenses from his current residence to Phoenix,
Arizona.
7. LOAN. The Company will loan to Garcia Five Thousand dollars ($5,000)
to be loaned and disbursed on the Effective Date. All amounts loaned will be
evidenced by a promissory note with interest at 10% per annum and with all
principal and accrued but unpaid interest due one (1) year from the Effective
Date if not sooner paid. The Company agrees that if Garcia has been employed by
the Company for six continuous months from the Effective Date, 50% of the
principal balance and accrued but unpaid interest shall be forgiven and, if
Garcia has been employed by the Company for a total of twelve continuous months
- 2 -
<PAGE> 3
of employment by the Company, then the remaining principal balance and accrued,
but unpaid interest shall be forgiven by the Company and the Note evidencing
such loan shall be canceled.
8. STOCK OPTIONS. Specifically subject to Section 8a and 8b below and
Section 10c and contingent upon Garcia being employed by the Company, Garcia
shall be granted options to purchase 15,000 shares of the Company's Common Stock
exercisable at $1.00 per share to vest and be exercisable in accordance with the
Company's 1998 Stock Option Plan and in accordance with the following and
Section 10c below:
(a) If Garcia's employment is terminated for any reason other than "for
Cause" as defined herein, then the unexercised options shall be exercisable for
a period of either (i) forty-five (45) days from the termination of Garcia's
employment or (ii) the end of the initial term of this Agreement or any
extension thereof; whichever period of later.
(b) If Garcia's employment by the Company is terminated "for Cause" as
defined in this Agreement, then all unexercised options granted to Garcia shall
immediately terminate and not be exercisable upon notice of Garcia's termination
of employment "for Cause."
9. BUSINESS EXPENSES. Upon submission of proper documentation, the
Company shall pay or reimburse Garcia for all reasonable and necessary office,
telephone, travel and other expenses which are incurred by Garcia in the pursuit
of Garcia's duties on behalf of the Company.
10. NON-COMPETITION AND CONFIDENTIALITY.
a. Non-Competition. The Company and Garcia acknowledge and agree that
Garcia's services are of a special and unusual character which have a unique
value to the Company, the loss of which cannot be adequately compensated by
damages in an action at law and if used in competition with the Company, could
cause serious harm to the Company. Accordingly, Garcia agrees that during the
term of this Agreement and for a period of two (2) years after the termination
of this employment by the Company, irrespective of the reason for such
termination, Garcia will not (1) enter into any agreement with or directly or
indirectly solicit or attempt to solicit any employee or other representatives
of the Company (the "Company") for the purpose of causing them to leave the
Company to take employment with any other business entity, or (2) compete,
directly or indirectly, with the Company in any way and that Garcia will not act
as an officer, director, employee, consultant, shareholder, lender or agent of
any entity engaged in any business of the same nature as, or in competition
with, the business in which the Company is now engaged, was engaged during
Garcia's employment or is engaged at the time of Garcia's termination of
employment, except for the ownership of less than five percent (5%) of the
outstanding capital stock of a publicly traded company.
b. Confidentiality.
(1) Garcia acknowledges that in Garcia's employment hereunder,
Garcia will be making use of, acquiring and adding to the Company's trade
secrets and its confidential and proprietary information of a special and unique
nature and value relating to such matters as, but not limited to, the Company's
business operations, internal structure, financial affairs, programs, software
systems, procedures, manuals, confidential reports, lists of clients and
prospective clients and sales and marketing methods, as well as the amount,
nature and type of services, equipment and methods used and preferred by the
Company's clients and the fees paid by such clients, all of which shall be
deemed to be confidential information. Garcia acknowledges that such
confidential information has been and will continue to be of central importance
to the business of the Company and that disclosure of it to or its use by others
could cause substantial loss to
- 3 -
<PAGE> 4
the Company. In consideration of employment by the Company, Garcia agrees that
during the Initial Term and any renewal term of this Agreement and upon and
after leaving the employ of the Company for any reason whatsoever, Garcia shall
not, for any purpose whatsoever, directly or indirectly, divulge or disclose to
any person or entity any of such confidential information which was obtained by
Garcia as a result of the Garcia's employment with the Company or any trade
secrets of the Company, but shall hold all of the same confidential and
inviolate.
(2) All contracts, agreements, financial books, records,
instruments and documents; client lists; memoranda; data; reports; programs;
software, tapes; Rolodexes; telephone and address books; letters; research; card
decks; listings; programming; and any other instruments, records or documents
relating or pertaining to clients serviced by the Company or Garcia, the
services rendered by Garcia, or the business of the Company (collectively, the
"Records") shall at all times be and remain the property of the Company. Upon
termination of this Agreement and Garcia's employment under this Agreement for
any reason whatsoever, Garcia shall return to the Company all Records (whether
furnished by the Company or prepared by Garcia), and Garcia shall neither make
nor retain any copies of any of such Records after such termination.
(3) All inventions and other creations, whether or not
patentable or copyrightable, and all ideas, reports and other creative works,
including, without limitation, computer programs, manuals and related materials,
made or conceived in whole or in part by Garcia while employed by the Company
and within one year thereafter, which relate in any manner whatsoever to the
business, existing or proposed, of the Company or any other business or research
or development effort in which the Company or any of its subsidiaries or
affiliates engages during Garcia's employment by the Company will be disclosed
promptly by Garcia to the Company and shall be the sole and exclusive property
of the Company. All copyrightable works created by Garcia and covered by this
Section 10b(3) shall be deemed to be works for hire. Garcia shall cooperate with
the Company in patenting or copyrighting all such inventions, ideas, reports and
other creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof through the world, and
shall cooperate with the Company obtaining, defending and enforcing its rights
therein.
c. Certain Claims Upon Termination. Garcia understands that if within
one year prior to the termination of Garcia's employment with the Company,
Garcia has either (i) committed an act of theft, dishonesty, gross dereliction
of duty, fraud, embezzlement, misappropriation, or breach of fiduciary duty
against the Company or any other act of comparable misconduct against the
Company; or (ii) breached any of his obligations under this Agreement, then the
Company shall have the right to purchase any or all shares of Common Stock of
the Company owned by Garcia at the time of such termination for a purchase price
equal to the amount that Garcia paid for such shares, together with interest
thereon at a rate of ten percent (10%) per annum. If the Company desires to
exercise such right, it shall notify Garcia within 60 days after the date of
such termination and Garcia shall tender the shares being purchased by the
Company at the time and place designated in such notice from the Company upon
receipt of the purchase price for such shares. If Garcia fails to tender such
shares, the shares shall be deemed to be canceled as of the date the Company
tenders payment of the purchase price thereof.
- 4 -
<PAGE> 5
d. Enforceability. In the event of the breach of the covenants
contained in this Section 10, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or equity for injunctive
relief in addition to any other relief which the Company may have under the law,
this Agreement or any other agreement executed in connection herewith. In
connection with the bringing of any legal or equitable action for the
enforcement of this Agreement, the Company shall be entitled to recover, whether
the Company seeks equitable relief, and regardless of what relief is afforded,
such reasonable attorneys' fees and expenses as the Company may incur in
prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 10 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the Company notwithstanding any claim
by Garcia that the Company has violated or breached this Agreement or any claim
that Garcia is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Garcia represents
and warrants to the Company that Section 10 of this Agreement is enforceable by
the Company in accordance with its terms.
The parties hereto agree that to the extent that any provision or
portion of Section 10 of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to the
extent necessary in order that any such provision or portion thereof shall be
legally enforceable to the fullest extent permitted by applicable law; and the
parties hereto do further agree that any court of competent jurisdiction shall,
and the parties hereto do hereby expressly authorize, request and empower any
court of competent jurisdiction to, enforce any such provision or portion
thereof or to modify any such provision or portion thereof in order that any
such provision or portion thereof shall be enforced by such court to the fullest
extent permitted by applicable law.
11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
12. NOTICES. Any notices, consents, demands, request, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: quepasa.com, inc.
One Arizona Center
400 East Van Buren, Suite 545
Phoenix, AZ 85004
If to Garcia: Luis Emiro Garcia
-----------------
-----------------
- 5 -
<PAGE> 6
Notices delivered personally will be deemed communicated as of actual receipt,
notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
14. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
15. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
16. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
17. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter, and the
number of all words will include the singular and plural.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE COMPANY:
quepasa.com, inc., a Nevada corporation
By: /s/ Jeffrey Peterson
------------------------------------------
Jeffrey Peterson, Chief Executive Officer
GARCIA:
/s/ Luis Emiro Garcia
--------------------------------------------
Luis Emiro Garcia
- 6 -
<PAGE> 1
EXHIBIT 10.12
[WEATHERLABS LOGO]
DOUBLE WEBSITE WEATHER DATA LICENSE AGREEMENT
This Agreement, dated November 5, 1998 between WeatherLabs, Inc., a wholly
owned subsidiary of Digital Courier Technologies, Inc., a Delaware corporation,
with its principal place of business at 187 Fremont St., San Francisco,
California ("WeatherLabs"), and, Internet Century with its principal place of
business at 400 E. VanBuren Ste. 545, Phoenix, AZ 85004 ("Company").
WITNESSETH:
WHEREAS, Company desires to provide its electronic subscribers on the
Internet's Worldwide Web with weather data, weather content and related weather
services
WHEREAS, WeatherLabs is in the business of providing weather information
worldwide to companies for distribution to end-users.
AGREEMENT:
NOW, THEREFORE, in consideration of the respective representations and
warranties hereinafter set forth and of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. Provision of Services.
(a) WeatherLabs will license weather data to Company in the format set forth
in Exhibit A to this Agreement (the "Weather Data"). Subject to the availability
of an online connection to the Internet communications infrastructure (the
"Internet"), the Weather Data will be provided to Company on a schedule set
forth in Exhibit A for selected U.S. and/or International city locations
(defined in Exhibit B). Company may only use the Weather Data to respond to
requests for weather information from its users or subscribers on the following
Worldwide Web site address (the "Licensee Web Site") with a URL that resolves
to: * see below. Company may not modify or alter the Weather Data in any manner,
except to display the Weather Data on the Licensee Web Site in the form of a
Hypertext Markup Language (HTML) template format set forth in Exhibit C to this
Agreement. In the event Company desires to present the Weather Data to its
subscribers in a format other than that set forth in Exhibit C, then Company
must have such new format approved in writing by WeatherLabs prior to its use,
which approval WeatherLabs shall not unreasonably withhold or delay.
* Quepasa.com
Netcentury.com
<PAGE> 2
(b) WeatherLabs will commence providing Company with Weather Data within 30
days after receiving a written request from Company for Weather Data (the first
date that Weather Data is provided is referred to herein as the "Initial Service
Date"). In no event shall the Initial Service Date be a date after three
months from the date of this Agreement without the prior written consent of
WeatherLabs.
2. Payment. "Fees" means, collectively, the following charges (in U.S.
dollars): for a total cost of $36,000.00 per year.
A. A service set-up fee of: $0.00, for which Company shall receive databases,
related manuals, and up to 10 hours of technical support.
B. Product Line Overview. Forecast products provide reliable and timely
information for over 5000 U.S. cities and 2400 international locations. In
addition to city level reporting, WeatherLabs can forecast for any zip code
in the U.S. or for any latitude and longitude coordinate (geocode)
worldwide.
1. Forecast Products.
a. 24 hour detailed (morning, afternoon, evening, overnight).
b. 5-day extended.
c. Long range climate/weather.
2. Real-time products.
a. Current hourly conditions.
b. Regional Doppler radar images.
c. Composite Doppler radar images.
d. Satellite maps.
e. Weather maps
3. Special Interest reports.
a. Ski reports for US and International resorts.
b. Airport delay forecasts.
c. Astronomy report.
4. Editorial products.
a. Weather stores.
b. Weather glossary
c. Barrington Report
d. Ask the WeatherLab
e. Educational weather information.
5. Weather Almanac.
a. "On this day" trivia.
b. Monthly averages for thousands of cities worldwide with 30 year
history.
C. Additional fee of: 0. Technical support in excess of 10 hours will be
charged at $100.00 per hour.
Company shall pay all Fees to WeatherLabs within 30 calendar days after the
receipt of the invoice. In addition to any other rights hereunder, Company shall
pay to WeatherLabs interest equal to 1.5% of an unpaid Fee which is not
disputed, for each 30 day period, or portion thereof, in which any Fee remains
unpaid. The Fees may be made payable via company check or electronic wire
transfer to WeatherLabs' global Citibank bank account from Company's bank.
<PAGE> 3
3. Term of Agreement.
(a) The term of this Agreement shall be for a period of one (1) year,
commencing on the date hereof and continuing through and including the day
immediately preceding the first (lst) anniversary of the date hereof (the
"Initial Term"). Unless terminated by either party by providing a 90-day written
notice prior to the expiration of the Initial Term, this Agreement will be
automatically renewed on a year-to-year basis at the expiration of the Initial
Term.
4. Termination of Agreement.
(a) After the expiration of the Initial Term, this Agreement may be
terminated at the option of the non-defaulting party, by delivery of a written
notice thereof to the defaulting party, specifying in reasonable detail the
reason for termination, if (i) the defaulting party breaches or otherwise fails
to perform or comply in a material respect with a material obligation or
covenant, and such breach or failure is not cured to the non-defaulting party's
reasonable satisfaction within 30 days receipt of such notice; or (ii) the
defaulting party fails to comply strictly with the provisions of this
Agreement. If the non-defaulting party is Company, then the sole and exclusive
remedy of the Company shall be that WeatherLabs refunds to Company all Fees
paid by Company up to the amount of the loss incurred. If the non-defaulting
party is WeatherLabs, then the sole and exclusive remedy of WeatherLabs shall
be that Company pays to WeatherLabs an amount equal to the unpaid Fees to have
accrued the remainder of the Term of Agreement up to the amount of the loss
incurred.
5. Ownership.
(a) All rights, title and interest in and to the Weather Data and any
modifications or enhancements thereto, including all trademarks, copyrights and
patent rights are and shall remain the exclusive property of WeatherLabs. This
Agreement does not grant to Company or any of its affiliates or customers any
right of ownership therein. The Weather Data, including any weather forecast
contained therein may not be re-transmitted, re-distributed, re-sold or
re-broadcast (in any electronic, video or print format) by the Company in whole
or in part to any party, other than a Company user or subscriber on the Licensee
Web Site in accordance with this Agreement, without the express written consent
of WeatherLabs.
6. Promotion.
(a) Neither party will make any public statement, press release or other
announcement relating to the terms of or existence of this Agreement without the
prior written approval of the other. Notwithstanding the foregoing, Company
hereby grants to WeatherLabs the right to issue an initial press release, the
timing and wording of which will be subject to Company's reasonable approval,
regarding the relationship between WeatherLabs and Company.
<PAGE> 4
7. Representations and Warranties.
(a) WeatherLabs warrants that it has full power and authority to provide the
Weather Data hereunder and the Weather Data will conform to the specifications
set forth in Exhibit A. WeatherLabs represents that it will deliver the Weather
Data to Company in the form of electronic data file(s). The actual transfer
method will be based on the standard Internet File Transfer Protocol (FTP), via
the Internet. WeatherLabs makes no representation or warranty as to the
capability of the Internet to provide a continuous online connection for
delivery of the Weather Data. WeatherLabs will make commercially reasonable
efforts to ensure that such online connection to the Internet is upheld.
WeatherLabs does not warrant or guarantee the accuracy of its weather forecasts.
All other warranties, including any WARRANTY OF MERCHANTABILITY OR FITNESS FOR
PARTICULAR PURPOSE are hereby EXCLUDED.
(b) The parties represent that they have the equipment and software
necessary to adequately service the request by the counter party and by the
users or subscribers for the information in question.
8. Limitation of Liability.
(a) Neither party shall be liable to the other for any special or
consequential damages of any character, including without limitation, damages
for loss of good will, lost revenue, lost prospective economic advantage or lost
profit, arising from any performance or failure to perform under this Agreement,
irrespective of whether or not such damages are foreseeable or whether or not
any exclusive remedy is deemed to have failed, and each party hereby releases
and waives any claims against the other party regarding such damages.
WeatherLabs' liability to Company for damages arising out of the performance or
breach of this Agreement shall not exceed the total Fees paid to WeatherLabs by
Company under this Agreement. In no event shall WeatherLabs be liable for its
failure to perform under this Agreement as a result of the malfunction of the
connection to the Internet or Company's equipment or software.
9. Confidentiality.
(a) Each party will reasonably protect any and all information obtained
about the other party and at a minimum provide the same safeguards afforded its
own confidential information. Each party will keep confidential information to
which it has access in the performance of this Agreement. Confidential
information includes information contained herein with respect to Weather Data,
and data bases that WeatherLabs provides to Company, as well as information
relating to all Fees applicable to this Agreement. Confidential information
shall not include information now or hereafter in the public domain, information
already in the possession of the other party, information obtained from another
source without obligation of confidentiality, information independently
developed or information required by a court or government order.
<PAGE> 5
10. General.
(a) Notices. Except as otherwise permitted herein, any notices or
consents required or permitted by this Agreement shall be in writing and
delivered in person or by registered or certified mail, postage prepaid, return
receipt requested, or by a reputable courier delivery service, or by facsimile
during regular business hours (provided that a confirmation copy follows by
first-class U.S. Mail or any other method of delivery permitted under this
Section), as follows unless such address is changed by written notice hereunder,
and such notice shall be deemed given for purposes of this Agreement on the day
that such writing is sent to the intended recipient thereof in accordance with
the provisions of this Section:
(i) IF TO:
WeatherLabs:
BRENDAN L. Larson, CEO
WeatherLabs, Inc.
187 Fremont Street
San Francisco, California 94105 (USA)
Phone: (415) 777-0577
Fax: (415) 243-9679
(ii) IF TO:
Internet Century
Bryan Ross
400 E. Van Buren Ste. 545
Phoenix, AZ 85004
Phone: (602)716-0100
FAX: (602)716-0200
[email protected]
(b) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other party hereto; provided, that such consent shall not be
required with respect to any successor-in-interest to all or substantially all
of either party's business or assets.
(c) Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of California.
(d) Captions. The captions and headings used in this Agreement are for
convenience of reference only, and shall not affect the construction or
interpretation of any of the provisions hereof.
<PAGE> 6
f
(e) Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereon were upon the same instrument. This Agreement shall
become effective when all parties hereto shall have executed and delivered
counterparts hereof.
(f) Entire Agreement. This Agreement, together with the Exhibits hereto
and the other documents referred to herein, constitutes the sole and entire
understanding between and among the parties with respect to the subject matter
hereof, and supersedes all prior agreements and understandings among the parties
with respect to such subject matter. This Agreement may be modified only in
writing, signed by both parties.
(g) Waiver. The failure by either party to insist upon strict enforcement
of any terms and conditions of this Agreement shall not be construed as a waiver
or relinquishment of the right to assert or rely upon any such terms on any
future occasion.
(h) Relationship of the Parties. The parties recognize that they are
independent contractors and that neither is an agent, employee, partner or joint
venturer of the other. Furthermore, neither party is authorized to waive any
right, or assume or create any contract or obligation of any kind in the name
of, or on behalf of, the other or to make any statement that it has the
authority to do so.
(i) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement
(j) Reliance and Benefit. This Agreement is intended for the sole and
exclusive benefit of the parties hereto, and is not intended to confer any
benefit upon any other persons whatsoever. Except for the parties hereto, no
other person shall have any right to rely upon this Agreement for any purpose
whatsoever, absent the written consent of the party to be charged with such
reliance.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
WEATHERLABS, INC.
By: /s/ Brendan L. Larson
-----------------------
Title: CEO
--------------------
Internet Century
By: /s/ Jennifer Ferlaino
-----------------------
Title: Secretary/Treasurer
--------------------
<PAGE> 1
EXHIBIT 10.13
- - - - --------------------------------------------------------------------------------
HBC NETWORK, INC. CONTRACT
- - - - --------------------------------------------------------------------------------
ADVERTISER: QUE PASA.COM
SPOT AND ANNOUNCEMENT SCHEDULE:
START DATE: FEBRUARY 15, 1999
<TABLE>
<CAPTION>
# OF
DAYS TIMES FREQUENCY AND RATE: WEEKS TOTAL COST
---- ----- ------------------- ----- ----------
<S> <C> <C> <C> <C>
M-SUN 6A-10A 14 X/WK @ $5,300.00 8 $ 593,600
6 X/WK TRAFFIC @ $2,650 8 127,200
1 X/WK (SUN) READ @ $2,400 8 19,200
M-F 10A-3P 10 X/WK @ $3,300.00 8 264,000
M-F 3P-6P 10 X/WK @ $2750.00 8 220,000
5 X/WK TRAFFIC @ $1375.00 8 55,000
M-F 6P-9P 10 X/WK @ $2,075.00 8 166,000
M-F 9P-12M 10 X/WK @ $2,000.00 8 160,000
TOTAL INVESTMENT $1,605,000
THIS CONTRACT IS NON-CANCELLABLE
</TABLE>
-CONTINUED-
Que Pasa.com Contract
Page 1
<PAGE> 2
MEDIA ELEMENTS
M-F 6A-10A 14 X/WK "LIVE READS", 30 SECONDS
AM/FM STATIONS 7 X/WK TRAFFIC SPONSORSHIP WITH 10 SECOND READ
2 "LIVE READS" PER SHOW WITH 1 HOUR SEPERATION.
TRAFFIC SPONSORSHIP BETWEEN "READS"
M-F 10A-3P 10 X/WK "LIVE READS", 30 SECONDS
FM STATIONS ONLY
M-F 3P-6P 10 X/WK "LIVE READS", 30 SECONDS
FM STATIONS ONLY 5 X/WK TRAFFIC SPONSORSHIP WITH: 10 SECOND READ
2 X/DAY FROM 3 X/DAY TRAFFIC SPONSORSHIP
WOULD BE BETWEEN "READS"
M-F 6P-9P 10 X/WEEK
AM/FM STATIONS SPORTS ELEMENTS: *SCOREBOARDS 1X/D
AM FOR ELEMENTS TRANSACTIONS 1X/D
FM FOR "READS", 30 SECONDS *UPDATES 1X/D
*TRIVIA QUIZ 1 X/D
CHOOSE 3 ELEMENTS
-CONTINUED-
Que Pasa.com Contract
Page 2
<PAGE> 3
TERMS AND CONDITIONS OF HBC NETWORK, INC. CONTRACT
IN CONSIDERATION of the providing of advertising services, production
services, or related services by HBC Network Inc. ("Network") now and/or in the
future, the undersigned (referred to herein as "Advertiser") agrees and shall
be governed by the following:
PAYMENT AND BILLING:
* The Advertiser shall pay for this first order, as described above, by wire
transfer of funds to Network. Thereafter, the Advertiser agrees to pay for
broadcasting, at the office of Network or its authorized representative, on or
before the fifteenth of the month following that in which the broadcasting is
done unless otherwise stipulated on the face of this agreement.
The terms and conditions set forth herein are in addition to and form a part
of the agreement between the Advertiser and the Network for purchase of
broadcast time.
Past due amounts shall accrue interest at the rate of 1.5%, or the maximum
rate allowed by law, whichever is less, per month, from the date any such
amount becomes past due.
RATES:
It is understood that this agreement covers Network facilities only. It is
further understood that failure of Advertiser to furnish approved advertising
copy or spots as provided herein or failure to occupy leased time for any
reason, shall not relieve Advertiser's obligation to pay for time contracted
for.
Notwithstanding anything to the contrary in this contract or any other
agreement between the parties, Network reserves the right to increase any of its
rates and charges, including charges set forth on the face hereof, by public
announcement of a new rate card, but no increase shall be applicable to
broadcast under this contract until expiration of the terms of this contract.
ADVERTISING COPY:
It is understood that each of Advertiser's commercials shall be submitted in
typewritten form and shall be available for reading and rehearsal by Network at
least 72 hours in advance of scheduled airing.
The Advertiser will hold and save the Network harmless against all liability
for libel, slander, illegal competition, or trade practice, infringement or
trade marks, trade names, or program titles, violation or right or privacy and
infringement of copyrights and proprietary rights resulting from the broadcast
of any program material, information or music furnished by the Advertiser.
SUBSTITUTION OF PROGRAM:
It is understood that advertising copy and programs sponsored by Advertiser
shall be subject to requirements of Network and governmental regulation.
Network shall have the right to cancel any broadcast covered by this
contract in order to substitute a program of outstanding public importance. In
such case, Network will notify the Advertiser, and the Advertiser and Network
will agree on a satisfactory substitute day or time for the broadcast, or, if no
such agreement can be reached, the broadcast will be considered as canceled
without affecting the rates or rights shown on this contract, provided, however,
that Network shall refund Advertiser for the cancelled advertising on a
pro rated basis.
* $1,000,000 Initial Payment 30 days for balance $605,000.
Que Pasa.com Contract
Page 4
<PAGE> 4
ADDITIONAL ELEMENTS INCLUDED:
CALLE OCHO SPONSORSHIP
$150,000 level
Co sponsorship; package to be discussed
NEW YORK
o SATURDAY NIGHT DANCE PARTY SPONSORSHIP INCLUDES:
o 2 units per hour (10 total)
o Open and close audio billboards
o 2 mention (on-air) per hour (10 total)
o 9P-2A
o Exclusivity
o $4500 per week value
MIAMI
o SATURDAY NIGHT DANCE PARTY SPONSORSHIP INCLUDES:
o 2 units per hour (6 total)
o Open and close audio billboards
o 2 mention (on-air) per hour (6 total)
o 1OP-1A
o Exclusivity
o $5000 per week value
o All sports elements discussed
o Creative fees for Talent
Que Pasa.com Contract
Page 3
<PAGE> 5
INABILITY TO BROADCAST:
It is understood that in case of mistake or other failure of Network or its
component broadcasting facilities which shall prevent or abbreviate Advertiser's
time, such Advertiser is to choose, receive and pay for any other equal length
of time which has not been contracted for by others. If such rescheduling cannot
be accomplished, the missed advertising shall be considered as canceled without
affecting the rates or rights shown on this contract, provided, however, that
Network shall refund Advertiser for the canceled advertising on a pro rated
basis.
GENERAL:
All commercial programming is subject to the approval of the Network, and
the Network, without restriction or liability, reserves the right to reject or
cancel any and all contracts with Advertiser, or to refuse to broadcast any part
or all of any material which does not, the opinion of the Network, maintain a
quality and character creditable alike to the Network and Advertisers, and/or
which, in the opinion of the Network, will not be of benefit to either the
Advertiser or to the Network. The Advertiser agrees that its announcements shall
contain (1) no unwarranted, exaggerated, doubtful or superlative claims, and the
Advertiser hereby guarantees as true all claims and statements made in its
programs and/or announcements; (2) no ambiguous statements that may be
misleading; (3) no infringements of another advertiser's rights through
plagiarism or imitation of either idea or copy slant; (4) no reflections
on competitors or competitor's goods; (5) no statements or announcements that
are slanderous, obscene, profane, vulgar, repulsive or offensive, either in
theme or in treatment; (6) no mention by the Advertiser of another generally
advertised company or product; and (7) no lottery or drawing contest under any
circumstances. The Network shall have and is hereby granted the right, in its
uncontrolled discretion, to omit or delete any part of any announcement
violating, in its opinion, any of the foregoing regulations or any terms of this
agreement.
Any dispute by Advertiser with any broadcast, commercial announcements, any
services provided by Network or the amount charged for the same shall be
reported to Network in writing within thirty (30) days from the date of invoice
relating to the same, time being of the essence (but any such dispute shall not
affect Advertiser's obligation to make payment as set forth above). Failure to
report any such dispute with such time shall constitute a waiver of any claim
by Advertiser with respect to such dispute.
The terms and conditions outlined herein shall govern and control all
future services, which may be provided by Media Provider from time to time
for the Advertiser, unless modified in writing.
If credit is approved, Network reserves the right to cancel credit at any
time with or without notice for whatever reason.
Advertiser understands that should Advertiser place advertising through an
advertising agency (or other third parties) that Advertiser will continue to be
responsible to Network for payment of such advertising. In the event an agency
requests advertising on behalf of an Advertiser, Advertiser acknowledges its
joint and several liability for the payment of such advertising under the terms
set forth herein above.
The failure or delay of the Network to enforce any term or condition of this
agreement shall not be construed as a waiver of any right contained herein or of
any breach hereof.
Que Pasa.com Contract
Page 5
<PAGE> 6
ACKNOWLEDGED AND AGREED:
Advertiser Quepasa.com
-------------------------------
Date 1-28-99
-------------------------------------
Authorized Signature /s/ JEFFREY PETERSON
---------------------
Printed Name Jeffrey Peterson
-----------------------------
Title President, CEO
------------------------------------
HBC Network, Inc. Contract
/s/ McHenry Tichenor
President
Que Pasa.com Contract
Page 6
<PAGE> 1
[Quepasa.com letterhead]
Exhibit 10.14
GTE Internetworking
150 Cambridge Park Drive
Cambridge, MA 02140
Attention: Corporate Sales Administration
Dear Sir/Madam:
Please accept this letter in lieu of a Purchase Order. We are hereby
authorizing BBN Planet to provision services in the dollar amount specified in
Quote #97610.9999.1 attached hereto.
Sincerely,
/s/ Jennifer L. Ferlaino
- - - - -------------------------------------
Jennifer L. Ferlaino
Secretary/Treasurer
<PAGE> 2
[GTE LOGO] CREDIT LIMIT REQUESTED $
------------
PRODUCT/SERVICES DESIRED:
-----------
ARE P.O.'S REQUIRED FOR PAYMENT? / / YES / / NO
CREDIT APPLICATION
===============================================================================
COMPANY INFORMATION
Name of Company: quepasa.com, inc. Telephone: (602) 716-0100
---------------------------------- ---------------
Street: One Arizona Center - 400 E. Van Buren Suite 545
---------------------------------------------------------------------
City: Phoenix State: AZ Zip: 85004
---------------------------- -------- -------
Type of Business: Internet Applications Developer
-----------------------------------------------------------
# of years in business: 1 1/2
---------------
Type of ownership: /X/ Corporation / / Partnership
/ / Proprietorship / / Other
------------------------
(Describe)
Officers and titles, name(s) of partners or owners: Jeffrey S. Peterson,
----------------------------
President & CEO, Michael D. Silberman, Chief Financial Officer & Chief
- - - - ------------------------------------------------------------------------------
Operations Officer, Jennifer L. Ferlaino, Secretary/Treasurer, Kevin Dieball,
- - - - ------------------------------------------------------------------------------
Vice President, Michael Hubert, Director of Marketing Vice President.
- - - - ------------------------------------------------------------------------------
Authorized Buyer(s): Jennifer L. Ferlaino, Michael D. Silberman, Jeffrey
---------------------------------------------------------
Peterson Federal ID #: 86-0879433
- - - - -------- --------------
OWNER INFORMATION (Must be completed for all partnerships, sole proprietorships
and corporations in business less than 3 years.)
Name: Michael D. Silberman Home Phone: (818) 348-6093
------------------------------------- -----------------------
Address, City, State, Zip: 22960 Burbank Blvd, Woodland Hills, CA 91367
-----------------------------------------------------
Title: CFO & COO
-----------
Ownership % SS# ###-##-####
----------------------- -------------
Name: Jennifer L. Ferlaino Home Phone: (602) 315-4387
------------------------------------- -----------------------
Address, City, State, Zip: 4400 N. Scottsdale Rd. #9302, Scottsdale, AZ 85251
-----------------------------------------------------
Title: Secretary/Treasurer
---------------------
Ownership % SS# ###-##-####
----------------------- -------------
BANK REFERENCES:
Bank(s): Wells Fargo Bank Contact: Rick Chambers (branch manager)
----------------------------- -------------------------------
Address: 2424 S. Carson St., Carson City, NV 89701 Telephone: 702-885-1111
------------------------------------------ -------------
Account #: 0455836379 Line of Credit:
----------------------------- --------------------------
AUTHORIZATION TO RELEASE INFORMATION:
I hereby authorize our bank(s) and vendor(s) to release any information
necessary to assist in establishing a line of credit.
Signature /s/ Jennifer L. Ferlaino Title: Secretary/Treasurer Date: 12/21/98
------------------------- -------------------- ---------
TRADE REFERENCES (Please provide complete street address, city, state, zip and
account number.)
BUSINESS REFERENCES:
Company #1: Exodus Communications Company #2: Arizona Republic
--------------------------- ---------------------------
Address: 2650 San Tomas Expressway Address: 106 E. Baseline Road
------------------------------ ------------------------------
Santa Clara, CA 95051 Mesa, AZ
------------------------------ ------------------------------
Account #: Customer ID ICI003 Account #: Acct #38562
---------------------------- ----------------------------
Telephone: 408-346-2200 Telephone: 602-444-7915
---------------------------- ----------------------------
Company #3: The Business Journal Company #4: Westec Security
--------------------------- ---------------------------
Address: PO BOX 16718 Address: 4602 E. University Dr.
------------------------------ ------------------------------
Phoenix, AZ 85011-6718 Phoenix, AZ 85034
------------------------------ ------------------------------
Account #: Account #:
---------------------------- ----------------------------
Telephone: 602-230-8400 Telephone: 602-829-3778
---------------------------- ----------------------------
PLEASE INCLUDE A COPY OF YOUR MOST RECENT AUDITED FINANCIAL STATEMENT WITH
THIS APPLICATION.
THIS STATEMENT IS REQUIRED FOR CREDIT APPROVAL. THANK YOU.
----------------------------------------------------------
<PAGE> 3
[GTE LOGO} Master Agreement for
Internetworking Services
Rev: February 19, 1998
THIS MASTER AGREEMENT BETWEEN GTE INTERNETWORKING INCORPORATED ("WE") AND THE
CUSTOMER IDENTIFIED BELOW ("YOU") INCLUDES THE ATTACHED SERVICE SCHEDULES AND
SERVICE QUOTATIONS (COLLECTIVELY "SCHEDULES") TOGETHER WITH ANY ADDITIONAL
SCHEDULES MUTUALLY AGREED IN WRITING IN THE FUTURE.
1. SERVICES. We will provide you the Internetworking services ("Services")
specified in the Schedule(s). Our commencement of providing any of the Services
shall constitute our acceptance of this Master Agreement.
2. PRICES. Prices are stated in the Schedules and are guaranteed for the Term
stated in the Schedules. If any of the Services are on a month-to-month basis,
we will give you at least 30 days notice of a price change. In addition, you
are responsible for applicable taxes, tariffs, telecommunications surcharges or
other governmental charges due on account of the Services.
3. PAYMENT. Unless otherwise stated in a Schedule, we will invoice you monthly.
You agree to pay within 30 days from receipt of invoice. For overdue invoices,
you will pay interest of 1.5% for each month or part of a month (or the maximum
allowed by law, whichever is less).
4. OUR RESPONSIBILITY. We are responsible for providing the Services by
qualified personnel in a professional manner. WE DISCLAIM ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
5. YOUR RESPONSIBILITY. You are responsible for the manner in which you use the
Services, including the maintenance and security of your data, computer network
and other facilities; your choice of equipment, software and online content,
and all other matters related to how you use the Services. Unless expressly
permitted by a Schedule or separate reseller agreement with us, you shall not
resell Services, or access to Services, directly or indirectly to third parties.
6. INDEMNIFICATION. We will indemnify you for damages, costs and attorneys fees
you incur from any claim that our design of the Services infringes any U.S.
patent, copyright, trademark, trade secret or other intellectual property
right. You will indemnify us for damages, costs and attorneys fees we incur
from any claim arising from your manner of using of the Services, your
combination of the Services with other products or services not provided by us,
or your modification of the Services. The indemnifying party shall conduct the
defense and shall have control of the litigation; the other party shall give
prompt notice of claims and shall cooperate in defending against the claim. THE
PARTIES DISCLAIM THE IMPLIED WARRANTY OF NON-INFRINGEMENT, RELYING INSTEAD ON
THE TERMS OF THIS SECTION.
7. IP ADDRESSES. Upon expiration, cancellation or termination of the Agreement
or applicable Schedule, you shall relinquish any IP addresses or address blocks
assigned to you by us.
8. ACKNOWLEDGEMENT. You agree that we may include your name in listings of our
customers.
9. COMPLIANCE WITH LAWS. You shall not use or permit your end users to use the
Services in ways that violate laws or our acceptable use policy which is
published on our web site at http://www.bbn.com/aup/, infringe the rights of
others, or interfere with users of our network or other networks. For example,
you shall not distribute chain letters or unsolicited bulk electronic mail
("spamming"); propagate computer worms or viruses; use a false identity;
attempt to gain unauthorized entry to any site or network; distribute child
pornography, obscenity or defamatory material over the Internet; or infringe
copyrights, trademarks or other intellectual property rights. You further agree
to comply with U.S. export laws concerning the transmission of technical data
and other regulated materials via the Services.
10. TERMINATION. Either party may terminate or cancel this Agreement if the
other fails to cure a material breach of the Agreement within 30 days after
receiving written notice of the breach. We reserve the right, but assume no
obligation, to suspend performance immediately if you are more than 30 days
overdue in payments or if, in our reasonable judgment, you have violated Section
9.
11. LIMITATION OF LIABILITY. EXCEPT FOR (A) INDEMNIFICATIONS PURSUANT TO
SECTION 6, (B) BREACH OF ANY CONFIDENTIALITY OBLIGATIONS STATED IN A SERVICE
SCHEDULE, AND (C) BREACHES BY YOU OF LICENSE TERMS APPLICABLE TO GTE-PROVIDED
SOFTWARE, NEITHER PARTY (NOR ITS SUPPLIERS OR CUSTOMERS) SHALL BE LIABLE TO THE
OTHER PARTY FOR PUNITIVE, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT
DAMAGES INCLUDING WITHOUT LIMITATION, LOST PROFITS OR LOSS OR DAMAGE TO DATA
ARISING OUT OF THE USE OR INABILITY TO USE SERVICES, EVEN IF THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12. LIMITATION OF DAMAGES. OUR AGGREGATE LIABILITY TO YOU RELATING TO OR
ARISING OUT OF THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL
NOT EXCEED (a) THE TOTAL AMOUNTS PAID BY YOU TO US FOR THE SERVICE IN QUESTION,
DURING THE ONE-YEAR PERIOD IMMEDIATELY PRECEDING THE EVENT WHICH GAVE RISE TO
YOUR CLAIMS OR (b) $100,000, WHICHEVER IS LESS.
13. MISCELLANEOUS. The terms and conditions of this Agreement supercede all
previous agreements, proposals or representations related to the Services.
Except for assignments to GTE affiliates, neither party may assign this
Agreement without the prior written consent of the other party. This Agreement
shall be governed by the substantive laws of the Commonwealth of Massachusetts.
Any changes to this Agreement, or any additional or different terms in your
purchase orders, acknowledgments or other documents, will not be effective
unless expressly agreed to in writing by us.
- - - - --------------------------------------------------------------------------------
Please sign below to indicate your understanding and acceptance of the terms of
this Agreement.
Company (Type or Print Full Customer Name): quepasa.com, inc.
-----------------------------------
Signature: /s/ Jennifer L. Ferlaino Date: 12/21/98
--------------------------------- -----------------------------
Print Name: Jennifer L. Ferlaino Title: Secretary/Treasurer
-------------------------------- ----------------------------
1 of 1 MA
<PAGE> 4
[GTE LETTERHEAD]
Service Quotation For Quepasa.com, Inc.
- - - - --------------------------------------------------------------------------------
TO: Jeff Peterson Quote Date: Dec 22, 1998
Quepasa.com, Inc. Quote Valid To:
One Arizona Center Quote Number: 87610.9999.1
Phoenix, AZ 85004 Service Level: Web Advantage,
USA Collocated 2.0
(100mb)
Additional Terms:
- - - - -----------------
(a) The Service Quotation and all Services that may be provided pursuant to this
Service Quotation are subject to the terms and conditions of (a) the Master
Agreement for Internetworking Services or the Master Agreement for Internet
Services or Internet Services and Products Master Agreement previously
signed by you (or, if you have not signed such a Master Agreement, the terms
and conditions of the current Master Agreement for Internetworking
Services), and (b) the Service Schedule for the applicable Services you are
purchasing as indicated in this Service Quotation.
(b) Final acceptance of this Service Quotation by us is subject to credit check
approval, and confirmation of a valid Master Agreement and Service Schedule
signed by Customer.
(c) are different from or in addition to the terms and conditions contained in
this Service Quotation, the applicable Master Agreement, and/or the
applicable Service Schedule(s) signed by Customer, shall not be binding on
us unless expressly accepted in writing, herein or otherwise, by our
authorized representative, and we hereby object to and reject all terms and
conditions not so accepted.
(d) Advance payment of $87,000.00 must be received by GTE Internetworking on or
before December 28, 1998.
Customer (Type or Print Full Name): Quepasa.com, Inc.
----------------------------------------
Signature: /s/ Jennifer L. Ferlaino Date: 12/23/98
----------------------------- ---------------------------
Print Name: Jennifer L. Ferlaino Title: Secretary/Treasurer
---------------------------- ---------------------------
Purchase orders should be made out
to: GTE Internetworking
Attention: Dean Wirtz
4041 N. Central Ave., Suite 400
Phoenix, AZ 85012
Should you have questions about this quotation, please contact Dean Wirtz at
602-207-8447, E-mail: [email protected]
<PAGE> 5
[GTE LOGO]
SERVICE SCHEDULE
SERVICES
This Service Schedule is part of and is governed by the Master Agreement for
Internetworking Services ("Master Agreement"). The terms and conditions of the
Master Agreement are incorporated herein by reference.
1. COVERED SERVICES. We will provide you with the level of Web Advantage(SM)
Service ("WA Service") indicated in the Service Quotation ("Quotation"). The
Service Period and fees for the WA Service are as described in the Quotation.
Our commencement of providing WA Service to you as described in the Quotation
shall constitute our acceptance of this Service Schedule.
2. SERVICE DESCRIPTION. WA Service provides you with web hosting services.
Further details of the WA Service are set forth in the applicable Service
Description for the level of WA Service selected on the Quotation. Service
Descriptions are available from your GTE sales representative.
3. RENEWAL. We encourage you to contact us, via email to: [email protected],
prior to the expiration of the then-current Service Period, to renew the WA
Service for an additional term of one year or greater. If the Service Period
expires before it has been renewed in writing, then we may continue to provide
you with the WA Services on a month-to-month basis at 105% of our then-current
undiscounted list prices, until the Service Period has been renewed in writing.
4. SERVICE CANCELLATION. You may cancel WA Service at any time by providing 60
days prior notice via email to: [email protected]. If you cancel during the
Service Period, you agree to pay us (a) all WA Service fees accrued as of the
cancellation date and (b) an early cancellation fee in an amount equal to 50% of
WA Service fees due for the canceled portion of the Service Period.
5. DOMAIN NAME FEES. Domain name registration fees and periodic maintenance fees
are your responsibility and will be billed directly to you by InterNIC. Such
fees are not included in the prices for WA Service.
6. CONTENT. Our provision of WA Services does not alter any of your pre-existing
right, title, and interest in content material (including but not limited to
text, software, scripts, multimedia images, graphics, audio, video, and other
data) which you install or have installed on our server computer (collectively
"Content").
7. THIRD PARTY SOFTWARE. If you purchase any optional functionality which
involves the acquisition of third party software through us (e.g., Real Networks
Software), you agree to sign any required third party license agreements prior
to delivery of the third party software. If we install third party software for
you and acceptance of license terms is effected electronically, you authorize us
to accept third party license terms on your behalf. In the event we make any
software available to you in connection with WA Service, you acknowledge and
agree that title to such software remains with us and our suppliers, if any,
that the content and design of such software are valuable trade secrets, and
that you may use such software only for purposes of the WA Service. You agree
not to (a) copy or duplicate such software; (b) reverse engineer, decompile or
disassemble such software; (c) make derivative works from such software; or (4)
modify such software. In the event we install any software on equipment owned by
you we shall remove the software before returning the equipment to you.
8. WEB ADVANTAGE(SM) CUSTOMER ADMINISTRATION AND WEB ADVANTAGE(SM) COLLOCATED
HOSTING SERVICES. If you are also purchasing Web Advantage(SM) Service Customer
Administration Service ("CA Service"), Web Advantage(SM) Collocated Housing
Services ("CO Service") or Customer Support Services, or any other optional
services, the nature of the service and the extent of your responsibilities in
connection therewith are set forth in the then-current Service Description for
the applicable optional service. For CA Service and CO Service, you will have
full server access, including remote power cycling. Because you have full
server access, you will be solely responsible for administration and support of
the server, including the operating system, application software and Content.
You agree to designate qualified personnel to manage such access.
9. TIME & MATERIALS SERVICES. If you are purchasing qualified (see applicable
Service Descriptions) Web Advantage(SM) Dedicated UNIX and/or Dedicated NT, you
may engage us to perform certain optional Time & Materials Services. (For Web
Advantage(SM) Collocated Hosting Service we may be required to perform Emergency
Time & Materials Services at a premium hourly rate, with regard to such services
the balance of this provision applies). Upon receipt of a written or electronic
request from you, we will provide Time & Materials Services in accordance with
and to the extent, described in the Web Advantage(SM) Server Support Services
Service Description. All Time & Materials Services shall be provided on an "AS
IS" basis. For Time and Materials Services we shall provide services at our then
current standard hourly rates and shall provide materials at our then current
standard prices. Costs incurred by us for travel, subsistence, supplies and/or
services shall be billed at our cost plus our standard administrative handling
charge. You agree to pay for any such Time & Materials Services, costs, and
handling charges promptly in accordance with the terms of this Agreement. YOU
AGREE THAT OUR LIABILITY TO YOU FOR ANY AND ALL CLAIMS OR DAMAGES RELATING TO OR
ARISING OUT OF OUR PROVISION OF TIME & MATERIALS SERVICES, WHETHER IN CONTRACT,
TORT OR OTHERWISE, WILL NOT EXCEED (a) THE TOTAL AMOUNTS PAID BY YOU TO US FOR
TIME & MATERIALS SERVICES DURING THE ONE-YEAR PERIOD IMMEDIATELY PRECEDING THE
EVENT WHICH CAUSED THE LIABILITY, OR (b) $100,000, WHICHEVER IS LESS. In the
event we provide any of our pre-existing software to you in connection with the
Time & Materials Services, you acknowledge and agree that title to such software
remains with us and that the content and design of such software are valuable
trade secrets, and that you may use such software only for purposes of the WA
Service. You agree not to (a) copy or duplicate such software; (b) reverse
engineer, decompile or disassemble such software; (c) make derivative works from
such software; or (d) modify such software.
10. IP ADDRESSES. Upon expiration, cancellation or termination of the Agreement
or applicable Schedule, you shall relinquish any IP addresses or address blocks
assigned to you by us.
11. ACCEPTABLE USE. You agree to use the WA Service in accordance with our
acceptable use policy. Our current acceptable use policy is published on our web
site at http://www.bbn.com/aup/.
<PAGE> 6
[GTE LOGO] SERVICE SCHEDULE
WEB ADVANTAGE SERVICES
12. COMPLIANCE WITH LAW. You shall not use or permit your end users to use the
Services in ways that violate laws, infringe the rights of others, or interfere
with users of our network or other networks, for example, you shall not
distribute chain letters or unsolicited bulk electronic mail ("Spamming"):
propagate computer worms or viruses; use a false identity; attempt to gain
unauthorized entry to any site or network; distribute child pornography,
obscenity or defamatory material over the Internet; or infringe copyrights,
trademarks or other intellectual property rights. You further agree to comply
with U.S. export laws concerning the transmission of technical data and other
regulated materials via the Services.
13. COMMERCE RE@ASM SERVICE OPTIONS:
iCat SOFTWARE OPTION. If you are purchasing Web Advantage(SM) Dedicated Unix
4.0 (or greater) Select or Premier Service from us, you may also purchase a
license to iCat software from us. Once you have paid us the applicable fees
stated in the Quotation, we will grant you a non-exclusive, royalty-free,
non-transferable sublicense to use the applicable iCat software in accordance
with the iCat license terms. In addition to iCat Commerce Publisher, an iCat
Catalog license must be purchased before an iCat Catalog can be hosted. For
purposes of this Agreement, the term "Catalog" means an original interactive
multimedia presentation of products, services, digital assets or information in
an electronic format, that is uniquely branded, uses a unique database, is
defused by a unique "Catalog Preference File," and is registered with iCat to
the name of the catalog owner.
DIGITAL DELIVERY OPTION. If you are purchasing Web Advantage(SM) Dedicated Unix
4.0 (or greater) Select or Premier Service, Cybercash Service, and Secure Socket
Layer ("SSL") from us, you may also purchase the Digital Delivery Service
option, which is a service that is designed to enable electronic distribution of
software by you. Further details concerning the service and your
responsibilities in connection with the Digital Delivery, SSL and CyberCash
Service options are stated in the applicable Service Description; your selection
of this optional service is indicated by the statement of the applicable fee in
the Quotation.
PLEASE SIGN BELOW TO INDICATE YOUR ACCEPTANCE OF THE TERMS OF THIS SERVICE
SCHEDULE.
CUSTOMER (Type or Print Name): quepasa.com, inc.
---------------------------------------------
SIGNATURE: /s/ Jennifer L. Ferlaino DATE: 12/23/98
---------------------------- ---------------------------
PRINT NAME: Jennifer L. Ferlaino TITLE: Secretary/Treasurer
--------------------------- ---------------------------
<PAGE> 7
[GTE LOGO] SERVICE QUOTATION FOR QUEPASA.COM, INC.
- - - - --------------------------------------------------------------------------------
TO: Jeff Peterson Quote Date: Dec 22, 1998
Quepasa.com, Inc. Quote Valid To:
One Arizona Center Quote Number: 87610.9999.1
400 E. Van Buren Service Level: Web Advantage,
Phoenix, AZ 85004 Collocated 2.0
USA (100mb)
Service Period (please check one as applicable):
X 1 Year 2 Years 3 Years
The Service Period shall commence upon the provisioning by BBN Corporation, a
subsidiary of GTE Internetworking Incorporated ("we", "our", or "us"), to you of
the services listed on this Service Quotation.
<TABLE>
<CAPTION>
RECURRING FEES (1 YEAR CONTRACT) MONTHLY ANNUAL
- - - - -------------------------------- ------- ------
<S> <C> <C>
WA Collocated Svc Fee - Full Rack............ $ 2,000.00 $ 24,000.00
WA Collocated Svc Fee - Full Rack............ $ 2,000.00 $ 24,000.00
WA Collocated Svc Fee - Full Rack............ $ 2,000.00 $ 24,000.00
WA 100Mbps - Committed 10Mbps of bandwidth... $ 8,000.00 $ 96,000.00
---------- -----------
$14,000.00 $168,000.00
ONE-TIME FEES ONE-TIME
- - - - -------------- ----------
WA Collocated Setup Fee...................... $ 3,000.00
----------
$ 3,000.00
</TABLE>
Web Advantage is a high performance, highly reliable, cost-effective Web hosting
service, providing the industry's best operations management and monitoring for
organizations who see an expanding role for the Web in reaching their strategic
business goals.
Web Advantage Collocated 2.0 bandwidth fee above coverage usage up to 2.0
Mbit/sec. This bandwidth fee may vary month-to-month, as it is based on the
customer's actual usage, and will be billed according to the following fee
schedule:
Over 10.0 Mbit/sec Additional $750 per 1.0 Mbit/sec
An invoice for the first prorated month of service plus the setup fees will be
issued at the time of setup. Web Advantage Collocated customers whose service
setup date occurs after the first of the month will receive a prorated bill for
that first partial month based on the service fee and minimum bandwidth fee
noted above, regardless of the actual usage. Normal 95th percentile usage-based
monthly billing will commence with the first full month following setup.
This service quotation is applicable only for Version 2.0 of Web Advantage
Collocated at 100-0 Mbit/sec connectivity.
<PAGE> 1
EXHIBIT 10.15
EXODUS COMMUNICATIONS, INC.
INTERNET DATA CENTER SERVICES AGREEMENT
THIS INTERNET DATA CENTER SERVICES AGREEMENT (This "Agreement") is made
effective as of the Submission Date (5/15, 1998) indicated in the initial
Internet Data Center Services Order Form accepted by Exodus, by and between
Exodus Communications, Inc. ("Exodus") and the customer identified below
("Customer").
PARTIES:
CUSTOMER NAME: Internet Century, Inc.
ADDRESS: 2533 N. Carson St. #3232
Carson City, NV 89706
PHONE: 702-841-1526
FAX: 602-557-8900
EXODUS COMMUNICATIONS, INC.
2650 San Tomas Expressway
Santa Clara, CA 95051
Phone: (408) 346-2200
Fax: (408) 346-2206
1. INTERNET DATA CENTER SERVICES.
Subject to the terms and conditions of this Agreement, during the term of this
Agreement, Exodus will provide to Customer the services described in the
Internet Data Center Services Order Form(s) ("IDC Services Order Form(s)")
accepted by Exodus, or substantially similar services if such substantially
similar services would provide Customer with substantially similar benefits
("Internet Data Center Services"). All IDC Services Order Forms accepted by
Exodus are incorporated herein by this reference, each as of the Submission
Date indicated in such form.
2. FEES AND BILLING.
2.1 Fees. Customer will pay all fees due according to the IDC Services Order
Form(s).
2.2 Billing Commencement. Billing for Internet Data Center Services, other
than Setup Fees, indicated in the initial IDC Services Order Form shall commence
on the earlier to occur of (i) the "Installation Date" indicated in the initial
IDC Services Order Form, regardless of whether Customer has commenced use of the
Internet Data Center Services, unless Customer is unable to install the Customer
Equipment and/or use the Internet Data Center Services by the Installation Date
due to the fault of Exodus, then billing will not begin until the date Exodus
has remedied such fault and (ii) the date the "Customer Equipment" (Customer's
computer hardware and other tangible equipment, as identified in the Customer
Equipment List which is incorporated herein by this reference) is placed by
Customer in the "Customer Area" (the portion(s) of the Internet Data Centers, as
defined in Section 3.1 below, made available to Customer hereunder for the
placement of Customer Equipment) and is operational. All Setup Fees will be
billed upon receipt of a Customer signed IDC Services Order Form. In the event
that Customer orders additional Internet Data Center Services, billing for such
services shall commence on the date Exodus first provides such additional
Internet Data Center Services to Customer or as otherwise agreed to by Customer
and Exodus.
2.3 Billing and Payment Terms. Customer will be billed monthly in advance of
the provision of Internet Data Center Services, and payment of such fees will be
due within thirty (30) days of the date of each Exodus invoice. All payments
will be made in U.S. dollars. Late payments hereunder will accrue interest at a
rate of one and one-half percent (1 1/2%) per month, or the highest rate allowed
by applicable law, whichever is lower. If in its judgment Exodus determines that
Customer is not creditworthy or is otherwise not financially secure, Exodus may,
upon written notice to Customer, modify the payment terms to require full
payment before the provision of Internet Data Center Services or other
assurances to secure Customer's payment obligations hereunder.
2.4 Taxes. All payments required by this Agreement are exclusive of all
national, state, municipal or other governmental excise, sales, value-added,
use, personal property, and occupational taxes, excises, withholding taxes and
obligations and other levies now in force or enacted in the future, all of
which Customer will be responsible for and will pay in full, except for taxes
based on Exodus' net income.
3. CUSTOMER'S OBLIGATIONS.
3.1 Compliance with Law and Rules and Regulations. Customer agrees that
Customer will comply at all times with all applicable laws and regulations and
Exodus' general rules and regulations relating to its provision of Internet Data
Center Services, as updated by Exodus from time to time ("Rules and
Regulations"). Customer acknowledges that Exodus exercises no control whatsoever
over the content of the information passing through its sites containing the
Customer Area and equipment and facilities used by Exodus to provide Internet
Data Center Services ("Internet Data Centers"), and that it is the sole
responsibility of customer to ensure that the information it transmits and
receives complies with all applicable laws and regulations.
3.2 Customer's Costs. Customer agrees that it will be solely responsible, and
at Exodus's request will reimburse Exodus, for all costs and expenses (other
than the those included as part of the Internet Data Center Services and except
as otherwise expressly provided herein) it incurs in connection with this
agreement.
3.3 Access and Security. Customer will be fully responsible for any charges,
costs, expenses (other than those included in the Internet Data Center
Services), and third party claims that may result from its use of, or access
to, the Internet Data Centers and/or the Customer Area including but not
limited to any unauthorized use of any access devices provided by Exodus
hereunder. Except with the advanced written consent of Exodus, Customer's
access to the Internet Data Centers will be limited solely to the individuals
identified and authorized by Customer to have access to the Internet Data
Centers and the Customer Area in accordance with this Agreement, as identified
in the Customer Registration Form, as amended from time to time, which is
hereby incorporated by this reference ("Representatives").
3.4 No Competitive Services. Customer may not at any time permit any
Internet Data Center Services to be utilized for the provision of any services
that compete with any Exodus services, without Exodus' prior written consent.
3.5 Insurance.
(a) Minimum Levels. Customer will keep in full force and effect during the
term of this Agreement: (i) comprehensive general liability insurance in an
amount not less than $5 million per occurrence for bodily injury and property
damage; (ii) employer's liability insurance in an amount not less than $1
million per occurrence; and (iii) workers' compensation insurance in an amount
not less than that required by applicable law. Customer also agrees that it
will, and will be solely responsible for ensuring that its agents (including
contractors and subcontractors) maintain, other insurance at levels no less
than those required by applicable law and customary in Customer's and its
agents' industries.
(b) Certificates of Insurance. Prior to installation of any Customer
Equipment in the Customer Area, Customer will furnish Exodus with certificates
of insurance which evidence the minimum levels of insurance set forth above.
(c) Naming Exodus as an Additional Insured. Customer agrees that prior to
the installation of any Customer Equipment, Customer will cause its insurance
provider(s) to name Exodus as an additional insured and notify Exodus in
writing of the effective date thereof.
4. CONFIDENTIAL INFORMATION.
4.1 Confidential Information. Each party acknowledges that it will have
access to certain confidential information of the other party concerning the
other party's business, plans, customers, technology, and products, including
the terms and conditions of this Agreement ("Confidential Information").
Confidential Information will include, but not be limited to, each party's
proprietary software and customer information. Each party agrees that it will
not use in any way, for its own account or the account of any third party,
except as expressly permitted by this Agreement, nor disclose to any third
party (except as required by law or to that party's attorneys, accountants and
other advisors as reasonably necessary), any of the other party's Confidential
Information and will take reasonable precautions to protect the confidentiality
of such information.
4.2 Exceptions. Information will not be deemed Confidential Information
hereunder if such information; (i) is known to the receiving party prior to
receipt from the disclosing party directly or indirectly from a source other
than one having an obligation of confidentiality to the disclosing party; (ii)
becomes known (independently of disclosure by the disclosing party) to the
receiving party directly or indirectly from a source other than one having an
obligation of confidentiality to the disclosing party; (iii) becomes publicly
known or otherwise ceases to be secret or confidential, except through a breach
of this Agreement by the receiving party; or (iv) is independently developed by
the receiving party.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Warranties by Customer.
(a) Customer Equipment. Customer represents and warrants that it owns or has
the legal right and authority, and will continue to own or maintain the legal
right and authority during the term of this Agreement, to place and use the
Customer Equipment as contemplated by this Agreement. Customer further
represents and warrants that its placement, arrangement, and use of the Customer
Equipment in the Internet Data Centers complies with the Customer Equipment
Manufacturer's environmental and other specifications.
(b) Customer's Business. Customer represents and warrants that Customer's
services, products, materials, data, information and Customer Equipment used by
Customer in connection with this Agreement as well as Customer's and its
permitted customers' and users' use of the Internet Data Center Services
(collectively, "Customer's Business") does not as of the Installation Date, and
will not during the term of this Agreement operate in any manner that would
violate any applicable law or regulation.
(c) Rules and Regulations. Customer has read the Rules and Regulations and
represents and warrants that Customer and Customer's Business are currently in
full compliance with the Rules and Regulations, and will remain so at all times
during the term of this Agreement.
(d) Breach of Warranties. In the event of any breach, or reasonably
anticipated breach, of any of the foregoing warranties, in addition to any other
remedies available at law or in equity, Exodus will have the right immediately,
in Exodus' sole discretion, to suspend any related Internet Data Center Services
if deemed reasonably necessary by Exodus to prevent any harm to Exodus and its
business.
EXODUS COMMUNICATIONS, INC. CONFIDENTIAL (rev 11/97) Page 1
<PAGE> 2
5.2 Warranties and Disclaimers by Exodus.
(a) Service Level Warranty. In the event Customer is unable to transmit
and receive information from Exodus' Internet Data Centers to other portions of
the Internet and Customer notifies Exodus immediately of such event and Exodus
determines in its reasonable judgment that such inability was caused by Exodus'
failure to provide Internet Data Center Services for reasons within Exodus'
reasonable control and not as a result of any actions or inactions of Customer
or any third parties (including failure of third party equipment), Exodus will,
upon Customer's request, credit Customer's account as follows: If Exodus failed
to provide the Internet Data Center Services for (i) more than two (2)
consecutive hours in a calendar month. Exodus will credit Customer's account the
connectivity charges for one (1) day of service; and (ii) more than eight (8)
consecutive hours in a calendar month, Exodus will credit Customer's account the
connectivity charges for one (1) week of service. Customer may receive only one
of the foregoing credits in any single calendar month, regardless of the number
of such occurrences. Exodus' scheduled maintenance of the Internet Data Centers
and Internet Data Center Services, as described in the Rules and Regulations,
shall not be deemed to be a failure of Exodus to provide Internet Data Center
Services. THIS WARRANTY DOES NOT APPLY TO ANY INTERNET DATA CENTER SERVICES THAT
EXPRESSLY EXCLUDE THIS WARRANTY. THIS SECTION 5.2(a) STATES CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY (OTHER THAN TERMINATION OF THIS AGREEMENT) FOR ANY FAILURE BY
EXODUS TO PROVIDE INTERNET DATA CENTER SERVICES.
(b) No Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET OUT IN
SUBSECTION (a) ABOVE, THE INTERNET DATA CENTER SERVICES ARE PROVIDED ON AN "AS
IS" BASIS, AND CUSTOMER'S USE OF THE INTERNET DATA CENTER SERVICES IS AT ITS OWN
RISK. EXODUS DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY AND ALL OTHER EXPRESS
AND/OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT AND TITLE,
AND ANY WARRANTIES ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE.
EXODUS DOES NOT WARRANT THAT THE INTERNET DATA CENTER SERVICES WILL BE
UNINTERRUPTED, ERROR-FREE, OR COMPLETELY SECURE.
(c) Disclaimer of Actions Caused by and/or Under the Control of Third
Parties. EXODUS DOES NOT AND CANNOT CONTROL THE FLOW OF DATA TO OR FROM EXODUS'
INTERNET DATA CENTERS AND OTHER PORTIONS OF THE INTERNET, SUCH FLOW DEPENDS IN
LARGE PART ON THE PERFORMANCE OF INTERNET SERVICES PROVIDED OR CONTROLLED BY
THIRD PARTIES. AT TIMES, ACTIONS OR INACTIONS CAUSED BY THESE THIRD PARTIES CAN
PRODUCE SITUATIONS IN WHICH EXODUS' CUSTOMERS' CONNECTIONS TO THE INTERNET (OR
PORTIONS THEREOF) MAY BE IMPAIRED OR DISRUPTED. ALTHOUGH EXODUS WILL USE
COMMERCIALLY REASONABLE EFFORTS TO TAKE ACTIONS IT DEEMS APPROPRIATE TO REMEDY
AND AVOID SUCH EVENTS, EXODUS CANNOT GUARANTEE THAT THEY WILL NOT OCCUR.
ACCORDINGLY, EXODUS DISCLAIMS ANY AND ALL LIABILITY RESULTING FROM OR RELATED TO
SUCH EVENTS.
6. LIMITATIONS OF LIABILITY.
6.1 Personal Injury. EACH REPRESENTATIVE AND ANY OTHER PERSONS VISITING
THE INTERNET DATA CENTERS DOES SO AT ITS OWN RISK AND EXODUS ASSUMES NO
LIABILITY WHATSOEVER FOR ANY HARM TO SUCH PERSONS RESULTING FROM ANY CAUSE OTHER
THAN EXODUS' GROSS NEGLIGENCE OR WILLFUL MISCONDUCT RESULTING IN PERSONAL INJURY
TO SUCH PERSONS DURING SUCH A VISIT.
6.2 Damage to Customer Equipment or Business. EXODUS ASSUMES NO LIABILITY
FOR ANY DAMAGE TO, OR LOSS RELATING TO, CUSTOMER'S BUSINESS RESULTING FROM ANY
CAUSE WHATSOEVER. CERTAIN CUSTOMER EQUIPMENT, INCLUDING BUT NOT LIMITED TO
CUSTOMER EQUIPMENT LOCATED ON CYBERRACKS, MAY BE DIRECTLY ACCESSIBLE BY OTHER
CUSTOMERS. EXODUS ASSUMES NO LIABILITY FOR ANY DAMAGE TO, OR LOSS OF, ANY
CUSTOMER EQUIPMENT RESULTING FROM ANY CAUSE OTHER THAN EXODUS' GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT. TO THE EXTENT EXODUS IS LIABLE FOR ANY DAMAGE TO, OR LOSS
OF, THE CUSTOMER EQUIPMENT FOR ANY REASON, SUCH LIABILITY WILL BE LIMITED SOLELY
TO THE THEN-CURRENT VALUE OF THE CUSTOMER EQUIPMENT.
6.3 Exclusions. EXCEPT AS SPECIFIED IN SECTIONS 6.1 AND 6.2, IN NO EVENT
WILL EXODUS BE LIABLE TO CUSTOMER, ANY REPRESENTATIVE, OR ANY THIRD PARTY FOR
ANY CLAIMS ARISING OUT OF OR RELATED TO THIS AGREEMENT, CUSTOMER EQUIPMENT,
CUSTOMER'S BUSINESS OR OTHERWISE, AND ANY LOST REVENUE, LOST PROFITS,
REPLACEMENT GOODS, LOSS OF TECHNOLOGY, RIGHTS OR SERVICES, INCIDENTAL, PUNITIVE,
INDIRECT OR CONSEQUENTIAL DAMAGES, LOSS OF DATA, OR INTERRUPTION OR LOSS OF USE
OF SERVICE OR OF ANY CUSTOMER EQUIPMENT OR CUSTOMER'S BUSINESS, EVEN IF ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER UNDER THEORY OF CONTRACT, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
6.4 Maximum Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, EXODUS'S MAXIMUM AGGREGATE LIABILITY TO CUSTOMER RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT WILL BE LIMITED TO THE TOTAL AMOUNT PAID BY
CUSTOMER TO EXODUS HEREUNDER FOR THE PRIOR TWELVE (12) MONTH PERIOD.
6.5 Customer's Insurance. Customer agrees that it will not pursue any
claims against Exodus for any liability Exodus may have under or relating to
this Agreement until Customer first makes claims against Customer's insurance
provider(s) and such insurance provider(s) finally resolve(s) such claims.
6.6 Basis of the Bargain; Failure of Essential Purpose. Customer
acknowledges that Exodus has set its prices and entered into this Agreement in
reliance upon the limitations of liability and the disclaimers of warranties and
damages set forth herein, and that the same is an essential basis of the bargain
between the parties. The parties agree that the conditions and exclusions of
liability and disclaimers specified in this Agreement will survive and apply
even if found to have failed of their essential purpose.
7. INDEMNIFICATION.
7.1 Exodus' Indemnification of Customer. Exodus will indemnify, defend and
hold Customer harmless from and against any and all costs, liabilities, losses,
and expenses (including, but not limited to, reasonable attorneys' fees)
(collectively, "Losses") resulting from any claim, suit, action, or proceeding
(each, an "Action") brought against Customer alleging (i) the infringement of
any third party registered U.S. copyright or issued U.S. patent resulting from
the provision of Internet Data Center Services pursuant to this Agreement (but
excluding any infringement contributorily caused by Customer's Business or
Customer Equipment) and (ii) personal injury to Customer's Representatives from
Exodus's gross negligence or willful misconduct.
7.2 Customer's Indemnification of Exodus. Customer will indemnify, defend
and hold Exodus, its affiliates and customers harmless from and against any and
all Losses resulting from or arising out of any Action brought by or against
Exodus, its affiliates or customers alleging: (a) with respect to the Customer's
Business: (i) infringement or misappropriation of any intellectual property
rights; (ii) defamation, libel, slander, obscenity, pornography, or violation of
the rights of privacy or publicity; or (iii) spamming, or any other offensive,
harassing or illegal conduct or violation of the Rules and Regulations; (b) any
damage or destruction to the Customer Area, the Internet Data Centers or the
equipment of Exodus or any other customer by Customer or Representative(s) or
Customer's designees; or (c) any other damage arising from the Customer
Equipment or Customer's Business.
7.3 Notice. Each party will provide the other party prompt written notice
upon of the existence of any such event of which it becomes aware, and an
opportunity to participate in the defense thereof.
8. TERM AND TERMINATION.
8.1 Term. This Agreement will be effective for a period of one (1) year
from the Installation Date, unless earlier terminated according to the
provisions of this Section 8. The Agreement will automatically renew for
additional terms of one (1) year each.
8.2 Termination.
(a) For Convenience.
(i) By Customer During First Thirty Days. Customer may terminate this
Agreement for convenience by providing written notice to Exodus at any time
during the thirty (30) day period beginning on the Installation Date.
(ii) By Either Party. Either party may terminate this Agreement for
convenience at any time effective after the first (1st) anniversary of the
Installation Date by providing ninety (90) days' prior written notice to the
other party at any time thereafter.
(b) For Cause. Either party will have the right to terminate this
Agreement if: (i) the other party breaches any material term or condition of
this Agreement and fails to cure such breach within thirty (30) days after
receipt of written notice of the same, except in the case of failure to pay
fees, which must be cured within five (5) days after receipt of written notice
from Exodus; (ii) the other party becomes the subject of a voluntary petition in
bankruptcy or any voluntary proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of creditors; or (iii) the other
party becomes the subject of an involuntary petition in bankruptcy or any
involuntary proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors, if such petition or proceeding is not
dismissed within sixty (60) days of filing.
8.3 No Liability for Termination. Neither party will be liable to the
other for any termination or expiration of this Agreement in accordance with its
terms.
8.4 Effect of Termination. Upon the effective date of expiration or
termination of this Agreement: (a) Exodus will immediately cease providing the
Internet Data Center Services; (b) any and all payment obligations of Customer
under this Agreement will become due immediately; (c) within thirty (30) days
after such expiration or termination, each party will return all Confidential
Information of the other party in its possession at the time of expiration or
termination and will not make or retain any copies of such Confidential
Information except as required to comply with any applicable legal or accounting
record keeping requirement; and (d) Customer will remove from the Internet Data
Centers all Customer Equipment and any of its other property within the Internet
Data Centers within five (5) days of such expiration or termination and return
the Customer Area to Exodus in the same condition as it was on the Installation
Date, normal wear and tear excepted. If Customer does not remove such property
within such five-day period, Exodus will have the option to (i) move any and all
such property to secure storage and charge Customer for the cost of such removal
and storage, and/or (ii) liquidate the property in any reasonable manner.
8.5 Customer Equipment as Security. In the event that Customer fails to
pay Exodus all amounts owed Exodus under this Agreement when due, Customer
Agrees that upon written notice, Exodus may take possession of any Customer
Equipment and store it, at Customer's expense, until taken in full or partial
satisfaction of any lien or judgment, all without being liable to prosecution or
for damages.
8.6 Survival. The following provisions will survive any expiration or
termination of the Agreement: Sections 2, 3, 4, 5, 6, 7, 8 and 9.
9. MISCELLANEOUS PROVISIONS.
9.1 Force Majeure. Except for the obligation to pay money, neither party
will be liable for any failure or delay in its performance under this Agreement
due to any cause beyond its reasonable control, including act of war, acts of
God, earthquake, flood, embargo, riot, sabotage, labor shortage or dispute,
governmental act or failure of the Internet, provided that the delayed party:
(a) gives the other party prompt notice of such cause, and (b) uses its
reasonable commercial efforts to correct promptly such failure or delay in
performance.
9.2 No Lease. This Agreement is a services agreement and is not intended
to and will not constitute a lease of any real or personal property. Customer
acknowledges and agrees that (i) it has been granted only a license to occupy
the Customer Space and use the Internet
EXODUS COMMUNICATIONS, INC. CONFIDENTIAL (REV 11/97) PAGE 2
<PAGE> 3
Data Centers and any equipment provided by Exodus in accordance with this
Agreement, (ii) Customer has not been granted any real property interest in the
Customer Space or Internet Data Centers, and (iii) Customer has no rights as a
tenant or otherwise under any real property or landlord/tenant laws,
regulations, or ordinances. For good cause, including the exercise of any
rights under Section 8.5 above, Exodus may suspend the right of any
Representative or other person to visit the Internet Data Centers.
9.3 Marketing. Customer agrees that Exodus may refer to Customer by trade
name and trademark, and may briefly describe Customer's Business, in Exodus'
marketing materials and web site. Customer hereby grants Exodus a license to
use any Customer trade names and trademarks solely in connection with the
rights granted to Exodus pursuant to this Section 9.3.
9.4 Government Regulations. Customer will not export, re-export, transfer,
or make available, whether directly or indirectly, any regulated item or
information to anyone outside the U.S. in connection with this Agreement
without First complying with all export control laws and regulations which may
be imposed by the U.S. Government and any country or organization of nations
within whose jurisdiction Customer operates or does business.
9.5 Non-Solicitation. During the period beginning on the Installation Data
and ending on the first anniversary of the termination or expiration of this
Agreement in accordance with its terms, Customer agrees that it will not, and
will ensure that its affiliates do not, directly or indirectly, solicit or
attempt to solicit for employment any persons employed by Exodus during such
period.
9.6 Governing Law; Dispute Resolution, Severability; Waiver. This
Agreement is made under and will be governed by and construed in accordance
with the laws of the State of California (except that body of law controlling
conflicts of law) and specifically excluding from application to this Agreement
that law known as the United Nations Convention on the International Sale of
Goods. Any dispute relating to the terms, interpretation or performance of
this Agreement (other than claims for preliminary injunctive relief or other
pre-judgment remedies) will be resolved at the request of either party through
binding arbitration. Arbitration will be conducted in Santa Clara County,
California, under the rules and procedures of the Judicial Arbitration and
Mediation Society ("JAMS"). The parties will request that JAMS appoint a single
arbitrator possessing knowledge of online services agreements; however the
arbitration will proceed even if such a person is unavailable. In the event any
provision of this Agreement is held by a tribunal of competent jurisdiction to
be contrary to the law, the remaining provisions of this Agreement will remain
in full force and effect. The waiver of any breach or default of this Agreement
will not constitute a waiver of any subsequent breach or default, and will not
act to amend or negate the rights of the waiving party.
9.7 Assignment; Notices. Neither party may assign its rights or delegate
its duties under this Agreement either in whole or in part without the prior
written consent of the other party, except that this Agreement may be assigned
in whole as part of a corporate reorganization, consolidation, merger, or sale
of substantially all of its assets. Any attempted assignment or delegation
without such consent will be void. This Agreement will bind and inure to the
benefit of each party's successors and permitted assigns. Any notice or
communication required or permitted to be given hereunder may be delivered by
hand, deposited with an overnight courier, sent by confirmed facsimile, or
mailed by registered or certified mail, return receipt requested, postage
prepaid, in each case to the address of the receiving party indicated on the
signature page hereof, or at such other address as may hereafter be furnished
in writing by either party hereto to the other. Such notice will be deemed to
have been given as of the date it is delivered, mailed or sent, whichever is
earlier.
9.8 Relationship of Parties. Exodus and Customer are independent
contractors and this Agreement will not establish any relationship of
partnership, joint venture, employment, franchise or agency between Exodus and
Customer. Neither Exodus nor Customer will have the power to bind the other or
incur obligations on the other's behalf without the other's prior written
consent, except as otherwise expressly provided herein.
9.9 Entire Agreement; Counterparts. This Agreement, including all
documents incorporated herein by reference, constitutes the complete and
exclusive agreement between the parties with respect to the subject matter
hereof, and supersedes and replaces any and all prior or contemporaneous
discussions, negotiations, understandings and agreements, written and oral,
regarding such subject matter. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
Customers's and Exodus' authorized representatives have read the foregoing and
all documents incorporated therein and agree and accept such terms effective as
of the date first above written.
CUSTOMER EXODUS COMMUNICATIONS, INC.
Signature: /s/ Jennifer L. Ferlaino Signature: /s/ Sue Irvine
-------------------
Print Name: Jennifer L. Ferlaino Print Name: Sue Irvine
------------------------- ----------------------
Title: Corp. Operations Officer Title: Contract Mgr.
---------------------------------- ---------------------------
EXODUS COMMUNICATIONS, INC. CONFIDENTIAL (rev 11/97) Page 3
<PAGE> 4
EXODUS COMMUNICATIONS
SERVICE INSTALLATION AND CUSTOMER ACCEPTANCE
Customer Name: Internet Century Service Installed: Yes
------------------- ---
Sales Order Number: Customer Installed: Yes
------------------- ---
Project Manager: Rick Harris Scheduled Install. Date: 05/26/98
------------------- -------------
Form Completed By: Rick Harris Actual Install. Date: 05/22/98
------------------- -------------
Date Form Completed: 05/22/98
-------------
Services Installed:
Installation of 1/2 Rack, 10 meg ckt, 20 amp ckt and installation of IP
information to customer server.
Services ordered, but not Installed or Available:
None
Additional Services Installed:
None
Customer Acceptance /s/ Jeffrey Peterson Date 5/22/98 Addendum Signed No
--------------------- ------------ --
Expo Data Entry Summary: Additional Notes:
Basic Customer Information: Completed Installation of the following:
Project Manager, Salesperson: Completed
Basic Circuit Info: Completed - 1/2 rack.
IP Info: Completed - 10 meg ckt.
Basic Facilities Info: Completed - 20 amp ckt for power.
Contact Info: Completed - Installation of IP
Server Inventory: Completed information on server.
Monitoring Systems:
HP Open View: Not Completed
WebWatcher: Not Completed
Bandwidth Reports: Not Completed
29June97
<PAGE> 1
EXHIBIT 10.16
[TELEMUNDO LETTERHEAD]
January 21, 1999
Mr. Richard Whelan
quepasa.com
Dear Richard:
The following confirms the agreement between quepasa.com and the Telemundo
Network:
MEDIA:
Total Investment: $738,800 (net)
TH A18-49 IMPs: 53,118
CPM: $13.91
SPONSORSHIPS:
Product Integration:
Cinemundo Premier:
Production of one: 20 product integration pitch to air lx per week
for 26 weeks
o Production materials due: Thursday, February 4, 1999 (:20 copy
points)
o Taping: Thursday, February 11, 1999 (on air Sunday, March 7, 1999)
MONEY WIRE INFORMATION
Dollar commitment to be wire transferred to:
First Union BK
Acct# 2090002375767
4695 Aviation Parkway
Atlanta, GA 30349
ABA# 067006432
CANCELLATION OPTION:
Schedule is non-cancelable
This is a very exciting time at Telemundo and we are committed to delivering
the Hispanic market audience to quepasa.com. We thank you for your business and
we look forward to strengthening our partnership in the years ahead.
Confirmed and approved by:
/s/ MAUREEN ALLEGRO /s/ JEFFREY PETERSON /s/ MICHAEL HUBERT
- - - - ------------------------ ---------------------- -----------------------
Maureen Allegro Jeffrey Peterson Michael Hubert
Telemundo Network Group quepasa.com quepasa.com
PC: Alan Sokol
Steve Levin
Sylvia Reed
<PAGE> 2
TELEMUNDO NETWORK/QUEPASA.COM
1999 MEDIA AGREEMENT
<TABLE>
<CAPTION>
EST EST TOTAL TOTAL
A18-49 A18-49 A18-49 A18-49 A18-49 TOTAL
DAY TIME PROGRAM FRQ RTG 000'S GRPS 000'S CPM COST
- - - - --- ---- ------- --- --- ----- ---- ----- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUN 8-10P Cinemundo Premier 52 2.9 374 150.8 19,448
- - - - -----------------------------------------------------------------------------------------------
SUN 8-10p :20 Product Pitch 26 2.9 374 75.4 9,724
- - - - -----------------------------------------------------------------------------------------------
M-F 5-6P Ocurrio Asi 52 2.2 320 114.4 16,640
- - - - -----------------------------------------------------------------------------------------------
MON 7-8P Discovery 26 2.0 281 52.0 7,306
- - - - -----------------------------------------------------------------------------------------------
- - - - ----------------------------------------------------- ----------------------------------------------
26 WEEK TOTALS 156 392.6 53,118 $13.91 $738,800 (NET)
- - - - ----------------------------------------------------- ----------------------------------------------
</TABLE>
26 CONSECUTIVE WEEKS:
---------------------
Source: NHTI, Q1-Q4'99AVG EST, TA18-49 3/1/99-8/29/99 REVISED: 1/25/99
<PAGE> 1
EXHIBIT 10.17
24/7 MEDIA INC.
NETWORK AFFILIATION
AGREEMENT
WHEREAS, the undersigned (hereinafter the "Network Affiliate") is the
operator and owner of the Internet website(s) (the "Web Site") specified on the
signature pages hereto;
WHEREAS, 24/7 Media, Inc. ("24/7"), a Delaware corporation with an address
at 1250 Broadway, 27th floor, New York, NY 10001, operates a network of internet
web sites (the "24/7 Network") for which it solicits advertisers, advertising
agencies, buying services or others ("Advertisers") regarding the placement of
advertising banners and similar devices and sponsorships ("Advertising") for
display on pages, screens, and other segments or spaces on web sites reasonably
suitable for the display of advertising and to which the Tags (as defined in
Section 2(A) below) can be affixed as provided herein (the "Pages");
WHEREAS, Network Affiliate wishes to subscribe to include the Web Site in
the 24/7 Network, and 24/7 wishes to accept such subscription;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is agreed as
follows:
1. AFFILIATION.
The Network Affiliate hereby subscribes as a member of 24/7 Network and
hereby grants to 24/7 the exclusive right to sell all Advertising on the Web
Site.
2. OBLIGATIONS OF 24/7.
In furtherance of the foregoing, 24/7 covenants and agrees to:
A. provide the Network Affiliate, during the term of this
Agreement (the "Term") and only for use in the performance of this Agreement,
with unique tags in HTML/Java or other appropriate languages (the "Tags") (in
which the Network Affiliate will not have or acquire any proprietary or property
rights or interests, including any intellectual property rights), which shall be
affixed appropriately by Network Affiliate to the Web Site's Pages to enable
24/7 to serve Advertising to those Pages;
B. utilize its best efforts to sell to Advertisers Advertising on
the Web Site's Pages, including sales of the Web Site as a single site, through
multi-site packages and through the 24/7 Network package, at such prices as 24/7
shall deem appropriate;
<PAGE> 2
C. serve or cause to be served Advertising to the Web Site's
Pages;
D. provide the Network Affiliate with notice, via on-line
posting, of new Advertising that has been solicited by 24/7 to be displayed on
the Web Site's Pages, and to use its best efforts to honor any decision by
Network Affiliate to decline any Advertising, in accordance with the provisions
in 3(D) below;
E. provide the Network Affiliate with real-time access to records
that will allow it to monitor the volume of paid Advertising delivered to the
Web Site's Pages and the revenue produced (subject to billing corrections and
adjustments) thereby; all such records, including data, statistical information
or other traffic analysis, produced or provided by 24/7 shall be the joint
property of 24/7 and Network Affiliate; and
F. 24/7 agrees to deliver to the Network Affiliate, (i) a monthly
statement showing revenues earned by Network Affiliate during the calendar month
and any sum(s) due the Network Affiliate on account thereof, and (ii) within 30
days of collection, payment representing the Network Affiliate's portion of such
revenues;
G. maintain suitable and qualified personnel in administrative,
sales and technical positions necessary for 24/7 to perform effectively the
terms of this Agreement.
3. OBLIGATIONS OF NETWORK AFFILIATE.
The Network Affiliate covenants and agrees:
A. that during the Term, it shall use its best efforts to
continue and maintain the Web Site and the Web Site's Pages in a manner
consistent with the intent and purpose of the Web Site;
B. to insert the Tags on each of the Web Site's Pages and only on
such Pages in such a manner as to assure that the Advertising to be affixed to
said Tag is fully and clearly visible on the first Web Site Page viewed when
that Page is viewed at a 640 x 480 pixel resolution;
C. to insert a button with the 24/7 logo on the Web Site's Home
Page directing potential advertisers to the 24/7 web site.
D. to notify 24/7 within one business day from the time of notice
of any new Advertising is given of the Network Affiliate's rejection of any new
Advertising. Failure to provide timely notice of rejection of the new
Advertising shall be deemed acceptance thereof, until such time as Network
Affiliate notifies 24/7 of Network Affiliate's rejection thereof at which time
24/7 will use its best efforts to remove the Advertising;
2
<PAGE> 3
E. to furnish 24/7 with all subscribership, viewership,
inventory, and usage reports, reviews and audience studies, deliveries, census
requirements, and any other information regarding the Web Site and the Web
Site's Pages as is reasonably available to the Network Affiliate and appropriate
for use by 24/7 for the sale of Advertising; and
F. not to engage, contract with, license or permit any person,
firm or entity (including the Network Affiliate and its employees) other than
24/7 and its employees to sell, or represent the Network Affiliate for the sale
of, Advertising on the Web Site;
4. PAYMENTS.
A. Advertisers shall be directed to pay all cash and other
consideration (the "Payment") generated from the sale of Advertising by 24/7
during the term of this Agreement. 24/7 shall retain a percentage of such
Payment (reduced by those advertising agency commissions actually retained by
agencies or paid by 24/7 to agencies with respect to the sale of Advertising on
the Web Site in accordance with the following chart, and shall pay to the
Network Affiliate the remainder of the Payment received by 24/7 for the sale of
Advertising on the Web:
<TABLE>
<CAPTION>
- - - - --------------------------------------------------------------------------------
Number of Impressions Percentage Retained by 24/7
Delivered in Preceding Month for Current Month
- - - - --------------------------------------------------------------------------------
<S> <C>
999,999 to 2,000,000 50%
- - - - --------------------------------------------------------------------------------
2,000,000 to 2,999,999 45%
- - - - --------------------------------------------------------------------------------
3,000,000 to 4,999,999 40%
- - - - --------------------------------------------------------------------------------
5,000,000 to 14,999,999 35%
- - - - --------------------------------------------------------------------------------
15,000,000+ 30%
- - - - --------------------------------------------------------------------------------
</TABLE>
Subject to verification of monthly Ad Impressions, the initial commission rate
to 24/7 Media is 50%.
B. The Network Affiliate may elect to have 24/7 serve promotional
or barter advertisements not sold by 24/7, for which Network Affiliate will pay
24/7 a serving fee of $2.50 cost per thousand ("CPM"); such promotional and
barter advertisements shall not exceed thirty percent (30%) of the Pages.
C. In the event any Advertiser remits any payment for Advertising
sold by 24/7 Media directly to the Network Affiliate rather than to 24/7 Media,
the Network Affiliate agrees to make prompt payment to 24/7 of any and all such
payments.
D. Network Affiliate will be obligated to compensate 24/7 Media
on any business contracted by 24/7 Media prior to termination date.
3
<PAGE> 4
5. INTELLECTUAL PROPERTY. All hardware, software, programs, codes, trade
names, technology, intellectual property, licenses, patents, trademarks,
copyrights, trade secrets, know-how, and processes (collectively, the "24/7
Technology") used by 24/7 under this Agreement shall remain the sole property of
24/7. Network Affiliate shall have no rights, title or interest in the 24/7
Technology. Upon the expiration or termination of this Agreement, each party
shall promptly return all information, documents, manuals and other materials
belonging to the other party except as otherwise provided in this Agreement.
6. CONFIDENTIALITY. 24/7 and Network Affiliate covenant to each other that
neither party shall disclose to any third party (other than its employees and
directors, in their capacity as such, and the employees and directors of any
affiliate on a need to know basis so long as they are bound by the terms of this
Agreement) any information regarding the terms and provisions of this Agreement
or any non-public confidential information which has been identified as such by
the other Party hereto except (i) to the extent necessary to comply with any law
or valid order of a court of competent jurisdiction (or any regulatory or
administrative tribunal), in which event the party so complying shall so notify
the others as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information, if
available; (ii) as part of its normal reporting or review procedure to its
auditors or its attorneys, as the case may be, so long as they are notified of
the provisions of this Agreement; (iii) in order to enforce its rights pursuant
to this Agreement; (iv) in connection with any filing with any governmental body
or as otherwise required by law, including the federal securities laws and any
applicable rules and regulations of any stock exchange or quotation system; and
(v) in a confidential disclosure made in connection with a contemplated
financing, merger, consolidation or sale of capital stock of 24/7 or the Network
Affiliate. Information which is or should be reasonably understood to be
confidential or proprietary includes, but is not limited to, information about
the 24/7 Network, sales, cost and other unpublished financial information,
product and business plans, projections, marketing data, and sponsors but shall
not include information (a) already lawfully known to or independently developed
by a party, (b) disclosed in published materials, (c) generally known to the
public, (d) lawfully obtained from any third party or (e) required to be
disclosed by law.
7. TERM. The term of this Agreement (the "Term") shall commence on the
Effective Date and shall continue in effect until either party terminates it.
Termination will be effective four (4) months after the date on which written
notice is given, as determined under the provisions of Section 13 below, to the
other party.
8. CONTENT OF WEB SITE. Network Affiliate covenants and agrees not to include
or provide via the Web Site or the Web Site's Pages any material that is or may
be considered: (i) libelous, pornographic, obscene, or defamatory under any
federal or state law; (ii) an infringement of any third party's intellectual
property rights (including copyright, patent, trademark, trade secret or other
proprietary rights); or (iii) an infringement on any third party's rights of
publicity or privacy. Network Affiliate further covenants and agrees, with
4
<PAGE> 5
respect to the operation of its Web Site and its Pages, to comply with all laws,
statutes, ordinances, and regulations.
9. INDEMNIFICATION. Network Affiliate shall indemnify and hold harmless 24/7,
its advertisers and other suppliers and any related third parties, against and
in respect of any and all claims, suits, actions, proceedings (formal and
informal), investigations, judgments, deficiencies, damages, settlements,
liabilities, and legal and other expenses (including reasonable legal fees and
expenses of attorneys chosen by 24/7) as and when incurred, arising out of or
based upon any act or omission or alleged act or alleged omission by Network
Affiliate in connection with the acceptance of, or the performance or
non-performance by Network Affiliate of, any of its duties under this Agreement
or arising from the breach by Network Affiliate of its warranties,
representations or covenants contained in this Agreement. 24/7 shall indemnify
and hold harmless the Network Affiliate, against and in respect of any and all
claims, suits, actions, proceedings (formal and informal), investigations,
judgments, deficiencies, damages, settlements, liabilities, and legal and other
expenses (including reasonable legal fees and expenses of attorneys chosen by
Network Affiliate) as and when incurred, arising out of or based upon any act or
omission or alleged act or alleged omission by 24/7 in connection with the
acceptance of, or the performance or non-performance by 24/7 of, any of its
duties under this Agreement or arising from the breach by 24/7 of its
warranties, representations or covenants contained in this Agreement.
10. NO POACHING. Network Affiliate agrees that, for a period of one year from
the end of the Term, neither it nor its affiliates will solicit or recruit the
services of any 24/7 employees, or hire any such employees.
11. NO WAIVER. This Agreement shall not be waived, modified, assigned or
transferred except by a written consent to that effect signed by Network
Affiliate and 24/7. Network Affiliate agrees that if it assigns or transfers
this Agreement, it shall cause such successor, assignee, or transferee to assume
all of the Network Affiliate's obligations hereunder. Any assignment, transfer,
or assumption shall not relieve the Network Affiliate of liability hereunder.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed therein, without regard to principles of conflicts of laws.
13. NOTICES. All notices required or permitted to be given hereunder shall be
in writing and either hand-delivered, telecopied, mailed by certified first
class mail, postage prepaid, or sent via electronic mail to the other party or
parties hereto at the address(es) set forth below. A notice shall be deemed
given when delivered personally, when the telecopied notice is transmitted by
the sender, three business days after mailing by certified first class mail, or
on the delivery date if delivered by electronic mail.
5
<PAGE> 6
14. ENTIRE AGREEMENT. This Agreement, including the Additional Terms attached
hereto, constitutes the entire agreement and supersedes all prior agreements of
the Parties with respect to the transactions set forth herein and, except as
otherwise expressly provided herein, is not intended to confer upon any other
person any rights or remedies hereunder.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
this_______________day of_____________________, 1998 (the "Effective Date").
24/7 MEDIA, INC.
By: /s/ Mark A. Burchill
----------------------------
Name: Mark A. Burchill
Title: SVP, Business Development
E-mail address: [email protected]
----------------------------
NETWORK AFFILIATE:
Name of Web Site: quepasa.com
----------------------------
Web Site URL: www.quepasa.com
----------------------------
Corporate Name: quepasa.com, Inc.
----------------------------
Address: ONE ARIZONA CENTER
----------------------------
Address: 400 E. VAN BUREN, 4TH FLOOR
----------------------------
By: /s/ MICHAEL HUBERT
----------------------------
Name: Michael Hubert
Title: COO
E-mail address:
7
<PAGE> 1
EXHIBT 10.18
EMPLOYMENT AGREEMENT
EFFECTIVE DATE: November 9, 1998
EMPLOYER: INTERNET CENTURY, INC., A NEVADA CORPORATION
One Arizona Center
400 East Van Buren, Suite 545
Phoenix, AZ 85004
EMPLOYEE: MICHAEL A. HUBERT
One Arizona Center
400 East Van Buren
4th Floor
Phoenix, AZ 85004
PURPOSE:
Employer is in the business of Internet website design and hosting,
Internet-based software applications development, and Internet services.
Employer desires to employ Employee and Employee desires to accept such
employment, on the terms, covenants and conditions set forth in this Employment
Agreement (this "Agreement").
AGREEMENTS:
For the reasons set forth above, and in consideration of the mutual
promises and agreements set forth in this Agreement, Employer and Employee agree
as follows:
1. Employment: Duties.
1.1 Subject to and in accordance with this Agreement, Employer employs
Employee as Senior Vice President of Marketing and Employee accepts employment
with Employer subject to the general supervision and pursuant to the orders,
advice and direction of Employer. In such capacity, employee's specific duties
shall include marketing and strategic development and such other duties as the
Employer may reasonably direct.
1.2 Employee agrees to perform all of the duties that may be required of
and from Employee pursuant to the express and implicit terms of this Agreement
faithfully, industriously and to the best of Employee's ability and experience
at all times. Employee shall perform all duties required hereunder in a
satisfactory manner and employment hereunder shall continue only so long as the
performance of such duties is and remains satisfactory. Employer shall be the
sole judge of whether Employee's duties are performed satisfactorily. Employee
shall obey all rules and regulations of Employer. Such duties shall be rendered
in Phoenix, Arizona, and at such other places as Employer and Employee shall
mutually agree upon. Employee shall be required to dedicate Employee's full time
and attention to Employee's duties hereunder.
1.3 Employee represents and warrants that there are no agreements or
arrangements, written or oral, in effect that would prevent Employee from
rendering services to Employer during the term of this Agreement.
1.4 Nothing herein contained shall be construed to create a partnership or
joint venture between Employer and Employee. Neither party hereto shall be
liable for the debts or obligations of the other unless expressly assumed in
writing and signed by the parties hereto.
1
<PAGE> 2
2. Term. This Agreement shall become effective on the date first written above
and, unless terminated sooner pursuant to Section 5, continue through December
1, 2000 ("initial term"). Employee shall have the right but not the obligation
to extend the initial term for an additional period of 2 years (an "extension"),
subject to the termination provisions of Section 5 below and the other terms and
provisions of this Agreement, by giving written notice of extension to Employer
on or before December 1, 2000.
3. Compensation and Other Benefits.
3.1 Compensation. For services rendered to Employer hereunder, in whatever
capacity rendered, Employee shall have and receive, subject to withholding and
other applicable taxes, a base salary of Ninety Thousand dollars ($90,000.00),
per year, payable in accordance with the then current payroll policies of the
Employer. This base salary excludes performance bonuses and stock options.
3.2 Business Expenses. Upon submission of proper documentation, Employer
shall pay or reimburse Employee for all reasonable and necessary office,
telephone, travel and other expenses which are incurred by Employee in the
pursuit of Employee's duties on behalf of Employer.
3.3 Employee Benefits. Employee shall be entitled to participate in any
other bonus, stock option, incentive compensation, deferred compensation, group
medical and dental insurance plans or other plans or programs and to receive any
other benefits for which Employee is eligible and which Employer may provide its
employees generally.
3.4 Loan. Employer will loan Employee Thirty-five Thousand dollars
($35,000) to be disbursed thirty (30) days from the Effective Date. The Employer
agrees that if Employee has been employed by the Employer for six months from
the Effective Date, 100% of the principal balance and accrued but unpaid
interest shall be forgiven by the Company and the Note evidencing such loan
shall be canceled.
3.5 Vacation. At such reasonable times as Employer shall in its sole
discretion permit, Employee shall be entitled, without loss of pay, to absence
himself voluntarily from the performance of this employment under this
agreement. Employee shall be entitled to such period of absence of not more than
four weeks per calendar year, during the agreement term.
3.6 Bonus. Employee shall be entitled to participate in any other bonus,
stock option, incentive compensation, deferred compensation, group medical and
dental insurance plans or other plans or programs and to receive any other
benefits for which he is eligible and which Employer may provide its employees
generally or its officers specifically.
3.7 Temporary Housing. Employer shall pay the temporary housing expenses or
hotel expenses incurred by Employee in Phoenix, Arizona. In addition, Employer
shall pay the Employee's travel expenses commuting from Chicago, Illinois to
Phoenix, Arizona.
3.8 Severance Pay. In the event this Agreement is terminated by the
Employer at any time on or before December 1, 2000, for any reason other than
pursuant to Section 5.2(a) or (b) of this Agreement or the voluntary
resignation, death, disability or incompetence of Employee, then Employer shall
pay to Employee severance pay representing the balance of the amounts owed
pursuant to this agreement.
4. Facilities. Employer shall provide and maintain (or cause to be provided and
maintained) such facilities, equipment, offices, secretarial help, and other
services and supplies as are necessary for Employee's performance of Employee's
duties under this Agreement, as established from time to time by Employer.
2
<PAGE> 3
5. Termination.
5.1 With Notice. This Agreement and Employee's employment hereunder may be
terminated by either party at any time upon 30 days prior written notice.
5.2 With Cause. Employer may terminate Employee's employment hereunder
immediately and without notice, for any of the following reasons: (a) upon
Employee's breach of any provision of this Agreement, (b) upon Employer
determining that there is good cause. For purposes of this Agreement, the term
"good cause" shall include, but not be limited to, the following: dishonesty,
conduct reflecting moral turpitude, conduct disloyal to Employer, arrest or
indictment for any crime, dependence on any addictive substance, conduct on the
part of Employee which is intended to result directly or indirectly in
substantial gain or personal enrichment to Employee or any person or entity
affiliated with Employee, at the expense of Employer.
5.3 Additional Provisions. Further, this Agreement and Employee's
employment hereunder shall automatically terminate upon the death, disability
(meaning Employee is found to be unable to fully perform substantially all
material aspects of Employee's duties as an employee of employer on a regular
and consistent basis for a consecutive period of 180 calendar days or for
shorter periods aggregating 180 calendar days during any 12 month period) or
insanity of Employee or the bankruptcy of employer or the discontinuance of
Employer's Business.
5.4 Affect of Termination. Notwithstanding the termination of this
Agreement or of Employee's employment hereunder, the parties hereto shall be
required to carry out any provision hereof which contemplate performance by them
subsequent to such termination, nor shall such termination affect any liability
or obligation which has accrued prior to such termination, including but not
limited to, accrued but unpaid compensation and any liability for loss or damage
on account of default.
5.5 Cooperation. During the 30 day period after notice of termination of
employment pursuant to paragraph 5.1, Employee shall fully cooperate with
Employer in all matters relating to the winding up of Employee's pending work on
behalf of Employer and the orderly transfer of any such pending work to other
employees of Employer as may be designated by Employer. Employer shall pay
Employee for any services rendered after the 30 day period at a mutually
agreeable rate.
5.6 Obligations. Upon termination of this Agreement, or whenever requested
by Employer, Employee shall immediately turn over to Employer all of Employer's
property, including all items used by Employee in rendering services hereunder,
that may be in Employee's possession or under Employee's control.
6. Covenant Not to Compete: Disclosure of Information.
6.1 Solicitation.
6.1.1 For a period of twelve (12) months after the date of termination
of this Agreement, Employee shall not, whether alone or as a partner, officer,
director, employee or shareholder (or other holder of an equity interest) of, or
consultant, advisor or lender to, any other corporation, partnership or other
entity, or as a trustee, fiduciary or other representative, solicit Employer's
customers with respect to, engage in or have any interest, including as a
creditor, in any person, partnership, corporation, association, or other
business entity, whether as employee, officer, director, agent, consultant,
stockholder or holder of any right to any form of equity ownership, or
otherwise, that engages in the Business.
6.1.2 Employee shall not, during or for a period of twelve (12) months
after the date of termination of this Agreement, solicit any employee, sales
representative or independent contractor of Employer for employment by any
person, firm, partnership, corporation, association or other entity for any
reason or purpose allied or related to the Business whatsoever.
3
<PAGE> 4
6.2 Non-Disclosure.
6.2.1 Employee hereby recognizes and acknowledges that: (i) Employee
will be making use of, acquiring, and/or adding to proprietary information of a
special and unique nature and value relating to and including, but not limited
to, such matters as Employer's trade secrets, systems, procedures, manuals,
confidential reports, lists of suppliers, research and development projects,
policies, processes, formulas, techniques, know-how and facts relating to sales,
advertising, mailing, promotions, financial matters, customers, customer lists,
purchases or requirements or other methods used and preferred by Employer in its
operations, (ii) the Company will disclose certain proprietary information to
Employee including, but not limited to, the details of any statistical or
financial data, the operations and structure of the business of Employer, and
manuals, forms, techniques, methods or procedures of Employer used by or made
available to Employee in the course of Employee's employment (the information
referenced in paragraphs 6.2.1 (i) and (ii) above are hereinafter collectively
referred to as the "Proprietary Information", except for such information which
at the time of disclosure is generally available to the public or thereafter
becomes available to the public by publication or otherwise through no act of
Employee).
6.2.2 Employee hereby recognizes and acknowledges that the Proprietary
Information is a valuable, special and unique asset of Employer's business.
6.2.3 Employee will not at any time, directly or indirectly make use
of, divulge or disclose any of the Proprietary Information or any part thereof
for any purpose whatsoever to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever that has been obtained by, or
disclosed to, Employee as a result of Employee's relationship with Employer.
Immediately upon request by Employer, Employee shall return to Employer any and
all materials relating to Proprietary Information.
6.3 Acknowledgment.
6.3.1 Employee acknowledges that the covenants contained in this
Section 6 are a material inducement for Employer to enter into this Agreement
and to perform its obligations hereunder and that the services Employee is to
render to Employer hereunder are of a special and unusual character with a
unique value to Employer. Employee acknowledges that it would take at least
twelve (12) months for Employer to retain and train personnel to replace
Employee. Accordingly, Employee acknowledges that the restrictions contained in
this Section 6 are reasonably necessary for the protection of Employer's
business and that a breach of any such restriction could not adequately be
compensated by damages in an action at law.
6.3.2 In the event of a breach or threatened breach by Employee of any
provision contained in this Section 6, Employer shall be entitled to obtain, by
posting an appropriate bond, an injunction (preliminary or permanent, or a
temporary restraining order) restraining Employee from the activity or
threatened activity constituting or that would constitute a breach.
6.3.3 In the event of a breach by Employee of any provision contained
under this Section 6, Employer shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remuneration or other benefits that
Employee, directly or indirectly, has realized and/or may realize as a result
of, arising out of or in connection with any such breach.
6.3.4 The remedies provided in this Section 6 shall be in addition to,
and not in lieu of, any and all other remedies of Employer at law or in equity.
4
<PAGE> 5
7. Miscellaneous.
7.1 Notice. Notices required or permitted to be given hereunder shall be
sufficient if in writing and delivered or deposited in the mail, postage
prepaid, certified mail, return receipt requested (or the equivalent in a
foreign country), addressed, if to Employer, at its principal place of business
and, if to Employee, at the home address set forth in Employer's employee
records or to such other address as may be designated in writing hereafter by
either party hereto. All notices hereunder shall be effective: (a) five (5) days
after deposit in the mail; or (b) upon delivery, if delivered in person or by
commercial express service.
7.2 Burden. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of any successor of Employer and any such
successor of Employer and any such successor shall be deemed substituted for
Employer under the terms of this Agreement. As used in this Agreement, the term
"successor" shall mean any person, firm, corporation or other business entity
which at any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of Employer.
7.3 Entire Agreement. This Agreement contains the entire agreement and
understanding by and between Employer and Employee with respect to the
employment of Employee and no representations, promises, agreements or
understandings, written or oral, not contained herein shall be of any force or
effect. No change or modification of this Agreement shall be valid or binding
unless it is in writing and signed by the parties intended to be bound. No
waiver of any provision of this Agreement shall be valid unless it is in writing
and signed by the parties against whom the waiver is sought to be enforced. No
valid waiver of any provision of this Agreement at any time shall be deemed a
waiver of any other provision of this Agreement at such time or any other time.
All prior agreements, if any, are null and void.
7.4 Arbitration. In the event any dispute or controversy arising out of
this Agreement cannot be settled by Employer and Employee, such controversy or
dispute, at the election of either Employer or Employee, by written notice to
the other may be submitted to arbitration in Phoenix, Arizona, and for this
purpose Employer and Employee each hereby expressly consent to such arbitration
and such place. In the event Employer and Employee cannot, within 15 days
following the election to submit the dispute or controversy to arbitration,
mutually agree upon an arbitrator to settle their dispute or controversy, then
Employer and Employee shall each select one arbitrator and the two arbitrators
shall select a third arbitrator. The decision of the majority of said
arbitrators shall be binding upon Employer and Employee for all purposes, and
judgment to enforce any such binding decision may be entered in the Superior
Court, Maricopa County, Arizona (and for this purpose Employer and Employee
hereby irrevocably consent to the jurisdiction of said court). If either
Employer or Employee fails to select an arbitrator within fifteen (15) days
after written demand from the other party to do so, then the chief Judge in the
United State District Court of the District of Arizona shall select such other
arbitrator. At the election of either Employer or Employee, all arbitrators
shall be selected pursuant to the then existing rules and regulations of the
Employee, all arbitrators shall be selected pursuant to the then existing rules
and regulations of the American Arbitration Association governing commercial
transactions. At the request of either Employer or Employee, arbitration
proceedings shall be conducted in the utmost secrecy. The parties agree that the
manner, method and scope of discovery conducted for purposes of the arbitration
will be defined and governed by Rules 26-37 of the Arizona Rules of Civil
Procedure then in effect. In such case, all documents, testimony and records
shall be available for inspection only for purposes of the arbitration and only
by either party and their respective attorneys and experts who shall agree, in
advance and in writing, to receive all such information in secrecy. In all other
respects, the arbitrators shall conduct all proceedings pursuant to the Uniform
Arbitration Act as adopted by the State of Arizona and the then existing rules
and regulations of the American Arbitration Association governing commercial
transactions. The costs of the arbitration and the arbitrators shall be borne by
the non-prevailing party, as determined by the arbitrators, and each party shall
bear their own attorneys' fees.
7.5 Prohibition Against Assignment. This Agreement is personal to Employee
and employee shall not assign or delegate any Employee's rights or obligations
hereunder without first obtaining the written consent of Employer.
5
<PAGE> 6
7.6 Governing Law. This Agreement shall be governed in all respects whether
as to validity, construction, capacity, performance or otherwise by the laws of
the State of Arizona. The section headings used in this Agreement are included
solely for convenience and shall not affect or be used in connection with the
interpretation of this Agreement.
7.7 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any one or more of the
provisions of this Agreement shall not affect the validity and enforceability of
the other provisions.
IN WITNESS WHEREOF, the parties have executed this document to be effective the
date first above written.
EMPLOYER:
INTERNET CENTURY, INC., a Nevada corporation
By: /s/ JEFFREY PETERSON
-----------------------------------------
Name: Jeffrey Peterson
---------------------------------------
Title: Chief Executive Officer
--------------------------------------
EMPLOYEE:
/s/ MICHAEL A. HUBERT
--------------------------------------------
Michael A. Hubert
6
<PAGE> 7
AMENDMENT OF EMPLOYMENT AGREEMENT
This Amendment of Employment Agreement is entered into as of the 21st
day of January, 1999, by and between QUEPASA.COM, INC., formally known as
Internet Century, Inc., a Nevada corporation (the "Employer"), and MICHAEL A.
HUBERT (the "Employee").
Explanatory Statements
A. Employer and Employee entered into an Employment Agreement dated as
of November 9, 1998 (the "Employment Agreement") whereby the Employer employed
the Employee.
B. The Employer and Employee desire to amend and modify certain terms
and conditions of the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Employment Agreement is hereby amended and
modified as follows:
1. Section numbered 1, "Employment: Duties " is hereby amended to read
as follows:
"Employee will serve the Company as its Chief Operating
Officer and will faithfully and diligently perform the
services and functions relating to such office and position or
otherwise reasonably incident to such office and position,
provided that all such services and functions will be
reasonable and within Employee's areas of expertise.
Employee's specific duties shall include the coordination of
the Company's daily operations and strategic planning and such
other duties as the Company may reasonably direct."
2. Section numbered 3.1 "Compensation" is hereby amended by the
addition of the following at the end of Section numbered 3.1:
"It is acknowledged that the Employee is in the process of
completing an initial public offering of its securities (the
"IPO"). It is agreed that upon the closing of the IPO,
Employee's base salary hereunder shall increase to One Hundred
Twenty Thousand dollars ($120,000) per year."
3. Section numbered 3.8, "Severance Pay" is hereby amended to read as
follows:
"In the event this Agreement is terminated by the Employer at
any time on or before December 1, 2000, for any reason other
than pursuant to Section 5.2(a) or (b) of this Agreement or
the voluntary resignation, death, disability or incompetence
of Employee, then Employer shall pay to Employee severance pay
representing the balance of the amounts owed pursuant to this
Agreement plus a payment of $100,000.
4. Section numbered 3, "Compensation and Other Benefits" is hereby
amended by the addition of a new subsection 3.9 to read as follows:
<PAGE> 8
"3.9 Lease of Automobile. During the term of this Agreement,
Employer shall lease or make available a new or late model
mid-size automobile for the use of Employee and shall pay all
monthly lease payments, not to exceed $500 per month, together
with insurance and maintenance costs relating to such
automobile."
5. The address of the Employer, quepasa.com, inc., formally known as
Internet Century, Inc., is hereby changed to:
quepasa.com, inc.
400 E. Van Buren, Suite 400
Phoenix, AZ 85004"
6. Any and all other terms and conditions of the Employment Agreement
not amended or modified herein shall remain the same and in full force and
effect.
Employer:
QUEPASA.COM, INC.
By: /s/ Jeffrey Peterson
------------------------------------------
Jeffrey Peterson, Chief Executive Officer
Employee:
/s/ Michael A. Hubert
------------------------------------------
Michael A. Hubert
2
<PAGE> 1
EXHIBIT 10.19
STANDARD OFFICE LEASE - GROSS
BANK OF AMERICA CENTER
INTERNET CENTURY, INC.
<PAGE> 2
STANDARD OFFICE LEASE - GROSS
BANK OF AMERICA CENTER
INTERNET CENTURY, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Basic Lease Provisions ................................................ 1
2. Premises, Parking and Common Areas .................................... 2
3. Term .................................................................. 3
4. Rent .................................................................. 4
5. Security Deposit ...................................................... 6
6. Use ................................................................... 6
7. Maintenance, Repairs, Alterations and Common Area Services ............ 7
8. Insurance; Indemnity .................................................. 9
9. Damage or Destruction ................................................. 11
10. Real Property Taxes ................................................... 13
11. Utilities ............................................................. 14
12. Assignment and Subletting ............................................. 14
13. Default; Remedies ..................................................... 17
14. Condemnation .......................................................... 18
15. Broker's Fee .......................................................... 19
16. Estoppel Certificate; Financial Statements ............................ 19
17. Landlord's Liability .................................................. 20
18. Severability .......................................................... 20
19. Interest on Past-due Obligations ...................................... 20
20. Time of Essence ....................................................... 20
21. Additional Rent ....................................................... 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
22. Incorporation of Prior Agreements; Amendments .......................... 20
23. Notices ................................................................ 20
24. Waivers ................................................................ 21
25. Recording .............................................................. 21
26. Holding Over ........................................................... 21
27. Cumulative Remedies .................................................... 21
28. Covenants and Conditions ............................................... 21
29. Binding Effect; Choice of Law .......................................... 21
30. Subordination .......................................................... 21
31. Attorneys' Fees ........................................................ 22
32. Landlord's Access ...................................................... 22
33. Auctions ............................................................... 22
34. Signs .................................................................. 22
35. Merger ................................................................. 22
36. Consents ............................................................... 22
37. Guarantor .............................................................. 23
38. Quiet Possession ....................................................... 23
39. Omitted ................................................................ 23
40. Security Measures-Landlord's Reservations .............................. 24
41. Easements .............................................................. 24
42. Performance Under Protest .............................................. 24
43. Authority .............................................................. 25
44. Conflict ............................................................... 25
45. No Offer ............................................................... 25
46. Lender Modification .................................................... 25
47. Multiple Parties ....................................................... 25
48. Intentionally Omitted .................................................. 25
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
49. Nondisclosure of Lease Terms ....................................... 25
50. Attachments ........................................................ 25
</TABLE>
EXHIBITS & RIDERS
Exhibit "A" - Floor Plan of Premises
Exhibit "B" - Rules and Regulations
THIS LEASE IS NOT IN EFFECT UNTIL
DULY SIGNED BY LANDLORD AND TENANT
iii
<PAGE> 5
STANDARD OFFICE LEASE - GROSS
BANK OF AMERICA CENTER
1. BASIC LEASE PROVISIONS ("Basic Lease Provisions").
1.1 PARTIES: This Standard Office Lease - Gross ("Lease"), dated, for
reference purposes only, August 21, 1998, is made by and between 101 CONVENTION
CENTER DRIVE CORPORATION, a Delaware corporation (herein called "Landlord"), and
INTERNET CENTURY, INC., a Nevada corporation, (herein called "Tenant").
1.2 PREMISES: Suite Number 690, consisting of approximately 1,012
rentable square feet, more or less, as defined in paragraph 2 and as shown on
Exhibit "A" hereto (the "Premises").
1.3 BUILDING: Commonly described as being located at 101 Convention
Center Drive, in the City of Las Vegas, County of Clark, State of Nevada.
1.4 USE: General office use only, subject to paragraph 6.
1.5 TERM: Thirty-Six (36) months commencing on September 1, 1998
("Commencement Date") and ending August 31, 2001, subject to the terms of
paragraph 3 below.
1.6 BASE RENT: Initially, $1,669.80 per month, payable on the first
day of each month, per paragraph 4.1, subject to adjustment as provided in
paragraph 1.7 below.
1.7 BASE RENT INCREASE: The monthly Base Rent payable under paragraph 1.6
above shall be adjusted as follows:
<TABLE>
<CAPTION>
Lease Year Base Rent Per Month
---------- -------------------
<S> <C>
1 $1,669.80
2 $1,720.40
3 $1,771.00
</TABLE>
1.8 BASE RENT TO BE PAID UPON EXECUTION: $1,669.80.
1.9 SECURITY DEPOSIT: $1,771.00.
1.10 TENANT'S SHARE OF OPERATING EXPENSE INCREASE: 0.33% as defined in
paragraph 4.2.
1.11 PARKING SPACES: 3 unreserved parking spaces.
1.12 BROKERS: CB Richard Ellis, representing Landlord as "listing broker"
and Cambridge Group, as "cooperating broker", both licensed real estate brokers.
1.13 LEASE YEAR: Shall refer to each 365-day period during the Term
commencing on the Commencement Date and ending on each anniversary thereof.
1.14 GUARANTORS (IF ANY): None.
<PAGE> 6
2. PREMISES, PARKING AND COMMON AREAS.
2.1 PREMISES. The Premises are a portion of a building, herein sometimes
referred to as the "Building" identified in paragraph 1.3 of the Basic Lease
Provisions. "Building" shall include adjacent parking structures used in
connection therewith. The Premises, the Building, the Common Areas, the land
upon which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the "Office
Building Project." Landlord hereby leases to Tenant and Tenant leases from
Landlord for the term, at the rental, and upon all of the conditions set forth
herein, the real property referred to in the Basic Lease Provisions, paragraph
1.2, as the "Premises", including rights to the Common Areas as hereinafter
specified.
2.2 VEHICLE PARKING. So long as Tenant is not in default, and subject to
the rules and regulations attached hereto, and as established by Landlord from
time to time, Tenant shall be entitled to rent and use the number and type of
parking spaces in the Office Building Project described in the Basic Lease
Provisions, paragraph 1.11, at the monthly rate applicable from time to time
for monthly parking as set by Landlord and/or its licensee.
2.2.1 If Tenant commits, permits or allows any of the prohibited
activities described in this Lease or the rules then in effect, then Landlord
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and charge
the cost to Tenant, which cost shall be immediately payable upon demand by
Landlord.
2.2.2 Tenant acknowledges and agrees that Landlord shall charge for
visitor and reserved parking for the Office Building Project and that Landlord
reserves the right to charge Tenant for the unreserved parking spaces provided
to Tenant during any renewal terms exercised by Tenant pursuant to any rider or
addendum attached hereto.
2.2.3 Landlord reserves the right to institute and operate, as an
Operating Expense of the Office Building Project, a valet parking service at the
Building and to require Tenant and its employees to use the valet service, at no
cost or expense to Tenant (other than Tenant's proportionate share of such
services as part of Tenant's Share of any Operating Expense Increase), as the
unreserved parking space rights granted to Tenant pursuant to paragraph 2.2
above.
2.3 COMMON AREAS - DEFINITION. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Office Building Project that are provided and designated by the Landlord
from time to time for the general non-exclusive use of Landlord, Tenant and of
other tenants of the Office Building Project and their respective employees,
suppliers, shippers, customers and invitees, including, but not limited to,
common entrances, lobbies, corridors, stairways and stairwells, public
restrooms, elevators, escalators, parking areas to the extent not otherwise
prohibited by this Lease, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, ramps, driveways, landscaped areas and decorative
walls.
2.4 COMMON AREAS - RULES AND REGULATIONS. Tenant agrees to abide by and
conform to the rules and regulations attached hereto as Exhibit "B" with respect
to the Office Building Project and Common Areas, and to cause its employees,
suppliers, shippers, customers, and invitees to so abide and conform. Landlord
or such other person(s) as Landlord may appoint shall have the exclusive control
and management of the Common Areas and shall have the right, from time to time,
to modify, amend and enforce said rules and regulations. Landlord shall not be
responsible to Tenant for the noncompliance with said rules and regulations by
other lessees, their agents, employees and invitees of the Office Building
Project, provided Landlord takes reasonable steps to enforce the rules and
regulations.
2.5 COMMON AREAS - CHANGES. Landlord shall have the right, in Landlord's
sole discretion, from time to time:
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<PAGE> 7
2.5.1 To make changes to the Building interior and exterior and Common
Areas, including, without limitation, changes in the location, size, shape,
number, and appearance thereof, including, but not limited to, the lobbies,
windows, stairways, air shafts, elevators, escalators, restrooms, driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, decorative walls, landscaped areas and walkways;
provided, however, Landlord shall at all times provide the parking facilities
required by applicable law;
2.5.2 To close temporarily any of the Common Areas for maintenance and
repair purposes so long as reasonable access to the Premises remains available;
2.5.3 To designate other land and improvements outside the boundaries
of the Office Building Project to be a part of the Common Areas, provided that
such other land and improvements have a reasonable and functional relationship
to the Office Building Project;
2.5.4 To add additional buildings and improvements to the Common Areas;
2.5.5 To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Office Building Project, or any
portion thereof;
2.5.6 To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Office Building Project as Landlord
may, in the exercise of sound business judgment, deem to be appropriate.
2.6 SUBSTITUTED PREMISES. If the Premises contain an area of 3,500 square
feet or less, Landlord shall have the right at any time during the term hereof,
upon giving Tenant not less than 30 days notice in writing, to provide and
furnish Tenant with reasonably comparable space elsewhere in the Office Building
Project of approximately the same size as the Premises, and to remove and place
Tenant in such space. Should Tenant refuse to permit Landlord to move Tenant to
such new space at the end of said 30-day period, Landlord shall have the right
to terminate this Lease, effective 60 days from the date of original
notification by Landlord. If Landlord moves Tenant to such new space, (i)
Landlord shall pay all reasonable moving expenses of Tenant which are directly
attributable to such substitution of Premises, (ii) this Lease and all of its
terms, covenants and conditions shall remain in full force and effect, and shall
be deemed applicable to such new space, except that a revised Exhibit "A" shall
become part of this Lease and shall reflect the location of the new space, (iii)
the Lease shall be amended to include and state all correct information as to
the new space, and (iv) such new space shall thereafter be deemed to be the
"Premises". Notwithstanding the foregoing, if such new space is smaller than the
Premises, the base rent under paragraphs 1.6 and 1.7 of the Basic Lease
Provisions, and Tenant's share of Operating Expense Increase under paragraph 1.
10 of the Basic Lease Provisions, shall be reduced proportionately, based upon
the reduction in square footage between the new space and the Premises. If the
new space is larger than the Premises, then there will be no increase in base
rent or Tenant's share of Operating Expense Increase, unless Landlord and Tenant
mutually agree to expand the Premises and/or extend the lease term.
3. TERM.
3.1 TERM. The term and Commencement Date of this Lease shall be as
specified in paragraph 1.5 of the Basic Lease Provisions, subject to the terms
of paragraphs 3.2 and 3.4 below.
3.2 DELAY IN POSSESSION. Notwithstanding said Commencement Date, if for any
reason Landlord cannot deliver possession of the Premises to Tenant on said date
and subject to paragraph 3.2.2, Landlord shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligations of Tenant hereunder, but, in such case, Tenant shall not be
obligated to pay rent or perform any other obligation of Tenant under the terms
of this Lease, except as may be otherwise provided in this Lease, until
possession of the Premises is tendered to Tenant, as hereinafter defined.
-3-
<PAGE> 8
3.2.1 POSSESSION TENDERED - DEFINED. Possession of the Premises shall
be deemed tendered to Tenant ("Tender of Possession") when (1) the Building
utilities are ready for use in the Premises, and (2) Tenant has reasonable
access to the Premises. Tenant hereby agrees to accept possession of the
Premises "as is," in their present state and condition.
3.2.2 DELAYS CAUSED BY TENANT. There shall be no abatement of rent to
the extent of any delays caused by acts or omissions of Tenant, Tenant's agents,
employees and contractors.
3.3 EARLY POSSESSION. If Tenant occupies the Premises prior to said
Commencement Date, such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not change the termination date, and Tenant shall
pay rent for such occupancy at the rate applicable for the first Lease Year.
3.4 UNCERTAIN COMMENCEMENT. In the event that the Commencement Date is a
date other than as specified in Section 1.5 as a result of a delay in possession
as defined in Section 3.2 hereinabove, then the commencement of the Lease term
shall be defined as the date of Tender of Possession as further described in
Section 3.2.1. In such event, Tenant and Landlord shall execute an Amendment to
this Lease establishing the date of Tender of Possession as defined in paragraph
3.2.1, or the date of actual taking of possession by Tenant, whichever first
occurs, as the Commencement Date.
4. RENT.
4.1 BASE RENT. Tenant shall pay to Landlord the Base Rent for the Premises
set forth in paragraph 1.6 of the Basic Lease Provisions, subject to adjustment
as provided in paragraph 1.7 of the Basic Lease Provisions, without notice,
offset or deduction on or before the first day of each month during the term.
Tenant shall pay Landlord upon execution hereof the advance Base Rent described
in paragraph 1.8 of the Basic Lease Provisions. Rent for any period during the
term hereof which is for less than one month shall be prorated based upon the
actual number of days of the calendar month involved. Rent shall be payable in
lawful money of the United States to Landlord at the address stated herein or to
such other persons or at such other places as Landlord may designate in writing.
4.2 OPERATING EXPENSE INCREASE. Tenant shall pay to Landlord during the
term hereof, in addition to the Base Rent, Tenant's Share, as hereinafter
defined, of the amount by which all Operating Expenses, as hereinafter defined,
for each Comparison Year exceeds the amount of all Operating Expenses for the
Base Year, such excess being hereinafter referred to as the "Operating Expense
Increase", in accordance with the following provisions:
4.2.1 "Tenant's Share" is defined, for purposes of this Lease, as the
percentage set forth in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate square footage of the
Premises by the total approximate square footage of the Office Building Project.
It is understood and agreed that the square footage figures set forth in the
Basic Lease Provisions are approximations which Landlord and Tenant agree are
reasonable and shall not be subject to revision except in connection with an
actual change in the size of the Premises or a change in the space available for
lease in the Office Building Project.
4.2.2 "Base Year" is defined as the calendar year in which the Lease
term commences.
4.2.3 "Comparison Year" is defined as each calendar year during the
term of this Lease subsequent to the Base Year. Tenant's Share of the Operating
Expense Increase for each Comparison Year of the Lease Term shall be prorated
according to that portion of such Comparison Year as to which Tenant is
responsible for a share of such increase. If the average occupancy of the Office
Building Project is not at least 95% for any Comparison Year, then Landlord will
make an appropriate adjustment of the operating expenses for such Comparison
Year to determine what the annual operating expenses would have been if the
average occupancy of the Office Building Project had been 95%, and the amount so
determined shall be deemed to have been the amount of operating expenses for
such Comparison Year. For any Comparison Year in which Landlord adjusts the
-4-
<PAGE> 9
operating costs to reflect an average occupancy of 95%, the operating costs for
the Base Year also shall be adjusted to reflect an average occupancy of 95% for
the Base Year (unless the average occupancy, of the Office Building Project was
95% or more for the Base Year, in which case it shall be unnecessary to adjust
the operating costs for the Base Year).
4.2.4 "Operating Expenses" is defined, for purposes of this Lease, to
include all costs, if any, incurred by Landlord in the exercise of its
reasonable discretion, for:
(i) The operation, repair, maintenance, and replacement, in
neat, clean, safe, good order and condition, of the Office Building Project,
including, but not limited to, the following:
(aa) The Common Areas, including their surfaces,
coverings, decorative items, carpets, drapes and window coverings, and including
parking areas, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, stairways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, Common Area lighting facilities, building exteriors and
roofs, fences and gates;
(bb) All heating, air conditioning, plumbing,
electrical systems, life safety equipment, telecommunication and other equipment
used in common by, or for the benefit of, lessees or occupants of the Office
Building Project, including elevators and escalators, tenant directories, fire
detection systems, including sprinkler system maintenance and repair.
(ii) Trash disposal, janitorial and security services;
(iii) Any other service to be provided by Landlord that is
elsewhere in this Lease stated to be an "Operating Expense";
(iv) The cost of the premiums for the liability and property
insurance policies to be maintained by Landlord under paragraph 8 hereof,
(v) The amount of the real property taxes to be paid by
Landlord under paragraph 10.1 hereof including any fees paid by Landlord to
contest or appeal the tax assessment for purposes of lowering such assessment;
(vi) The cost of water, sewer, gas, electricity, and other
publicly mandated services to the Office Building Project;
(vii) Labor, salaries and applicable fringe benefits and
costs, materials, supplies and tools, used in maintaining and/or cleaning the
Office Building Project and accounting and a management fee attributable to the
operation of the Office Building Project;
(viii) Replacing and/or adding improvements mandated by any
law or governmental agency and any repairs or removals necessitated thereby
amortized over its useful life according to Federal income tax regulations or
guidelines for depreciation thereof (including interest on the unamortized
balance as is then reasonable in the judgment of Landlord's accountants);
(ix) Operating Expenses shall include the cost of any capital
improvements made to the Office Building Project, the common facilities or any
part thereof for the purpose of reducing operating expenses, such costs to be
amortized over such reasonable period as Landlord shall determine;
(x) Replacements of equipment or improvements that have a
useful life for depreciation purposes according to Federal income tax guidelines
of five (5) years or less, as amortized over such life.
4.2.5 Operating Expenses shall not include the following:
-5-
<PAGE> 10
(i) costs of replacements of equipment or improvements that
have a useful life for Federal income tax purposes in excess of five (5) years
unless the item is of the type described in paragraph 4.2.4(viii) or (ix), in
which case their cost for such item shall be included as above provided; or
(ii) any expenses paid by any lessee directly to third
parties, or as to which Landlord is otherwise reimbursed by any third party,
other tenant, or by insurance proceeds.
4.2.6 Tenant's Share of Operating Expense Increase shall be payable by
Tenant within fifteen (15) days after a reasonably detailed statement of actual
expenses is presented to Tenant by Landlord. At Landlord's option, however, an
amount may be estimated by Landlord from time to time, in advance of Tenant's
Share of the Operating Expense Increase for any Comparison Year, and the same
shall be payable monthly or quarterly, as Landlord shall designate during each
Comparison Year of the Lease term, on the same day as the Base Rent is due
hereunder. If Tenant pays Landlord's estimate of Tenant's Share of Operating
Expense Increase as aforesaid, Landlord shall deliver to Tenant after the
expiration of each Comparison Year a reasonably detailed statement showing
Tenant's Share of the actual Operating Expense Increase incurred during such
year. If Tenant's payments under this paragraph 4.2.6 during said Comparison
Year exceed Tenant's Share as indicated on said statement, Tenant shall be
entitled to credit the amount of such overpayment against Tenant's Share of
Operating Expense Increase next falling due. If Tenant's payments under this
paragraph during said Comparison Year were less than Tenant's Share as indicated
on said statement, Tenant shall pay to Landlord the amount of the deficiency
within fifteen (15) days after delivery by Landlord to Tenant of said statement.
Landlord and Tenant shall forthwith adjust between them by cash payment any
balance determined to exist with respect to that portion of the last Comparison
Year for which Tenant is responsible as to Operating Expense Increases,
notwithstanding that the Lease term may have terminated before the end of such
Comparison Year.
5. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon execution hereof
the security deposit set forth in paragraph 1.9 of the Basic Lease Provisions as
security for Tenant's faithful performance of Tenant's obligations hereunder. If
Tenant fails to pay rent or other charges due hereunder, or otherwise defaults
with respect to any provision of this Lease, Landlord may use, apply or retain
all or any portion of said deposit for the payment of any rent or other charge
in default, for the payment of any other sum to which Landlord may become
obligated by reason of Tenant's default, or to compensate Landlord for any loss
or damage which Landlord may suffer thereby. If Landlord so uses or applies all
or any portion of said deposit, Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
said deposit to the full amount then required of Tenant. Landlord shall not be
required to keep said security deposit separate from its general accounts. If
Tenant performs all of Tenant's obligations hereunder, said deposit, or so much
thereof as has not heretofore been applied by Landlord, shall be returned,
without payment of interest or other increment for its use, to Tenant (or at
Landlord's option, to the last assignee, if any, of Tenant's interest hereunder)
within a reasonable time after the expiration of the term hereof, and after
Tenant has vacated the Premises. No trust relationship is created herein between
Landlord and Tenant with respect to said Security Deposit.
6. USE.
6.1 USE. The Premises shall be used and occupied only for the purpose set
forth in paragraph 1.4 of the Basic Lease Provisions or any other use which is
reasonably comparable to that use and for no other purpose, without the express
written permission of Landlord.
6.2 COMPLIANCE WITH LAW.
6.2.1 LANDLORD'S WARRANTY. Landlord warrants to Tenant that to
Landlord's actual knowledge, the Premises, in the state existing on the date
that the Lease term commences, but without regard to alterations or improvements
made by Tenant or the use for which Tenant will occupy the Premises, does not
violate any covenants or restrictions of record, or any applicable building
code, regulation or ordinance with which the Premises must comply.
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<PAGE> 11
6.2.2 TENANT'S COMPLIANCE. Except as provided in paragraph 6.2.1.
Tenant shall, at Tenant's expense, promptly comply with all applicable statutes,
ordinances, rules, regulations, orders. covenants and restrictions of record,
and requirements of any fire insurance underwriters or rating bureaus, now in
effect or which may hereafter come into effect whether or not they reflect a
change in policy from that now existing, during the term or any part of the term
hereof, relating in any manner to the Premises and the occupation, use,
alteration or improvement by Tenant of the Premises. Tenant shall conduct its
business in a lawful manner and shall not use or permit the use of the Premises
or the Common Areas in any manner that will tend to create waste or a nuisance
or shall tend to disturb other occupants of the Office Building Project.
6.3 CONDITION OF PREMISES.
6.3.1 DELIVERY OF POSSESSION. Landlord shall deliver the Premises to
Tenant in a clean condition on the Lease Commencement Date (unless Tenant is
already in possession) and Landlord warrants to Tenant that the plumbing,
lighting, air conditioning, and heating system in the Premises shall be in good
operating condition. If Tenant notifies Landlord in writing within the first six
(6) months of the term of this Lease ("Warranty Period") that this warranty has
been violated, then it shall be the obligation of Landlord, after receipt of
written notice from Tenant setting forth with specificity the nature of the
violation, to initiate, at Landlord's sole cost, measures to rectify such
violation. From and after the expiration of the Warranty Period, and provided
that Tenant has not delivered written notice to Landlord during the Warranty
Period of any alleged violation of such warranty, the foregoing warranty of
Landlord shall be deemed to be true and correct during the Warranty Period and
Landlord shall have no further obligation to initiate or otherwise undertake any
measures to rectify any purported violation of the warranty.
6.3.2 ACCEPTANCE OF POSSESSION. Except as otherwise provided in this
Lease, Tenant hereby accepts the Premises and the Office Building Project in
their condition existing as of the Lease Commencement Date or the date that
Tenant takes possession of the Premises, whichever is earlier, subject to all
applicable zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and any easements, covenants
or restrictions of record, and accepts this Lease subject thereto and to all
matters disclosed thereby and by any exhibits attached hereto. Tenant
acknowledges that the Premises are in good order and repair and that it has
satisfied itself by its own independent investigation that the Premises are
suitable for its intended use, and that neither Landlord nor Landlord's agent or
agents has made any representation or warranty as to the present or future
suitability of the Premises, Common Areas, or Office Building Project for the
conduct of Tenant's business.
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.
7.1 LANDLORD'S OBLIGATIONS. Subject to being reimbursed by Tenant for
Tenant's Share of Operating Expense Increase, and subject to Tenant's repair
obligations contained in paragraph 7.2 below, Landlord shall keep the Office
Building Project, including the roof, and Common Areas, and the equipment,
whether used exclusively for the Premises or in common with other premises, in
good condition and repair; provided, however, Landlord shall not be obligated to
paint, repair or replace wall coverings, or to repair or replace any
improvements that are not ordinarily a part of the Building or are above
generally accepted Building standards. Except as provided in paragraph 9.5,
there shall be no abatement of rent or liability of Tenant on account of any
injury or interference with Tenant's business with respect to any improvements,
alterations or repairs made by Landlord to the Office Building Project or any
part thereof, nor shall such improvement, alteration or repair constitute an
eviction or disturbance of Tenant's use or possession of the Premises.
7.2 TENANT'S OBLIGATIONS.
7.2.1 TENANT'S REPAIR OBLIGATIONS. Notwithstanding Landlord's
obligation to keep the Office Building Project in good condition and repair,
Tenant shall be responsible for payment of the cost thereof to Landlord as
additional rent for that portion of the cost of any maintenance and repair of
the Premises, or any equipment (wherever located) that serves only Tenant or the
Premises, to the extent such cost is attributable to
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causes beyond normal wear and tear. Tenant shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any
Premises improvements that are not ordinarily a part of the Building or that are
above Building standards including, without limitation, all alterations, special
or supplemental HVAC systems and electrical systems, all fixtures, furniture and
equipment, Tenant's signs, locks, closing devices, security devices, floor
coverings, shelving, kitchen and/or restroom facilities and appliances located
within the Premises, if any, custom lighting, and any alterations, additions and
other personal property located within the Premises. Landlord may, at its
option, upon reasonable notice, elect to have Tenant perform any part of such
maintenance or repairs, the cost of which is otherwise Tenant's responsibility
hereunder.
7.2.2 SURRENDER. On the last day of the term hereof, or on any sooner
termination, Tenant shall surrender the Premises to Landlord in the same
condition as received, ordinary wear and tear excepted, clean and free of
debris. Any damage or deterioration of the Premises shall not be deemed ordinary
wear and tear if the same could have been prevented by good maintenance
practices by Tenant. Tenant shall repair any damage to the Premises occasioned
by the installation or removal of Tenant's trade fixtures, alterations,
furnishings and equipment. Except as otherwise stated in this Lease, Tenant
shall leave the air lines, power panels, electrical distribution systems,
lighting fixtures, air conditioning, window coverings, wall coverings, carpets,
wall paneling, ceilings and plumbing on the Premises and in good operating
condition.
7.3 ALTERATIONS AND ADDITIONS.
7.3.1 ALTERATIONS. Tenant shall not, without Landlord's prior written
consent make any alterations, improvements, additions, Utility Installations or
repairs in, on or about the Premises, or the Office Building Project. As used in
this paragraph 7.3 the term "Utility Installation" shall mean carpeting, window
and wall coverings, power panels, electrical distribution systems, lighting
fixtures, air conditioning, plumbing, and telephone and telecommunication wiring
and equipment. At the expiration of the term, Landlord may require the removal
of any or all of said alterations, improvements, additions or Utility
Installations, and the restoration of the Premises and the Office Building
Project to their prior condition, at Tenant's expense. Should Landlord permit
Tenant to make its own alterations, improvements, additions or Utility
Installations, Tenant shall use only such contractor as has been expressly
approved by Landlord, and Landlord may require Tenant to provide Landlord, at
Tenant's sole cost and expense, a lien and completion bond in an amount equal to
one and one-half times the estimated cost of such improvements, to insure
Landlord against any liability for mechanic's and materialmen's liens and to
insure completion of the work. Should Tenant make any alterations, improvements,
additions or Utility Installations without the prior approval of Landlord, or
use a contractor not expressly approved by Landlord, Landlord may, at any time
during the term of this Lease, require that Tenant remove any part or all of the
same.
7.3.2 LANDLORD'S CONSENT. Any alterations, improvements, additions or
Utility Installations in or about the Premises or the Office Building Project
that Tenant shall desire to make shall be presented to Landlord in written form,
with proposed detailed plans. If Landlord shall give its consent to Tenant's
making such alteration, improvement, addition or Utility Installation, the
consent shall be deemed conditioned upon Tenant acquiring a permit to do so from
the applicable governmental agencies, furnishing a copy thereof to Landlord
prior to the commencement of the work, and compliance by Tenant with all
conditions of said permit in a prompt and expeditious manner.
7.3.3 CLAIMS AND LIENS. Tenant shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Tenant
at or for use in the Premises, which claims are or may be secured by any
mechanics' or materialmen's lien against the Premises, the Building or the
Office Building Project, or any interest therein. Tenant shall give Landlord not
less than ten (10) day's notice prior to the commencement of any work in the
Premises by Tenant, and Landlord shall have the right to post notices of
nonresponsibility in or on the Premises or the Building as provided by law. If
Tenant shall, in good faith, contest the validity of any such lien, claim or
demand, then Tenant shall, at its sole expense defend itself and Landlord
against the same and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof against the Landlord or the
Premises, the Building or the Office Building Project, upon the condition that
if
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Landlord shall require, Tenant shall furnish to Landlord a surety bond
satisfactory to Landlord in an amount equal to such contested lien claim or
demand indemnifying Landlord against liability for the same and holding the
Premises, the Building and the Office Building Project free from the effect of
such lien or claim. In addition, Landlord may require Tenant to pay Landlord
reasonable attorneys' fees and costs in participating in such action if Landlord
shall decide it is to Landlord best interest so to do.
7.3.4 QUALITY OF WORK. All alterations, improvements, additions and
Utility Installations (whether or not such Utility Installations constitute
trade fixtures of Tenant), which may be made to the Premises by Tenant,
including but not limited to, floor coverings, panelings, doors, drapes,
built-ins, moldings, sound attenuation, and lighting and telephone or
communication systems, conduit, wiring and outlets, shall be made and done in a
good and workmanlike manner and of good and sufficient quality and materials and
shall be the property of Landlord and remain upon and be surrendered with the
Premises at the expiration of the Lease term, unless Landlord requires their
removal pursuant to paragraph 7.3.1. Provided Tenant is not in default,
notwithstanding the provisions of this paragraph 7.3.4, Tenant's personal
property and equipment, other than that which is affixed to the Premises so that
it cannot be removed without material damage to the Premises or the Building,
and other than Utility Installations, shall remain the property of Tenant and
may be removed by Tenant subject to the provisions of paragraph 7.2.
7.3.5 AS-BUILT PLANS. Tenant shall provide Landlord with as-built plans
and specifications for any alterations, improvements, additions or Utility
Installations.
7.4 UTILITY ADDITIONS. Landlord reserves the right to install new or
additional utility facilities throughout the Office Building Project for the
benefit of Landlord or Tenant, or any other lessee of the Office Building
Project, including, but not by way of limitation, such utilities as plumbing,
electrical systems, communication systems, and fire protection and detection
systems, so long as such installations do not unreasonably interfere with
Tenant's use of the Premises.
8. INSURANCE; INDEMNITY.
8.1 LIABILITY INSURANCE-TENANT. Tenant shall, at Tenant's expense, obtain
and keep in force during the term of this Lease a policy of Commercial General
Liability insurance utilizing an Insurance Services Office standard form with
Broad Form General Liability Endorsement (GL0404), or equivalent, in an amount
of not less than $1,000,000 per occurrence of bodily injury and property damage
combined or in a greater amount as reasonably determined by Landlord and shall
insure Tenant with Landlord (and Landlord's property manager and all other
agents and lenders designated by Landlord) as additional insureds against
liability arising out of the use, occupancy or maintenance of the Premises.
Compliance with the above requirement shall not, however, limit the liability of
Tenant hereunder.
8.2 LIABILITY INSURANCE-LANDLORD. Landlord shall obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury
and Broad Form Property Damage Insurance, plus coverage against such other risks
Landlord deems advisable from time to time, insuring Landlord, but not Tenant,
against liability arising out of the ownership, use, occupancy or maintenance of
the Office Building Project in an amount not less than $2,000,000.00 per
occurrence; however, Landlord may elect to self insure.
8.3 PROPERTY INSURANCE-TENANT. Tenant shall, at Tenant's expense, obtain
and keep in force during the term of this Lease for the benefit of Tenant,
replacement cost "All-Risk" insurance, with vandalism and malicious mischief,
sprinkler leakage and earthquake sprinkler leakage endorsements, in an amount
sufficient to cover not less than 100% of the full replacement cost, as the same
may exist from time to time, of all of Tenant's personal property, fixtures,
equipment and tenant improvements.
8.4 PROPERTY INSURANCE-LANDLORD. Landlord shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss or
damage to the Office Building Project improvements, but not Tenant's personal
property, fixtures, equipment or tenant improvements, in the amount of the full
replacement
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cost thereof, as the same may exist from time to time, utilizing Insurance
Services Office standard form, or equivalent, such other perils as Landlord
deems advisable or may be required by a lender having a lien on the Office
Building Project. In addition, Landlord shall obtain and keep in force, during
the term of this Lease, a policy of rental value insurance covering a period of
one year, with loss payable to Landlord, which insurance shall also cover all
Operating Expenses for said period. Tenant will not be named in any such
policies carried by Landlord and shall have no right to any proceeds therefrom.
The policies required by these paragraphs 8.2 and 8.4 shall contain such
deductibles as Landlord or the aforesaid lender may determine. In the event that
the Premises shall suffer an insured loss as defined in paragraph 9.1(f)
hereof, the deductible amounts under the applicable insurance policies shall be
deemed an Operating Expense. Tenant shall not do or permit to be done anything
which shall invalidate the insurance policies carried by Landlord. Tenant shall
pay the entirety of any increase in the property insurance premium for the
Office Building Project over what it was immediately prior to the commencement
of the term of this Lease if the increase is specified by Landlord's insurance
carrier as being caused by the nature of Tenant's occupancy or any act or
omission of Tenant. Landlord may elect to self insure.
8.5 INSURANCE POLICIES. Tenant shall deliver to Landlord copies of
liability insurance policies required under paragraph 8.1 or certificates
evidencing the existence and amounts of such insurance prior to Tenant taking
possession or early entry of the Premises. No such policy shall be cancelable or
subject to reduction of coverage or other modification except after thirty (30)
days prior written notice to Landlord. Tenant shall, at least thirty (30) days
prior to the expiration of such policies, furnish Landlord with renewals
thereof.
8.6 WAIVER OF SUBROGATION. Tenant and Landlord each hereby release and
relieve the other, and waive their entire right of recovery against the other,
for direct or consequential loss or damage arising out of or incident to the
perils covered by property insurance carried by such party, whether due to the
negligence of Landlord or Tenant or their agents, employees, contractors and/or
invitees. All property insurance policies required under this Lease shall be
endorsed to so provide.
8.7 INDEMNITY. Tenant shall indemnify, protect, defend and hold harmless
Landlord and its agents, Landlord's master or ground lessor, partners and
lenders, from and against any and all claims for damage to the person or
property of anyone or any entity arising from Tenant's use of the Office
Building Project, or from the conduct of Tenant's business or from any activity,
work or things done, permitted or suffered by Tenant in or about the Premises or
elsewhere and shall further indemnify, protect, defend and hold harmless
Landlord from and against any and all claims, costs and expenses arising from
any breach or default in the performance of any obligation on Tenant's part to
be performed under the terms of this Lease, or arising from any act or omission
of Tenant, or any of Tenant's agents, contractors, employees, or invitees, and
from and against all costs, attorneys' fees, expenses and liabilities incurred
by Landlord as the result of any such use, conduct, activity, work, things done,
permitted or suffered, breach, default or negligence, and in dealing reasonably
therewith, including, but not limited to, the defense or pursuit of any claim or
any action or proceeding involved therein; and in case any action or proceeding
be brought against Landlord by reason of any such matter, Tenant, upon notice
from Landlord, shall defend the same at Tenant's expense by counsel reasonably
satisfactory to Landlord and Landlord shall cooperate with Tenant in such
defense. Landlord need not have first paid any such claim in order to be so
indemnified.
8.8 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property of
Tenant or injury to persons, in, upon or about the Office Building Project
arising from any cause and Tenant hereby waives all claims in respect thereof
against Landlord. Tenant hereby agrees that Landlord shall not be liable for
injury to Tenant's business or any loss of income therefrom or for loss of or
damage to the goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers, or any other person in or about the Premises or
the Office Building Project, nor shall Landlord be liable for injury to the
person of Tenant, Tenant's employees, agents or contractors, whether such damage
or injury is caused by or results from theft, fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said damage or injury results from
conditions arising upon the Premises or upon other portions of the Office
Building Project, or from other sources or places, or from new construction or
the repair, alteration or improvement of any part of the Office Building
Project, or of the equipment, fixtures or
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appurtenances applicable thereto, and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible, Landlord
shall not be liable for any damages arising from any act or neglect of any other
lessee, occupant or user of the Office Building Project, nor from the failure of
Landlord to enforce the provisions of any other Lease Agreement between Landlord
and any other Tenant of the Office Building Project.
8.9 NO REPRESENTATION OF ADEQUATE COVERAGE. Landlord makes no
representation that the limits or forms of coverage of insurance specified in
this paragraph 8 are adequate to cover Tenant's property or obligations under
this Lease.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
9.1.1 "Premises Damage" shall mean if the Premises are damaged or
destroyed to any extent.
9.1.2 "Premises Building Partial Damage" shall mean if the Building of
which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is less than fifty percent (50%) of the then Replacement Cost of
the Building.
9.1.3 "Premises Building Total Destruction" shall mean if the Building
of which the Premises are a part is damaged or destroyed to the extent that the
cost to repair is fifty percent (50%) or more of the then Replacement Cost of
the Building.
9.1.4 "Office Building Project Buildings" shall mean all of the
buildings on the Office Building Project site.
9.1.5 "Office Building Project Buildings Total Destruction" shall mean
if the Office Building Project Buildings are damaged or destroyed to the extent
that the cost of repair is fifty percent (50%) or more of the then Replacement
Cost of the Office Building Project Buildings.
9.1.6 "Insured Loss" shall mean damage or destruction which was caused
by an event required to be covered by the insurance described in paragraph 8.
The fact that an Insured Loss has a deductible amount shall not make the loss an
uninsured loss.
9.1.7 "Replacement Cost" shall mean the amount of money necessary to be
spent in order to repair or rebuild the damaged area to the condition that
existed immediately prior to the damage occurring, which shall include the
unamortized cost of the improvements installed by Landlord pursuant to the Work
Letter, but shall exclude all improvements made by Tenant (other than those
installed by Landlord at Tenant's expense).
9.2 PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.
9.2.1 Insured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is an
Insured Loss and which falls into the classification of either Premises Damage
or Premises Building Partial Damage, then Landlord shall, as soon as reasonably
possible and to the extent the required materials and labor are readily
available through usual commercial channels, at Landlord's expense, repair such
damage (but not Tenant's fixtures, equipment or tenant improvements originally
paid for by Tenant) to its condition existing at the time of the damage, and
this Lease shall continue in full force and effect.
9.2.2 Uninsured Loss: Subject to the provisions of paragraphs 9.4 and
9.5, if at any time during the term of this Lease there is damage which is not
an Insured Loss and which falls within the classification of Premises Damage or
Premises Building Partial Damage, unless caused by a negligent or willful act of
Tenant (in which event Tenant shall make the repairs at Tenant's expense), which
damage prevents Tenant from making any substantial use of the Premises, Landlord
may at Landlord's option either (i) repair such damage as soon as
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reasonably possible at Landlord's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Tenant within
thirty (30) days after the date of the occurrence of such damage of Landlord's
intention to cancel and terminate this Lease as of the date of the occurrence of
such damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.
9.3 PREMISES BUILDING TOTAL DESTRUCTION; OFFICE BUILDING PROJECT TOTAL
DESTRUCTION. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time
during the term of this Lease there is damage, whether or not it is an Insured
Loss, which falls into the classifications of either (i) Premises Building Total
Destruction, or (ii) Office Building Project Total Destruction, then Landlord
may at Landlord's option either (i) repair such damage or destruction as soon as
reasonably possible at Landlord's expense (to the extent the required materials
are readily available through usual commercial channels) to its condition
existing at the time of the damage, but not Tenant's fixtures, equipment or
tenant improvements, and this Lease shall continue in full force and effect, or
(ii) give written notice to Tenant within thirty (30) days after the date of
occurrence of such damage of Landlord's intention to cancel and terminate this
Lease, in which case this Lease shall terminate as of the date of the occurrence
of such damage.
9.4 DAMAGE NEAR END OF TERM.
9.4.1 Subject to paragraph 9.4.2, if at any time during the last twelve
(12) months of the term of this Lease there is substantial damage to the
Premises, Landlord may at Landlord's option cancel and terminate this Lease as
of the date of occurrence of such damage by giving written notice to Tenant of
Landlord's election to do so within 30 days after the date of occurrence of such
damage.
9.4.2 Notwithstanding paragraph 9.4.1, in the event that Tenant has an
option to extend or renew this Lease, and the time within which said option may
be exercised has not yet expired, Tenant shall exercise such option, if it is to
be exercised at all (and otherwise in accordance with the terms hereof), no
later than twenty (20) days after the occurrence of an Insured Loss falling
within the classification of Premises Damage during the last twelve (12) months
of the term of this Lease. If Tenant duly exercises such option during said
twenty (20) day period, Landlord shall, at Landlord's expense, repair such
damage, but not Tenant's fixtures, equipment or tenant improvements, as soon as
reasonably possible and this Lease shall continue in full force and effect. If
Tenant fails to exercise such option during said twenty (20) day period, then
Landlord may at Landlord's option terminate and cancel this Lease as of the
expiration of said twenty (20) day period by giving written notice to Tenant of
Landlord's election to do so within ten (10) days after the expiration of said
twenty (20) day period, notwithstanding any term or provision in the grant of
option to the contrary.
9.5 ABATEMENT OF RENT; TENANT'S REMEDIES.
9.5.1 In the event Landlord repairs or restores the Building or
Premises pursuant to the provisions of this paragraph 9, and any part of the
Premises are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including Tenant's Share of
Operating Expense Increase) for the period during which such damage, repair or
restoration continues shall be abated, provided (1) the damage was not the
result of the negligence of Tenant, and (2) such abatement shall only be to the
extent the operation and profitability of Tenant's business as operated from the
Premises is adversely affected. Except for said abatement of rent, if any,
Tenant shall have no claim against Landlord for any damage suffered by reason of
any such damage, destruction, repair or restoration.
9.5.2 If Landlord shall be obligated to repair or restore the Premises
or the Building under the provisions of this Paragraph 9 and shall not commence
such repair or restoration within ninety (90) days after such occurrence, or if
Landlord shall not complete the restoration and repair within two hundred
seventy (270) days after such occurrence for reasons other than delays caused by
Tenant, its employees or agents, Tenant may at Tenant's option (and, if elected,
as Tenant's sole remedy) cancel and terminate this Lease by giving Landlord
written notice of Tenant's election to do so within five (5) days following the
expiration of such ninety (90) or two
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hundred seventy (270) day period, respectively. In such event this Lease shall
terminate as of the date of such notice.
9.5.3 Tenant agrees to cooperate with Landlord in connection with any
such restoration and repair, including but not limited to the approval and/or
execution of plans and specifications required.
9.6 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to this paragraph 9, an equitable adjustment shall be made concerning advance
rent and any advance payments made by Tenant to Landlord.
9.7 WAIVER. Landlord and Tenant waive the provisions of any statute which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Landlord shall pay all real property taxes, as
defined in paragraph 10.3, applicable to the Office Building Project subject to
reimbursement by Tenant of Tenant's Share of such taxes in accordance with the
provisions of paragraph 4.2, except as otherwise provided in paragraph 10.2.
10.2 ADDITIONAL IMPROVEMENTS. Tenant shall not be responsible for paying
any increase in real property taxes specified in the tax assessor's records and
work sheets as being caused by additional improvements placed upon the Office
Building Project by other lessees or by Landlord for the exclusive enjoyment of
any other lessee. Tenant shall, however, pay to Landlord at the time that
Operating Expenses are payable under paragraph 4.2.3 the entirety of any
increase in real property taxes if assessed solely by reason of additional
improvements placed upon the Premises by or for Tenant or at Tenant's request.
10.3 DEFINITION OF "REAL PROPERTY TAXES". As used herein, the term "real
property taxes" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Office Building Project or any
portion thereof by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Landlord in the Office
Building Project or in any portion thereof, as against Landlord's right to rent
or other income therefrom, and as against Landlord's business of leasing the
Office Building Project. The term "real property taxes" shall also include any
tax, fee, levy, assessment or charge (i) in substitution of, partially or
totally, or in lieu of any increase in any tax, fee, levy, assessment or charge
hereinabove included within the definition of "real property taxes", or (ii) the
nature of which was hereinbefore included within the definition of "real
property taxes", or (iii) which is imposed as a result of a change in ownership,
as defined by applicable local statutes for property tax purposes, of the Office
Building Project or which is added to a tax or charge hereinbefore included
within the definition of "real property taxes" by reason of such change of
ownership, or (iv) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.
10.4 JOINT ASSESSMENT. If the improvements or property, the taxes for which
are to be paid separately by Tenant under paragraph 10.2 or 10.5, are not
separately assessed, Tenant's portion of such taxes shall be equitably
determined by Landlord from the respective valuations assigned in the assessor's
work sheets or such other information (which may include the cost of
construction) as may be reasonably available. Landlord's reasonable
determination thereof, in good faith, shall be conclusive.
10.5 PERSONAL PROPERTY TAXES.
(a) Tenant shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Premises or elsewhere.
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(b) If any of Tenant's personal property shall be assessed with
Landlord's real property, Tenant shall pay to Landlord the taxes attributable to
Tenant within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Tenant's property.
11. UTILITIES.
11.1 SERVICES PROVIDED BY LANDLORD. As part of Operating Expenses, Landlord
shall provide heating, ventilation, air conditioning, and janitorial service as
reasonably required, reasonable amounts of electricity for normal lighting and
office machines, tap water for reasonable and normal drinking and lavatory use,
and replacement light bulbs and/or fluorescent tubes and ballasts for standard
overhead fixtures.
11.2 SERVICES EXCLUSIVE TO TENANT. Tenant shall pay for all water, gas,
heat, light, power, telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Tenant,
together with any taxes thereon. If any such services are not separately metered
to the Premises, Tenant shall pay at Landlord's option, either Tenant's Share or
a reasonable portion to be determined by Landlord of all charges jointly metered
with other premises in the Building.
11.3 HOURS OF SERVICE. Said services and utilities shall be provided during
generally accepted business days and hours or such other days or hours as may
hereafter be set forth. Utilities and services required at other times shall be
subject to advance request and reimbursement by Tenant to Landlord of the cost
thereof.
11.4 EXCESS USAGE BY TENANT. Tenant shall not make connection to the
utilities except by or through existing outlets and shall not install or use
machinery or equipment in or about the Premises that uses excess water, lighting
or power, or suffer or permit any act that causes extra burden upon the
utilities or services, including, but not limited to security services, over
standard office usage for the Office Building Project. Landlord shall require
Tenant to reimburse Landlord for any excess expenses or costs that may arise out
of a breach of this subparagraph by Tenant. Landlord may, in its sole
discretion, install at Tenant's expense supplemental equipment and/or separate
metering applicable to Tenant's excess usage or loading, and Tenant will
reimburse Landlord for such excess utility use.
11.5 INTERRUPTIONS. Their shall be no abatement of rent and Landlord shall
not be liable in any respect whatsoever for the inadequacy, stoppage,
interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Landlord's
reasonable control or in cooperation with governmental request or directions,
nor shall such inadequacy, stoppage, interruption or discontinuance be
considered an eviction or interruption of Tenant's use or possession of the
Premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Tenant's interest in the Lease or in the Premises,
without Landlord's prior written consent, which Landlord shall not unreasonably
withhold. Landlord shall respond to Tenant's request for consent hereunder in a
reasonably timely manner and any attempted assignment, transfer, mortgage,
encumbrance or subletting without such consent shall be void, and shall
constitute a material default and breach of this Lease without the need for
notice to Tenant under paragraph 13.1. "Transfer" within the meaning of this
paragraph 12 shall include the transfer or transfers aggregating: (a) if Tenant
is a corporation, more than twenty-five percent (25%) of the voting stock of
such corporation, or (b) if Tenant is a partnership, more than twenty-five
percent (25%) of the profit and loss participation in such partnership.
12.2 TENANT AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Tenant may assign or sublet the Premises, or any portion thereof,
without Landlord's consent, to any corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from the
merger or consolidation with Tenant, or to any person or entity which acquires
all the assets of Tenant as a going concern of the business that is being
conducted on the Premises, all of which are referred to as "Tenant Affiliate";
provided
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that before such assignment shall be effective, (a) said assignee shall assume,
in full, the obligations of Tenant under this Lease and (b) Landlord shall be
given written notice of such assignment and assumption. Any such assignment
shall not, in any way, affect or limit the liability of Tenant under the terms
of this Lease even if after such assignment or subletting the terms of this
Lease are materially changed or altered without the consent of Tenant, the
consent of whom shall not be necessary.
12.3 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.
12.3.1 Regardless of Landlord's consent, no assignment or subletting
shall release Tenant of Tenant's obligations hereunder or alter the primary
liability of Tenant to pay the rent and other sums due Landlord hereunder
including Tenant's Share of Operating Expense Increase, and to perform all other
obligations to be performed by Tenant hereunder.
12.3.2 Landlord may accept rent from any person other than Tenant
pending approval or disapproval of such assignment.
12.3.3 Neither a delay in the approval or disapproval of such
assignment or subletting, nor the acceptance of rent, shall constitute a waiver
or estoppel of Landlord's right to exercise its remedies for the breach of any
of the terms or conditions of this paragraph 12 or this Lease.
12.3.4 If Tenant's obligations under this Lease have been guaranteed
by third parties, then an assignment or sublease, and Landlord's consent
thereto, shall not be effective unless said guarantors give their written
consent to such assignment or sublease and the terms thereof.
12.3.4 The consent by Landlord to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Tenant or
to any subsequent or successive assignment or subletting by the sublessee.
However, Landlord may consent to subsequent sublettings and assignments of the
sublease or any amendments or modifications thereto without notifying Tenant or
anyone else liable on the Lease or sublease and without obtaining their consent
and such action shall not relieve such persons from liability under this Lease
or said sublease; however, such persons shall not be responsible to the extent
any such amendment or modification enlarges or increases the obligations of the
Tenant or sublessee under this Lease or such sublease.
12.3.5 In the event of any default under this Lease, Landlord may
proceed directly against Tenant, any guarantors or any one else responsible for
the performance of this Lease, including the assignee or sublessee, without
first exhausting Landlord's remedies against any other person or entity
responsible therefor to Landlord, or any security held by Landlord or Tenant.
12.3.6 Landlord's written consent to any assignment or subletting of
the Premises by Tenant shall not constitute an acknowledgment that no default
then exists under this Lease of the obligations to be performed by Tenant nor
shall such consent be deemed a waiver of any then existing default, except as
may be otherwise stated by Landlord at the time.
12.3.7 The discovery of the fact that any financial statement relied
upon by Landlord in giving its consent to an assignment or subletting was
materially false shall, at Landlord's election, render Landlord's consent null
and void.
12.4 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. Regardless
of Landlord's consent, the following terms and conditions shall apply to any
subletting (but not to any permitted assignment) by Tenant of all or any part of
the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:
12.4.1 Tenant hereby assigns and transfers to Landlord all of Tenant's
interest in all rentals and income arising from any sublease heretofore or
hereafter made by Tenant, and Landlord may collect such rent and
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income and apply same toward Tenant's obligations under this Lease; provided,
however, that until a default shall occur in the performance of Tenant's
obligations under this Lease, Tenant may receive, collect and enjoy the rents
accruing under such sublease. Landlord shall not, by reason of this or any other
assignment of such sublease to Landlord nor by reason of the collection of the
rents from a sublessee, be deemed liable to the sublessee for any failure of
Tenant to perform and comply with any of Tenant's obligations to such sublessee
under such sublease. Tenant hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Landlord stating that a default
exists in the performance of Tenant's obligations under this Lease, to pay to
Landlord the rents due and to become due under the sublease. Tenant agrees that
such sublessee shall have the right to rely upon any such statement and request
from Landlord, and that such sublessee shall pay such rents to Landlord without
any obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Tenant to the contrary. Tenant
shall have no right or claim against said sublessee or Landlord for any such
rents so paid by said sublessee to Landlord, nor shall Tenant have the right to
offset any sums due Landlord under this Lease as the result of payments made
directly to Landlord from any sublessee.
12.4.2 No sublease entered into by Tenant shall be effective unless
and until it has been approved in writing by Landlord. In entering into any
sublease, Tenant shall use only such form of sublessee as is satisfactory to
Landlord, and once approved by Landlord, such sublease shall not be changed or
modified without Landlord's prior written consent. Any sublease shall, by reason
of entering into a sublease under this Lease, be deemed, for the benefit of
Landlord to have assumed and agreed to conform and comply with each and every
obligation herein to be performed by Tenant other than such obligations as are
contrary to or inconsistent with provisions contained in a sublease to which
Landlord has expressly consented in writing.
12.4.3 In the event Tenant shall default in the performance of its
obligations under this Lease, Landlord at its option and without any obligation
to do so, may require any sublessee to attorn to Landlord, in which event
Landlord shall undertake the obligations of Tenant under such sublease from the
time of the exercise of said option to the termination of such sublease;
provided, however, Landlord shall not be liable for any prepaid rents or
security deposit paid by such sublessee to Tenant or for any other prior
defaults of Tenant under such sublease.
12.4.4 No sublessee shall further assign or sublet all or any part of
the Premises without Landlord's prior written consent.
12.4.5 With respect to any subletting to which Landlord has consented,
Landlord agrees to endeavor to deliver a copy of any notice of default by
Tenant to the sublessee. Such sublessee shall have the right to cure a default
of Tenant within three (3) days after service of said notice of default upon
such sublessee, and the sublessee shall have a right of reimbursement and
offset from and against Tenant for any such defaults cured by the sublessee.
12.5 LANDLORD'S EXPENSES. In the event Tenant shall assign or sublet the
Lease or request the consent of Landlord to any assignment or subletting or if
Tenant shall request the consent of Landlord for any act Tenant proposes to do
then Tenant shall pay Landlord's reasonable costs and expenses incurred in
connection therewith, including attorneys', architects, engineers' or other
consultants' fees. Landlord and Tenant agree that the fee will be at least
$200.00.
12.6 CONDITIONS TO CONSENT. Landlord reserves the right to condition any
approval to assign or sublet upon any reasonable factors including, without
limitation, Landlord's determination that (a) the proposed assignee or sublessee
shall conduct a business on the Premises of a quality substantially equal to
that of Tenant and consistent with the general character of the other occupants
of the Office Building Project and not in violation of any exclusives or rights
then held by other tenants, (b) the proposed assignee or sublessee is at least
as financially responsible as Tenant was expected to be at the time of the
execution of this Lease or of such assignment or subletting, whichever is
greater, (c) the proposed sublease will not result in more than two subleases of
portions of the Premises being in effect at any one time during the Term; (d)
the proposed assignee or subtenant is not an existing tenant of the Project
and/or is not negotiating with Landlord for space in the Project; (e) the
proposed
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assignee or subtenant is not a governmental entity; (f) the portion of the
Premises to be sublet or assigned is not irregular in shape with inadequate
means of ingress and egress; and (g) the proposed assignment or sublease will
not result in significant increase in the use of the parking areas or Common
Areas by the transferee's employees or visitors, and/or significantly increase
the demand upon utilities and services to be provided by Landlord to the
Premises.
13. DEFAULT; REMEDIES.
13.1 DEFAULT. The occurrence of any one or more of the following events
shall constitute a material default of this Lease by Tenant:
13.1.1 The vacation or abandonment of the Premises by Tenant. Vacation
of the Premises shall include the failure to occupy the Premises for a
continuous period of thirty (30) days or more, whether or not the rent is paid.
13.1.2 The breach by Tenant or any of the covenants, conditions or
provisions of paragraphs 7.3.1, 7.3.2 or 7.3.4 (alterations), 12.1 (assignment
or subletting), 13.1.1 (vacation or abandonment), 13.1.5 (insolvency, 13.1.6
(false statement), 16.1 (estoppel certificate), 30.2 (subordination), 33
(auctions), or 41.1 (easements), all of which are hereby deemed to be material,
non-curable defaults without the necessity of any notice by Landlord to Tenant
thereof.
13.1.3 The failure by Tenant to make any payment of rent or any other
payment required to be made by Tenant hereunder, without deduction or offset, as
and when due, where such failure shall continue for a period of three (3) days
after written notice thereof from Landlord to Tenant. In the event that Landlord
serves Tenant with a Notice to Pay Rent or Quit pursuant to applicable Unlawful
Detainer statutes such Notice to Pay Rent or Quit shall also constitute the
notice required by this subparagraph.
13.1.4 The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or performed by
Tenant other than those referenced in subparagraphs 13.1.2 and 13.1.3, above,
where such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given to Tenant under applicable Unlawful Detainer statutes.
13.1.5 (i) The making by Tenant of any general arrangement or general
assignment for the benefit of creditors; (ii) Tenant becoming a "debtor" as
defined in II U.S.C. Section 101 or any successor statute thereto (unless, in
the case of a petition filed against Tenant, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to take possession
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within
thirty (30) days; or (iv) the attachment, execution or other judicial seizure
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. In the event that any provision of this paragraph 13.1.5 is contrary to
any applicable law, such provision shall be of no force or effect.
13.1.6 The discovery by Landlord that any financial statement given to
Landlord by Tenant, or its successor in interest or by any guarantor of Tenant's
obligation hereunder, was materially false.
13.2 REMEDIES. In the event of any default or breach of this Lease by
Tenant, Landlord may at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have by reason of such default or breach:
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13.2.1 Terminate Tenant's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. In
such event Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant's default including, but not limited
to, all unpaid rent through to the date of award by court having jurisdiction,
together with interest on such amount at fourteen percent (14%), the cost of
recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and any real estate commission actually paid; the worth at the time of award by
the court having jurisdiction thereof of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Tenant proves could be reasonably avoided;
that portion of the leasing commission paid by Landlord pursuant to paragraph 15
applicable to the unexpired term of this Lease.
13.2.2 Maintain Tenant's right to possession in which case this Lease
shall continue in effect whether or not Tenant shall have vacated or abandoned
the Premises. In such event Landlord shall be entitled to enforce all of
Landlord's rights and remedies under this Lease, including the right to recover
the rent as it becomes due hereunder.
13.2.3 Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state wherein the Premises are
located. Unpaid installments of rent and other unpaid monetary obligations of
Tenant under the terms of this Lease shall bear interest from the date due at
fourteen percent (14%) per annum.
13.3 DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within a reasonable time, but
in no event later than thirty (30) days after written notice by Tenant to
Landlord and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Tenant
in writing, specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord's obligation is such that more
than thirty (30) days are reasonably required for performance then Landlord
shall not be in default if Landlord commences performance within such 30-day
period and thereafter diligently pursues the same to completion.
13.4 LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant
to Landlord of Base Rent, Tenant's Share of Operating Expense increase or other
sums due hereunder will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges, and
late charges which may be imposed on Landlord by the terms of any mortgage or
trust deed covering the Office Building Project. Accordingly, if any installment
of Base Rent, Operating Expense Increase, or any other sum due from Tenant shall
not be received by Landlord or Landlord's designee within ten (10) days after
such amount shall be due, then, without any requirement for notice to Tenant,
Tenant shall pay to Landlord a late charge equal to six percent (6%) of such
overdue amount, plus interest on such overdue amount at the rate specified above
in paragraph 13.2.3. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount, nor
prevent Landlord from exercising any of the other rights and remedies granted
hereunder.
14. CONDEMNATION. If the Premises or any portion thereof or the Office Building
Project are taken under the power of eminent domain, or sold under the threat of
the exercise of said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs; provided that if so
much of the Premises or the Office Building Project are taken by such
condemnation as would substantially and adversely affect the operation and
profitability of Tenant's business conducted from the Premises, Tenant shall
have the option, to be exercised only in writing within thirty (30) days after
Landlord shall have given Tenant written notice of such taking (or in the
absence of such notice, within thirty (30) days after the condemning authority
shall have taken possession), to terminate this Lease as of the date the
condemning authority takes such possession. If Tenant does not terminate this
Lease in
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accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the rent and Tenant's
Share of Operating Expense Increase shall be reduced in the proportion that the
floor area of the Premises taken bears to the total floor area of the Premises.
Common Areas taken shall be excluded from the Common Areas usable by Tenant and
no reduction of rent shall occur with respect thereto or by reason thereof.
Landlord shall have the option in its sole discretion to terminate this Lease as
of the taking of possession by the condemning authority, by giving written
notice to Tenant of such election within thirty days after receipt of notice of
a taking by condemnation of any part of the Premises or the Office Building
Project. Any award for the taking of all or any part of the Premises or the
Office Building Project under the power of eminent domain or any payment made
under threat of the exercise of such power shall be the property of Landlord,
whether such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages; provided,
however, that Tenant shall be entitled to any separate award for loss or damage
to Tenant's trade fixtures, removable personal property and unamortized tenant
improvements that have been paid for by Tenant. For that purpose the cost of
such improvements shall be amortized over the original term of this Lease
excluding any options. In the event that this Lease is not terminated by reason
of such condemnation, Landlord shall to the extent of severance damages received
by Landlord in connection with such condemnation, repair any damage to the
Premises caused by such condemnation except to the extent that Tenant has been
reimbursed therefor by the condemning authority. Tenant shall pay any amount in
excess of such severance damages required to complete such repair.
15. BROKER'S FEE.
15.1 Landlord shall pay to the broker(s) identified in paragraph 1.12 of
the Basic Lease Provisions jointly, or in such separate shares as they may
mutually designate in writing, a fee as set forth in a separate agreement
between Landlord and said broker(s).
15.2 Tenant and Landlord each represent and warrant to the other that
neither has had any dealings with any person, firm, broker or finder (other than
the person(s), if any, whose names are set forth in paragraph 1.12 of the Basic
Lease Provisions) in connection with the negotiation of this Lease and/or the
consummation of the transaction contemplated hereby, and no other broker or
other person, firm or entity is entitled to any commission or finder's fee in
connection with said transaction and Tenant and Landlord do each hereby
indemnify and hold the other harmless from and against any costs, expenses,
attorney's fees or liability for compensation or charges which may be claimed by
any such unnamed broker, finder or other similar party by reason of any dealings
or actions of the indemnifying party.
16. ESTOPPEL CERTIFICATE; FINANCIAL STATEMENTS.
16.1 Each party (as "responding party") shall at any time upon not less
than ten (10) days' prior written notice from the other party ("requesting
party") execute, acknowledge and deliver to the requesting party a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, (ii) acknowledging
that there are not, to the responding party's knowledge, any uncured defaults on
the part of the requesting party, or specifying such defaults if any are claimed
and (iii) such other matters as are reasonably requested by the requesting
party. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Office Building Project or of the business of
Tenant.
16.2 At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it shall
be conclusive upon such party that (i) this Lease is in full force and effect,
without modification except as may be represented by the requesting party, (ii)
there are no uncured defaults in the requesting party's performance, and (iii)
if Landlord is the requesting party, not more than one month's rent has been
paid in advance.
16.3 If Landlord desires to finance, refinance, or sell the Office Building
Project, or any part thereof, Tenant hereby agrees to deliver to any lender or
purchaser designated by Landlord such financial statements of
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Tenant as may be reasonably required by such lender or purchaser. Such
statements shall include the past three (3) years' financial statements of
Tenant. All such financial statements shall be received by Landlord and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.
17. LANDLORD'S LIABILITY. The term "Landlord" as used herein shall mean only
the owner or owners. at the time in question, of the fee title or a lessee's
interest in a ground lease of the Office Building Project and except as
expressly provided in paragraph 15, in the event of any transfer of such title
or interest, Landlord herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of all
liability as respects Landlord's obligations thereafter to be performed,
provided that any funds in the hands of Landlord or the then grantor at the time
of such transfer, in which Tenant has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by Landlord
shall, subject as aforesaid, be binding on Landlord's successors and assigns,
only during their respective periods of ownership. Notwithstanding
anything contained in this Lease to the contrary, the obligations of Landlord
under this Lease (including any actual or alleged breach or default by Landlord)
do not constitute personal obligations of the individual partners, directors,
officers or shareholders of Landlord or Landlord's partners, and Tenant shall
not seek recourse against the individual partners, directors, officers or
shareholders of Landlord or Landlord's partners, or any of their personal assets
for satisfaction of any liability with respect to this Lease. Landlord's total
liability under this Lease shall be limited to Landlord's ownership interest in
the Office Building Project.
18. SEVERABILITY. The invalidity of any provision of this Lease as determined
by a court of competent jurisdiction shall in no way affect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any
amount due to Landlord not paid when due shall bear interest at fourteen percent
(14%) from the due date. Payment of such interest shall not excuse or cure any
default by Tenant under this Lease; provided, however, that interest shall not
be payable on late charges incurred by Tenant. Interest, however, shall be
payable on any amounts upon which late charges are paid by Tenant.
20. TIME OF ESSENCE. Time is of the essence with respect to the obligations to
be performed under this Lease.
21. ADDITIONAL RENT. All monetary obligations of Tenant to Landlord under the
terms of this Lease, including, but not limited to, Tenant's Share of Operating
Expense Increase and any other expenses payable by Tenant hereunder shall be
deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
or contemporaneous agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification. Except as otherwise stated
in this Lease, Tenant hereby acknowledges that neither the real estate broker
listed in paragraph 15 hereof nor any cooperating broker on this transaction nor
the Landlord or any employee or agents of any of said persons has made any oral
or written warranties or representations to Tenant relative to the condition or
use by Tenant of the Premises or the Office Building Project and Tenant
acknowledges that Tenant assumes all responsibility regarding the Occupational
Safety Health Act, the Americans with Disabilities Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable laws
and regulations in effect during the term of this Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified or registered
mail, and shall be deemed sufficiently given if delivered or addressed to Tenant
or to Landlord at the address noted below the signature of the respective
parties. Mailed notices shall be deemed given upon actual receipt at the address
required, or forty-eight (48) hours following deposit in the mail, postage
prepaid, whichever first occurs. Either party may by notice to the other specify
a different address for notice purposes except that upon Tenant's taking
possession of the Premises, the Premises shall constitute Tenant's address for
notice purposes. A copy of all notices required or permitted to be given to
Landlord hereunder shall be
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concurrently transmitted to such party or parties at such addresses as Landlord
may from time to time hereafter designate by notice to Tenant.
24. WAIVERS. No waiver by Landlord of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Tenant of
the same or any other provision. Landlord's consent to, or approval of, any act
shall not be deemed to render unnecessary the obtaining of Landlord's consent to
or approval of any subsequent act by Tenant. The acceptance of rent hereunder by
Landlord shall not be a waiver of any preceding breach by Tenant of any
provision hereof, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.
25. RECORDING. Neither this Lease nor a short form memorandum thereof shall be
recorded without Landlord's consent.
26. HOLDING OVER. If Tenant, with Landlord's consent, remains in possession of
the Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Tenant, except that the rent payable
shall be two hundred percent (200%) of the rent payable immediately preceding
the termination date of this Lease, and all Options, if any, granted under the
terms of this Lease shall be deemed terminated and be of no further effect
during said month to month tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting
assignment or subletting by Tenant and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State
where the Office Building Project is located and any litigation concerning this
Lease between the parties hereto shall be initiated in the county in which the
Office Building Project is located.
30. SUBORDINATION.
30.1 This Lease, and any Option or right of first refusal granted hereby,
at Landlord's option, shall be subordinate to any ground lease, mortgage, deed
of trust, or any other hypothecation or security now or hereafter placed upon
the Office Building Project and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof. If any mortgagee, trustee or ground lessor shall elect to
have this Lease and any Options granted hereby prior to the lien of its
mortgage, deed of trust or ground lease, and shall give written notice thereof
to Tenant, this Lease and such Options shall be deemed prior to such mortgage,
deed of trust or ground lease, whether this Lease or such Options are dated
prior or subsequent to the date of said mortgage, deed of trust or ground lease
or the date of recording thereof.
30.2 Tenant agrees to execute any documents required to effectuate an
attornment, a subordination, or to make this Lease or any Option granted herein
prior to the lien of any mortgage, deed of trust or ground lease, as the case
may be. Tenant's failure to execute such documents within ten (10) days after
written demand shall constitute a material default by Tenant hereunder without
further notice to Tenant or, at Landlord's option, Landlord shall execute such
documents on behalf of Tenant as Tenant's attorney-in-fact. Tenant does hereby
make, constitute and irrevocably appoint Landlord as Tenant's attorney-in-fact
and in Tenant's name, place and stead, to execute such documents in accordance
with this paragraph 30.2.
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<PAGE> 26
31. ATTORNEYS' FEES.
31.1 If either party named herein brings an action to enforce the terms
hereof or declare rights hereunder, the prevailing party in any such action,
trial or appeal thereon, shall be entitled to his reasonable attorneys' fees to
be paid by the losing party as fixed by the court in the same or a separate
suit, and whether or not such action is pursued to decision or judgment.
31.2 The attorneys' fees award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred in good faith.
31.3 Landlord shall be entitled to reasonable attorneys' fees and all other
costs and expenses incurred in the preparation and service of notice of default
and consultations in connection therewith whether or not a legal transaction is
subsequently commenced in connection with such default.
32. LANDLORD'S ACCESS.
32.1 Landlord and Landlord's agents shall have the right to enter the
Premises at reasonable times for the purpose of inspecting the same, performing
any services required of Landlord, showing the same to prospective purchasers,
lenders, or lessees, taking such safety measures, erecting such scaffolding or
other necessary structures, making such alterations, repairs, improvements or
additions to the Premises or to the Office Building Project as Landlord may
reasonably deem necessary or desirable and the erecting, using and maintaining
of utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Tenant's use of the
Premises. Landlord may at any time place on or about the Premises or the
Building any ordinary "For Sale" signs and Landlord may at any time during the
last 120 days of the term hereof place on or about the Premises any ordinary
"For Lease" signs.
32.2 All activities of Landlord pursuant to this paragraph shall be without
abatement of rent, nor shall Landlord have any liability to Tenant for the same,
nor shall such activities be considered an eviction or disturbance of Tenant's
use or possession of the Premises.
32.3 Landlord shall have the right to retain keys to the Premises and to
unlock all doors in or upon the Premises other than to files, vaults and safes,
and in the case of emergency to enter the Premises by any reasonably appropriate
means, and any such entry shall not be deemed a forcible or unlawful entry or
detainer of the Premises or an eviction. Tenant waives any charges for damages
or injuries or interference with Tenant's property or business in connection
therewith.
33. AUCTIONS. Tenant shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises or the Common Areas
without first having obtained Landlord's prior written consent. Notwithstanding
anything to the contrary in this Lease, Landlord shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such
consent. The holding of any auction on the Premises or Common Areas in violation
of this paragraph shall constitute a material default of this Lease.
34. SIGNS. Tenant shall not place any sign upon the Premises or the Office
Building Project without Landlord's prior written consent. Under no
circumstances shall Tenant place a sign on any roof or in the Common Areas of
the Office Building Project.
35. MERGER. The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation thereof, or a termination by Landlord, shall not work a
merger, and shall, at the option of Landlord, terminate all or any existing
subtenancies or may, at the option of Landlord, operate as an assignment to
Landlord of any or all of such subtenancies.
36. CONSENTS. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
wherever in this Lease the consent of one party is required to an act of the
other party such consent shall not be unreasonably withheld or delayed.
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<PAGE> 27
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Tenant under this Lease.
38. QUIET POSSESSION. Upon Tenant paying the rent for the Premises and
observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease. The individuals executing this Lease on behalf of
Landlord represent and warrant to Tenant that they are fully authorized and
legally capable of executing this Lease on behalf of Landlord and that such
execution is binding upon all parties holding an ownership interest in the
Office Building Project.
39. OPTIONS.
39.1 DEFINITION. As used in this paragraph the word "Option" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Tenant has on other
property of Landlord; (2) The option of right of first refusal to lease the
Premises or the right of first offer to lease the Premises or the right of first
refusal to lease other space within the Office Building Project or other
property of Landlord; (3) the right or option to purchase the Premises or the
Office Building Project, or the right of first refusal to purchase the Premises
or the Office Building Project or the right of first offer to purchase the
Premises or the Office Building Project, or the right or option to purchase
other property of Landlord, or the right of first refusal to purchase other
property of Landlord or the right of first offer the purchase other property of
Landlord.
39.2 OPTIONS PERSONAL. Each Option granted to Tenant in this Lease is
personal to the original Tenant and may be exercised only by the original Tenant
while occupying the Premises who does so without the intent of thereafter
assigning this Lease or subletting the Premises or any portion thereof, and may
not be exercised or be assigned, voluntarily or involuntarily, by or to any
person or entity other than the Tenant; provided, however, that an Option may be
exercised by or assigned to any Lease Affiliate as defined in paragraph 12.2 of
this Lease. The Options, if any, herein granted to Tenant are not assignable
separate and apart from this Lease, nor may any Option be separated from this
Lease in any manner, either by reservation or otherwise.
39.3 MULTIPLE OPTIONS. In the event that Tenant has any multiple options to
extend or renew this Lease, a later option cannot be exercised unless the prior
option to extend or renew this Lease has been so exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Tenant shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary, (i) during the time
commencing from the date Landlord gives to Tenant a notice of default pursuant
to paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance alleged
in said notice of default is cured, or (ii) during the period of time commencing
on the day after a monetary obligation to Landlord is due from Tenant and unpaid
(without any necessity for notice thereof to Tenant) and continuing until the
obligation is paid, or (iii) in the event that Landlord has given to Tenant
three or more notices of default under paragraph 13.1 (c), or paragraph 13.1
(d), whether or not the defaults are cured, during the 12 month period of time
immediately prior to the time that Tenant attempts to exercise the subject
Option, or (iv) if Tenant has committed any non-curable breach, including
without limitation those described in paragraph 13.1 (b), or is otherwise in
default of any of the terms, covenants or conditions of this Lease.
(b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Tenant's inability to exercise an
Option because of the provisions of paragraph 39.4(a).
(c) All rights of Tenant under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Tenant's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Tenant fails to pay to Landlord a monetary obligation of Tenant
for a period of
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<PAGE> 28
thirty (30) days after such obligation becomes due (without any necessity of
Landlord to give notice thereof to Tenant), or (ii) Tenant fails to commence to
cure a default specified in paragraph 13.1 (d) within thirty (30) days after
the date that Landlord gives notice to Tenant of such default and/or Tenant
fails thereafter to diligently prosecute said cure to completion, or (iii)
Landlord gives to Tenant three or more notices of default under paragraph
13.1(c) or paragraph 13.1(d) whether or not the defaults are cured, or (iv) if
Tenant has committed any non-curable breach, including without limitation those
described in paragraph 13.1(b), or is otherwise in default of any of the
terms, covenants and conditions of this Lease.
40. SECURITY MEASURES-LANDLORD'S RESERVATIONS.
40.1 Tenant hereby acknowledges that Landlord shall have no obligation
whatsoever to provide guard service or other security measures for the benefit
of the Premises or the Office Building Project. Tenant assumes all
responsibility for the protection of Tenant, its agents, and invitees and the
property of Tenant and of Tenant's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Landlord, at Landlord's sole
option, from providing security protection for the Office Building Project or
any part thereof, in which event the cost thereof shall be included within the
definition of Operating Expenses, as set forth in paragraph 4.2.2.
40.2 Landlord shall have the following rights:
(a) To change the name, address or title of the Office Building
Project or building in which the Premises are located upon not less than 60 days
prior written notice;
(b) To, at Tenant's expense, provide and install Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Landlord shall reasonably deem appropriate;
(c) To permit any lessee the exclusive right to conduct any business
as long as such exclusive does not conflict with any rights expressly given
herein; or
(d) To place such signs, notices or displays as Landlord reasonably
deems necessary or advisable upon the roof, exterior of the buildings or the
Office Building Project or on pole signs in the Common Areas.
40.3 Tenant shall not:
(a) Use a representation (photographic or otherwise) of the Building
or the Office Building Project or their name(s) in connection with Tenant's
business; or
(b) Suffer or permit anyone, except in emergency, to go upon the roof
of the Building.
41. EASEMENTS.
41.1 Landlord reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Landlord deems necessary or
desirable, and to cause the recordation of Parcel Maps and restrictions, so long
as such easements, rights, dedications, Maps and restrictions do not
unreasonably interfere with the use of the Premises by Tenant. Tenant shall sign
any of the aforementioned documents upon request of Landlord and failure to do
so shall constitute a material default of this Lease by Tenant without the need
for further notice to Tenant.
41.2 The obstruction of Tenant's view, air or light by any structure
erected in the vicinity of the Building, whether by Landlord or third parties,
shall in no way affect this Lease or impose any liability upon Landlord.
42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a
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<PAGE> 29
voluntary payment, and there shall survive the right on the part of said party
to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on the part of said party to pay such sum or any part
thereof, said party shall be entitled to recover such sum or so much thereof as
it was not legally required to pay under the provisions of this Lease.
43. AUTHORITY. If Tenant is a corporation, trust, or general or limited
partnership, Tenant, and each individual executing this Lease on behalf of such
entity represent and warrant that such individual is duly authorized to execute
and deliver this Lease on behalf of said entity. If Tenant is a corporation,
trust or partnership, Tenant shall, within thirty (30) days after execution of
this Lease, deliver to Landlord evidence of such authority satisfactory to
Landlord.
44. CONFLICT. Any conflict between the printed provisions, Exhibits or Addenda
of this Lease and the typewritten or handwritten provisions, if any, shall be
controlled by the typewritten or handwritten provisions.
45. NO OFFER. Preparation of this Lease by Landlord or Landlord's agent and
submission of same to Tenant shall not be deemed an offer to Tenant to lease.
This Lease shall become binding upon Landlord and Tenant only when fully
executed by both parties.
46. LENDER MODIFICATION. Tenant agrees to make such reasonable modifications to
this Lease as may be reasonably required by an institutional lender in
connection with the obtaining of normal financing or refinancing of the Office
Building Project.
47. MULTIPLE PARTIES. If more than one person or entity is named as either
Landlord or Tenant herein, except as otherwise expressly provided herein, the
obligations of the Landlord or Tenant herein shall be the joint and several
responsibility of all persons or entities named herein as such Landlord or
Tenant, respectively.
48. INTENTIONALLY OMITTED.
49. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees that the terms
of this Lease are confidential and constitute proprietary information of
Landlord. Disclosure of the terms could adversely affect the ability of Landlord
to negotiate other leases and impair Landlord's relationship with other tenants.
Accordingly, Tenant agrees that it, and its partners, officers, directors,
employees, agents and attorneys, shall not intentionally and/or voluntarily
disclose the terms and conditions of this Lease to any newspaper or other
publication or any other tenant or apparent prospective tenant of the Building
or other portion of the Office Building Project, or real estate agent, either
directly or indirectly, without the prior written consent of Landlord, provided,
however, that Tenant may disclose the terms to prospective subtenants or
assignees under this Lease.
50. ATTACHMENTS. Attached hereto are the following documents which constitute a
part of this Lease:
Exhibit "A" - Floor Plan of Premises
Exhibit "B" - Rules and Regulations
LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE
TERMS. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE LANDLORD OR BROKERS AS
TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF
THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
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<PAGE> 30
LANDLORD TENANT
101 CONVENTION CENTER DRIVE INTERNET CENTURY, INC.,
CORPORATION, a Delaware corporation a Nevada corporation
By: PMRealty Advisors, Inc. By: /s/ JENNIFER L. FERLAINO
a Delaware corporation -------------------------
Its: Investment Advisor
Its: Treasurer
By: /s/ DAVID K. HUBBS ------------------------
-------------------------
David K. Hubbs By: /s/ JEFFREY PETERSON
-------------------------
Its: Vice President
----------------------- Its: Chief Executive Officer
------------------------
By: /s/ THOMAS A. HURST
------------------------- Address for Notices:
Thomas A. Hurst Internet Century
101 Convention Center Drive,
Suite 690
Its: Assistant Secretary Las Vegas, Nevada 89109
-----------------------
Address for Notices:
PMRealty Advisors, Inc.
800 Newport Center Drive, Suite 300
Newport Beach, CA 92660
Attn: Asset Management - Ofc. Bldg. Div.
With a copy to:
CB Commercial Real Estate Services, Inc.
101 Convention Center Drive
Las Vegas, NV 89109
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<PAGE> 31
THE PREMISES
[DIAGRAM]
scale: 1/16" = 1'-0"
EXHIBIT "A"
<PAGE> 32
RULES AND REGULATIONS FOR
STANDARD OFFICE LEASE
GENERAL RULES
1. Tenant shall not suffer or permit the obstruction of any, Common
Areas, including driveways, walkways and stairways.
2. Landlord reserves the right to refuse access to any persons Landlord
in good faith judges to be a threat to the safety, reputation, or property of
the Office Building Project and its occupants.
3. Tenant shall not make or permit any noise or odors that annoy or
interfere with other Tenants or persons having business within the Office
Building Project.
4. Tenant shall not keep animals or birds within the Office Building
Project, and shall not bring bicycles, motorcycles or other vehicles into areas
not designated as authorized for same.
5. Tenant shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.
6. Tenant shall not alter any lock or install new or additional locks
or bolts.
7. Tenant shall be responsible for the inappropriate use of any toilet
rooms, plumbing or other utilities. No foreign substances of any kind are to be
inserted therein.
8. Tenant shall not deface the walls, partitions or other surfaces of
the premises or Office Building Project.
9. Tenant shall not suffer or permit anything in or around the Premises
or Building that causes excessive vibration or floor loading in any part of the
Office Building Project.
10. Furniture, significant freight and equipment shall be moved into or
out of the building only with the Landlord's knowledge and consent, and subject
to such reasonable limitations, techniques and timing, as may be designated by
Landlord. Tenant shall be responsible for any damage to the Office Building
Project arising from any such activity.
11. Tenant shall not employ any service or contractor for services or
work to be performed in the Building, except as approved by Landlord.
12. Landlord reserves the right to close and lock the Building on
Saturdays, Sundays and legal holidays, and on other days between the hours of
7:00 P.M. and 7:00 A.M. of the following day. If Tenant uses the Premises during
such periods, Tenant shall be responsible for securely locking any doors it may
have opened for entry.
13. Tenant shall return all keys at the termination of its tenancy and
shall be responsible for the cost of replacing any keys that are lost.
14. No window coverings, shades or awnings shall be installed or used
by Tenant.
15. No Tenant, employee or invitee shall go upon the roof of the
Building.
EXHIBIT "B"
<PAGE> 33
16. Tenant shall not suffer or permit smoking or carrying of lighted
cigars or cigarettes in areas reasonably designated by Landlord or by applicable
governmental agencies as non-smoking areas.
17. Tenant shall not use any method of heating or air conditioning
other than as provided by Landlord.
18. Tenant shall not install, maintain or operate any vending machines
upon the Premises without Landlord's written consent.
19. The Premises shall not be used for lodging or manufacturing,
cooking or food preparation (microwave ovens for Tenant's personal use
excepted).
20. Tenant shall comply with all safety, fire protection and evacuation
regulations established by Landlord or any applicable governmental agency.
21. Landlord reserves the right to waive any one of these rules or
regulations, and/or as to any particular Tenant, and any such waiver shall not
constitute a waiver of any other rule or regulation or any subsequent
application thereof to such Tenant.
22. Tenant assumes all risks from theft or vandalism and agrees to keep
its Premises locked as may be required.
23. Landlord reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Tenant
agrees to abide by these and such rules and regulations.
24. Hazardous Substances.
(a) Neither Tenant, its successors or assigns, nor any permitted
assignee, subtenant, licensee or other person or entity acting at the direction
or with the consent of Tenant shall (i) manufacture, treat, use, store or
dispose of any "Hazardous Substance" (as hereinafter defined) on the Premises,
the Office Building Project, or any part thereof or (ii) permit the "release"
(as hereinafter defined) of a Hazardous Substance on or from the Premises, the
Office Building Project, or any part thereof unless manufacturing, treatment,
use, storage, disposal, or release of a hazardous substance is approved in
writing by Landlord.
(b) Tenant covenants at its cost and expense, to protect, indemnify,
defend and save Landlord harmless against and from any and all damages, losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, or expenses of any kind or nature
(including, without limitation, attorney's fees and expert's fees) which may at
any time be imposed upon, incurred by or asserted or awarded against Landlord
arising from or out of any Hazardous Substance on, in, under or affecting the
Premises, Office Building Project, or any part thereof occurring as a result of
any act or omission by Tenant after the Commencement Date, its successors or
assigns, or any assignee, permitted subtenant, licensee or other person or
entity acting at the direction, knowledge or implied consent of Tenant.
(c) The term "Hazardous Substance" shall mean any waste, substance or
material (i) identified in Section 101(14) of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as the same may be amended
from time to time (hereinafter called "CERCLA", or (ii) determined to be
hazardous, toxic, a pollutant or contaminant, under federal, state, or local
statute, law, ordinance, rule, regulation or judicial or administrative order or
decision, as same may be amended from time to time, including, but not limited
to, petroleum and petroleum products. The term "release" shall have the meaning
given to such term in Section 101(22) of CERCLA.
B-2
<PAGE> 34
PARKING RULES
1. Parking areas shall be used only for parking by vehicles no longer
than full size, passenger automobiles herein called "Permitted Size Vehicles".
2. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Landlord for such activities.
3. Parking stickers or identification devices shall be the property of
Landlord and be returned to Landlord by the holder thereof upon termination of
the holder's parking privileges. Tenant will pay such replacement charge as is
reasonably established by Landlord for the loss of such devices.
4. Landlord reserves the right to refuse the sale of monthly
identification devices to any person or entity that willfully refuses to comply
with the applicable rules, regulations, laws and/or agreements.
5. Landlord reserves the right to relocate all or a part of parking
spaces from floor to floor, within one floor, and/or to reasonably adjacent
offsite location(s), and to reasonably allocate them between compact and
standard size spaces, as long as the same complies with applicable laws,
ordinances and regulations.
6. Users of the parking area will obey all posted signs and park only
in the areas designated for vehicle parking.
7. Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Landlord will not be responsible for
any damage to vehicles, injury to persons or loss of property, all of which
risks are assumed by the party using the parking area.
8. Validation, if established, will be permissible only by such method
or methods as Landlord and/or its licensee may establish at rates generally
applicable to visitor parking.
9. The maintenance, washing, waxing or cleaning of vehicles in the
parking area is prohibited.
10. Tenant shall be responsible for seeing that all of its employees,
agents and invitees comply with the applicable parking rules, regulations, laws
and agreements.
11. Landlord reserves the right to modify these rules and/or adopt
such other reasonable and non-discriminatory rules and regulations as it may
deem necessary for the proper operation of the parking area.
12. Such parking use as is herein provided is intended merely as a
license only and no bailment is intended or shall be created hereby.
B-3
<PAGE> 35
STORAGE SPACE AGREEMENT
This document will serve as a Storage Space Agreement (called "Agreement"
herein), between the parties hereto as follows:
1. 101 Convention Center Drive Corporation, hereto referred to as
"Lessor", hereby leases to Internet Century, Inc., herein referred to
as "Lessee", approximately 69 square feet of storage space (the
"Storage Space") located at 101 Convention Center Drive, Las Vegas, NV
89109. Said Storage Space is designated as PS-1-10, the location of
which is indicated on the floor plan attached hereto as Exhibit "A".
2. The term of the Agreement shall be month to month commencing on
September 16, 1998 and may be terminated by either party upon 30 days
written notice.
3. The monthly rental for said Storage Space shall be in the amount of
$41.4, payable to Lessor in advance on the first day of each and every
calendar month that this Agreement is in effect. All rental payments as
provided for hereunder shall be by check, payable to 101 Convention
Center Drive Corporation, and shall be mailed or delivered to Lessor at
101 Convention Center Drive, Suite #101. Las Vegas, NV 89109.
4. Lessee acknowledges having inspected said Storage Space and accepts
same in its present condition (as of the date hereof) as adequate for
the purpose set forth in Paragraph 5 hereof.
5. Said Storage Space shall be used only for the purpose of storing
Lessee's personal property, and (except for lighting) no utility
service whatsoever will be supplied to said Storage Space. No hazardous
materials may be stored in the Storage Space.
6. Lessee agrees to fully indemnify Lessor with respect to any liability,
damages, expenses, attorney's fees, causes of action, suits, fines,
claims or judgements arising from injury to any personal or damage to
any property, arising out of or connected with the use of said Storage
Space by Lessee. In addition, Lessee shall arrange for liability
insurance to cover its use of said Storage Space. Lessee shall not do
or permit to be done anything which shall invalidate the Lessor's
insurance coverage referred to herein.
7. Upon termination of this Agreement, Lessee shall remove all property
placed by it in said Storage Space, and shall promptly repair any
damage to said Storage Space caused by Lessee's use of same. Said
obligations shall be performed at Lessee's own expense and risk. Any
property which is not promptly removed from said Storage Space
following termination shall be either stored in said Storage Space or
removed and stored elsewhere, in either case, entirely at Lessee's
expense, and (if Lessee does not timely claim such property and
reimburse Lessor for the aforementioned expenses) disposed of by
Lessor.
Page 1 of 2
<PAGE> 36
8. Lessee shall be responsible for securing (e.g. by means of a lock) said
Storage Space against entry by unauthorized person; accordingly, Lessee
hereby hold Lessor harmless with respect to any loss of and/or damage
to any property stored by Lessee in said Storage Space.
9. This Agreement constitutes the entire agreement between the parties
hereto with respect to said Storage Space and supersedes all prior
negotiations, representations, or agreements, either oral or written.
No modification of this Agreement shall be binding unless evidenced by
a written agreement signed by Lessor and Lessee.
LESSOR LESSEE
101 Convention Center Drive Corporation Internet Century, Inc.
By /s/ LEIGH SCHROM By /s/ MORGAN DUNN
---------------------------------- ----------------------------
Leigh Schrom Morgan Dunn
Property Manager Nevada Operations Officer
Page 2 of 2
<PAGE> 37
[DIAGRAM OF THE COLONNADE]
<PAGE> 1
EXHIBIT 10.20
INTERNET CENTURY, INC.
1998 STOCK OPTION PLAN
Article I. Establishment and Purpose
1.1 Establishment. Internet Century, Inc., a Nevada corporation (the
"Company"), hereby establishes a stock option plan for officers, directors,
employees and consultants who provide services to the Company, as described
herein, which shall be known as the 1998 Stock Option Plan (the "Plan"). It is
intended that certain of the options issued under the Plan to employees of the
Company shall constitute "Incentive Stock Options" within the meaning of section
422A of the Internal Revenue Code ("Code"), and that other options issued under
the Plan shall constitute "Nonstatutory Options" under the Code. The Board of
Directors of the Company (the "Board") shall determine which options are to be
Incentive Stock Options and which are to be Nonstatutory Options and shall enter
into option agreements with recipients accordingly.
1.2 Purpose. The purpose of this Plan is to enhance the Company's
stockholder value and financial performance by attracting, retaining and
motivating the Company's officers, directors, key employees and consultants and
to encourage stock ownership by such individuals by providing them with a means
to acquire a proprietary interest in the Company's success through stock
ownership.
Article II. Definitions
2.1 Definitions. Whenever used herein, the following capitalized terms
shall have the meanings set forth below, unless the context clearly requires
otherwise.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee provided for by Article IV
hereof.
(d) "Company" means Internet Century, Inc., a Nevada corporation.
(e) "Consultant" means any person or entity, including an officer or
director of the Company who provides services (other than as an
Employee) to the Company and shall include a Nonemployee Director, as
defined below.
(f) "Date of Exercise" means the date the Company receives notice, by
an Optionee, of the exercise of an Option pursuant to section 8.1 of
the Plan. Such notice shall indicate the number of shares of Stock the
Optionee intends to exercise.
<PAGE> 2
(g) "Employee" means any person, including an officer or director of
the Company who is employed by the Company.
(h) "Fair Market Value" means the fair market value of Stock upon which
an Option is granted under this Plan.
(i) "Incentive Stock Option" means an Option granted under this Plan
which is intended to qualify as an "incentive stock option" within the
meaning of section 422A of the Code.
(j) "Nonemployee Director" means a member of the Board who is not an
employee of the Company at the time an Option is granted hereunder.
(k) "Nonstatutory Option" means an Option granted under the Plan which
is not intended to qualify as an Incentive Stock Option within the
meaning of section 422A of the Code. Nonstatutory Options may be
granted at such times and subject to such restrictions as the Board
shall determine without conforming to the statutory rules of section
422A of the Code applicable to Incentive Stock Options.
(l) "Option" means the right, granted under the Plan, to purchase Stock
of the Company at the option price for a specified period of time. For
purposes of this Plan, an Option may be either an Incentive Stock
Option or a Nonstatutory Option.
(m) "Optionee" means an Employee or Consultant holding an Option under
the Plan.
(n) "Parent Corporation" shall have the meaning set forth in section
425(e) of the Code with the Company being treated as the employer
corporation for purposes of this definition.
(o) "Significant Shareholder" means an individual who, within the
meaning of section 422A(b)(6) of the Code, owns securities possessing
more than ten percent of the total combined voting power of all classes
of securities of the Company. In determining whether an individual is a
Significant Shareholder, an individual shall be treated as owning
securities owned by certain relatives of the individual and certain
securities owned by corporations in which the individual is a
shareholder; partnerships in which the individual is a partner; and
estates or trusts of which the individual is a beneficiary, all as
provided in section 425(d) of the Code.
(p) "Stock" means the $.001 par value common stock of the Company.
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2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology when used in this Plan also shall include the feminine
gender, and the definition of any term herein in the singular also shall include
the plural.
Article III. Eligibility and Participation
3.1 Eligibility and Participation. All Employees are eligible to
participate in this Plan and receive Incentive Stock Options and/or Nonstatutory
Options hereunder. All Consultants are eligible to participate in this Plan and
receive Nonstatutory Options hereunder. Optionees in the Plan shall be selected
by the Board from among those Employees and Consultants who, in the opinion of
the Board, are in a position to contribute materially to the Company's continued
growth and development and to its long-term financial success.
Article IV. Administration
4.1 Administration. The Board shall be responsible for administering
the Plan.
The Board is authorized to interpret the Plan; to prescribe, amend, and
rescind rules and regulations relating to the Plan; to provide for conditions
and assurances deemed necessary or advisable to protect the interests of the
Company; and to make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. Determinations, interpretations or other actions made or
taken by the Board, pursuant to the provisions of this Plan, shall be final and
binding and conclusive for all purposes and upon all persons.
The Plan shall be administered by the standing Compensation Committee
of the Board (the "Committee") which is an executive committee of the Board, and
consists of not less than three (3) members of the Board, at least two of whom
are not executive officers or salaried employees of the Company. The members of
the Committee may be directors who are eligible to receive Options under the
Plan, but Options may be granted to such persons only by action of the full
Board and not by action of the Committee. The Committee shall have full power
and authority, subject to the limitations of the Plan and any limitations
imposed by the Board, to construe, interpret and administer the Plan and to make
determinations which shall be final, conclusive and binding upon all persons,
including, without limitation, the Company, the stockholders, the directors and
any persons having any interests in any Options which may be granted under the
Plan, and, by resolution or resolution providing for the creation and issuance
of any such Option, to fix the terms upon which, the time or times at or within
which, and the price or prices at which any Stock may be purchased from the
Company upon the exercise of Options, which terms, time or times and price or
prices shall, in every case, be set forth or incorporated by reference in the
instrument or instruments evidencing such Option, and shall be consistent with
the provisions of the Plan.
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The Board may from time to time remove members from or add members to,
the Committee. The Board may terminate the Committee at any time. Vacancies on
the Committee, howsoever caused, shall be filled by the Board. The Committee
shall select one of its members as Chairman, and shall hold meetings at such
times and places as the Chairman may determine. A majority of the Committee at
which a quorum is present, or acts reduced to or approved in writing by all of
the members of the Committee, shall be the valid acts of the Committee. A quorum
shall consist of two-thirds (2/3) of the members of the Committee.
Where the Committee has been created by the Board, references herein to
actions to be taken by the Board shall be deemed to refer to the Committee as
well, except where limited by the Plan or the Board.
The Board shall have all of the enumerated powers of the Committee but
shall not be limited to such powers. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option granted under it.
4.2 Special Provisions for Grants to Officers or Directors. Rule 16b-3
under the Securities and Exchange Act of 1934 (the "Act") provides that the
grant of a stock option to a director or officer of a company subject to the Act
will be exempt from the provisions of section 16(b) of the Act if the conditions
set forth in said Rule are satisfied. Unless otherwise specified by the Board,
grants of Options hereunder to individuals who are officers or directors of the
Company shall be made in a manner that satisfies the conditions of said Rule.
Article V. Stock Subject to the Plan
5.1 Number. The total number of shares of Stock hereby made available
and reserved for issuance under the Plan shall be 500,000. The aggregate number
of shares of Stock available under this Plan shall be subject to adjustment as
provided in section 5.3. The total number of shares of Stock may be authorized
but unissued shares of Stock, or shares acquired by purchase as directed by the
Board from time to time in its discretion, to be used for issuance upon exercise
of Options granted hereunder.
5.2 Unused Stock. If an Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares of Stock subject
thereto shall (unless the Plan shall have terminated) become available for other
Options under the Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification or other similar corporate change, the
aggregate number of shares of Stock set forth in section 5.1 shall be
appropriately adjusted by the Board to reflect such change. The Board's
determination shall be conclusive; provided, however, that fractional shares
shall be rounded to the nearest whole share. In any such case, the number and
kind of shares of Stock that are subject to any Option (including any Option
outstanding after termination of employment) and the Option price per share
shall be proportionately and appropriately adjusted without any change in the
aggregate Option price to be paid therefor upon exercise of the Option.
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Article VI. Duration of the Plan
6.1 Duration of the Plan. The Plan shall be in effect until September
30, 2008 unless extended by the Company's shareholders. Any Options outstanding
at the end of said period shall remain in effect in accordance with their terms.
The Plan shall terminate before the end of said period, if all Stock subject to
it has been purchased pursuant to the exercise of Options granted under the
Plan.
Article VII. Terms of Stock Options
7.1 Grant of Options. Subject to section 5.1, Options may be granted to
Employees or Consultants at any time and from time to time as determined by the
Board; provided, however, that Consultants may receive only Nonstatutory
Options, and may not receive Incentive Stock Options. The Board shall have
complete discretion in determining the number of Options granted to each
Optionee. In making such determinations, the Board may take into account the
nature of services rendered by such Employees or Consultants, their present and
potential contributions to the Company, and such other factors as the Board in
its discretion shall deem relevant. The Board also shall determine whether an
Option is to be an Incentive Stock Option or a Nonstatutory Option.
In the case of Incentive Stock Options the total Fair Market Value
(determined at the date of grant) of shares of Stock with respect to which
incentive stock options are exercisable for the first time by the Optionee
during any calendar year under all plans of the Company under which incentive
stock options may be granted (and all such plans of any Parent Corporations and
any subsidiary corporations of the Company) shall not exceed $100,000.
(Hereinafter, this requirement is sometimes referred to as the "$100,000
Limitation.")
Nothing in this Article VII shall be deemed to prevent the grant of
Options permitting exercise in excess of the maximums established by the
preceding paragraph where such excess amount is treated as a Nonstatutory
Option.
The Board is expressly given the authority to issue amended or
replacement Options with respect to shares of Stock subject to an Option
previously granted hereunder. An amended Option amends the terms of an Option
previously granted (including an extension of the terms of such Option) and
thereby supersedes the previous Option. A replacement Option is similar to a new
Option granted hereunder except that it provides that it shall be forfeited to
the extent that a previously granted Option is exercised, or except that its
issuance is conditioned upon the termination of a previously granted Option.
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<PAGE> 6
7.2 No Tandem Options. Where an Option granted under the Plan is
intended to be an Incentive Stock Option, the Option shall not contain terms
pursuant to which the exercise of the Option would affect the Optionee's right
to exercise another Option, or vice versa, such that the Option intended to be
an Incentive Stock Option would be deemed a tandem stock option within the
meaning of the regulations under section 422A of the Code.
7.3 Option Agreement; Terms and Conditions to Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option shall be
evidenced by an Option agreement (the "Option Agreement") that includes the
nontransferability provisions required by section 10.2 hereof and specifies:
whether the Option is an Incentive Stock Option or a Nonstatutory Option; the
Option price; the term (duration) of the Option; the number of shares of Stock
to which the Option applies; any vesting or exercisability restrictions which
the Board may impose; in the case of an Incentive Stock Option, a provision
implementing the $100,000 Limitation; and any other terms or conditions which
the Board may impose. All such terms and conditions shall be determined by the
Board at the time of grant of the Option.
If not otherwise specified by the Board, the following terms and
conditions shall apply to Options granted under the Plan:
(a) Term. The Option shall be exercisable to purchase Stock for a
period of ten years from the date of grant, as evidenced by the
execution date of the Option Agreement.
(b) Exercise of Option. Unless an Option is terminated as provided
hereunder, an Optionee may exercise his Option for up to, but not in
excess of, the number of shares of Stock subject to the Option
specified below, based on the Optionee's number of years of continuous
service with the Company from the date on which the Option is granted.
In the case of an Optionee who is an Employee, continuous service shall
mean continuous employment; in the case of an Optionee who is a
Consultant, continuous service shall mean the continuous provision of
consulting services. In applying said limitations, the amount of
shares, if any, previously purchased by the Optionee under the Option
shall be counted in determining the amount of shares the Optionee can
purchase at any time. The Optionee may exercise his Option in the
following amounts:
(i) After one (1) year of continuous services to the Company,
the Optionee may purchase up to 33.3% of the shares of Stock
subject to the Option;
(ii) After two (2) years of continuous services to the
Company, the Optionee may purchase up to 66.6% of the shares
of Stock subject to the Option;
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(iii) After three years of continuous services to the Company,
the Optionee may purchase all shares of Stock subject to the
Option.
The Board may specify terms and conditions other than those set forth
above, in its discretion.
All Option Agreements shall incorporate the provisions of the Plan by
reference, with certain provisions to apply depending upon whether the Option
Agreement applies to an Incentive Stock Option or to a Nonstatutory Option.
7.4 Option Price. No Incentive Stock Option granted pursuant to this
Plan shall have an Option price that is less than the Fair Market Value of the
Stock on the date the Option is granted. Incentive Stock Options granted to
Significant Stockholders shall have an Option price of not less than 110 percent
of the Fair Market Value of the Stock on the date of grant. The Option price for
Nonstatutory Options shall be established by the Board and shall not be less
than 100 percent of the Fair Market Value of the Stock on the date of grant.
7.5 Term of Options. Each Option shall expire at such time as the Board
shall determine, provided, however, that no Option shall be exercisable later
than ten years from the date of its grant.
7.6 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for all
Optionees.
7.7 Payment. Payment for all shares of Stock shall be made at the time
that an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash or
certified funds, or (ii) if acceptable to the Board, in Stock or in some other
form; provided, however, in the case of an Incentive Stock Option, that said
other form of payment does not prevent the Option from qualifying for treatment
as an Incentive Stock Option within the meaning of the Code.
Article VIII. Written Notice, Issuance of
Stock Certificates, Stockholder Privileges
8.1 Written Notice. An Optionee wishing to exercise an Option shall
give written notice to the Company, in the form and manner prescribed by the
Board. Full payment for the shares exercised pursuant to the Option must
accompany the written notice.
8.2 Issuance of Stock Certificates. As soon as practicable after the
receipt of written notice and payment, the Company shall deliver to the Optionee
or to a nominee of the Optionee a certificate or certificates for the requisite
number of shares of Stock.
8.3 Privileges of a Stockholder. An Optionee or any other person
entitled to exercise an Option under this Plan shall not have stockholder
privileges with respect to any Stock covered by the Option until the date of
issuance of a stock certificate for such stock.
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Article IX. Termination of Employment or Services
Except as otherwise expressly specified by the Board for Nonstatutory
Options, all Options granted under this Plan shall be subject to the following
termination provisions:
9.1 Death. If an Optionee's employment in the case of an Employee, or
provision of services as a Consultant, in the case of a Consultant, terminates
by reason of death, the Option may thereafter be exercised at any time prior to
the expiration date of the Option or within 12 months after the date of such
death, whichever period is the shorter, by the person or persons entitled to do
so under the Optionee's will or, if the Optionee shall fail to make a
testamentary disposition of an Option or shall die intestate, the Optionee's
legal representative or representatives. The Option shall be exercisable only to
the extent that such Option was exercisable as of the date of Optionee's death.
9.2 Termination Other Than For Cause or Due to Death. In the event of
an Optionee's termination of employment, in the case of an Employee, or
termination of the provision of services as a Consultant, in the case of a
Consultant, other than by reason of death, the Optionee may exercise such
portion of his Option as was exercisable by him at the date of such termination
(the "Termination Date") at any time within three (3) months of the Termination
Date; provided, however, that where the Optionee is an Employee, and is
terminated due to disability within the meaning of Code section 422A, he may
exercise such portion of his Option as was exercisable by him on his Termination
Date within one year of his Termination Date. In any event, the Option cannot be
exercised after the expiration of the term of the Option. Options not exercised
within the applicable period specified above shall terminate.
In the case of an Employee, a change of duties or position within the
Company, shall not be considered a termination of employment for purposes of
this Plan. The Option Agreements may contain such provisions as the Board shall
approve with reference to the effect of approved leaves of absence upon
termination of employment.
9.3 Termination for Cause. In the event of an Optionee's termination of
employment, in the case of an Employee, or termination of the provision of
services as a Consultant, in the case of a Consultant, which termination is by
the Company for cause, any Option or Options held by him under the Plan, to the
extent not exercised before such termination, shall forthwith terminate.
Article X. Rights of Optionees
10.1 Service. Nothing in this Plan shall interfere with or limit in any
way the right of the Company to terminate any Employee's employment, or any
Consultant's services, at any time, nor confer upon any Employee any right to
continue in the employ of the Company, or upon any Consultant any right to
continue to provide services to the Company.
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10.2 Nontransferability. Except as otherwise specified by the Board for
Nonstatutory Options, Options granted under this Plan shall be nontransferable
by the Optionee, other than by will or the laws of descent and distribution, and
shall be exercisable during the Optionee's lifetime only by the Optionee.
Article XI. Optionee-Employee's
Transfer or Leave of Absence
11.1 Optionee-Employee's Transfer or Leave of Absence. For Plan
purposes:
(a) A transfer of an Optionee who is an Employee within the Company, or
(b) a leave of absence for such an Optionee (i) which is duly
authorized in writing by the Company, and (ii) if the Optionee holds an
Incentive Stock Option, which qualifies under the applicable
regulations under the Code which apply in the case of Incentive Stock
Options,
shall not be deemed a termination of employment. However, under no circumstances
may an Optionee exercise an Option during any leave of absence, unless
authorized by the Board.
Article XII. Amendment, Modification
and Termination of the Plan
12.1 Amendment, Modification, and Termination of the Plan. The Board
may at any time terminate, and from time to time may amend or modify the Plan,
provided, however, that no such action of the Board, without approval of the
stockholders, may:
(a) increase the total amount of Stock which may be purchased through
Options granted under the Plan, except as provided in Article V;
(b) change the class of Employees or Consultants eligible to receive
Options;
No amendment, modification or termination of the Plan shall in any manner
adversely affect any outstanding Option under the Plan without the consent of
the Optionee holding the Option.
Article XIII. Acquisition, Merger and Liquidation
13.1 Acquisition. In the event that an Acquisition occurs with respect
to the Company, the Company shall have the option, but not the obligation, to
cancel Options outstanding as of the effective date of Acquisition, whether or
not such Options are then exercisable, in return for payment to the Optionees of
an amount equal to a reasonable estimate of an amount (hereinafter the "Spread")
equal to the difference between the net amount per share of Stock payable in the
Acquisition, or as a result of the Acquisition, less the exercise price of the
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Option. In estimating the Spread, appropriate adjustments to give effect to the
existence of the Options shall be made, such as deeming the Options to have been
exercised, with the Company receiving the exercise price payable thereunder, and
treating the shares receivable upon exercise of the Options as being outstanding
in determining the net amount per share. For purposes of this section, an
"Acquisition" shall mean any transaction in which substantially all of the
Company's assets are acquired or in which a controlling amount of the Company's
outstanding shares are acquired, in each case by a single person or entity or an
affiliated group of persons and/or entities. For purposes of this section a
controlling amount shall mean more than 50% of the issued and outstanding shares
of stock of the Company. The Company shall have such an option regardless of how
the Acquisition is effectuated, whether by direct purchase, through a merger or
similar corporate transaction, or otherwise. In cases where the acquisition
consists of the acquisition of assets of the Company, the net amount per share
shall be calculated on the basis of the net amount receivable with respect to
shares upon a distribution and liquidation by the Company after giving effect to
expenses and charges, including but not limited to taxes, payable by the Company
before the liquidation can be completed.
Where the Company does not exercise its option under this section 13.1,
the remaining provisions of this Article XIII shall apply, to the extent
applicable.
13.2 Merger or Consolidation. Subject to any required action by the
stockholders, if the Company shall be the surviving corporation in any merger or
consolidation, any Option granted hereunder shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to the
Option would have been entitled in such merger or consolidation.
13.3 Other Transactions. A dissolution or a liquidation of the Company
or a merger and consolidation in which the Company is not the surviving
corporation shall cause every Option outstanding hereunder to terminate as of
the effective date of such dissolution, liquidation, merger or consolidation.
However, the Optionee either (i) shall be offered a firm commitment whereby the
resulting or surviving corporation in a merger or consolidation will tender to
the Optionee an option (the "Substitute Option") to purchase its shares on terms
and conditions both as to number of shares and otherwise, which will
substantially preserve to the Optionee the rights and benefits of the Option
outstanding hereunder granted by the Company, or (ii) shall have the right
immediately prior to such dissolution, liquidation, merger, or consolidation to
exercise any unexercised Options whether or not then exercisable, subject to the
provisions of this Plan. The Board shall have absolute and uncontrolled
discretion to determine whether the Optionee has been offered a firm commitment
and whether the tendered Substitute Option will substantially preserve to the
Optionee the rights and benefits of the Option outstanding hereunder. In any
event, any Substitute Option for an Incentive Stock Option shall comply with the
requirements of Code section 425(a).
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Article XIV. Securities Registration
14.1 Securities Registration. In the event that the Company shall deem
it necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to qualify
any such Options or Stock under the Securities Act of 1933, as amended, or any
other statute, then the Optionee shall cooperate with the Company and take such
action as is necessary to permit registration or qualification of such Options
or Stock.
Unless the Company has determined that the following representation is
unnecessary, each person exercising an Option under the Plan may be required by
the Company, as a condition to the issuance of the shares pursuant to exercise
of the Option, to make a representation in writing (a) that the Optionee is
acquiring such shares for his own account for investment and not with a view to,
or for sale in connection with, the distribution of any part thereof, (b) that
before any transfer in connection with the resale of such shares, the Optionee
will obtain the written opinion of counsel for the Company, or other counsel
acceptable to the Company, that such shares may be transferred. The Company may
also require that the certificates representing such shares contain legends
reflecting the foregoing.
Article XV. Tax Withholding
15.1 Tax Withholding. Whenever shares of Stock are to be issued in
satisfaction of Options exercised under this Plan, the Company shall have the
power to require the recipient of the Stock to remit to the Company an amount
sufficient to satisfy federal, state and local withholding tax requirements.
Article XVI. Indemnification
16.1 Indemnification. To the extent permitted by law, each person who
is or shall have been a member of the Board shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of judgment in any such action, suit or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
articles of incorporation or bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
Article XVII. Requirements of Law
17.1 Requirements of Law. The granting of Options and the issuance
of shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
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17.2 Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Arizona.
Article XVIII. Effective Date of Plan
18.1 Effective Date. The Plan shall be effective as of November 1,
1998, the date of its adoption by the Company's stockholders.
Article XIX. Compliance with Code
19.1 Compliance with Code. Incentive Stock Options granted hereunder
are intended to qualify as Incentive Stock Options under Code section 422A. If
any provision of this Plan is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with Incentive Stock
Options granted under this Plan being treated as Incentive Stock Options under
the Code.
Article XX. No Obligation to Exercise Option
20.1 No Obligation to Exercise. The granting of an Option shall impose
no obligation upon the holder thereof to exercise such Option.
Dated at Phoenix, Arizona, November 1, 1998.
INTERNET CENTURY, INC.
By /s/ Jeffrey S. Peterson
------------------------------------
Jeffrey S. Peterson, President
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AMENDMENT
TO
1998 STOCK OPTION PLAN
By resolution of the Board of Directors of quepasa.com, Inc. (the
"Company") dated January 20, 1999, and by resolution of the Company's
shareholders at the Shareholders' Annual Meeting held February 22, 1999, the
Company's 1998 Stock Option Plan (the "Plan") is hereby amended by increasing
the number of shares of stock available under the Plan from 500,000 shares to
2,500,000 shares in accordance with Section 5.1 of the Plan.
Any and all other terms and conditions of the Company's 1998 Stock
Option Plan not amended or modified as stated above remain the same and in full
force and effect.
The foregoing is effective as of February 22, 1999.
quepasa.com, inc.
By: /s/ Jennifer Ferlaino
---------------------------------
Jennifer Ferlaino, Secretary
<PAGE> 14
INTERNET CENTURY, INC.
FORM OF INCENTIVE STOCK OPTION AGREEMENT
UNDER THE 1998 STOCK OPTION PLAN
Between:
Internet Century, Inc. (the "Company") and _____________________________________
(the "Employee"), dated _______________.
The Company hereby grants to the Employee an option (the "Option") to
purchase __________ shares of the Company's no par value common stock ("Stock")
under the Internet Century, Inc. 1998 Stock Option Plan (the "Plan") upon the
following terms and conditions:
1. Purchase Price. The purchase price of the Stock shall be _____ per
share, which is not less than the fair market value of the Stock on the date of
this Agreement.
2. Incentive Stock Option. The Option shall be an Incentive Stock
Option, as defined in the Plan.
3. Period of Exercise. The Option will expire ten years from the date
of this Agreement. The Option may be exercised only while the Employee is
actively employed by the Company and as provided in Section 6, dealing with
termination of employment.
The Option may be exercised for up to, but not in excess of, the
amounts of shares subject to the Option specified below, based on the Employee's
number of years of continuous employment with the Company from the date hereof.
In applying the following limitations, the amount of shares, if any, previously
purchased by Employee shall be counted in determining the amount of shares the
Employee can purchase at any time in accordance with said limitations. The
Employee may exercise the Option in the following amounts and in accordance with
the conditions set forth in paragraph 7.3 of the Plan:
(i) After one (1) year of continuous services to the Company,
the Employee may purchase up to 33.3% of the shares of Stock
subject to the Option;
(ii) After two (2) years of continuous services to the
Company, the Employee may purchase up to 66.6% of the shares
of Stock subject to the Option;
(iii) After three years of continuous services to the Company,
the Employee may purchase all shares of Stock subject to the
Option.
<PAGE> 15
This Option may not be exercised for less than fifty shares at any time
unless the number of shares purchased is the total number purchasable at the
time under the Option.
Where the Employee holds (whether under this Option alone or under this
Option in conjunction with other incentive stock options) incentive stock
options upon shares of the Company's common stock having an aggregate fair
market value (determined at the time of grant of each option) exceeding
$100,000, the $100,000 Limitation set forth in Section 4 below may impose
additional limitations upon the exercisability of this Option and any other
incentive stock options granted to the Employee. Such limitations are in
addition to, and not in lieu of, the limitations set forth in this Section 3.
4. $100,000 Limitation. Notwithstanding anything to the contrary
contained herein, the total fair market value (determined as of the date of
grant of an option) of shares of stock with respect to which this Option (and
any other incentive stock options granted by the Company) shall become
exercisable for the first time during any calendar year shall not exceed
$100,000. (Hereinafter this limitation is sometimes referred to as the "$100,000
Limitation.") If in any calendar year shares of stock having a fair market value
of more than $100,000 first would become exercisable, but for the limitations of
this section, this Option shall be exercisable in such calendar year only for
shares having a fair market value not exceeding $100,000. (Hereinafter, shares
with respect to which this Option is not exercisable in a calendar year due to
the $100,000 Limitation are referred to as "Excess Shares.")
This Option shall become exercisable with respect to Excess Shares from
a calendar year in the next succeeding calendar year (subject to any other
restrictions on exercise which may be contained herein), provided that the
$100,000 limitation shall also be applied to such succeeding calendar year.
Subject to the term of this Option, such carryovers of Excess Shares shall be
made to succeeding calendar years, including carryovers of any Excess Shares
from previous calendar years, without limitation.
If as of the date of this Agreement the Employee already holds
incentive stock options granted by the Company (hereinafter any such incentive
stock options are referred to as "Prior Options"), and the fair market value
(determined as the date of grant of each option) of the shares subject to this
Option and the Prior Options held by the Employee is such that the $100,000
Limitation must be imposed, the $100,000 Limitation shall be applied as follows
unless a special provision is made on Exhibit A attached hereto. If no special
provision is made on Exhibit A, the $100,000 Limitation shall be applied by
giving priority to options which first become exercisable during a calendar year
under the Prior Options. Thus, in applying the $100,000 Limitation under this
Option, the fair market value (determined as of the date of grant) of the shares
of stock with respect to which options first become exercisable under the Prior
Options during the calendar year shall first be determined. Only the balance
remaining for the calendar year of the $100,000 Limitation, if any, may be
exercisable under this Option for the calendar year, with any excess to be
carried over as provided in the preceding paragraph, but with such carryover
also to be subject to the provisions of this paragraph.
2
<PAGE> 16
Employee acknowledges that it is possible that he or she may be granted
incentive stock options by the Company after the date of this Agreement.
(Hereinafter such options are referred to as "Subsequent Options.") If the
exercise price of a Subsequent Option is less than the exercise price of this
Option, and if permitted under the regulations and decisions applicable to the
$100,000 Limitation, Employee agrees that the Company may reduce the number of
shares of stock for which this Option is exercisable in specified calendar
years, so that all or part of the $100,000 limitation for said calendar years
may be applied to such Subsequent Option, permitting earlier exercise of such
Subsequent Option than would otherwise be possible. Where such reductions are
made, Employee agrees to enter into any appropriate documentation to implement
such reductions.
Employee further acknowledges that, as provided in the Plan, in certain
circumstances connected with a dissolution or liquidation of the Company, or a
merger, consolidation or other form of reorganization in which the Company is
not the surviving corporation, the imposition of the $100,000 Limitation may
result in the termination of all or part of this Option or other incentive stock
options.
5. Transferability. This Option is not transferable except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Employee only by him or her.
6. Termination of Employment. In the event that employment of the
Employee with the Company is terminated, the Option may be exercised (to the
extent exercisable at the date of his termination) by the Employee within three
months after the date of termination; provided, however, that:
(a) If the Employee's employment is terminated because he is disabled
within the meaning of Internal Revenue Code section 422A, the Employee
shall have one year rather than three months to exercise the Option (to
the extent exercisable at the date of his termination).
(b) If the Employee dies, the Option may be exercised (to the extent
exercisable by the Employee at the date of his death) by his legal
representative or by a person who acquired the right to exercise such
option by bequest or inheritance or by reason of the death of the
Employee, but the Option must be exercised within one year after the
date of the Employee's death.
(c) If the Employee's employment is terminated for cause, this Option
shall terminate immediately.
(d) In no event (including death of the Employee) may this Option be
exercised more than ten years from the date hereof.
3
<PAGE> 17
7. No Guarantee of Employment. This Agreement shall in no way restrict
the right of the Company to terminate Employee's employment at any time.
8. Investment Representation; Legend. The Employee (and any other
purchaser under paragraphs 6(a) or 6(b) hereof) represents and agrees that all
shares of Stock purchased by him under this Agreement will be purchased for
investment purposes only and not with a view to distribution or resale. The
Company may require that an appropriate legend be inscribed on the face of any
certificate issued under this Agreement, indicating that transfer of the Stock
is restricted, and may place an appropriate stop transfer order with the
Company's transfer agent with respect to the Stock.
9. Method of Exercise. The Option may be exercised, subject to the
terms and conditions of this Agreement, by written notice to the Company. The
notice shall be in the form attached to this Agreement and will be accompanied
by payment (in such form as the Company may specify) of the full purchase price
of the Stock to be issued, and in the event of an exercise under the terms of
paragraphs 6(a) or 6(b) hereof, appropriate proof of the right to exercise the
Option. The Company will issue and deliver certificates representing the number
of shares purchased under the Option, registered in the name of the Employee (or
other purchaser under paragraph 6 hereof) as soon as practicable after receipt
of the notice.
10. Withholding. In any case where withholding is required or advisable
under federal, state or local law in connection with any exercise by Employee
hereunder, the Company is authorized to withhold appropriate amounts from
amounts payable to Employee, or may require Employee to remit to the Company an
amount equal to such appropriate amounts.
11. Incorporation of Plan. This Agreement is made pursuant to the
provisions of the Plan, which Plan is incorporated by reference herein. Terms
used herein shall have the meaning employed in the Plan, unless the context
clearly requires otherwise. In the event of a conflict between the provisions of
the Plan and the provisions of this Agreement, the provisions of the Plan shall
govern.
INTERNET CENTURY, INC.
By
------------------------------------
President
ACCEPTED:
- - - - --------------------------------------
Employee
4
<PAGE> 18
INTERNET CENTURY, INC.
FORM OF NOTICE OF EXERCISE OF STOCK OPTION ISSUED
UNDER THE 1998 STOCK OPTION PLAN
To: Compensation Committee
Internet Century, Inc.
400 E. Van Buren, Suite 545
Phoenix, AZ 85004
I hereby exercise my Option dated __________ to purchase
__________ shares of no par value common stock of the Company at the option
exercise price of $ per share. Enclosed is a certified or cashier's check in the
total amount of $ , or payment in such other form as the Company has specified.
I represent to you that I am acquiring said shares for
investment purposes and not with a view to any distribution thereof. I
understand that my stock certificate may bear an appropriate legend restricting
the transfer of my shares and that a stock transfer order may be placed with the
Company's transfer agent with respect to such shares.
I request that my shares be issued in my name as follows:
------------------------------------------------------------
(Print your name in the form in which you
wish to have the shares registered)
------------------------------------------------------------
(Social Security Number)
------------------------------------------------------------
(Street and Number)
------------------------------------------------------------
(City) (State) (Zip Code)
Dated: , 19 .
---------------------- --
Signature:
-----------------------------------
6
<PAGE> 19
INTERNET CENTURY, INC.
FORM OF NON-STATUTORY STOCK OPTION AGREEMENT
UNDER THE 1998 STOCK OPTION PLAN
Between:
INTERNET CENTURY, INC. (the "Company") and ____________________________
(the "Consultant") dated _______________.
The Company hereby grants to the Consultant an option (the
"Option") to purchase __________ shares of the Company's common stock under the
Retrospettiva, Inc. 1998 Stock Option Plan (the "Plan") upon the following terms
and conditions:
1. Purchase Price. The purchase price of the Stock shall be __________
per share, which is not less than the fair market value of the Stock on the date
of this Agreement.
2. Non-Statutory Option. The Option shall be a Non-Statutory Option,
as defined in the Plan.
3. Period of Exercise. The Option will expire ten years from the date
of this Agreement. The Option may be exercised only while the Consultant is
actively providing consulting services to the Company and as provided in Section
5, dealing with termination of services.
4. The Option may be exercised for up to, but not in excess of, the
amounts of shares subject to the Option specified below, based on the
Consultant's number of years of continuous services with the Company from the
date hereof. In applying the following limitations, the amount of shares, if
any, previously purchased by Consultant shall be counted in determining the
amount of shares the Consultant can purchase at any time in accordance with said
limitations. The Consultant may exercise the Option in the following amounts and
in accordance with the conditions set forth in paragraph 7.3 of the Plan:
(1) After one (1) year of continuous services to the Company,
the Consultant may purchase up to 33.3% of the shares of Stock
subject to the Option;
(2) After two (2) years of continuous services to the Company,
the Consultant may purchase up to 66.6% of the shares of Stock
subject to the Option;
<PAGE> 20
(3) After three years of continuous services to the Company,
the Consultant may purchase all shares of Stock subject to the
Option.
In the event the Consultant's services with the Company are terminated
due to Consultant's disability or death as described in paragraphs 5(a) and
5(b), the foregoing vesting schedule shall be accelerated and the Option shall
upon such disability or death become exercisable in whole or in part, but it
shall not be exercisable after the expiration of four (4) years from the date
hereof. This Option may not be exercised for less than fifty shares at any time
unless the number of shares purchased is the total number purchasable at the
time under the Option.
5. Transferability. This Option is not transferable except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Consultant only by him.
6. Termination of Services. In the event of a termination in the
providing of consulting services by Consultant, including serving as a
Non-employee Director as defined in the Plan, to the Company, the Option may be
exercised (to the extent exercisable at the date of his termination) by the
Consultant within three months after the date of such termination; provided,
however, that:
(a) If the Consultant's consulting relationship is terminated because
he is disabled within the meaning of Internal Revenue Code section
422A, the Consultant shall have one year rather than three months to
exercise the Option (to the extent exercisable at the date of his
termination).
(b) If the Consultant dies, the Option may be exercised (to the extent
exercisable by the Consultant at the date of his death) by his legal
representative or by a person who acquired the right to exercise such
option by bequest or inheritance or by reason of the death of the
Consultant, but the Option must be exercised within one year after the
date of the Consultant's death.
(c) If the Consultant's consulting relationship is terminated for
cause, this Option shall terminate immediately.
(d) In no event (including death of the Consultant) may this Option be
exercised more than ten years from the date hereof.
7. No Guarantee of Services. This Agreement shall in no way restrict
the right of the Company or any Subsidiary Corporation to terminate Consultant's
consulting relationship at any time.
8. Investment Representation; Legend. The Consultant (and any other
purchaser under paragraphs 5(a) or 5(b) hereof) represents and agrees that all
shares of Stock purchased by him under this Agreement will be purchased for
investment purposes only and not with a view to distribution or resale. The
2
<PAGE> 21
Company may require that an appropriate legend be inscribed on the face of any
certificate issued under this Agreement, indicating that transfer of the Stock
is restricted, and may place an appropriate stop transfer order with the
Company's transfer agent with respect to the Stock.
9. Method of Exercise. The Option may be exercised, subject to the
terms and conditions of this Agreement, by written notice to the Company. The
notice shall be in the form attached to this Agreement and will be accompanied
by payment (in such form as the Company may specify) of the full purchase price
of the Stock to be issued, and in the event of an exercise under the terms of
paragraphs 5(a) or 5(b) hereof, appropriate proof of the right to exercise the
Option. The Company will issue and deliver certificates representing the number
of shares purchased under the Option, registered in the name of the Consultant
(or other purchaser under paragraph 5 hereof) as soon as practicable after
receipt of the notice.
10. Incorporation of Plan. This Agreement is made pursuant to the
provisions of the Plan, which Plan is incorporated by reference herein. Terms
used herein shall have the meaning employed in the Plan, unless the context
clearly requires otherwise. In the event of a conflict between the provisions of
the Plan and the provisions of this Agreement, the provisions of the Plan shall
govern.
INTERNET CENTURY, INC.
By
----------------------------------------
Jeffrey Peterson, President
ACCEPTED:
- - - - -----------------------------------
Consultant
3
<PAGE> 22
INTERNET CENTURY, INC.
FORM OF NOTICE OF EXERCISE OF STOCK OPTION ISSUED
UNDER THE 1998 STOCK OPTION PLAN
To: Compensation Committee
Internet Century, Inc.
400 E. Van Buren, Suite 545
Phoenix, AZ 85004
I hereby exercise my Option dated __________ to purchase
__________ shares of _____ par value common stock of the Company at the option
exercise price of $__________ per share. Enclosed is a certified or cashier's
check in the total amount of $__________, or payment in such other form as the
Company has specified.
I represent to you that I am acquiring said shares for
investment purposes and not with a view to any distribution thereof. I
understand that my stock certificate may bear an appropriate legend restricting
the transfer of my shares and that a stock transfer order may be placed with the
Company's transfer agent with respect to such shares.
I request that my shares be issued in my name as follows:
- - - - --------------------------------------------------------------------------------
(Print your name in the form in which you
wish to have the shares registered)
- - - - --------------------------------------------------------------------------------
(Social Security Number)
- - - - --------------------------------------------------------------------------------
(Street and Number)
- - - - --------------------------------------------------------------------------------
(City) (State) (Zip Code)
Dated: , 19 .
--------------------- --
Signature:
-----------------------------------
5
<PAGE> 23
EXHIBIT 10.21
PROMISSORY NOTE
$1,000,000 March 1, 1999
FOR VALUED RECEIVED, the undersigned, QUE PASA.COM, INC. a Nevada Corporation
("Maker"), promises to pay to the Monolith Limited Partnership ("Holder") in
lawful money of the United States of America, the aggregate principal sum of One
Million Dollars ($1,000,000), together with interest as more fully described
below. All payments in respect of this Promissory Note (this "Note") shall be
made in immediately available funds.
Interest on the principal sum of this Note shall be calculated on the basis of a
three hundred sixty (360) day year composed of twelve (12) months of thirty (30)
days each except that interest due and payable for a period less than a full
month shall be calculated by multiplying the actual number of days elapsed in
such period by a daily rate based on said 360 day year. The principal sum of
this Note shall bear simple interest at the rate of twelve percent (12%) per
annum from the date of this Note through and including the fourth month and
fourteen percent (14%) per annum thereafter until Maturity Date, as that term is
defined below. The outstanding principal balance under this Note is due and
payable on the second anniversary date of this Note. Interest shall be paid
monthly on and including the last day of the month. Maker shall have a three day
grace period to pay accrued interest for the prior month. If Holder does not
receive its interest payment by the end of the grace period, Holder may force
Maker into default of its interest payments and cause the remaining interest
payments to be paid at fourteen percent (14%) per annum paid monthly for the
duration of this Note.
Prepayment of principal amounts outstanding under this Note shall be permitted
in whole or in part at any time, without penalty. Any prepayment of principal
shall be accompanied by a payment of all accrued interest on the amount of
principal being prepaid through the date of payment.
Time is of the essence in the performance of all obligations hereunder. If
default be made in payment hereunder, or if default be made in any other term or
condition of this Note or any other event of default occurs, Holder or its
successor holder hereof may at their option, without further notice or demand,
declare this Note immediately due and payable, whereupon this Note shall become
immediately due and payable and Maker will pay to Holder the entire unpaid
principal balance of this Note, all accrued and unpaid interest earned thereon
and all other sums owing in connection with this Note.
Payments received with respect to this Note shall be applied first to costs and
expenses of Holder incurred in collecting amounts owed to it under this Note and
to enforce its rights or obligations under this Note, then to accrued and unpaid
interest and then to principal owing hereunder.
If Maker is in default hereunder and Holder undertakes to collect this Note,
Maker will pay to Holder in addition to any indebtedness due and unpaid, all
costs and expenses of collection including, without limitation, Holder's
reasonable attorneys' fees, whether or not legal proceedings shall be
instituted.
Every person or entity at any time liable for the payment of the indebtedness
evidenced hereby severally waives: demand, presentment for payment, protest,
notice of presentment for payment, protest, and demand; notice of dishonor and
nonpayment of this Note and each and every other notice of any kind respecting
this Note except as provided herein. Every such person or entity
<PAGE> 24
further consents that Holder may renew or extend the time of payment of any part
of the whole of the indebtedness and may amend or modify this Note, release or
substitute collateral, release any guarantor, surety or Maker of this Note, at
any time and from time to time, without limit as to the number or aggregate
period of such renewals, extensions, amendments, modifications, releases or
substitutions, at the request of any other person or entity liable therefor. Any
such renewals, extensions, amendments, modifications, releases or substitutions
may be made without notice to any person or entity liable for the payment of the
indebtedness evidenced hereby, and shall not affect the obligation of Maker,
endorsers, guarantors or sureties under this Note.
This Note and all its provisions, conditions, promises and covenants hereof
shall be binding in accordance with the terms hereof upon Maker, its successors,
transferees and assigns; and the same shall inure to the benefit of Holder, its
successors and assigns. No modification, variation, termination, discharge or
abandonment hereof and no waiver of any of the provisions or conditions hereof
shall be valid unless in writing and signed by Maker and Holder or their
successors, transferees or assigns, as the case may be; and a waiver of any
right or remedy on one occasion shall not be construed as continuing or as a bar
to or waive of such right or remedy on any other occasion. No remedy herein
conferred on or reserved to Holder is intended to be exclusive of any other
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission to exercise any right or
power shall be construed to be a waive of any default or acquiescence therein or
a waiver of any right or power; and every such right and power may be exercised
from time to time and as often as may be deemed expedient.
If any one or more of the provisions contained in this Note shall be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
This Note shall be governed by the internal substantive laws of the State of
Arizona (without reference to choice of law principals) and, to the extent they
preempt the laws of such state, the laws of the United States.
It is the intent of Maker and Holder to comply with all usury laws ("Applicable
Usury Law") applicable pursuant to the terms of the preceding paragraph or such
other usury law which is applicable if the laws chosen by the parties is not.
Accordingly, it is agreed that notwithstanding any provisions to the contrary
in this Note, in no event shall this Note require the payment or permit the
collection of interest in excess of the maximum contract rate permitted by the
Applicable Usury Law.
"MAKER"
QUE PASA.COM, INC.
By: /s/ Jennifer L. Ferlaino
-----------------------------------
Jennifer L. Ferlaino
Secretary
<PAGE> 1
PROMISSORY NOTE
$1,000,000.00 March 8, 1999
FOR VALUED RECEIVED, the undersigned, QUE PASA.COM, INC. a Nevada Corporation
("Maker"), promises to pay to the Monolith Limited Partnership ("Holder") in
lawful money of the United States of America, the aggregate principal sum of One
Million Dollars ($1,000,000.00), together with interest as more fully described
below. All payments in respect of this Promissory Note (this "Note") shall be
made immediately available funds.
Interest on the principal sum of this Note shall be calculated on the basis of a
three hundred sixty (360) day year composed of twelve (12) months of thirty (30)
days each except that interest due and payable for a period less than a full
month shall be calculated by multiplying the actual number of days elapsed in
such period by a daily rate based on said 360 day year. The principal sum of
this Note shall bear simple interest at the rate of twelve percent (12%) per
annum from the date of this Note through and including the fourth month and
fourteen percent (14%) per annum thereafter until Maturity Date, as that term is
defined below. The outstanding principal balance under this Note is due and
payable on the second anniversary date of this Note. Interest shall be paid
monthly on and including the last day of the month. Maker shall have a three day
grace period to pay accrued interest for the prior month. If Holder does not
receive its interest payment by the end of the grace period, Holder may force
Maker into default of its interest payments and cause the remaining interest
payments to be paid at fourteen percent (14%) per annum paid monthly for the
duration of this Note.
Prepayment of principal amounts outstanding under this Note shall be permitted
in whole or in part at any time, without penalty. Any prepayment of principal
shall be accompanied by a payment of all accrued interest on the amount of
principal being prepaid through the date of payment.
Time is of the essence in the performance of all obligations hereunder. If
default be made in payment hereunder, or if default be made in any other term or
condition of this Note or any other event of default occurs, Holder or its
successor holder hereof may at their option, without further notice or demand,
declare this Note immediately due and payable, whereupon this Note shall become
immediately due and payable and Maker will pay to Holder the entire unpaid
principal balance of this Note, all accrued and unpaid interest earned thereon
and all other sums owing in connection with this Note.
Payments received with respect to this Note shall be applied first to costs and
expenses of Holder incurred in collecting amounts owned to it under this Note
and to enforce its rights or obligations under this Note, then to accrued and
unpaid interest and then to principal owing hereunder.
If Maker is in default hereunder and Holder undertakes to collect this Note,
Maker will pay to Holder in addition to any indebtedness due and unpaid, all
costs and expenses of collection including, without limitation, Holder's
reasonable attorneys' fees, whether or not legal proceedings shall be
instituted.
Every person or entity at any time liable for the payment of the indebtedness
evidenced hereby severally waives: demand, presentment for payment, protest,
notice of presentment for payment, protest, and demand; notice of dishonor and
nonpayment of this Note and each and every other notice of any kind respecting
this Note except as provided herein. Every such person or entity further
comments that Holder may renew or extend the time of payment of any part of the
whole of the indebtedness and may amend or modify this Note, release or
substitute collateral, release any guarantor, surety or Maker of this Note, at
any time and from time to time, without limit as to the number or aggregate
period of such renewals, extensions, amendments, modifications, releases or
substitutions, at the request of any other person or entity liable therefor. Any
such renewals, extensions, amendments, modifications, releases or substitutions
may be made without notice to any person or entity liable for the payment of the
indebtedness evidenced hereby, and shall not affect the obligations of Maker,
endorsers, guarantors or articles under this Note.
<PAGE> 2
This note and all its provisions, conditions, promises and covenants hereof
shall be binding in accordance with the terms hereof upon Maker, its successors,
transferees, and assigns; and the same shall inure to the benefit of Holder, its
successors and assigns. No modification, variation, termination, discharge or
abandonment hereof and no waiver of any of the provisions or conditions hereof
shall be valid unless in writing and signed by Maker and Holder or their
successors, transferees or assigns, as the case may be; and a waiver of any
right or remedy on any other occasion. No remedy herein conferred on or reserved
to Holder is intended to be exclusive of any other remedy or remedies, but each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power shall be construed to be a
waive of any default or acquiescence therein or a waiver of any right or power;
and every such right and power may be exercised from time to time and as often
as may be deemed expedient.
If any one of more of the provisions contained in this Note shall be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
This Note shall be governed by the internal substantive laws of the State of
Arizona (without reference to choice of law principals) and, to the extent they
preempt the laws of such state, the laws of the United States.
It is the intent of Maker and Holder to comply with all usury laws (Applicable
Usury Law") applicable pursuant to the terms of the preceding paragraph or such
other usury law which is applicable if the laws chosen by the parties is not.
Accordingly, it is agreed that notwithstanding any provisions to the contrary in
this Note, in no event shall this Note require the payment or permit the
collection of interest in excess of the maximum contract rate permitted by the
Applicable Usury Law.
"MAKER"
QUE PASA.COM, INC.
By: /s/ Jeffrey S. Peterson
------------------------
Jeffrey S. Peterson
President
<PAGE> 1
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into as of the 23rd day
of February, 1999, by and among quepasa.com, inc., a Nevada corporation (the
"Company") and Robert Taylor ("Taylor").
WHEREAS, the Company desires to employ Taylor as provided herein; and,
WHEREAS, Taylor desires to accept such employment,
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. The Company hereby employs Taylor and Taylor hereby
accepts employment with the Company as a Vice President of Strategy and
Operations upon the terms and conditions hereinafter set forth.
2. DUTIES. Taylor will serve the Company as a Vice President of
Strategy and Operations and will faithfully and diligently perform the services
and functions relating to such positions or otherwise reasonably incident to
such position, provided that all such services and functions will be reasonable
and within Taylor's area of expertise. Taylor's specific duties shall include
those related to organizational development and growth management, strategic
operations planning and execution, strategy review and execution and such other
duties as the Company may reasonably direct. Taylor will, during the term of
this Agreement (or any extension thereof), devote his time, attention and skills
and best efforts as a full time employee to the promotion of the business of the
Company in the Company's Phoenix, Arizona office.
3. TERM. This Agreement and Taylor's employment shall commence on the
8th day of March 1999 (the "Effective Date"). The term of this Agreement shall
be for three years ("Initial Term") from the Effective Date unless terminated
earlier in accordance with this Agreement. The term of this Agreement may be
extended by agreement of the Company and Taylor.
4. COMPENSATION. As compensation for the services rendered to the
Company under this Agreement commencing on the Effective Date hereof, Taylor
will be paid a base salary of Eighty Thousand dollars ($80,000) per year,
payable in accordance with the then current payroll policies of the Company or
as otherwise agreed to by the parties (the "Salary"). At any time and from time
to time, the Salary may be increased if so determined by the Company's board of
directors after a review of Taylor's performance of his duties hereunder.
5. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following events;
a. The death of Taylor;
b. The "Total Disability" (as hereinafter defined) of Taylor;
c. Written notice to Taylor from the Company of termination for "Cause"
(as hereinafter defined);
<PAGE> 2
d. The voluntary termination of this Agreement by Taylor upon (30) days'
prior written notice;
e. The later of three (3) years from the Effective Date of this Agreement
or the date to which this Agreement is extended in accordance with
Section 3 above; or
f. Written notice to Taylor from the Company for any reason without
"Cause" upon 30 days prior written notice.
For purposes of Section 5b, the term "Total Disability" means physical or
mental disability, or both, determined to be (or reasonably expected to be,
based upon then available medical information) of not less than twelve (12)
months duration or more. The determination shall rest upon the opinion of the
physician regularly attending Taylor. If the Company disagrees with said
physician's opinion, the Company may engage at their own expense a physician to
examine Taylor, and Taylor hereby consents to such examination and to waive, if
applicable any privilege between the physician and Taylor that may arise as a
result of said examination. If after conferring, the two physicians cannot
concur on a final opinion, they shall choose a third consulting physician whose
opinion shall control. The expense of the third consulting physician shall be
borne equally by Taylor and the Company.
For purposes of Section 5c, "Cause" means (i) Taylor has failed to
substantially perform his duties as reasonably determined by any Officer of the
Company or the Board of Directors of the Company, (ii) Taylor engages in poor
performance that is not cured within thirty (30) days after counseling by the
Company, (iii) Taylor has failed to comply with the reasonable directives and
policies of the Board of Directors of the Company or of any Officer of the
Company, (iv) the U.S. Government or an agency thereof determines that Taylor
is not eligible to work within the United States, or (v) Taylor breaches his
fiduciary duty to the Company or commits any dishonest, unethical, fraudulent,
or felonious act in respect to Taylor's duties to the Company.
6. BENEFITS. Taylor shall be entitled to participate in any Company
benefits as they become available, if at all, and which are normal and
customary Company benefits for a like position, including life insurance,
incentive compensation, deferred compensation, stock option plans or other
Company programs or plans. In addition, Taylor shall be entitled to the
following benefits:
(a) full coverage health insurance to be paid by the Company with a maximum
premium not to exceed $350 per month;
(b) at reasonable times and upon prior Company approval, Taylor shall be
entitled to three weeks paid vacation per calendar year for each year
employed during the term of this Agreement;
(c) the Company will provide Taylor with a moving allowance of $15,000 to
cover moving and related expenses in conjunction with relocation from
his current residence to Phoenix, Arizona;
(d) the Company will pay the temporary housing incurred by Taylor for a
term not to exceed 90 days from the Effective Date.
(e) the Company will reimburse Taylor for airfare and ground transportation
costs incurred by either Taylor or his spouse (if Taylor remains in
Phoenix over the weekend) in commuting from Chicago to Phoenix for a
period not to exceed 90 days from the Effective Date.
<PAGE> 3
3
7. LOAN. The Company will loan to Taylor Twenty Thousand dollars
($20,000) to be loaned and disbursed on the Effective Date. All amounts loaned
will be evidenced by a promissory note with interest at 10% per annum and with
all principal and accrued but unpaid interest due one (1) year from the
Effective Date if not sooner paid. The Company agrees that if Taylor has been
employed by the Company for six continuous months from the Effective Date, 50%
of the principal balance and accrued but unpaid interest shall be forgiven and,
if Taylor has been employed by the Company for a total of twelve continuous
months of employment by the Company, then the remaining principal balance and
accrued, but unpaid interest shall be forgiven by the Company and the Note
evidencing such loan shall be canceled.
8. STOCK OPTIONS. Specifically subject to Section 8a and 8b below and
Section 10c and contingent upon Taylor being employed by the Company, Taylor
shall be granted options to purchase 60,000 shares of the Company's Common
Stock exercisable at $8.00 per share, with 25,000 Stock Options to vest upon
the Effective Date with the remaining 35,000 to vest and be exercisable over
the three (3) year period from the Effective Date in accordance with the
Company's 1998 Stock Option Plan and in accordance with the following and
Section 10c below:
(a) If Taylor's employment is terminated for any reason other than "for
Cause" as defined herein, then all options shall vest immediately and will be
exercisable in accordance with the Company's 1998 Stock Option Plan.
(b) If Taylor's employment by the Company is terminated "for Cause" as
defined in this Agreement, then all unexercised options granted to Taylor shall
immediately terminate and not be exercisable upon notice of Taylor's
termination of employment "for Cause."
9. BUSINESS EXPENSES. Upon submission of proper documentation, the
Company shall pay or reimburse Taylor for all reasonable and necessary office,
telephone, travel and other expenses that are incurred by Taylor in the pursuit
of Taylor's duties on behalf of the Company.
10. NON-COMPETITION AND CONFIDENTIALITY.
a. Non-Competition. The Company and Taylor acknowledge and agree that
Taylor's services are of a special and unusual character which have a unique
value to the Company, the loss of which cannot be adequately compensated by
damages in an action at law and if used in competition with the Company, could
cause serious harm to the Company. Accordingly, Taylor agrees that during the
term of this Agreement and either for a period of two (2) years in the event
Taylor's employment is terminated "for Cause" or for a period of six (6) months
in the event Taylor's employment is terminated without "Cause", Taylor will not
(1) enter into any agreement with or directly or indirectly solicit or attempt
to solicit any employee or other representatives of the Company (the "Company")
for the purpose of causing them to leave the Company to take employment with
any other business entity, or (2) compete, directly or indirectly, with the
Company in any way and that Taylor will not act as an officer, director,
employee, consultant, shareholder, lender or agent of any entity engaged in any
business of the same nature as, or in competition with, the business in which
the Company is now engaged, was engaged during Taylor's employment or is
engaged at the time of Taylor's termination of employment, except for the
ownership of less than five percent (5%) of the outstanding capital stock of a
publicly traded company.
b. Confidentiality.
(1) Taylor acknowledges that in Taylor's employment hereunder, Taylor
will be making use of, acquiring and adding to the Company's trade secrets and
its confidential and proprietary
<PAGE> 4
information of a special and unique nature and value relating to such matters
as, but not limited to, the Company's business operations, internal structure,
financial affairs, programs, software systems, procedures, manuals, confidential
reports, lists of clients and prospective clients and sales and marketing
methods, as well as the amount, nature and type of services, equipment and
methods used and preferred by the Company's clients and the fees paid by such
clients, all of which shall be deemed to be confidential information. Taylor
acknowledges that such confidential information has been and will continue to be
of central importance to the business of the Company and that disclosure of it
to or its use by others could cause substantial loss to the Company. In
consideration of employment by the Company, Taylor agrees that during the
Initial Term and any renewal term of this Agreement and upon and after leaving
the employ of the Company for any reason whatsoever, Taylor shall not, for any
purpose whatsoever, directly or indirectly, divulge or disclose to any person or
entity any of such confidential information which was obtained by Taylor as a
result of the Taylor's employment with the Company or any trade secrets of the
Company, but shall hold all of the same confidential and inviolate.
(2) All contracts, agreements, financial books, records, instruments and
documents; client lists; memoranda; data; reports; programs; software, tapes;
Rolodexes; telephone and address books; letters; research; card decks; listings;
programming; and any other instruments, records or documents relating or
pertaining to clients serviced by the Company or Taylor, the services rendered
by Taylor, or the business of the Company (collectively, the "Records") shall at
all times be and remain the property of the Company. Upon termination of this
Agreement and Taylor's employment under this Agreement for any reason
whatsoever, Taylor shall return to the Company all Records (whether furnished by
the Company or prepared by Taylor), and Taylor shall neither make nor retain any
copies of any of such Records after such termination.
(3) All inventions and other creations, whether or not patentable or
copyrightable, and all ideas, reports and other creative works, including,
without limitation, computer programs, manuals and related materials, made or
conceived in whole or in part by Taylor while employed by the Company and within
one year thereafter which relate in any manner whatsoever to the business,
existing or proposed, of the Company or any other business or research or
development effort in which the Company or any of its subsidiaries or affiliates
engages during Taylor's employment by the Company will be disclosed promptly by
Taylor to the Company and shall be the sole and exclusive property of the
Company. All copyrightable works created by Taylor and covered by this Section
10b(3) shall be deemed to be works for hire. Taylor shall cooperate with the
Company in patenting or copyrighting all such inventions, ideas, reports and
other creative works, shall execute, acknowledge, seal and deliver all documents
tendered by the Company to evidence its ownership thereof through the world, and
shall cooperate with the Company obtaining, defending and enforcing its rights
therein.
c. Certain Claims Upon Termination. Taylor understands that if within one
year prior to the termination of Taylor's employment with the Company, Taylor
has either (i) committed an act of theft, dishonesty, gross dereliction of
duty, fraud, embezzlement, misappropriation, or breach of fiduciary duty
against the Company or any other act of comparable misconduct against the
Company; or (ii) breached any of his obligations under this Agreement, then the
Company shall have the right to purchase any or all shares of Common Stock of
the Company owned by Taylor at the time of such termination for a purchase
price equal to the amount that Taylor paid for such shares, together with
interest thereon at a rate of ten percent (10%) per annum. If the Company
desires to exercise such right, it shall notify Taylor within 60 days after the
date of such termination and Taylor shall tender the shares being purchased by
the Company at the time and place designated in such notice from the Company
upon receipt of the purchase
-4-
<PAGE> 5
price for such shares. If Taylor fails to tender such shares, the shares shall
be deemed to be canceled as of the date the Company tenders payment of the
purchase price thereof.
d. Enforceability. In the event of the breach of the covenants contained
in this Section 10, it is understood that damages will be difficult to
ascertain and the Company may petition a court of law or equity for injunctive
relief in addition to any other relief which the Company may have under the law,
this Agreement or any other agreement executed in connection herewith. In
connection with the bringing of any legal or equitable action for the
enforcement of this Agreement, the Company shall be entitled to recover, whether
the Company seeks equitable relief, and regardless of what relief is afforded,
such reasonable attorneys' fees and expenses as the Company may incur in
prosecution of the Company's claim for breach hereof.
It is hereby agreed that the provisions of this Section 10 are separate
and independent from the other provisions of this Agreement, that these
provisions are specifically enforceable by the Company notwithstanding any
claim by Taylor that the Company has violated or breached this Agreement or any
claim that Taylor is entitled to any offset or compensation.
To induce the Company to enter into this Agreement, Taylor represents and
warrants to the Company that Section 10 of this Agreement is enforceable by the
Company in accordance with its terms.
The parties hereto agree that to the extent that any provision or portion
of Section 10 of this Agreement shall be held, found or deemed to be
unreasonable, unlawful or unenforceable by a court of competent jurisdiction,
then any such provision or portion thereof shall be deemed to be modified to
the extent necessary in order that any such provision or portion thereof shall
be legally enforceable to the fullest extent permitted by applicable law; and
the parties hereto do further agree that any court of competent jurisdiction
shall, and the parties hereto do hereby expressly authorize, request and
empower any court of competent jurisdiction to, enforce any such provision or
portion thereof or to modify any such provision or portion thereof in order that
any such provision or portion thereof shall be enforced by such court to the
fullest extent permitted by applicable law.
11. WAIVER OF BREACH. The waiver by any party hereto of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach by any party.
12. NOTICES. Any notices, consents, demands, request, approvals and other
communications to be given under this Agreement by either party to the other
will be deemed to have been duly given if given in writing and personally
delivered, faxed or if sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to the Company: quepasa.com, inc.
One Arizona Center
400 East Van Buren, Suite 545
Phoenix, AZ 85004
If to Taylor: Robert Taylor
404 North Marion Street
Oak Park, Illinois 60302
-5-
<PAGE> 6
Notices delivered personally will be deemed communicated as of actual receipt,
notices by fax shall be deemed delivered when such notices are faxed to
recipient's fax number and notices by mail shall be deemed delivered when
mailed.
13. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understanding, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
14. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof will remain
in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically, as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
15. GOVERNING LAW. To the extent permitted by applicable law, this
Agreement and the rights and obligations of the parties will be governed by and
construed and enforced exclusively in accordance with the substantive laws (but
not the rules governing conflicts of laws) of the State of Arizona and the State
of Arizona shall have exclusive jurisdiction regarding any legal actions
relating to this Agreement.
16. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
17. GENDER AND NUMBER. When the context requires, the gender of all words
used herein will include the masculine, feminine and neuter, and the number of
all words will include the singular and plural.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
THE COMPANY:
quepasa.com, inc., a Nevada corporation
By: /s/ Jeffrey Peterson
-----------------------------------------
Jeffrey Peterson, Chief Executive Officer
TAYLOR:
/s/ Robert Taylor
-----------------------------------------
Robert Taylor
-6-
<PAGE> 1
Exhibit 16.01
[BDO LOGO] BDO SEIDMAN LLP 1900 Avenue of the Stars, 11th Floor
Accountants and Consultants Los Angeles, California 90067
Telephone (310) 557-0300
Fax (310) 557-1777
March 9, 1999
Securities and Exchange Commission
450 5th Street N.W.
Washington D.C. 20549
Gentlemen:
We have been furnished with a copy of the response to Item 304 of Regulation S-K
included in Item 11 of the Registration Statement on Form S-1, for the event
that occurred on February 4, 1999, to be filed by our former client,
quepasa.com, inc. We agree with the statements made in response to that item
insofar as they relate to our Firm.
Very truly yours,
/s/ BDO Seidman, LLP
<PAGE> 1
Exhibit 23.06
INDEPENDENT AUDITORS' CONSENT
We consent to the use in the Registration Statement of quepasa.com,inc. on Form
S-1, of our report dated February 17, 1999 on the financial statements of
quepasa.com, inc. appearing in the Prospectus, which is part of the
Registration Statement.
We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.
/s/ Ehrhardt Keefe Steiner & Hottman PC
----------------------------------------
Ehrhardt Keefe Steiner & Hottman PC
March 9, 1999
Denver, Colorado
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,199,172
<SECURITIES> 0
<RECEIVABLES> 1,658,632
<ALLOWANCES> 0
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<CURRENT-ASSETS> 3,857,804
<PP&E> 354,620
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0
0
<COMMON> 9,076
<OTHER-SE> 3,523,882
<TOTAL-LIABILITY-AND-EQUITY> 4,860,759
<SALES> 0
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<CGS> 0
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<OTHER-EXPENSES> 6,861,828
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