U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
UBRANDIT.COM
(Exact name of registrant as specified in its charter)
Nevada 88-0381646
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12626 High Bluff Drive, Suite 200, San Diego, CA 92130
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (858) 350-9566
Securities registered or to be registered pursuant to Section 12(b) of the Act
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered:
------------------- --------------------
common shares None
$.001 Par Value
<PAGE>
TABLE OF CONTENTS
ITEM 1: DESCRIPTION OF BUSINESS...............................................6
ITEM 2. FINANCIAL INFORMATION................................................19
ITEM 3. DESCRIPTION OF PROPERTY..............................................24
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......25
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.....................................26
ITEM 6. EXECUTIVE COMPENSATION...............................................29
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................30
ITEM 8. LEGAL PROCEEDINGS....................................................30
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS..........................................30
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES..............................31
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED..............32
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................34
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA..........................34
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL
DISCLOSURE...........................................................34
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS....................................35
<PAGE>
CERTAIN DEFINITIONS
The following are definitions of terms commonly used in the Internet industry
and in this document.
Archive
A collection of files stored on a computer network - often
retrievable by FTP (File Transfer Protocol).
Authentication
A security measure for checking a network user's identity.
Backbone
The Internet's high speed data highways that serve as major
access points to which other networks connect.
Bandwidth
The amount of data you can send through a network connection.
Bandwidth is usually measured in bits-per-second (bps).
Branding
"Private Labeling" or "branding" means that when Ubrandit.com
creates content for a client's Web site (such as content from
its e-commerce or financial destination sites), the content
will contain the client company's name, logo, and navigation
buttons, and will include very minimal information about
Ubrandit.com or its affiliates.
Browser
Another name for a client program that allows users to access
documents on the WWW (World Wide Web). Browsers can be both
text-based or graphic.
Client
A remote computer connected to a host or server computer. Also
refers to the software that makes this connection possible.
Cyberspace
A term coined by author William Gibson in his novel
"Neuromancer." Cyberspace is currently used to refer to the
digital world constructed by computer networks, in particular
the Internet.
Domain Name
The address that identifies an Internet site. Domain Names
consist of at least two parts. The part on the left is the
name of the company, institution, or other organization. The
part on the right identifies the highest subdomain. This can
be a country, such as ca for Canada, fr for France, or the
type of organization: com for commercial; edu for educational,
etc. The IP address is translated into the domain name by the
DNS.
DNS
Domain Name System -- A database system that translates an IP
address into a domain name. For example, a numeric address
like 205.206.106.50 is converted into wwli.com.
Download
To transfer files from one computer to another. The most
common way of doing this on the Internet is by FTP (File
Transfer Protocol).
1
<PAGE>
e-commerce
A term used to describe the ability of users to research,
compare, and buy products and services directly from companies
and individuals who have sites on the World Wide Web.
e-mail (electronic mail)
A way of sending messages on computers attached to local or
global networks.
Electronic Mall
A virtual shopping mall where you can browse and buy products
and services online.
Electronic Storefront
A virtual space in an electronic mall. This consists of space
on a server (usually at a Web site) where HTML documents are
stored.
Encryption
A way of making data unreadable to everyone except the
receiver. An increasingly common way of sending credit card
numbers over the Internet when conducting commercial
transactions.
Firewall
The computer file system of a site's inner network that is
protected against unauthorized access by Internet users.
FTP
(File Transfer Protocol) -- A way of moving files across
networks. With FTP you can login to another Internet site and
download or send files. Some sites have public file archives
that you can access by using FTP with the account name
"anonymous" and your e-mail address as password.
This type of access is called anonymous FTP.
Gateway
A computer system for exchanging information across
incompatible networks that use different protocols. For
example, many commercial services have e-mail gateways for
sending messages to Internet addresses.
Hit
In the context of the WWW (World Wide Web), it refers to the
act of accessing an HTML (hypertext markup language) document
on a Server.
Home Page
The first page on a Web site that acts as the starting point
for navigation.
Host
A computer that acts as a server.
Hyperlink
These are links in HTML documents that you can click on to go
to other Web resources.
Hypermedia
The multimedia links on the Web that lead to sound, graphics,
video, or text resources.
Information Packet
A bundle of data sent over a network. The protocol used
determines the size and makeup of the packet.
2
<PAGE>
Internet
A global collection of computer networks that exchange
information by the TCP/IP (Transmission Control
Protocol/Internet Protocol) suite of networking protocols.
Internet Account
An account with an ISP that allows you to access the Internet.
IP Address
The Internet Protocol address - the numeric address that is
translated into a domain name by the DNS (Domain Name System).
ISDN
Integrated Services Digital Network -- Digital
telecommunications lines with two channels that can yield a
combined capacity of 128 kbps.
ISP (Internet Service Provider)
A company that provides various kinds of Internet accounts to
organizations and individuals.
Load
On the WWW (World Wide Web), HTML (Hypertext Markup Language)
documents and graphics are loaded into the browser whenever a
URL (Universal Resource Locator) or is accessed.
Mailing-List
A discussion forum where participants subscribe to a list and
receive messages via e-mail.
Modem
A device for translating the digital data of computers into
analog signals. Two or more computers connected together over
phone lines are therefore able to exchange files and generally
communicate with each other.
Navigate
To move around on the WWW (World Wide Web) by following
hypertext paths from document to document on different
computers.
Netizen
A citizen of the Internet.
Newsfeed
ISPs get their newsgroups from different newsfeeds, or news
sources, by transferring them over the Internet or other
networks.
Newsgroup
A discussion forum on the Internet similar to that found on
local BBS's (bulletin board system). There are currently
around 15,000 different groups covering a wide range of
topics.
Newsreader
Application software for reading and posting articles to
newsgroups.
Online
When a user is connected to a network, they are described as
being online.
Page View or Unique Visitors
A term used to describe the number of times that a page is
actually viewed as opposed to hits wherein a page may have
many hits depending on the structure and design of the page.
3
<PAGE>
Password
A secret combination of letters and other symbols needed to
login to a computer system.
Platform
The type of computer or operating system on which a software
application runs. For example, some common platforms are PC,
Macintosh, Unix, and NeXT.
POP (Point of Presence)
The nearest connection point at which a user may connect to a
remote site - usually that of the ISP (Internet Service
Provider) or telephone company. This is relevant when ordering
a dedicated line since you have to pay for mileage.
Post
Subscribers to newsgroups and mailing lists take part in
discussions by sending or posting their articles or comments
online.
Postmaster
An alias on a mail server for administering routing of e-mail.
Preference Setting
A set of parameters on software tools, especially WWW (World
Wide Web) browsers, that allows a signature file to e-mail or
newsgroup messages, change the color and appearance of text,
etc.
Protocol
A specification that describes how computers will talk to each
other on a network.
Real-Time Chat
This is one use of the Internet that allows live conversation
between online users by typing on a computer terminal. The
most common tools are Talk and IRC (International Relay Chat).
Script
In the context of the WWW, a (gateway) script is a program
that runs on a Web server and processes requests based on
input from the browser.
Search Engine
Programs on the Internet that allow users to search through
massive databases of information.
Server
A host computer on a network that answers requests for
information from it. The term server is also used to refer to
the software that makes the process of serving information
possible.
Signature File
A file automatically attached to outgoing e-mail messages and
postings to newsgroups.
SMTP
Simple Mail Transfer Protocol - standard protocol on the
Internet for delivering e-mail.
Stickiness
Stickiness (retention) is one of the most important trends on
today's Internet. The concept is to find ways of keeping Web
users glued to a particular Web site. The key to stickiness or
retention is providing users with an abundance of useful
content that they are able to find virtually all their needs
onsite or in other words - one stop shopping.
4
<PAGE>
Surf
To search for information in the cyberspace reality of the WWW
(World Wide Web) by navigating in a nonlinear way.
TCP/IP
The Transmission Control Protocol (TCP) and the Internet
Protocol (IP) are protocols that let different types of
computers communicate with each other. The Internet is based
on this suite of protocols.
URL
Universal Resource Locator -- An address you use to tell your
browser where to find a resource. For example, the URL for the
World Wide Language Institute is http://wwli.com.
Username
The name assigned to users of a computer network. By
convention, default usernames usually consist of a person's
initial(s) plus their family name. For example, if your name
is Ricardo Garcia, your username would be rgarcia. Typing your
username on the computer screen is part of the login procedure
and identifies you to the computer system.
Viewer
Most browsers use helper applications, sometimes called
"viewers," to display full-size graphics and play sound and
video clips. These are separate applications that the browser
initiates after it has downloaded the image or clip.
Virtual
An adjective that refers to objects, activities, etc., that
exist or are carried on in cyberspace. For example, on the WWW
(World Wide Web) you can find virtual or electronic malls and
storefronts.
Webmaster
The person responsible for administering a Web site.
WWW or Web
World Wide Web -- A hypermedia-based system for accessing
Internet sites by clicking on hyperlinks.
5
<PAGE>
ITEM 1: DESCRIPTION OF BUSINESS
Forward-Looking Statements
This Registration Statement contains certain forward-looking statements
that involve risks and uncertainties. Our company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of a variety of factors that may or may not be within our control,
including the risks set forth in "Risk Factors" and elsewhere in this
Registration Statement.
Overview
Ubrandit.com, a Nevada corporation (together with its subsidiary, the
"Company" or "Ubrandit"), is a development-stage enterprise engaged in the
development of specialty Web sites and other online related services and
products. Our primary focus is the "branding" (private labeling) of our
destination financial and e-commerce sites on the World Wide Web to the existing
Web sites of companies desiring to drive traffic and encourage repeat visitors
to their respective sites. "Private labeling" or "branding" means that when the
Company creates content for a client's Web site, the content (or Web pages) will
contain the client company's name, logo, and navigation buttons, and will not
include information about Ubrandit.com. We believe that branded content provides
more credibility to a client's Web site than a linked component, which directs
all of the credit to the company that created the content. We will initially
focus on providing brandable turnkey systems for two of the fastest growing
segments of the World Wide Web, financial information and e-commerce.
The Company offers online financial information and related services
through its recently acquired wholly-owned subsidiary, Global Investors Guide,
Inc., a California corporation ("Global Investors Guide"). Global Investors
Guide is an early stage start-up company, which provides financial information
services via a World Wide Web site located at www.stockstudy.com. Stockstudy.com
is a comprehensive financial site that provides Web users with an extensive
array of valuable features, including: stock quotes, personal portfolio
management, mutual fund data, news releases, and exclusive editorial content. In
addition to the financial services provided by Stockstudy.com, the Company has
also launched two additional financial sites since its acquisition of Global
Investors Guide, Irpackages.com at the Internet address www.irpackage.com and
Newsletterz.com located at www.newsletterz.com. The IRpackages.com site features
a fully automated investor relations package request system developed by the
Company whereby users of the Web site can request investor relations packages
from over 5,200 public companies. Newsletterz.com is a financial
newsletter-marketing program that promotes a growing number of financial
publications from various investment categories. The Company is in the process
of launching its initial e-commerce site, JungleJeff.com, located at
www.junglejeff.com, which will offer books, music CDS, videos, and movie DVDs to
online purchasers.
The Company was incorporated on December 19, 1997, in the State of
Nevada under the name of Mount Merlot Estates, Inc. In January 1999, the Company
changed its name to Virtual Brand, Inc. In February 1999, the Company changes
its name a second time to Ubrandit.com. The Company has sold equity shares to
raise capital, recruit and organize management, and to commence corporate
strategic planning and development. Other than the combined operations of Global
Investors Guide, the Company has not conducted any significant operations as of
the date of this Registration Statement. The Company's principal corporate
offices are located at 12626 High Bluff Drive, Suite 200, San Diego, CA 92130 .
Its telephone number is (858) 350-9566.
6
<PAGE>
Risk Factors
Our business is subject to a variety of risks and uncertainties. These
include but are not limited to, the risks and uncertainties identified below.
Additional risks and uncertainties that are presently not known to us or that we
deem immaterial may also impair our business operations or financial condition.
Our company is subject to risks inherent in any new business venture.
As discussed elsewhere in this Registration Statement, we are not fully
operational and we have not as of yet introduced our branding services.
Therefore, we are unable to provide any assurance or guarantee that the
marketplace will accept our branding services and related online products, or
that we will be able to sell such services and products at a profit.
Our company has a limited operating history and we have not yet
launchedour branding services and fully commenced operations.
Other than revenues generated through our combined operations of Global
Investors Guide, we have not as of yet generated any significant revenues from
operations and we are unable to provide any assurance or guarantee that we will
be able to generate any substantial revenues in the future. Since its inception
in December 1997, our company's principal business activities have been limited
to organizational matters, research and development activities, the acquisition
and creation of Web site content and the introduction of its e-commerce sites.
Our company therefore has no significant operating history on which to evaluate
its future prospects and ability to implement its business plan and objectives.
We expect our operating losses to continue in the near future as our
development, marketing and sales activities, and operations continue. We are
uncertain as to when, or if, our company will ever become profitable.
Our capital is limited and we may need additional capital to implement
our business plan and continue operations.
Our company has limited operating capital and limited access to credit
facilities. We expect that additional funds will be necessary for our company to
implement its business plan, as described in this Registration Statement. Our
company's continued operations therefore will depend upon its ability to raise
additional funds through bank borrowings or equity or debt financing. There is
no assurance that the Company will be able to obtain additional funding when
needed, or that such funding, if available, can be obtained on terms acceptable
to the Company. If the Company cannot obtain needed funds, it may be forced to
curtail or cease its activities.
Our company's success still depends on its ability to attract and
retain qualified technical and management personnel.
At present, our company employs eleven full-time personnel plus various
consultants in management, sales, programming, legal, and editorial
responsibilities. Our company's success will depend, in part, upon its ability
to attract and retain qualified employees, technical consultants and management
personnel. We are unable to provide any assurance or guarantee that we will be
able to attract, integrate or retain sufficiently qualified personnel. Our
inability to retain additional qualified personnel in the future could harm our
business.
We face a number of risks associated with obtaining Year 2000
compliance.
Computer systems, software packages and microprocessor dependent
equipment may cease to function or generate erroneous data when the Year 2000
arrives. To correctly identify the Year 2000, a four-digit code field will be
required to be what is commonly termed "Year 2000 compliant." Our business may
suffer if the systems we depend on to conduct day-to-day operations are not Year
2000 compliant. The potential areas of exposure include electronic data exchange
systems operated by third parties with which we may transact business and
computers, software, telephone systems and other equipment that we may use
internally.
7
<PAGE>
Our systems may fail or experience a slow down.
Our facilities will house a variety of hardware and software computer
systems. Our operations depend on our ability to protect these systems against
damage from fire, earthquakes, power loss, telecommunications failures,
break-ins and similar events. Additionally, computer viruses, electronic
break-ins or other similar disruptive problems could harm our operations. A
disaster or malfunction that disables our facility could cause an interruption
in the production and distribution of our products and services, or limit the
quantity or timeliness of updates to our productions. Our insurance policies may
not adequately compensate us for any losses that may occur due to any failures
or interruptions in our systems. We do not presently have a formal disaster
recovery plan.
The market for online services is intensely competitive.
E-commerce and the market for online services are intensely competitive
industries. The Company will compete against established companies with
significantly greater financial, marketing, personnel, and other resources than
the Company. Such competition could have a material adverse effect on the
Company's profitability.
The market for our company's securities is limited and may not provide
adequate liquidity.
The Company's Common Stock is currently traded on the OTC Electronic
Bulletin Board. We are unable to provide any assurance or guarantee that the OTC
Bulletin Board will provide adequate liquidity or that a trading market will be
sustained. Holders of our company's stock may be unable to sell shares purchased
should they desire to do so. Furthermore, it is unlikely that a lending
institution will accept our company's securities as pledged collateral.
"Penny stock" regulations may impose certain restrictions on
marketability of securities.
The SEC has adopted regulations which generally define "penny stock" to
be an equity security that has a market price of less than $5.00 per share. The
Company's Common Stock may be subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's prior written consent to the
transaction. Additionally, for any transaction, other than exempt transactions,
involving a penny stock, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the SEC relating to the
penny stock market. The broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative, current quotations
for the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Company's Common Stock and
may affect the ability to sell the Company's Common Stock in the secondary
market.
Our market and business technology is rapidly changing.
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our Web sites and Internet
storefronts. Internet e-commerce and other Internet-based industries are
currently characterized by rapid technological change, changes in customer
requirements and preferences, frequent new product and service introductions
embodying new technologies, and the emergence of new industry standards and
practices that could render our existing Web sites, Internet storefronts and
enabling technologies obsolete. If we are unable, for technical, legal,
financial or other reasons, to adapt quickly to changing market conditions and
customer requirements, our business, financial condition and results of
operations would be materially adversely affected.
8
<PAGE>
Security breached and credit card fraud could harm our business.
A significant barrier to online commerce and communications is the
secure transmission of confidential information over public networks. We rely on
licensed third party encryption and authentication technology to provide the
security and authentication necessary to effect secure transmission of
confidential information, such as customer credit card numbers. Advances in
computer capabilities, new discoveries in the field of cryptolography, or other
events or developments may result in a compromise or breach of the algorithms we
use to protect our customers, transaction data or our software vendors and
products. Someone who is able to circumvent our security measures could
misappropriate proprietary information to cause interruptions in our operations.
We may be required to expend significant capital and other resources to protect
against such security breaches or alleviate problems caused by such breaches.
Such expenditures could have a material adverse effect on our business, results
of operations and financial condition.
Because we store and transmit proprietary information, a breach of our
security could damage our reputation and expose us to potential liability from
litigation and reimbursement of losses. We are unable to provide any assurance
that our security measures will prevent a future security breach or that, should
a security breach occur, it will not have a material adverse effect on our
business, results of operations and financial condition. In addition, we may
incur losses, as have other retailers who accept credit card payments without
obtaining a signature, from orders placed using fraudulent or stolen credit card
information, despite obtaining approvals from financial institutions. Under
current commercial banking and credit card practices, we are liable for
fraudulent credit card transactions. We are unable to provide any assurance that
our security measures will always be successful and, as a result, could suffer
from significant losses in the future which could have a material adverse effect
on our business, results of operations and financial condition.
Our operations significantly depend upon maintenance and continued
improvement of the Internet's infrastructure.
The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic. Our
success will depend upon the development and maintenance of the Internet's
infrastructure to cope with this increased traffic. This will require a reliable
network backbone with the necessary speed, bandwidth, data capacity and
security. Improvement of the Internet's infrastructure will also require the
timely development of complementary products, such as high-speed modems, to
provide reliable Internet access and services.
The Internet has experienced a variety of outages and other delays as a
result of damage to portions of its infrastructure and could face similar
outages and delays in the future. Outages and delays are likely to affect the
level of Internet usage, the level of traffic on our Web site and the number of
purchases on our Web site. In addition, the Internet could lose its viability as
a mode of commerce due to delays in the development or adoption of new standards
to handle increased levels of activity or due to increased government
regulation. The adoption of new standards or government regulation may also
require us to incur substantial compliance costs.
We may be exposed to liability for content retrieved from our Web
sites.
Our exposure to liability from providing content on the Internet is
currently uncertain. Due to third party use of information and content
downloaded from our Web sites, we may be subject to claims for defamation,
negligence, copyright, trademark or patent infringement or other theories based
on the nature and content of online materials. Our exposure to any related
liability, particularly for claims not covered by insurance, or in excess of any
insurance coverage, could have a material adverse effect on our business,
financial condition and results of operations. Liability or alleged liability
could further harm our business by diverting the attention and resources of our
management and by damaging our reputation in our industry and with our
customers.
9
<PAGE>
Our industry may be subject to increased government regulation.
As commerce conducted on the Internet and online services continue to
evolve, federal, state or foreign agencies may adopt regulations or impose new
taxes intended to cover our business operations. These agencies may seek to
regulate areas including user privacy, pricing, content and consumer protection
standards for our products and services. Compliance with additional regulation
could hinder our growth or prove to be prohibitively expensive. It is also
possible that the introduction of additional regulations could expose companies
involved in Internet commerce, or the provision of content over the Internet, to
significant liability. If enacted, these government regulations could materially
adversely affect the viability of the Internet commerce and online services,
generally, as well as our business, financial condition and results of
operations.
Acquisition of Global Investors Guide
On March 11, 1999, the Company entered into an Agreement and Plan of
Reorganization for the Acquisition of All the Outstanding Shares of Common Stock
of Global Investors Guide. Said shares were purchased from the shareholders of
Global Investors Guide in exchange for 1,826,000 shares of the Company's common
stock. Global Investors Guide became a wholly owned subsidiary of the Company.
The transaction was treated as a reverse acquisition and accordingly the
Company's audited financial statements reflect the combined operations. Global
Investors Guide is a progressive Internet company that provides financial
information services via a Web site located at www.stockstudy.com. Headquartered
in Del Mar, California, Global Investors Guide employed eight full-time
personnel plus various consultants in management, sales, programming, legal, and
editorial responsibilities at the time of acquisition. The Web site
stockstudy.com provides online investors with targeted content, including, but
not limited to: stock quotes, personal portfolio management, charting, mutual
fund data, news releases, public company Web site listings, an automated
investor relations package request system, and financial editorial content. At
the time of acquisition, Global Investors Guide, in conjunction with major
industry partners was developing a comprehensive online e-commerce destination
site designed to directly compete for present market share. This site has since
developed into junglejeff.com, the Company's book, music, video, e-commerce site
discussed in detail below. Prior to its acquisition by the Company, Global
Investors Guide was developing a "branding" technology for future release with
the sales of its private-labeled sites to follow after completion and adequate
testing. This branding technology has become one of the principal technologies
of the Company as set forth below. The Company hired all the key employees of
Global Investors Guide and has continued the development of the branding and
private labeling technology. Global Investors Guide is the first significant
acquisition of Company .
Business Strategy
The Company's business strategy is to build a Company that offers
brandable Web modules to other Web sites. The Company is focused on creating
value for its stockholders through revenues created by advertising, sales, and
sponsorship payments on its soon to be brandable destination financial and
e-commerce sites on the World Wide Web. The Company expects that companies with
existing Web sites desiring to drive traffic and encourage repeat visitors to
their respective sites will brand the Ubrandit.com's destination sites thereby
increasing Ubrandit.com's e- commerce sales, the value of its advertising space,
and sponsorship revenue. The key components of the Company's business strategy
include the following:
(1) To develop destination Web sites in the areas of finance
(stock quotes, company and financial information and reports)
and entertainment (books, videos, and music ).
(2) Upgrade its existing financial sites Stockstudy.com,
newsletterz.com and Irpackages.com to brandable sites and
increase and improve the content on these sites.
(3) Complete development and beta testing of its e-commerce site,
Junglejeff.com, make the site brandable, and continue to
increase and perfect the content of the site once the site is
in operation.
(4) Market its brandable sites and the advertising space and
sponsorships available on its main sites and branded sites.
10
<PAGE>
(5) Continue developing and increasing the customers utilizing the
Company's custom Web site design and programming
The Company's principal business objective is to provide "private
labeled" and "branded" financial and e- commerce Web-based systems to the
Internet. "Private Labeling" or "branding" means that when the Company creates
content for a client's Web site, the content (or Web pages) will contain the
client company's name, logo, and navigation buttons, and will include very
minimal information about Ubrandit.com. or its affiliates. The goal of one of
the Company's branded sites is to have it appear to be part of the client's Web
site and to have the Web user believe that he or she has not left the clients
site when accessing the content available on the private labeled site. The
Company believes that the content provided by branded sites will provide Web
users with significant incentives to visit and remain at the client's Web site
enabling the client to have an increased Web presence. Branded content is
different than content assessable by "linking". Usually linking occurs when a
Web user accesses a link and is sent to a different and distinct site where the
company that created the content is located. After visiting the different site
the Web user has little incentive to return to the originating site where the
link was found when desiring to access that specific content again.
Through the development of completely brandable systems for financial
information and e-commerce, the Company believes that it has found a niche
within the Internet industry that has yet to have been fully exploited. To date
the Company knows of no Internet company has positioned itself as the leader in
this niche area. The Company believes that there will be significant demand for
branded systems.
The Company's current focus is on providing branded turnkey systems for
two significant segments of the World Wide Web, financial information and
e-commerce. Through technology developed by Global Investors Guide and through
the development of and purchase of other Web content, it is the Company's plan
to develop valuable "sticky" technology (content and systems which hold traffic
at Web sites) that will enable the generation of income through commission-based
programs and advertisement.
Plan of Operation
The Company has financed its research and development activities
through the sale of equity securities to its stockholders in private
transactions. As of March 31, 1999, the Company had approximately $941,566 in
cash, together with approximately $990,000 in remaining proceeds received in
April from a recent private sale of its securities, to conduct operations. At
the current expense rate, the Company anticipates that such funds will be
sufficient to continue operations until the end of the third quarter of the next
fiscal year. Thereafter, the Company will be dependent upon the receipt of
additional capital to sustain operations. Without additional capital, there is
substantial uncertainty about the ability of the Company to achieve its business
plan.
The Company intends to commence providing branding services to approved
clients by August 1999, and to continue its research and development efforts to
the extent permitted by available financing
The Company's principal focus over the remainder of this fiscal year
and for the first six months of fiscal 2000 will be to complete the development
of its branding technology. The Company uses outside programmers and computer
technicians as well as Company employees in its research and development
efforts. The Company also plans, as part of its development efforts, to increase
the amount of content and the quality of the content on all of its sites. This
will involve extensive programming to increase the ease of use of the Web sites
and the overall presentation of the sites so that users of the site will find a
hassle free, friendly and exciting environment. The Company believes that such
improvements will increase Web traffic and the length of time that users are on
its affiliated sites thereby, which will increase the potential for higher
advertising revenues. The Company expects to increase the number of programmers
employed to four over the next year and to continue its outsourcing of
programmers. It is expected that two more outsourcing firms will be added to the
Company's research and development outsourcing program over the next year. The
Company plans to control costs by extensively utilizing outsourcing in the
future. It is possible that the Company may encounter opportunities to acquire
strategic Internet related entities and/or content providers for the purpose of
consolidation or expansion of its current operations. Any such acquisition would
be outside the scope of our management's currently anticipated workload. The
Company may be required to raise additional capital and recruit additional
qualified management personnel to lead and supervise these efforts. In the event
11
<PAGE>
that the Company decides to make an acquisition, these operational and other
issues will be addressed as part of the acquisition evaluation.
The Company also plans to increase the "stickiness" of its sites by the
acquisition of more and improved content to the existing sites. With regards to
the e-commerce site, Junglejeff.com, this would mean the acquisition of more
products to sell. At present the Company is researching the development of sub
sites for computer products and auction based e-commerce. The Company plans also
to enter into other strategic alliances with product providers such as those
providing the book, music , and video products to offer a larger number and
greater variety of products. The Company expects to increase the information
available on its financial sites and significantly increase the database of
public companies available on irpackages.com. The Company intends to allocate
additional capital to recruit and train additional qualified personnel to
implement this expansion strategy. The Company plans to continue to increase the
quality of the quotes, portfolio management, charting, and company information
available on the site stockstudy.com. This will be done through additional
programming and development of the site and by the purchase of additional data
feeds from data providers. The Company also plans to increase the attractiveness
of newsletterz.com by increasing both the number and variety of news letters
available on the site. The Company has allocated additional personnel to market
the service to the newsletter community.
Through the first six (6) months of the next fiscal year, the Company
plans to purchase approximately $200,000 in computer equipment which will
include servers, hubs, routers, Internet connectivity lines, and work stations.
The Company expects that this equipment will be capable of servicing the
projected number of users on the Company's e-commerce sites and content sites
over this period. The Company's computer systems are scalable and if the number
of Internet users accessing the sites exceed expectations more funds will be
allocated to the purchase of additional servers and connectivity lines. The
Company expects that the present office space that it is leasing will be
adequate to accommodate the growth of the Company through the end of the next
fiscal year. The Company uses off-site server providers in secure server
locations to house most of its Internet server computers and expects to continue
this practice in the foreseeable future.
The Company expects to hire four additional programmers and computer
technicians during the remainder of this year and the first half of the next
fiscal year and expects to extensively employ outside computer consultants on a
project by project basis. The Company will be hiring approximately twelve people
to work in a newly formed marketing department. This new department will market
the services and products of the Company including: selling advertising on the
Company's sites and associates sites, marketing the associates program to the
Companies and institutions that have Web sites that could benefit from a branded
e-commerce or financial site, and selling custom programming to Web Sites. The
Company also expects to hire an additional ten technicians to support the
operations of the e-commerce site, and an additional five persons for general
administrative purposes.
Principal Markets
The Company initially will focus on two principal markets on the World
Wide Web: the market for financial services and information (stock quotes,
personal portfolio management, charting, mutual fund data, news releases,
automated investor relations package request system, and financial editorial
content) and the market for entertainment products and services (books, videos,
and music ).
The Company expects to generate the majority of its revenue through 1)
revenues derived from the sale of products via e-commerce (through the Company's
main sites and through the Company's client (associate branded sites)), 2) the
sale of advertisement space (on main sites and on client sites), 3) Fees Charged
for custom Web site design and programming, and 4) Fees charged for graphic
customization of the branded content on individual associate sites.
Marketing
The Company plans to implement an aggressive marketing campaign over
the next 12 months. The Company expect to finance the bulk of its marketing
expenses through the future sale of its equity securities. The Company has
allocated approximately $200,000 to finance the cost of marketing its
destination Web sites and related products over the next six months. Additional
12
<PAGE>
funds will be required to implement the Company's marketing strategy. The
Company has determined that the most effective way to market its products will
be through multiple media advertising campaigns, including Web-based
advertisements, targeted mailings, and print and radio advertisements. The
Company will also benefit as its client base grows since the Company plans to
control the advertising space on its branded sites. The Company expects
advertising exposure to increase as the Company develops more branded sites.
The potential customers of the Company are significant since many Web
sites are constantly searching for new "sticky" content to differentiate
themselves from their competition and to encourage repeat visits by their users.
The Company believes that its products will appeal to virtually every type of
Web site that provides content and will represent very significant savings to
these sites over the development of similar sticky solutions by their own
programmers.
Initial Marketing Prospects
The Company has targeted several different types of Internet sites for
its initial marketing effort over the next 12 months. The Company believes that
these sites would significantly benefit from branding its sticky financial
information and e-commerce systems and therefore be most receptive to its
marketing efforts. The Company plans to hire twelve additional sales and service
personnel to service these new accounts. As of this time the Company has not
completed its branding technology nor has it entered into any branding
agreements with Web Site owners.
Portal Sites (an example of some very large portal sites are Excite,
Yahoo!, and Netscape's Netcenter) are continuously adding and searching for new
sticky content to help ensure that they are able to keep users glued onsite. The
Company believes that its brandable products could significantly assist portals
that want to add powerful sticky content without providing links to the
competition. Though some very large sites may already have agreements with
sticky content providers, the Company will market to other portals which are as
yet unaffiliated with financial information or e-commerce systems or sites that
wish to upgrade their present systems to the sophistication of a branded system.
The Company believes that many financial sites will be able to benefit
from the Company's products. For example, many financial information sites
provide services such as stock quotes and personal portfolio management, but
lose users to other sites when it comes to other important features such as
financial editorial content and e- commerce capabilities. The Company could also
market to such sites its newsletterz.com and irpackages.com sites.
The Company expects to fulfill these needs when its branding technology is
competed.
Many radio station Web sites currently do not offer their users an
online music CD store. The Company believes that this is a market with
significant potential for exposure to the Company's branded e-commerce stores
and the sale of music products. The Company expects that its future radio
station partners will be able to customize their stores in order to appeal to
the music preferences of the station's listeners. For its marketing effort over
the next twelve months the Company has compiled a data base of radio and
television stations, daily weekly newspapers, and magazines and plans to promote
its products to these companies as soon as the Company's e-commerce site is
available for branding. The Company expects to generate low or no cost
advertising from radio stations that sign up for its branded sites; stations
stand to benefit when their listeners visit their Web sites. The Company plans
to give its partners the opportunity to earn commissions from sales of music CDS
and other merchandise that listeners purchase from the radio station's branded
store.
The Company will also be marketing its sticky e-commerce and financial
sites to Community Sites. Community Sites (some examples of some very large
community sites are Geocities and the Mining Company) create "fraternities" of
users by providing Community-building features such as personal Web pages,
networking opportunities, and free e-mail services. A typical Community Site
organizes its site's features in ways that entice users into visiting various
areas of the site on a regular basis. When successful, the site's users become
accustomed to frequenting the site for specific information and interaction with
users of similar interests. The Company's products cover topics with such
wide-range appeal (from the financial markets to entertainment products) that
the Company believes that its branded sites will represent significant
additional assets to Community Sites.
The Company believes that one of the key benefits of its e-commerce
site is that it will be highly customizable to the partner when all of the
technology is completed. The Company believes this will be appealing to a wide
selection of sites such as sports, travel, automotive and health related sites
13
<PAGE>
where the site could tailor its branded e- commerce store to increase the time a
user spends on his site and the users repeat visits. For example a partner sport
related site could select and showcase specific sports books, videos, and DVDs
relating to its site.
Sticky Technology
The Company believes that "stickiness" is one of the most important
trends on today's Internet. As the word would imply, stickiness means finding
ways of keeping Web users glued to a particular Web site.
While a Web user may utilize a Web site for a specific purpose, such as
the purchasing of computer hardware, the moment the need arises for something
else, such as a stock quote or book purchase, the user is off to another site if
the current site does not provide the desired content. The key to stickiness is
providing users with so much useful content that they are able to find virtually
everything they need onsite.
The Company has taken that model one step further by developing
integrated systems that when completed will provide the client company's Web
site with an array of important content that will be branded with the client
company's name, logo, and color scheme - not those of Ubrandit.com.
Prior to acquisition and now as part of the Company, Global Investors
Guide, has been developing a diverse suite of sophisticated Web sites with the
purpose of "branding" the sites to clients as sticky solutions. Three major
sites are completed www.stockstudy.com , www.irpackage.com, and
www.newsletterz.com. The Company has launched its fourth site,
www.junglejeff.com and is presently beta testing the site. The Company's
destination Web sites have been designed to reflect the latest in sticky
technologies. The Company expects to release its proprietary branding technology
in the third calendar quarter of 1999 and begin branding its sites to clients
shortly thereafter.
Branding Technology
The Company uses the terms "branding" and "private labeling"
interchangeably. The goal of the Company's proprietary branding technology, is
to provide private labeled content to client sites whereby the content will
appear to belong exclusively to the client company. This will be achieved by
incorporating the client company's name, logo, Web-color scheme, and navigation
into the content. The Company's destination Web sites have been designed to be
"transparent" in the way client sites access the branded content. The branding
content is designed so that the user will not notice the change in content
provider when they leave the client's site and enter the Company's branded
content. This is unlike the traditional "affiliate" model or "linking"
arrangement where the user is typically transferred directly to the main site of
the company that created the content. The Company believes that the lack of
transparency in the traditional affiliate model and linking arrangement is a
major shortcoming. In many cases the user will eventually just bypass the
affiliate site in favor of going directly to the content provider. The Company's
systems have been designed so that the user will not be aware of the Company's
destination sites, JungleJeff.com, StockStudy.com, Irpackages.com, or
newsletterz.com. This is key in that then users will not be tempted to bypass
the clients site and also it will enable the Company to run a variety of
e-mail-based promotions designed to drive traffic back to our clients' sites.
The Company expects to begin branding its destination sites to approved clients
by August 1999.
The Company's Brandable Sticky Solutions
Stockstudy.com
Located on the Internet at www.stockstudy.com, stockstudy.com is a
comprehensive financial site that provides Web users with an extensive array of
sticky features including: stock quotes, personal portfolio management, mutual
fund data, news releases, and exclusive editorial content. The Company plans to
add several new features to the site over the remainder of 1999 including adding
data feeds that provide additional news sources and editorial comment.
Upon completion of its branding technology the Company expects to be
able to brand stockstudy.com to Web sites that either do not have a finance
center or wish to upgrade their finance center - a customer base that includes a
significant portion of Web sites on the Internet. There are thousands of sites
14
<PAGE>
that currently "link" to other sites for finance content. The Company believes
that a significant number of these sites would take advantage of a cost
effective and sophisticated private labeled finance center if it was made
available to them. It is the goal of the Company's private labeled finance
center to appear as part of the client's Web site - not as a link to another
company's financial content. With enhanced content the Web user will have more
of an incentive to visit and remain at a client's site.
Newsletterz.com
Located on the Internet at www.newsletterz.com, Newsletterz.com is a
unique financial newsletter-marketing program that promotes a growing number of
publications from various investment categories. Investors can sample dozens of
respected financial publications and read daily market commentary from the
editors.
When the Company's branding technology is complete, Newsletterz.com
will provide clients with an opportunity to earn revenue from the sale of trial
subscriptions. Users of the site will be able to purchase long-term and trial
subscriptions directly from the site. The Company plans to generate revenues
from the sale of trial subscriptions by a client's site shared with the client.
It is expected that newsletterz.com will be available as a stand-alone brandable
product and also as an integrated part of stockstudy.com.
IR Packages.com
IR packages.com is located on the Internet at www.irpackages.com. The
"IR" in IR Packages.com stands for "Investor Relations." Investor relations
packages are a resource that many investors require when evaluating the
investment merits of a company. A typical IR package includes the company's
corporate profile, recent press releases, recent public filings, and other
pertinent company information.
The Company has developed a fully automated IR package request system.
Users simply utilize the site's search engine to find the company they are
interested in receiving an IR package from, and click "send." The system
automatically sends an e-mail to the IR department of the selected company with
the user's contact information and request. The IR department of the specific
company then makes a determination on the disposition of the request. IR
packages.com already has included in its data base more than 5,200 publicly
traded companies and is on pace to add a significant number of additional
companies by the end of the third calendar quarter of 1999.
IR Packages.com is an integrated part of the Company's stockstudy.com
and it is expected that the site will also be available as a separate brandable
product.
JungleJeff.com
Launched on June 8,1999 and currently in beta testing, JungleJeff.com
is a large e-commerce site that currently features music, videos, and DVDs. The
site is located on the Web at www.junglejeff.com. The site's book store will
soon be completed and it is expected that other product lines will be added over
time. Once branding technology is complete, the Company will be able to private
label JungleJeff.com to Web sites that either do not have an entertainment
presence or wish to upgrade their entertainment presence, a customer base that
potentially encompasses a significant portion of Web sites on the Internet. As
is the case with finance centers, there are thousands of Web sites that
currently link to other sites for their entertainment presence via associates
programs (associate sites earn commissions through the generation of sales). The
Company believes that a significant number of these sites would take advantage
of a cost effective and sophisticated private labeled entertainment e-commerce
site if it was made available to them. The Company plans through JungleJeff.com
to offer client companies an affiliate revenue sharing program. It is
anticipated that an affiliate site, when the technology is complete, will be
able to customize their store to highlight certain categories and items,
according to their respective needs.
The products that are sold through Junglejeff.com, similar to other
e-commerce sites, are purchased from large music and book distributors and
resold to buyers purchasing on the Web. Currently the Company has a contract
with a major industry distributor to provide its music, book, and video products
through a drop shipment program. Pursuant to the program products purchased on a
retail Web site are drop shipped to the customer on an as available basis. No
specific inventory has been designated as belonging to the Company and the
Company only purchases the inventory as it fulfills orders. The Company has also
15
<PAGE>
contracted with major industry data providers to provide the book, music, and
video data base feeds. These data feeds that appear on the Company's destination
sites (and the Company's branded sites when the technology is completed), allow
purchasers to view video, book, or music jackets and pricing, biographic
synopsis, and other information about the products that are being sold. Since
the Company will rely exclusively on the drop shipment program run by its
distributors, the Company will not keep an inventory of its products. Since the
Company will not keep its own inventory, products will only be available to the
Web purchaser if they are currently in stock or as they become available to the
Company's distributors. The Company's system updates distributor's inventory on
a weekly basis. Products are purchased exclusively by credit card and the
Company processes said credit card purchases through CyberCash, Inc. of Reston,
Virginia, a provider of secure electronic payment solutions. The Company insures
secure Internet transactions by the use of VeriSign, of Mountain View,
California, a provider of Public Key Infrastructure (PKI) and digital credit
solutions used by Web sites to conduct communications and transactions over the
Internet. Products are purchased from distributors on an as available basis. If
the product is not available within 15 days then the purchaser will be notified
by e-mail and have the opportunity to cancel the order. The Company has a return
policy that a customer may return any unused item for a full refund provided
that the customer returns it to the Company in its original condition within 15
days following receipt of order. Shipping costs are only refunded if the return
in due to an error on the part of the Company.
Revenue Sources
The Company has in previous years generated revenue from list rentals,
sponsorship advertising, and design of Web sites. The Company anticipates these
sources will not to be as significant in the future due to the in Company's
change in planning. As stated previously in this section the main focus of the
Company is on new areas of revenue generation, specifically, e-commerce, selling
Web site advertising, and graphic customization. Though not a primary focus, the
Company will also continue its Web site development and to seek sponsorship
advertising.
E-commerce
The Company recently launched a beta version of its site on June 8,
1999. No significant revenues have been earned by the site and there are no
material backorders. The Company expects to earn revenues on items (books, music
CDS, Videos, DVDs, etc.) sold via its e-commerce site JungleJeff.com. The
Company plans to earn revenues on items sold through partnered versions of the
site upon the completion of the Company's branding technology. The Company
anticipates offering discounts on items sold through JungleJeff.com and through
branded versions of the site. The Company plans to pay a commission to partners
on sales generated by their branded sites.
The Company's other source of revenue generation from e-commerce is
through the sale of financial newsletter trial subscriptions from StockStudy.com
and Newsletterz.com. To date no significant revenues have been earned.
(Newsletterz.com is an integrated part of StockStudy.com and is expected to also
be available to partners as a separate brandable product upon completion of the
Company's branding technology). The Company plans to pay its partner sites a
commission on all trial subscription revenue generated by their branded sites.
Advertising
To date the Company has not earned any significant revenue from
advertising. Currently the layouts of the Company's branded and destination
sites allow for one large banner ad and up to two smaller banner ads per page.
The Company plans to follow the generally accepted guidelines for advertising
fees on the World Wide Web. Ad fees are generally calculated through a
combination of the following two criteria: 1) The number of page views received
(each time a banner ad has the opportunity of being seen by a user counts as one
page view); 2) The popularity of the host site (and the popularity of specific
pages of the host site). Typically, Web sites charge advertisers by CPM (cost
per thousand) page views. The Company plans to follow this general model.
The Company plans to charge fees that are commensurate with these
criteria. As mentioned above, the Company currently plans on controlling the
advertising space on its destination and branded sites. Therefor the value of
the Company's advertising space should increase as the size of the Company's
partner base grows.
16
<PAGE>
Graphic Customization
The Company plans to charge a fee to partners who wish to customize and
have their official corporate logo integrated into their branded Web-content.
Depending on the level of customization required, the Company plans to charge a
fee accordingly. Though no assurances can be given, management believes that the
amount of revenue from this area could be significant if a large percentage of
partners opt for graphic customization.
Web Site Development
In addition to providing private labeled Web-content to partner sites,
the Company plans to continue and expand its custom Web site design and
programming for clients who wish to upgrade their existing Web presence.
The Company is not dependent on any large customer but conversely is
dependent upon various individual Web sites deciding to have the Company's
branded content appear on their respective Web sites. The Company believes that
the e-commerce and financial sites are suited for large corporate Web sites or
small individual sites. Since the Web sites will be able to customize the
branded content with regards to the color, logo, and highlighted content, the
branded content should be readily able to integrate into the look and feel of a
specific site whether it be a large car company or a small independent service
provider. It is in the Company's best interest to make their sites readily
brandable so that there is maximum exposure to the products sold by its
e-commerce sites and the advertisement space available on its e-commerce and
financial sites. The Company expects that its e-commerce business will be
seasonal in the same respect that any retail business is seasonal, with greater
sales expected in the holiday seasons.
Proprietary Technology and Research and Development
The Company does not have any patents on any of its Internet processes.
The Company does have various technologies that it has developed which are
proprietary. The Company expects that upon delivery of said proprietary
processes and technology to the market place that competitors will attempt and
possibly may successfully replicate certain advantageous processes developed by
the Company's that are part of its branding technology. The Company has applied
for Trademark protection with regards to its name and logo. The current business
strategy of the Company focusing on the development and branding of its
destination Web sites has resulted in the Company expending significant amounts
of its resources on research and development. The Company estimates that during
the past two years the that it has spent approximately $312,000 on Company
sponsored research and development. The dollar amount spent on research
activities sponsored by customers is not a material amount.
Competition
The Internet market is extremely competitive, new, and dynamic. The
Company will be competing with companies that have far greater resources than
that of the Company. The Company, a startup company, will be competing against
Company's with far greater experience and better funding. Though the competition
is formidable management believes that because of the dynamics and huge breadth
of Web e-commerce that there are certain areas of e-commerce where the Company
can compete effectively. Through the development of private labeled systems for
financial information and e-commerce, the Company believes that it has found a
niche within the Internet industry that has yet to be fully exploited. To date,
the Company believes that no Internet company has positioned itself as the
leader in this niche area.
It is management's opinion that when the Company's branding technology
is completed its value as a content provider to the Web sites of its partners
will stem from several distinct areas, including: the appeal of brandable
content, the turnkey nature of its content, the Company's planned no-cost (or
nominal fee charged for graphic customization) to participate model, the ability
for a partner to customize their e-commerce store to reflect the unique nature
of their business, and the expected breadth of the Company's products.
It is management's opinion that content providers represent the major
competition to the Company as they are vying for similar relationships with
third-party Internet marketers. The Company's major competitors generally fall
into the following two categories (1) e-commerce sites, such as Amazon.com and
BarnesandNoble.com, provide third-party sites with affiliate programs similar to
the partnering programs the Company will be offering when its branding
technology is complete. Larger sites may also keep an inventory of certain books
and music and thus may be able to deliver products that are not available to the
Company through its distributors. Also some of the larger sites may be able to
deliver certain products out of inventory on a more timely basis then the
Company. (2) Financial Information Providers, such as CBS Marketwatch and PC
Quote, Inc. provide third-party sites with comprehensive financial information
(stock quotes, market news, etc.) much like stockstudy.com. Many of the larger
sites have the advantages of "tie ins" with radio, print, and television media
that give them significantly greater exposure then that available to the Company
primarily dependent upon exposure through the Web.
17
<PAGE>
The Company believes that its branding program has certain advantages
not offered by the "affiliate programs" offered by other e-commerce providers.
Generally affiliate programs work similar to the following. Destination Web
sites will advertise a number of books, CDS, or videos from one of the large
e-commerce sites offering the products, such as books that pertain to the
destination Web site's business. When a visitor to the site takes an interest in
a book (by "clicking" a link or picture of the book's jacket cover), the user is
instantly transferred to the e-commerce Web site.
That model has been generally very successful for these e-commerce Web
sites. The e-commerce site generates additional traffic and sells more
merchandise, users enjoy the shopping and browsing experience that the
e-commerce content provides, and the affiliate site hopefully generates more
repeat users and gets a commission on certain sales the e-commerce site makes
from its users.
The Company's program will be different providing partners with a
series of Web sites, any of which can be customized and "private labeled" to the
partner's existing site. By incorporating the partner company's logo and color
scheme, the Company will be able to add sophisticated sticky content with the
general "touch and feel" of the client's own Web site. Customers who click on
the Company's branded content will technically be transported to the Company's
servers; however, the change should be transparent to the customer. The
transition should be such that the Web site visitor would be unaware that he has
left the partner's site. The Company believes that the lack of transparency in
the traditional affiliate model is a major shortcoming because in many cases the
user may eventually just bypass the affiliate site in favor of going directly to
the content provider. Also once the user becomes a customer of the content
provider many times the content provider markets directly to the user bypassing
the affiliate site that directed the business. It is the present intention of
the Company to redirect traffic back to the Company's branded sites with certain
marketing campaigns which the Company believes will increase the "sticky" nature
of the branded sites.
Governmental Regulation
The Company will be subject to regulation by state, federal, local
authorities, with regards to content, copyright and Federal Trade Commission
regulations. No assurance can be given that unforeseen regulations will not be
adopted by the governmental authorities prohibiting the Company from conducting
business as planned or once in business limiting the success of said business
operations through the expense of complying with new regulations.
Employees
The Company currently has 11 full-time personnel plus various
consultants in management, sales, Internet and technology computer application,
programming, legal, and editorial responsibilities. The Company relies
significantly on outsourcing of its computer programming and other consulting
needs and plans to control costs by extensively utilizing outsourcing in the
future. Management of the Company expects to hire additional employees as
needed.
Further reference is made to the Company's Consolidated Financial
Statements, and the notes included therein and to the subsection "Management
Discussion and Analysis" included in Item 3 with regards to the Company'
business and planning.
18
<PAGE>
ITEM 2. FINANCIAL INFORMATION
Summary of Certain Information
Capitalization
The following table sets forth the capitalization of Ubrandit.com and
subsidiary at March 31, 1999. This table should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Information Statement.
March 31,
1999
--------------
Short Term Debt.........................................$ 150,000
Long Term Debt.......................................... --0--
Shareholders' equity:
Common Stock, $0.001 par value,
25,000,000 shares authorized;
8,756,000 shares issued and
outstanding.................................... 8,756
Additional paid-in capital......................... 974,270
Retained earnings (deficit)........................ (282,139)
Total shareholders' equity .................... 700,887
Total capitalization...................... 850,887
==============
19
<PAGE>
SUMMARY OF HISTORICAL FINANCIAL DATA
The following table, which sets forth certain historical combined
financial data for the Ubrandit.com and subsidiary for the period December 3,
1996 to September 30, 1997, the year ended September 30, 1998, and the six
months ended March 31, 1999, has been derived from the audited consolidated
Ubrandit.com and subsidiary financial statements. The selected historical data
as of and for the six months ended March 31, 1998, is unaudited and was derived
from the accounting records of Ubrandit.com. In the opinion of management, the
historical consolidated financial statements of Ubrandit.com and subsidiary as
of September 30, 1997 and 1998, and for the period December 3, 1996 to September
30, 1997, and the year ended September 30, 1998, and as of March 31, 1998
(unaudited) and 1999, and for the six months then ended, included all adjusting
entries (consisting only of normal recurring adjustments) necessary to present
fairly the information set forth therein. Historical financial data may not be
indicative of the Company's future performance. This information should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Historical Combined Financial Statements and
notes thereto included elsewhere herein. Historical earnings per share and
dividend data have not been presented, as the Company was not a publicly-held
company during the periods presented below.
<TABLE>
(In Thousands)
<CAPTION>
For the Six months
period Year ended Ended Six months
December 3, September March 31, Ended
1996 30, 1998 March 31,
To September 1998 (Unaudited) 1999
30,
1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenue $86.4 $341.9 $274.7 $51.0
Operating expenses 78.0 443.4 239.0 224.1
Operating income (loss) 8.4 (101.6) 35.7 (173.0)
Other (expense) net 0 (13.0) (5.9) (1.2)
Income (loss) before income taxes 8.4 (114.7) 29.8 (174.2)
Income taxes 1.6 0 0 0
Net income (loss) $6.8 $(114.7) $29.8 $(174.2)
</TABLE>
20
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
General
Since its inception, the main activity of the Company, an early stage
startup Company, has been organizational. The Company has sold equity shares to
raise capital, recruited and organized management, has commenced corporate
strategic planning, and has engaged in the limited development of destination
Web sites and the branding and private labeling of systems for the Company. The
Company has conducted no significant operations to date. Though no assurance can
be given, management expects the Company to launch its brandable book, music,
video store and its brandable financial and other related financial sites in the
final quarter of the current fiscal year ending September 30, 1999. Even though
the Company expects to generate revenues from advertising, e-commerce sales, and
custom programming during the next fiscal year, management expects that, the
Company will continue to operate at a loss for the foreseeable future. On March
11, 1999, the Company purchased all of the common shares of Global Investors
Guide and Global Investors Guide became a wholly owned subsidiary of the
Company. Global Investors Guide is an Internet development Company with a
limited operating history. As of March 31, 1999, the Company owns approximately
$93,886 in tangible property, less depreciation of approximately $15,061.
Recent Events
The Company's most recent audited financial statements are as of March
31, 1999. In March of this year the Company negotiated a conversion of debt to
shares of Common stock with two creditors of the Company converting $264,251 in
debt to 500,000 shares of Common Stock. The negotiations and conversion
agreements were reached in March and are mentioned in Note 13 "Subsequent
Events" of the audited financial statements, but the shares were not issued
until April of 1999 and thus the debt conversion and the additional issuance of
shares is not reflected in the financial statements by either a reduction of
liabilities or an increase in the shares outstanding. Also, subsequent to March
31, 1999, 1,000,000 shares of Common Stock were purchased for $1.00 per share in
April of this year by accredited persons investing in a private offering of the
Company's Common Shares pursuant to Regulation D, Rule 506, promulgated under
the Securities Act of 1933, as amended. The offering and sale of these
additional shares is not reflected in the audited financial statements or the
notes to the financial statements.
Results of Operation
Six month period ended March 31, 1999, compared to the six month period
ended March 31, 1998
Consolidated revenues for the six months ended March 31, 1999, were
$51,060, as compared to revenues of $274,676 for the period ending March 31,
1998, representing a cumulative decrease of approximately 81%. The decrease in
revenues was principally due to the change in the Company's business focus.
During the six month period ended March 31, 1998, the Company generated revenues
from the sale of sponsorships and advertising space on its comprehensive
financial Web site and the sale of its financial newsletter subscriptions.
Previously, the Company's business model contemplated the development and
maintenance of a comprehensive financial Web site, the selling of sponsorships
on the site, and the marketing and selling of its Web site's financial
newsletter. The Company subsequently changed its business focus to the
development of its branding technology and "brandable destination Web sites."
Operating expenses consist of direct operating expenses, sales, general
and administrative expenses, and other operating expenses. Operating expenses
were $224,141 during the period ended March 31, 1999, in comparison to $238,976
for the period ended March 31, 1998. However, operating expenses as a percentage
of revenues increased approximately 352% to approximately 439% for the period
ended March 31, 1998, as compared to 87% for the period ended March 31, 1997.
The increase was primarily due to the decline in revenues and an increase in
research and development expenses relating to the Company's change in business
strategy.
Net losses from operations for the six months ended March 31, 1999,
were $173,081 as compared to net operating income of $35,700 for the six month
period ended March 31, 1998. The net losses during the period ended March 31,
1999, were due to the decline in revenue and increase in research and
development costs relating to the Company's implementation of its new business
plan.
Fiscal year ended September 30, 1998, compared to the period from
December 3, 1996, to September 30, 1997
Consolidated revenues for the fiscal year ended September 30, 1998,
were $341,887, as compared to revenues of $86,390 for the period ending
September 30, 1997, representing a cumulative increase of approximately 296%.
21
<PAGE>
The increase in revenues was principally due to the additional revenues that the
Company was able to generate from its expanded sale of sponsorships and
advertising, custom programming and design, and subscriptions.
Operating expenses consist of direct operating expenses, sales, general
and administrative expenses, and other operating expenses. Operating expenses
were $443,481 during the fiscal year ended September 30, 1998, in comparison to
$78,027 for the period ended September 30, 1997, representing an increase of
approximately 468% over the preceding fiscal year. The increase was primarily
due to the increased research, development, and marketing costs associated with
the Company's change in business focus during the latter part of the fiscal year
ended September 30, 1998.
Net losses from operations for the fiscal year ended September 30,
1998, were $101,594 as compared to net operating income of $8,363 for the fiscal
year ended September 30, 1997. The increase in net losses during the fiscal year
ended September 30, 1998, was due to the decline in revenue and increase in
research, development and marketing costs relating to the Company's
implementation of its new business plan.
Certain Balance Sheet Items
In comparing the Balance sheet as of March 31, 1998 to September 30,
1998, current assets increased from $65 thousand to $954 thousand. The increase
was principally due to cash received from a private equity financing pursuant to
Regulation D, Rule 504, promulgated under the Securities Act of 1933. Total
assets increased from $100 thousand to $1.024 million on the March 31, 1998
balance sheet compared to the balance sheet on September 30, 1998. The increase
was due to the increase in cash as noted above and an increase in property and
equipment (primarily computer hardware and software), net of accumulated
depreciation. Current liabilities increased from $200 thousand to $323 thousand
on the March 31, 1998 balance sheet compared to the balance sheet on September
30, 1998. This increase was due to increases in accrued expenses and amounts due
to a related party.
Liquidity and Capital Resources.
At present, the Company is not producing revenues and only limited
revenues are being produced by its wholly owned subsidiary Global Investors
Guide. The Company's main source of funds has been the sale of the Company's
equity securities. The Company has issued 7,930,000 shares of its Common Stock
for approximately $1,975,000, including the most recent offering and after
deduction of estimated offering expenses, has exchanged 1,826,000 shares of its
Common Stock for all the outstanding shares of Global Investors Guide and has
converted 264,251 in debt to 500,000 shares issued to two creditors of the
Company. The Company had $941,566 in cash as of the date of its latest audit as
set forth in Exhibit "B" Financial Statements. Since March 31st 1999 the Company
has raised approximately $1,000,000 in cash, less offering expenses estimated
under $10,000, by the sale of Common Stock in a recent offering, as referenced
above. This cash is at present being used mainly to develop and market the
Company's destination Web sites and its co-branding and private label technology
and to fund certain ongoing general and administrative expenses plus consulting
expense with the total of such expenses estimated by Management to be in excess
of $90,000 per month. The Company will need to raise additional capital either
by the sale of it's securities or by alternative funding methods, to meet its
current development and marketing plans. Such funding may be obtained through
the sale of additional shares, warrants or convertible debentures, which will
dilute the ownership interests of present shareholders. The Company is seeking
to raise additional funds through the private placements of shares of its common
stock. During 1999 equity market financing has been increasingly available to
Internet startup ventures. Due to the volatility of the new issue market and the
stock market in general said equity financing could become scarce or
unattainable at any time. If the Company is unable to obtain sufficient funds to
develop and market its Internet strategies then Ubrandit.com may seek to find
development partners or industry partners to assist in the development of its
business plan. The capital resources of the Company are limited. At present the
Company is not producing any significant revenues and is not expected to produce
revenues until the 3rd calendar quarter of 1999. These revenues, if realized,
22
<PAGE>
are projected to be insufficient to fund the aggressive ongoing development and
marketing of the Company's Internet branding and e-commerce strategy and
additional funds will be required as discussed above in this section. Further,
if revenue from branding, advertising, sponsorship fees, and custom programming
is realized said revenues will be subject to all of the risks set forth in the
section entitled "RISKS FACTORS" and no profits may be realized from said
revenue. The main source of funds at the present is the sale of the Company's
equity securities. Other possible sources of funding includes loans by financial
institutions with the Company's computer equipment as collateral. However, the
collateral value of Company's tangible property is limited. The Company has no
material contractual commitments for capital expenditure at present.
Year 2000 Compliance; Year 2000 Readiness Disclosure
To the fullest extent permitted by law, the following discussion is a
"Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information
and Readiness Disclosure Act 105 P.L. 271.
Background
Many of the world's computer systems and programs currently record
years in a two-digit format. Such computer systems or programs that have
date-sensitive software or hardware may recognize a date using "00" as the year
1900 rather than the year 2000, and therefore, may be unable to recognize,
interpret or use dates in and beyond the year 1999 correctly. Because the
activities of many businesses are affected by dates or are date-related, the
inability of these systems or programs to use such date information correctly
could result in system failures or disruptions and lead to disruptions of
business operations in the United States and internationally (the "Year 2000
Problem"). In the case of the Company, such disruptions may include, among other
things, an inability to process transactions, send invoices, or engage in
similar routine business activities.
Issues relating to the Year 2000 Problem arise in a number of different
contexts in which the Company and its operating subsidiary use or access
computer programming. In its operations, the Company uses both third-party and
internally developed software programs and relies on customary
telecommunications services, as well as building and property logistical
services, including, without limitation, embedded computer-controlled systems.
The Company generally will also rely heavily upon suppliers, as well as data
processing, transmission and other services provided by third-party service
providers, including, without limitation, Internet access, online content,
product distribution and delivery, and information services.
The Company and its operating subsidiary will rely upon independent
internal local access network (LAN) computer systems. In addition, the Company
and its subsidiaries lease their office space from third parties and may conduct
business through multiple locations in major cities. Although the operating
subsidiary will, for the most part, conduct business independently, it will
substantially use similar third-party software and have common relationships and
dependencies with third party service providers.
Assessing the Impact of the Year 2000 Problem on the Company's
Operations
The Company has reviewed its computer systems and programs, including
information technology ("IT") and non-IT systems, and has determined that they
are in compliance with the requirements of the Year 2000. The Year 2000 problem,
however, is pervasive and complex as virtually every computer operation will be
affected in some way by the rollover of the two digit year to 00. Failure of any
of the Company's third-party service providers to adequately address this issue
could result in a substantial interruption of the Company's normal plan of
operation and business affairs, and could result in significant losses from
operations. To the extent that the Company relies upon non-U.S. third-party
service providers who may be less capable or prepared than their U.S.
counterparts to address and resolve the Year 2000 problem, the Company's
operations may be subject to a greater level of risk with respect to Year 2000
compliance. Although the Company could incur substantial costs in connection
with the failure of third-party computing systems and software, such costs are
not sufficiently certain to estimate at this time.
23
<PAGE>
Contingency Planning
The Company has not developed any plan to address contingencies arising
from the inability of third-party service providers to become Year 2000
compliant in a timely manner. Consequently, no assurance can be given that the
potential failure of third-party systems will not increase the Company's
operating costs or create uncertainties that may have an adverse effect on the
Company's operating results or financial condition.
ITEM 3. DESCRIPTION OF PROPERTY
The Company subleases approximately 5,000 square feet of general use
office space in San Diego California as its primary corporate office. The term
of the sublease is until June 30, 2000. These offices are sufficient for the
Company to conduct its current operations. On site the Company has a secure
facility for housing one of the Company's eight high capacity Internet servers.
The other seven servers are housed at a secure location operated by CONNECTNET,
a local Internet service provider located in San Diego. The Company believes
that its current configuration of server computers and purchased bandwidth are
capable of handling the expected high volume Internet traffic during peak user
hours. In addition the Company's systems have been designed to be scalable to
meet growth beyond the expected use of the system.
24
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Common Stock as of June 30, 1999 for (i) each current director
who owns shares, (ii) each executive officer of the Company who owns shares,
(iii) all persons known by the Company to beneficially own more than 5% of the
outstanding shares of the Common Stock, and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated in the footnotes
below, the address of each stockholder is 12626 High Bluff Dr., San Diego, CA
92130.
Names of Number of Shares Percent of Shares
Beneficial Owners(1) Beneficially Owned Beneficially Owned
- -------------------- ------------------ ------------------
Jeff Phillips 2,006,880(3) 18.8%
Gregory V. Gibson 125,000(4) 1.2%
Roger C. Royce 75,000 *
Steven K. Radowicz 25,000(5) *
Michael Fagan 54,780 *
Mark Cullivan 54,780 *
J. Eric Arteburn 54,780 *
William Childers 54,780 *
All officers & Directors
as a group (nine persons)(9) 2,461,000 22.7%
- ------------------------
* Less than 1%
(1) Unless otherwise noted, the Company believes that all shares are
beneficially owned and that all persons named in the table have sole
voting and investment power with respect to all shares owned by them.
(2) Beneficial ownership is determined in accordance with the applicable
rules under the Exchange Act. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options held by that person
that are currently exercisable, or become exercisable within 60 days
from the date hereof, are deemed outstanding. However, such shares are
not deemed outstanding for purposes of computing the percentage
ownership of any other person. Percentage ownership is based on
10,256,000 shares of Common Stock outstanding as of June 30, 1999.
(3) Includes 400,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $.50 per
share.
(4) Includes 125,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $.50 per
share.
(5) Includes 25,000 shares issuable upon the exercise of currently
exercisable stock purchase options, exercisable at a price of $1.50 per
share. Mr. Radowicz's address is Apquip Company, #8 Harris Court Unit
C1, Monterey, California 93940 .
25
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
The names, ages and positions of the Company's Directors and executive
officers as of June 30, 1999 are listed below:
Name Age Position
- ---- --- --------
Jeff Phillips 31 President, Chief Executive Officer,
Chairman of the Board
Roger C. Royce 59 Chief Operating Officer, Director
Gregory V. Gibson 49 Vice President, Legal, Director
Steven K. Radowicz 31 Director
Michael Fagan 32 Vice President Corporate Development
Mark Cullivan 31 Vice President Operations
J. Eric Arterburn 28 Vice President Design Development
William Childers 28 Vice President MIS
JEFFERY PHILLIPS,
PRESIDENT, CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD OF DIRECTORS
Mr. Phillips was appointed as the Company's President, Chief Executive
Officer and Chairman of the Board in January 1999. From 1997 to the present, Mr.
Phillips also has been the President of Global Investors Guide of San Diego, CA.
Global Investors Guide maintains a financial research site and performs contract
programming for companies in the financial and e-commerce markets. As president,
Mr. Phillips has been in charge of budgeting, project planning and management,
and development of specialty tools as per the clients' needs. He was also
responsible for exploring and implementing the newest technology into Global
Investors Guide's Web sites pertaining to the financial Internet market. During
the past five years, Mr. Phillips has also been a marketing consultant to public
relations firms and the owner of LPC Communications, an Advertising Agency and
Market Publishing, Inc. a fulfillment and order processing company. Prior to Mr.
Phillips joining Global Investors Guide he was President of Arboc Marketing, an
independent marketing company located in Santa Barbara, CA. As president, Mr.
Phillips was responsible for designing and implementing marketing programs for
over one hundred small and medium sized businesses. Business types included
health organizations, banks, retail outlets, and manufacturing enterprises. The
company also handled political campaigns in the state of California in the
capacity of campaign management, marketing, and public relations. Mr. Phillips
received his Bachelor of Arts in Economics from the University of California,
Santa Barbara.
26
<PAGE>
ROGER C. ROYCE,
DIRECTOR AND CHIEF OPERATING OFFICER.
Mr. Royce joined the Company in March of 1999 as its Chief Operating
Officer and as a member of the Board of Directors. Mr. Royce brings over 30
years of corporate experience in managing rapid growth enterprises in
conglomerate environments both in the private and public sector. Prior to his
association with the Company, Mr. Royce was Chairman and CEO of Fortune
Financial Systems, Inc., a diversified national education and training company.
Before joining Fortune Financial, he was President and CEO of Academic
Excellence Institute, Inc., an accelerated learning and distribution company,
and now serves as CEO of Westban Financial, Inc., a financial and management
consulting company. His other experience includes: President and CEO of Motel 6,
Inc., a 400 property lodging chain with revenues of $275 million and assets in
excess of $900 million employing over 7,000 employees; President of Fotomat
Labs, Inc. and Corporate Sr. Vice President and Managing Operations Director for
Fotomat Corporation, a national conglomerate holding company with a retail chain
of 3,850 photographic processing/camera stores generating sales in excess of
$265 million and 12 nationwide processing plant and manufacturing facilities
having wholesale billing of $120 million and employing over 13,000 employees;
and President of Woodfin Suites Hotels, Inc., a national hotel management and
franchise company which was the founding franchisee for the Marriott Residence
Inns chain. During his business career he has also been a consultant for
companies involved in Internet delivery systems. Mr. Royce holds a BA and MBA
from California Western University and has completed additional postgraduate
studies at UCLA and Harvard.
GREGORY V. GIBSON,
VICE PRESIDENT LEGAL, DIRECTOR
Mr. Gibson has been an officer and director of the Company since
January of this year. Mr. Gibson has been an attorney specializing in securities
and securities broker dealerships for over 15 years. Presently Mr. Gibson is a
member of the law firm Gibson, Haglund and Paulsen and Vice President Legal for
Pennaco Energy, Inc. a Denver based public Oil and Gas Company. Prior to his
present affiliations Mr. Gibson was corporate counsel for three years to Global
Resource Investment Limited, a southern California based broker dealer
specializing in resource and foreign publicly traded securities. Prior to
working at Global Mr. Gibson was practicing securities and international law
with the law firms of Gibson and Haglund and Gibson, Ogden and Johnson. Mr.
Gibson attended Claremont Men's College and Brigham Young University for
undergraduate studies and received his juris doctorate degree from Pepperdine
University School of Law.
STEVEN K. RADOWICZ,
DIRECTOR
Mr. Radowicz has been a director of the Company since March 1999. Mr.
Radowicz, an independent director of the Company, is the managing partner and
owner of Apquip Company LLC. Located in Monterey, California, Apquip is a
Company that manufactures equipment for the wood products industry and services
a worldwide clientele. Mr. Radowicz has held numerous positions with the Company
over the past nine years and has served as the Chief Executive Officer for the
past two years. Apquip has distribution and sales throughout five continents
with many of the largest wood producing companies in the industry. While at
Apquip, Mr. Radowicz has been responsible for much of the growth of the company
setting up a network of dealers and representation for the company worldwide.
Mr. Radowicz graduated from the University of California at Santa Barbara with a
B. A. degree in business economics in 1990.
27
<PAGE>
MICHAEL FAGAN,
VICE PRESIDENT CORPORATE DEVELOPMENT
Mr. Fagan has been the Company's Vice President of Corporate
Development since March 1999. Michael Fagan, from July 1997 until assuming his
present position as VP Corporate Development with the Company, served as Vice
President of Global Investors Guide of San Diego, California. In that position,
Mr. Fagan created and implemented the company's marketing strategy and was
responsible for all Web-content-related matters. Also serving as Editor for
Global Investors Guide Financial Digest, he wrote market commentary and
interviewed financial analysts. Prior to his association with Global Investors,
from 1996 to 1997, Mr. Fagan held the position of Senior Research Analyst for
the London Taylor Group, a Southern California-based financial service provider.
From 1994 through 1996 Mr. Fagan was sales and marketing representative with The
Sporting Club at Aventine a California- based health/fitness corporation where
his responsibilities included the development and implementation of marketing
programs and the training of personnel for the company's sales force. Mr. Fagan
received his Bachelor of Science in Business Management from San Diego State
University, California, in 1992.
MARK CULLIVAN,
VICE PRESIDENT OPERATIONS, CONTROLLER
Mr. Cullivan joined the Company in March 1999. His responsibilities
include management of the Company's e-commerce sites and all in-house financial
reporting. From December 1996 to February 1999, Mr. Cullivan as President of
Market Publishing Corporation of San Diego, CA he was in charge of all the
operations of a fulfillment and order processing company. Prior to Market
Publishing, Mr. Cullivan was the Senior Sales and Marketing Analyst for the
Rembrandt Consumer Division of Den-Mat Corporation from 1993-1996. At Den-Mat,
he was responsible for the design and implementation of the corporate sales
programs utilized by the company's regional vice presidents of sales and
national network of product brokers. In addition to his corporate positions, Mr.
Cullivan has been an instructor of economics for several California colleges
from 1992 to present. He received his Bachelor of Arts and Master of Arts
degrees in Business Economics from the University of California, Santa Barbara.
J. ERIC ARTERBURN,
VICE PRESIDENT DESIGN DEVELOPMENT
Mr. Arterburn joined the Company in March of 1999 and since May of 1998
has been the Art Director of the Company's subsidiary Global Investors Guide.
Prior to working at Global Investors Guide Mr. Arterburn was the Art Director
for Internetwork Media from 1994 until 1998. Internetwork Media, a Southern
California design firm, specializes in multimedia cd-rom as well as traditional
media. At Internetwork Media, he worked on numerous projects for the Unites
States Geological Survey (USGS), the National Ocean and Atmospheric Association
(NOAA), as well as projects for Times Mirror and New Millennia. His pursuant to
his responsibilities as Art Director at Global Investors Guide and now as the
Company's Art Director he has designed and directed the content of various
projects including StockStudy.com, Newsletterz.com, IR Packages.com,
JungleJeff.com. Mr. Arterburn graduated from San Diego State University with a
Bachelor of Arts degree with a focus in Graphic Design.
WILLIAM CHILDERS,
VICE PRESIDENT MIS
Mr. Childers was appointed as the Company's Vice President of MIS in
March 1999. Mr. Childers, prior to his association with the Company, was MIS
director for Global Investors Guide from January of 1997 to March of 1999. He
brings to Ubrandit.com 15 years of computer experience in administration,
security, planning, design, and implementation of LAN/WAN networks. His
responsibilities at Global Investors Guide included systems and software
administration and maintenance, planning and execution of the internal network
and Internet Web server farm, installation and maintenance of interoffice links,
WAN connections and leased lines, e-mail system, FTP and Web site
implementation, file and Web server maintenance, network security and anti-virus
protection, backup solutions, and disaster-preparedness planning. Prior to his
involvement with the Company and Global Investors Guide, Mr. Childers was
systems administrator and a consultant regarding Novell NetWare and Windows NT
LAN/WAN networks with small and medium sized companies. From 1994 to 1996 Mr.
Childers was a sales and Technical Consultant for Networks Plus Technology
Group, a Corporate Value added Reseller specializing in high-end applications
and equipment. Mr. Childers studied Computer Science at Colorado State
University, Fort Collins.
28
<PAGE>
Employment Agreements
The Company anticipates entering into employment agreements with its
officers in the near future, the terms of which are undecided at the present
time. The Company has not as of yet entered into any employment agreement with
its officers or other employees.
Committees of the Board
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate legal principles, it is not involved in
day-to-day operating details. Members of the Board are kept informed of the
Company's business through discussions with the Chairman and other officers, by
reviewing analyses and reports sent to them, and by participating in Board and
committee meetings.
The Board has not established any committees at this time.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual compensation of the Company's Chief Executive Officer and each of the
Company's three other most highly compensated executive officers for services
rendered to Ubrandit.com during the Company's only two completed fiscal years
ended September 30, 1998 and 1997.
<TABLE>
<CAPTION>
Compensation
-----------------------------
Name Annual Other Restricted Securities LTIP All
And Principal Year Salary($) Bonus Annual Stock Underlying Pay- Other
Position (1) ($) Compen- Award(s) Option/ outs Compen-
sation ($) SARS(#) ($) sation
($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jeff Phillips, 98 18,000 -0- -0- -0- -0- -0- -0-
CEO(2) 97 1,826 -0- -0- -0- -0- -0- -0-
Patricia Wiate(3) 98 -0- -0- -0- -0- -0- -0- -0-
97 -0- -0- -0- -0- -0- -0- -0-
- ----------------
</TABLE>
(1) All other compensation in the form of perquisites and other personal
benefits has been omitted because the aggregate amount of such
perquisites and other personal benefits constituted the lesser of
$50,000 or 10% of the total annual salary and bonus of the named
executive for such year.
(2) Mr. Phillips was the President and CEO of Global Investors Guide as of
the end of the last completed fiscal year ended September 30, 1998.
(3) Ms. Wiate was the President and CEO of the Company prior to the
acquisition of Global Investors Guide. Ms. Wiate resigned in February
3, 1999, and is no longer employed by the Company.
The Company has no retirement, pension, profit sharing or medical
reimbursement plans exclusively covering its officers and directors, and does
not contemplate implementing any such plans at this time.
29
<PAGE>
Directors of the Company who are also employees do not receive cash
compensation for their services as directors or members of committees of the
Board of Directors, but are reimbursed for their reasonable expenses in
connection with attending meetings of the Board of Directors or management
committees. Non-employee directors are expected to be paid a fee per Board
meeting attended, and reimbursement for expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition of Global Investors Guide in March
1998, all of the shares of Global Investors Guide were purchased from officers
and a director of that company in exchange for restricted shares of the
Company's $.001 par value Common Stock (the "exchange shares") on a pro rata
basis. Specifically Mr. Phillips, President and director of the Company received
1,606,880 exchange shares and Messrs. Fagan, Cullivan, Childers, and Arterburn,
all executive officers of the Company, received 54,780 shares each for an
aggregate of 1,826,000 exchange shares. The Company received computer equipment,
services and cash in exchange for a $100,000 amount due to a company 100% owned
by Mr. Phillips an executive officer and director of Ubrandit.com. The aggregate
$100,000 amount due resulted from $50,000 advanced to the Company, office space
provided the Company at $1,000 a month for 12 months, receptionist, secretarial,
and clerical support services provided to the Company at $2,000 per month for 12
months, and the sale of following office equipment: copier, postage machine,
shredder, address labeler, computer printer, two fax machines, and three
computers. Said office equipment was sold to the Company for $14,000. Said
equipment was purchased by Mr. Phillip's company within the last eighteen months
for approximately $23,000. The amount due was converted to 200,000 shares of
Ubrandit.com $.001 Common Stock that were issued to said company. Mr. Phillips
has sold all his interest in said company, which is now owned by an unrelated
party. Mr. Gibson an executive officer and director, provides legal services to
the Company through his law firm Gibson, Haglund and Johnson. As of March 31,
1999, said law firm had received $18,000 for legal services rendered.
ITEM 8. LEGAL PROCEEDINGS
No material legal proceedings to which the Company is a party are
pending nor are any known to be contemplated and the Company knows of no legal
proceedings pending or threatened, or judgments entered against any Director or
Officer of the Company in his capacity as such.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock, par value $.001 (the "Common Stock") trades
over the counter and is quoted on the OTC Bulletin Board System. The following
table sets forth the high and low closing prices for the Common Stock as
reported on the OTC Bulletin Board system for the quarters traded in Fiscal
1999.
Low High
---------- ----------
Year Ended September 30, 1999
Second Quarter $ .375 $ 3.625
Third Quarter 3.625 11.125
The Company has not paid any cash dividends on its Common Stock since
its incorporation and anticipates that, for the foreseeable future, earnings, if
any, will continue to be retained for use in its business. As of June 30, 1999
the Company had approximately 4,700 shareholders of its Common Stock.
30
<PAGE>
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is certain information concerning all sales of
securities by the Company during the past three years that were not registered
under the Securities Act:
(a) The Company, at the time operating under the named Mount Merlot
Estates, Inc., issued 40,000 shares in December of 1997 for the purchase price
of $.01 per share in reliance on the exemption from registration available under
Section 4(2) of the Securities Act. At that time, the Company had a business
plan to enter into the viticulture business and no assets. The offeree was
apprised of both the Company's start-up nature and its business plan. There was
one offeree in this offering, who made the only purchase pursuant to the terms
of an investment letter. In the investment letter the purchaser acknowledged
that (i) that he was purchasing for his own account, for investment, and not
with a view towards distribution (ii) that he solicited the offer and sale of
the securities and the offer and sale were not accompanied by any publication or
advertisement and (iii) the he understands that the shares purchased may only be
sold or otherwise transferred if they are registered under the Securities Act of
1933 or unless an exemption from such registration is available. No underwriters
were used in connection with this offering.
(b) The Company, at the time name Mount Merlot Estates, in February of
1998, offered 5,000,000 shares for a purchase price of $.01 per share in
reliance on the exemption from registration available under Rule 504 of
Regulation D promulgated under the Securities Act. Offerees were provided with a
private placement memorandum containing detailed information about the Company
and its plan to engage in the development of a Merlot viticulture operation in
Santa Ynez Valley County, California and that the securities had not been
registered under the Securities Act and may have not been registered or
qualified under applicable state securities laws. The Company required each
prospective investor to represent in writing that (i) they had adequate means of
providing for their current needs and personal contingencies and had no need to
sell the securities in the foreseeable future and (ii) they, either alone or
with their duly designated purchaser representative, had such knowledge and
experience in business and financial matters that they were capable of
evaluating the risks and merits of an investment in the securities. No
underwriters were used in connection with this offering.
(c) The Company, at the time named Virtual Brand, Inc. to reflect the
Company's change in business plan to that of developing or acquiring an Internet
service company, in February of 1999, offered 1,890,000 shares for a purchase
price of $.50 per share in reliance on the exemption from registration available
under Rule 504 of Regulation D promulgated under the Securities Act. All
1,890,000 shares were issued by the Company in February of 1998. There were six
Offerees, which were also the only purchasers of the offering. The Company
required each prospective investor to represent in writing (i)that the investor
was a sophisticated investor with sufficient knowledge and experience to be
capable of evaluating the merit and risks of the offering (ii) that all
documents they deemed material in making an investment decision were provided by
the Company and that the investor had been afforded the opportunity to make
inquires and receive answers from management, (iii) that the investor had
substantial means of providing for his current needs and contingencies and was
capable of understanding and bearing the economic risk of the investment. (iii)
they understood that the securities had not been registered under the Securities
Act and may have not been registered or qualified under applicable state
securities laws. No underwriters were used in connection with this offering.
(d) Pursuant to an Agreement and Plan of Reorganization for the
Acquisition of All the Outstanding Shares of Common Stock of Global Investors
Guide, the Company issued 1,826,000 pro rata to all the shareholders of Global
Investment Guide to purchase all of the shares of Common Stock of the Company.
The offering of the shares was made to five accredited investors only, in
reliance on the exemption from registration available under Rule 506 of
Regulation D promulgated under the Securities Act. Said investors received 1,826
shares of the Company's Common Stock for each share of Global Investors Guide
that they owned. Each investor represented in an investment letter that (i) he
acquired said common stock for my own account for investment and not with a view
towards any distribution thereof (ii) that he understood that the shares may not
be sold or otherwise transferred unless they are subsequently registered under
the Act or unless an exemption from such registration is available. (iii)that he
understood that the investment was highly speculative with very substantial
risks and could result in a complete loss of my investment (iv) that he had such
knowledge and experience with the Company, Internet businesses, and general
business matters that he was capable of fully evaluating the merits and risks of
this investment; (v) that he was fully aware that the Company is a startup
company with very limited resources in an extremely competitive industry; and
(vi) that the Company had afforded him the opportunity to ask and had answered
all questions. All investors understood that the securities would bear a
restrictive legend prohibiting transfers except in compliance with the
provisions of the Act. No underwriters were used in connection with this
offering.
31
<PAGE>
(e) In March and April of 1999, the Company negotiated and reached a
debt conversion to common stock agreement with two of the large creditors of its
wholly owned subsidiary Global Investment Guide. Pursuant to said agreements
Bloomington Corporate Services was issued 300,000 shares of the Company's Common
Stock for forgiveness of $164,251.43 in debt and Market Publishing, Inc. was
issued 200,000 shares of Common Stock for forgiveness of $100,000 in debt. Both
issuances of shares were to sophisticated companies pursuant to a private
placement exempt from the registration requirements of the Securities Act in
reliance on the exemption from registration available under Section 4(2) of the
Securities Act. The Company fully apprised the said sophisticated companies of
the Company's start-up nature and gave them full details regarding the Company's
business plan. There was no general solicitation or advertising used in
connection with the offer to sell or sale of these securities. Said companies
were advised that the securities, once purchased, could not be resold or
otherwise transferred without subsequent registration under the Securities Act
and that they would carry a legend stating said restrictions to transfer.
No underwriters were used in connection with this offering.
(f) The Company issued 1,000,000 shares in April 1999, for a purchase
price of $1.00 per share in reliance on the exemption from registration
available under Rule 506 of Regulation D promulgated under the Securities Act.
The Company accepted subscriptions only from accredited investors. The Company
changed its name to Ubrandit.com at the time of purchase of Global Investors
Guide to better reflect its adoption and continuation of the business plan of
Global Investors Guide, the Company's current business plan, which is the
branding and private labeling of Internet sites. Offerees were provided with a
private placement memorandum containing detailed information about the Company
and its current plan. The Company required each prospective investor to
represent in writing that (i) they had received and reviewed the private
placement memorandum and understood the risks of an investment in the Company;
(ii) they had the experience and knowledge with respect to similar investments
which enabled them to evaluate the merits and risks of such investment, or they
had obtained and relied upon an experienced independent adviser with respect to
such evaluation; (iii) they had adequate means to bear the economic risk of such
investment, including the loss of the entire investment; (iv) they had adequate
means to provide for their current needs and possible personal contingencies;
(v) they had no need for liquidity of their investment in the Company; (vi) they
understood that the securities had not been registered under the Securities Act
and may have not been registered or qualified under applicable state securities
laws and, therefore, that they could not sell or transfer the securities unless
the securities were subsequently registered or an exemption therefrom was
available to them; (vii) they were acquiring the securities for investment
solely for their own account and without any intention of reselling or
distributing them; and (viii) they understood that the securities would bear a
restrictive legend prohibiting transfers except in compliance with the
provisions of the securities, the subscription agreement executed by the
purchaser and the applicable federal and state securities laws. No underwriters
were used in connection with this offering.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
General
The authorized Common Stock of the Company consists of 25,000,000
shares of $0.001 par value common stock. The following summary of the terms and
provisions of the Company's capital stock does not purport to be complete and is
qualified in its entirety by reference to the Company's Articles of
Incorporation and By-laws, which have been filed as exhibits to the Company's
registration statement, of which this prospectus is a part, and applicable law.
Common Stock
The holders of Common Stock are entitled to one vote for each share on
all matters voted upon by stockholders, including the election of directors.
Such holders are not entitled to vote cumulatively for the election of
directors. Holders of a majority of the shares of Common Stock entitled to vote
in any election of directors may elect all of directors standing for election.
Holders of Common Stock are entitled to participate pro rata in such
dividends as may be declared in the discretion of the Board of Directors out of
funds legally available therefor. Holders of Common Stock are entitled to share
ratably in the net assets of the Company upon liquidation after payment or
provision for all liabilities. Holders of Common Stock have no preemptive rights
to purchase shares of stock of the Company. Shares of Common Stock are not
subject to any redemption provisions and are not convertible into any other
securities of the Company. All outstanding shares of Common Stock are fully paid
and non-assessable.
32
<PAGE>
The Common Stock is quoted on the OTC Bulletin Board system under the
symbol "UBRT."
As of June 30, 1999, 10,256,000 shares are issued and outstanding.
Transfer Agent
The Company's transfer agent is: Pacific Stock Transfer Company, 3690
South Eastern, Las Vegas, Nevada 89109.
1999 Stock Option and Incentive Plan
As of March 31, 1999, 1,485,000 shares have been granted to employees
and directors for exercise prices ranging from $0.50 to $3.35 per shares
pursuant to the vesting schedules of the respective agreements. No options were
granted during the last completed fiscal year ended September 30, 1998. The
following table details the shares granted to executive officers and directors:
Name Principal Position Number of shares granted
Jeff Phillips President, CEO 400,000
Roger C. Royce (1) COO 425,000
Gregory V. Gibson VP legal 125,000
Steven K. Radowicz Director 25,000
Michael Fagan VP Corporate Development 60,000
Mark Cullivan VP Operations 50,000
J. Eric Arterburn VP Design Development 50,000
William Childers VP MIS 50,000
Total: 1,185,000
- ------------------
(1) 387,500 of the options granted Mr. Royce, have been continently granted
pursuant to terms of his employment. Additionally 50,000 options to
purchase shares have been granted to current non-executive employees of
the Company and Jeffrey L. Taylor, a former director, was granted
options to purchase 250,000 shares.
On January 22, 1999, the Board of Directors adopted the 1999 Stock
Option and Incentive Plan (the "Plan") which was subsequently approved by the
stockholders of the Company. The Plan is intended to provide incentive to key
employees and directors of, and key consultants, vendors, customers, and others
expected to provide significant services to, the Company, to encourage
proprietary interest in the Company, to encourage such key employees to remain
in the employ of the Company and its Subsidiaries, to attract new employees with
outstanding qualifications, and to afford additional incentive to consultants,
vendors, customers, and others to increase their efforts in providing
significant services to the Company. The Plan is administered by the Board of
Directors or can be administered by a Committee appointed by the Board of
Directors, which Committee shall be constituted to permit the Plan to comply
with Rule 16b-3 of the Act, and which shall consist of not less than two
members. The Board of Directors, or the Committee if there be one, at its
discretion, can select the eligible employees and consultants to be granted
awards, determine the number of shares to be applicable to such award, and
designate any Options as Incentive Stock Options or Nonstatutory Stock Options
(except that no Incentive Stock Option may be granted to a non-employee director
or a non-employee consultant). The stock subject to awards granted under the
Plan are shares of the Company's authorized but unissued or reacquired Common
Stock. The aggregate number of shares which may be issued as awards or upon
exercise of awards under the Plan is 2,500,000 shares. The shares that may
presently be issued pursuant to the exercise of an option awarded by the Plan
have not been registered under the Securities Act of 1933 (the "Securities Act")
nor any state securities authority and will be subject to the limitations of
Rule 144.
33
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada Revised Statutes and certain provisions of the Company's
Bylaws under certain circumstances provide for indemnification of the Company's
Officers, Directors and controlling persons against liabilities that they may
incur in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this description is
qualified in its entirety by reference to the Company's Bylaws and to the
statutory provisions.
In general, any Officer, Director, employee or agent may be indemnified
against expenses, fines, settlements or judgments arising in connection with a
legal proceeding to which such person is a party, if that person's actions were
in good faith, were believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by independent
decision of the Board of Directors, by legal counsel, or by a vote of the
stockholders, that the applicable standard of conduct was met by the person to
be indemnified.
The circumstances under which indemnification is granted in connection
with an action brought on behalf of the Company is generally the same as those
set forth above; however, with respect to such actions, indemnification is
granted only with respect to expenses actually incurred in connection with the
defense or settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed to have been
in the Company's best interest, and must not have been adjudged liable for
negligence or misconduct.
Indemnification may also be granted pursuant to the terms of agreements
that may be entered in the future or pursuant to a vote of stockholders or
Directors. The statutory provision cited above also grants the power to the
Company to purchase and maintain insurance which protects its Officers and
Directors against any liabilities incurred in connection with their service in
such a position, and such a policy may be obtained by the Company.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The information required by this item is contained in Item 2. Financial
Information and Item 15. Financial Statement and Exhibits.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURE.
None
34
<PAGE>
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
List of Financial Statements
Report of Independent Public Accountant
Consolidated Balance Sheet September 30, 1997, 1998 and March 31, 1999
Consolidated Statements of Operations and Statements of Cash Flows for December
3, 1996 to September 30, 1997, year ended 1998, six months ended March 31, 1998
(unaudited), Six months ended March 31, 1999
Consolidated Statement of Shareholders' Equity for the period December 3, 1996 -
March 31, 1999
Notes to Consolidated Financial Statements
<PAGE>
Ubrandit.com and subsidiary
As of September 30, 1997, September 30, 1998
and March 31, 1999, and
for the period December 3, 1996 to
September 30, 1997,
the year ended September 30, 1998 and
the six months ended March 31, 1999
<PAGE>
Ubrandit.com and subsidiary
Table of Contents
Page
----
Report of Independent Auditors F-1
Consolidated Balance Sheet F-2
Consolidated Statement of Operations F-3
Consolidated Statement of Changes in Stockholders' Equity F-4
Consolidated Statement of Cash Flows F-5
Notes to Consolidated Financial Statements F-6-12
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Ubrandit.com and subsidiary
Del Mar, California
We have audited the accompanying consolidated balance sheets of Ubrandit.com and
subsidiary as of September 30, 1997, September 30, 1998 and March 31, 1999, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the periods December 3, 1996 to September 30, 1997; the year
ended September 30, 1998 and the six months ended March 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ubrandit.com and subsidiary as
of September 30, 1997, September 30, 1998 and March 31, 1999, and the results of
its operations, and its cash flows for the period December 3, 1996 to September
30, 1997; the year ended September 30, 1998 and the six months ended March 31,
1999, in conformity with generally accepted accounting principles.
Stark Tinter & Associates, LLC
Englewood, Colorado
June 7, 1999
F-1
<PAGE>
<TABLE>
Ubrandit.com and subsidiary
Consolidated Balance Sheets
<CAPTION>
September 30, March 31,
1997 1998 1999
------------------ ------------------ ---------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash $ 10,439 $ 45,604 $ 941,566
Accounts receivable 18,820 10,097
Employee advances 150
Prepaid expenses 1,025 1,662
Deposits 237
------------------ ------------------ ---------------------
Total current assets 10,439 65,449 953,712
Other assets:
Property and equipment - net of
accumulated depreciation 2,888 31,260 63,847
Organizational costs - net of accumulated
amortization 380 1,250
Deferred Offering costs 3,000 5,000
------------------ ------------------ ---------------------
$ 13,327 $ 100,089 $1,023,809
================== ================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expenses $ 4,714 $ 8,681 $ 42,192
Due to related party 28,589 100,000
Due to stockholder 4,990
Payroll taxes payable 11,489
Convertible debt 150,000 150,000
Accrued interest 13,063 14,251
------------------ ------------------ ---------------------
Total current liabilities 4,714 200,333 322,922
Stockholders' equity (deficiency)
Common stock, $0.001 par value,
25,000,000 shares authorized; 1,000,
901,000; and 8,756,000 shares issued
and outstanding in 1997, 1998 and 1999,
respectively 1,826 2,726 8,756
Additional paid in capital 4,900 974,270
Retained earnings (deficit) 6,787 (107,870) (282,139)
------------------ ------------------ ---------------------
Total stockholders' equity (deficiency) 8,613 (100,244) 700,887
------------------ ------------------ ---------------------
$ 13,327 $ 100,089 $1,023,809
================== ================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
<TABLE>
Ubrandit.com and subsidiary
Consolidated Statements of Operations
<CAPTION>
Six months
For the period ended Six months
December 3, 1996 Year ended March 31, ended
to September 30, September 30, 1998 March 31,
1997 1998 (Unaudited) 1999
---------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Revenue $ 86,390 $ 341,887 $ 274,676 $ 51,060
---------------------- ---------------------- --------------------- ---------------------
Expenses:
Direct operating 54,176 154,310 57,270 137,166
Sales, general and administrative 23,456 278,611 176,276 78,345
Depreciation and amortization 395 10,560 5,430 8,630
---------------------- ---------------------- --------------------- ---------------------
Total operating expenses 78,027 443,481 238,976 224,141
---------------------- ---------------------- --------------------- ---------------------
Operating income (loss) 8,363 (101,594) 35,700 (173,081)
Other (expense):
Interest - (13,063) (5,938) (1,188)
---------------------- ---------------------- --------------------- ---------------------
Income (loss) before income taxes 8,363 (114,657) 29,762 (174,269)
Income taxes 1,576 - - -
---------------------- ---------------------- --------------------- ---------------------
Net income (loss) $ 6,787 $ (114,657) $ 29,762 $ (174,269)
====================== ====================== ===================== =====================
Per share information:
Weighted average shares outstanding 1,000 535,247 167,484 3,870,967
====================== ====================== ===================== =====================
Net income per common share - basic $ 6.79 $ (0.21) $ 0.18 $ (0.05)
====================== ====================== ===================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
Ubrandit.com and subsidiary
Consolidated Statements of Stockholders'
Equity For the period December 3, 1996 to March 31, 1999
<CAPTION>
Common Stock Additional
------------------------------ Paid in Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 3, 1996 $ -- $ -- $ -- $ -- $ --
Issuance of stock at $0.01 per share
in consideration for services
rendered 1,000 1,826 1,826
Net income for the period 6,787 6,787
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1997 1,000 1,826 -- 6,787 8,613
Issuance of stock for cash
at $0.01 per share net
of issuance cost 900,000 900 4,900 5,800
Net loss for the year (114,657) (114,657)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1998 901,000 2,726 4,900 (107,870) (100,244)
Issuance of stock for cash
at $0.01 per share net
of issuance cost 4,140,000 4,140 34,260 -- 38,400
Issuance of stock for cash
at $0.50 per share net
of issuance costs 1,890,000 1,890 935,110 -- 937,000
Stock acquired by parent in
a business combination (1,000) (1,826) -- (1,826)
Issuance of stock in a
business combination 1,826,000 1,826 1,826
Net loss for the period (174,269) (174,269)
----------- ----------- ----------- ----------- -----------
Balance at March 31, 1999 8,756,000 $ 8,756 $ 974,270 $ (282,139) $ 700,887
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
Ubrandit.com and subsidiary
Consolidated Statements of Cash Flows
<CAPTION>
Six months
For the period ended Six months
December 3, 1996 Year ended March 31, ended
to September 30, September 30, 1998 March 31,
1997 1998 (Unaudited) 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 6,787 $(114,657) $ 29,762 $(174,269)
--------- --------- --------- ---------
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 395 10,560 5,430 8,630
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (18,820) 8,723
(Increase) in employee advances (150)
(Increase) in prepaid expenses (1,025) (637)
(Increase) in deferred offering costs (3,000) (2,000)
(Increase) in deposits (237)
(Increase) in organizational costs (400) (400) (1,000)
Increase (decrease) in accrued expenses 4,714 3,967 (3,158) 33,511
Increase in due to stockholder 4,990
Increase in payroll taxes payable 11,489
Increase in accrued interest 13,063 5,938 1,188
--------- --------- --------- ---------
Total adjustments 5,109 4,345 7,810 64,507
--------- --------- --------- ---------
Net cash provided by (used in) operating
activities 11,896 (110,312) 37,572 (109,762)
--------- --------- --------- ---------
Cash flows from investing activities:
Purchase of fixed assets (3,283) (38,912) (36,220) (41,087)
Proceeds from related party advances 28,589 9,000 71,411
--------- --------- --------- ---------
Net cash (used in) provided by investing
activities (3,283) (10,323) (27,220) 30,324
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from convertible debt 150,000 150,000
Net proceeds from issuance of common
stock, net of issuance costs 1,826 5,800 5,800 975,400
--------- --------- --------- ---------
Net cash provided by financing activities 1,826 155,800 155,800 975,400
--------- --------- --------- ---------
Net increase in cash 10,439 35,165 166,152 895,962
Cash, beginning -- 10,439 10,439 45,604
--------- --------- --------- ---------
Cash, ending $ 10,439 $ 45,604 $ 176,591 $ 941,566
========= ========= ========= =========
</TABLE>
F-5
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on December 19, 1997 in the State of
Nevada under the name of Mount Merlot Estates, Inc. On January 14, 1999
the Company's name was changed to Virtual Brand, Inc. and amended
articles of Incorporation were filed. The name was again changed to
Ubrandit.com on February 18, 1999 and a second set of amended articles
of Incorporation was filed with the State of Nevada. The Company's
primary concentrations are in providing of "branded" financial and
e-commerce Web-based systems to the Internet in order to earn both
advertising and sponsorship revenue. The Company also derives revenue
from custom programming and website design.
On March 11, 1999 the Company acquired Global Investors Guide
("Global") a related Corporation in a business combination. The
combination has been accounted for as if it were a reverse acquisition,
accordingly these statements reflect the combined operations from the
beginning of the period (see Note 9). Global was incorporated in
California in 1996. The financial statements include the accounts of
the Company and its wholly owned subsidiary. All significant
inter-company accounts and transactions have been eliminated.
Net income per share
The net income per share is computed by dividing the net income for the
period by the weighted average number of common shares outstanding for
the period. For the period December 3, 1996 to September 30, 1997 and
for the six months ended March 31, 1998 there were no potential common
shares to include in a computation of diluted earnings per share. For
the year ended September 30, 1998 and the six months ended March 31,
1999 potential common shares and the computation of diluted earnings
per share are not considered as their effect would be anti-dilutive.
Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Property and Equipment
Property and equipment are being depreciated by the straight-line and
accelerated methods over lives ranging from three to five years. The
depreciation methods are designed to expense the cost of the assets
over their estimated useful lives.
F-6
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Intangibles
Organization costs are amortized under the straight-line method over
five years. Amortization of organization costs expensed to operations
for the year ended September 30, 1998 and the six months ended March
31, 1999 were $20 and $130, respectively.
Revenue Recognition
The Company recognizes revenue when website design is complete, terms
of advertising projects are met and when mailing lists are rented.
Comprehensive Income
There were no items of other comprehensive income in the period
December 3, 1996 to September 30, 1997; the year ended September 30,
1998, the six months ended March 31, 1998 (unaudited) and the six
months ended March 31, 1999 and, thus, net income is equal to
comprehensive income for all four periods.
Research and Development Costs
Research and development costs are charged to operations when incurred
and are included in operating expenses. The amounts charged to
operations for the period December 3, 1996 to September 30, 1997; the
year ended September 30, 1998, the six months ended March 31, 1998
(unaudited) and the six months ended March 31, 1999 were approximately
$8,000, $8,000, $4,000 and $30,894, respectively.
Note 2. CONCENTRATIONS OF CREDIT RISK
The Company's funds are deposited in a federally insured institution up
to $100,000. As of March 31, 1999 the funds under deposit exceed this
insured amount by $750,000.
For the year ended September 30, 1998 and the six months ended March
31, 1998 (unaudited) the Company derived 54% of its revenues from one
customer for sponsorship advertising on e-commerce Web-based systems to
the Internet for both periods. The Company derived ninety-nine percent
of its revenues from the rental of customer mailing lists to one
customer for the six months ended March 31, 1999. The Company
anticipates these concentrations not to be significant in the future as
revenue will be derived from other sources.
F-7
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 3. RELATED PARTY TRANSACTIONS
The Company received computer equipment, services and cash from a
company controlled by a majority stockholder of the Company. These
items were received in exchange for amounts due of $28,589 as of
September 30, 1998 and $100,000 as of March 31, 1999, respectively. The
total amount due of $100,000, as of March 31, 1999, was converted to
stock in April 1999 (see Note 13).
The Company owes $4,990 to a stockholder as a result of a stock
subscription overpayment during February 1999. This amount was refunded
to this stockholder in April 1999.
Note 4. PROPERTY AND EQUIPMENT
The following is a summary of property and equipment, at cost, less
accumulated depreciation:
September 30, March 31,
----------------- ---------
1997 1998 1999
------- ------- -------
Computer equipment $ 3,283 $42,195 $83,281
Less accumulated depreciation 395 10,935 19,434
------- ------- -------
Net property and equipment $ 2,888 $31,260 $63,847
======= ======= =======
For the period December 3, 1996 to September 30, 1997, the year ended
September 30, 1998, the six months ended March 31, 1998 (unaudited) and
the six months ended March 31, 1998, the amounts for depreciation
expense charged to operations were $395, $10,540, $5,430 and $8,480,
respectively.
Note 5. LICENSE AGREEMENTS
On February 2, 1998 the Company's subsidiary Global entered into an
Information Distribution License agreement with an unrelated company.
The Agreement grants a nonexclusive, nontransferable right and license
to distribute electronically, a stock quote data feed. Under the terms
of the three-year agreement Global paid a one-time installation fee of
$1,230 in January 1998. In addition the contract requires Global to pay
a monthly fee of $970 plus redistribution fees based on the number of
months the data feed is used. During the year ended September 30, 1998,
the six months ended March 31, 1998 (unaudited) and the six months
ended March 31, 1999 Global paid fees of $9,331, $2,200 and $970,
respectively. As of September 30, 1998 and March 31, 1999 there are
amounts due of $5,830 and $8,300, respectively.
Additionally, the Company's subsidiary Global entered into a Computer
Software License Agreement on April 21, 1998. The agreement grants
Global the right to use "NT-TASRV" operating system and provides
monthly service and support of this system. Under the terms of the
contract Global paid an initial license fee of $1,025 and pays a
monthly fee of $1,025. For the year ended September 30, 1998 and the
six months ended March 31, 1999 Global had paid $7,175 and $5,125,
respectively, in fees.
F-8
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 5. LICENSE AGREEMENTS (Continued)
In addition, the Company's subsidiary Global entered into a License
Agreement with an unrelated company on January 19, 1999. The Agreement
grants non-exclusive, non-transferable, limited right to use data feeds
for music, video, books and an encyclopedia of popular music. Under the
terms of the one-year agreement, Global will pay the greater of a
minimum monthly fee of $3,500 or a calculated fee based on a fixed
price per unit sold. For the six months ended March 31, 1999 Global has
not paid any fees and March 31, 1999 there is an amount due of $3,500.
Note 6. CONVERTIBLE DEBT
As of September 30, 1998 and March 31, 1999 the Company had an
outstanding note payable of $150,000 to an unrelated party due
November, 2000. The terms of the note require a balloon payment of
$150,000 of principle and cumulative interest accrued at 9.5%. The debt
and accrued interest were converted to stock in April 1999 (see Note
13).
Note 7. STOCKHOLDERS' EQUITY
During December 1996 the Company issued 1,000 shares of stock to an
officer of the Company in consideration for services provided to the
Company.
During February 1998, 860,000 shares of stock were issued to various
investors at $0.01 per share for cash of $8,600, pursuant to a
Regulation D, Rule 504 offering. Issuance costs were $3,200.
Additionally, the Company issued 40,000 shares of restricted stock at
$0.01 per share for cash of $400 pursuant to Rule 4-2
During December 1998, 4,140,000 shares of stock were issued to various
investors at $0.01 per share for cash of $41,400, pursuant to a
Regulation D, Rule 504 offering. Issuance costs were $3,000.
During February 1999, 1,890,000 shares of stock were issued to various
investors at $0.50 per share for cash of $945,000, pursuant to a
Regulation D, Rule 504 offering. Issuance costs were $8,000.
On March 11, 1999 1,826,000 shares of stock were issued in conjunction
with the acquisition of Global (see Note 9).
F-9
<PAGE>
Ubrandit.com and subsidiary
Notes to Consolidated Financial Statements (Continued)
Note 8. STOCK OPTION PLAN
The Company adopted an incentive stock option plan on March 11, 1999.
Under the plan, the Company may grant up to 2,500,000 in options for
the purchase of common stock. The exercise price of each option shall
not be less than eighty five percent (85%) of the fair market value of
the common stock at the date of grant. The maximum term of the options
is five years. Of the 1,135,000 options granted 785,000 are fully
vested and the remainder vest within one year from the date of grant.
Pursuant to the terms of an employment contract the Company issued
350,000 stock purchase options to an officer of the Company. Of the
350,000 options granted, one third will vest September, 1999, one third
will vest in March 2000 and the remaining one third will vest March,
2001.
The Company applies APB Opinion 25 in accounting for its stock
compensation plan. No compensation cost has been recognized for the
period ending March 31, 1999. Had the Company elected to account for
stock based compensation pursuant to SFAS No. 123 "Accounting for Stock
Based Compensation" the difference would not have been material.
Following is a summary of the status of the options during the period
ended March 31, 1999:
<TABLE>
<CAPTION>
Incentive Stock Option Plan Others
---------------------- ----------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Shares Price Shares Price
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Outstanding at October 1, 1998 -- -- -- --
Granted 1,135,000 $ 0.81 350,000 $ 3.35
Exercise -- -- -- --
Forfeited -- -- -- --
--------- --------- --------- ---------
Outstanding at March 31, 1999 1,135,000 $ 0.81 350,000 $ 3.35
========= ========= ========= =========
Options exercisable at
March 31, 1999 785,000 $ 0.50 -- --
========= ========= ========= =========
Weighted average fair value
of options granted during
year $ 0.004
=========
</TABLE>
F-10
<PAGE>
Note 8. STOCK OPTION PLAN (Continued)
Following is a summary of the status of the options outstanding at
March 31, 1999:
Outstanding Options Exercisable Options
----------------------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Contractual Exercise Exercise
Price Range Number Life Price Number Price
----------- ----------- ----------- --------- ------ ---------
Incentive Stock Option Plan:
$0.50-$0.75 785,000 5 years $0.50 785,000 $0.50
$1.50-$1.50 350,000 5 years $1.50 -- --
Others:
$3.35-$3.35 350,000 5 years $3.35 -- --
Note 9. ACQUISITION
On March 11, 1999 the Company entered into an Agreement and Plan of
Exchange with a related corporation, Global Investors Guide. As of
March 11, 1999 Global became a wholly owned subsidiary of the Company.
On March 11, 1999 the Company issued shares of stock to each common
stock shareholder of Global in exchange for all of the issued and
outstanding Global stock at an exchange rate of 1,826 shares of the
Company's common stock for 1 share of Global's common stock (See Note
1).
Pursuant to this agreement the shareholders of Global received
1,826,000 Shares of the Company's common stock in exchange for its
issued and outstanding common shares.
Note 10. DEFERRED OFFERING COSTS
As of September 30, 1998 and March 31, 1999, the Company had,
respectively, $3,000 and $5,000 in professional fees, which related
directly to Rule 506 offerings in process.
Note 11. INCOME TAXES
The Company has a Federal net operating loss carryforward of
approximately $280,000, which will expire in the year 2014. The tax
benefit of this net operating loss of approximately $175,000 has been
offset by a full allowance for realization. This carryforward may be
limited upon the consummation of a business combination under Section
381 of the Internal Revenue Code.
F-11
<PAGE>
Note 12. YEAR 2000
The Company has assessed its exposure to date sensitive computer
software programs that may not be operative subsequent to 1999 and has
implemented a requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruption of normal business
operations are encountered. However, because there is no guarantee that
all systems of outside vendors or other entities on which the Company's
operations rely will be 2000 compliant, the Company remains susceptible
to consequences of the Year 2000 issue.
Note 13. SUBSEQUENT EVENTS
In April 1999 the Company converted $150,000 of debt and accrued
interest due to an unrelated party into 300,000 shares of stock at a
value of $164,251 (see Note 3).
In April 1999 the Company converted an amount due to a related party of
$100,000 into 200,000 shares of stock.
During April 1999, 1,000,000 shares of stock were issued to various
investors at $1.00 per share for cash of $1,000,000, pursuant to a
Regulation D, Rule 506 offering. Issuance costs were $10,000.
The Company entered into an operating lease for office space in April
1999. The lease has a one year term with monthly payments of $9,540.
F-12
<PAGE>
INDEX TO EXHIBITS
2.1 Agreement and Plan of Reorganization for the Acquisition of all of the
Outstanding Shares of Common Stock of Global Investors Guide by
Ubrandit.com *
3.1 Ubrandit.com Articles of Incorporation and amendments *
3.2 Ubrandit.com By-laws *
10.1 1999 Stock Option and Incentive Plan *
10.2 Form of Incentive Stock Option Agreement **
10.3 Form of Non-Statutory Stock Option Agreement **
10.4 Information Distribution Agreement *
10.5 Database License Agreement ***
10.6 Computer Software License Agreement *
10.7 License Agreement ***
11.1 Statement of Computation of per share earnings reference is made to the
Income Statement of the Financial Statements *
21.1 Subsidiary of Registrant Global Investment Guide, Inc. Articles of
Incorporation *
21.2 Subsidiary of Registrant Global Investment Guide, Inc. By-laws *
- ----------
* Filed herewith.
** To be filed with subsequent amendment to the Registration Statement.
*** To be filed with subsequent amendment to the Registration Statement.
Portions omitted pursuant to a confidential treatment request to be
filed separately with the Commission.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Ubrandit.com
by:
Jeff Phillips,
President and Chief Executive Officer
36
AGREEMENT AND PLAN OF REORGANIZATION
FOR THE ACQUISITION OF ALL OF THE OUTSTANDING SHARES OF
COMMON STOCK OF GLOBAL INVESTORS GUIDE
BY UBRANDIT.COM
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
RECITALS ..................................................................................................1
ARTICLE I - THE REORGANIZATION ............................................................................2
ARTICLE II - EXCHANGE OF SHARES ...........................................................................3
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF GIG .......................................................4
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF UBRANDIT ...................................................9
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS ...............................................12
ARTICLE VI - MISCELLANEOUS ...............................................................................13
EXHIBITS:
List of GIG Shareholders ............................................................................"A"
Liabilities of GIG .................................................................................."B"
Schedule of Tangible Property of GIG ................................................................"C'
Accounts Receivable of GIG .........................................................................."D"
Contracts and Commitments of GIG ...................................................................."E"
Schedule of Proprietary Information and Intellectual Property of GIG ................................"F"
List of GIG Bank Accounts and Signatories Therefor .................................................."G"
Financial Statements of UBRANDIT ...................................................................."H"
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
FOR THE ACQUISITION OF ALL OF THE OUTSTANDING SHARES OF
COMMON STOCK OF GLOBAL INVESTORS GUIDE
BY UBRANDIT.COM
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated this 11' day of
March, 1999, by and among the common shareholders of GLOBAL INVESTORS GUIDE,
whose names are listed in Exhibit "A," a copy of which is attached hereto and
incorporated herein by this reference (the "Shareholders"), GLOBAL INVESTORS
GUIDE ("GIG"), a California corporation, and UBRANDIT.COM ("UBRANDIT"), a
Nevada corporation.
RECITALS:
A. WHEREAS, the Shareholders together own, beneficially and of record,
the issued and outstanding shares of the common stock of GIG (hereinafter the
shares of common stock are referred to as the "Exchanged Shares") as set forth
in the schedule attached hereto and incorporated herein by this reference as
Exhibit "A;" and
B. WHEREAS, UBRANDIT desires to purchase from each of the Shareholders
all of the outstanding Exchanged Shares owned by them solely in exchange for an
aggregate of 1,826,000 shares (the "UBRANDIT Shares") of the common stock of
UBRANDIT, par value $.001, and each of the Shareholders desires to exchange
their Exchanged Shares for the UBRANDIT Shares, the number of the Exchanged
Shares being surrendered and the number of UBRANDIT Shares being received by
each of the Shareholders is as set forth in Exhibit "A" hereto; and
C. WHEREAS, the parties hereto desire to set forth the definitive
terms and conditions upon which each of the Shareholders shall sell to
UBRANDIT, and UBRANDIT shall purchase from each of the Shareholders, all of the
Stock of GIG owned by each of them; and
D. WHEREAS, it is intended that GIG, UBRANDIT, and their respective
shareholders will recognize no gain or loss for U.S. federal income tax
purposes under Section 368 (a)(1)(B) of the Internal Revenue Code of 1986, as
1
<PAGE>
amended (the "Code"), and the regulations promulgated thereunder as a result of
the Reorganization; and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements contained herein,
and in accordance with the applicable provisions of state law, the parties
hereto covenant and agree as follows:
ARTICLE I
THE REORGANIZATION
1.1 The Reorganization. On and as of the Closing (as defined in
Section 1.2 below) of this Agreement, the Shareholders shall surrender all of
their Exchanged Shares in exchange for the UBRANDIT Shares in the amounts set
forth opposite the respective names of the Shareholders in Exhibit "A." The
transactions contemplated hereby are intended to qualify as a tax-free
reorganization under ss.368(a)(1)(B) of the Code and the regulations
promulgated thereunder and the parties hereto agree to report them as such.
1.2 Closing. The closing of the Reorganization (the "Closing") shall
take place (i) at the offices of GIG, at 1130 Camino Del Mar, Suite J, Del Mar,
CA 92014 at 10:00 a.m., local time, on March 11, 1999; or (ii) at such other
time and place and on such other date as the Shareholders, GIG, and UBRANDIT
agree (the "Closing Date"). The Closing Date shall be the effective date of the
Reorganization.
1.3 Taking of Necessary Actions. The Shareholders, GIG, and UBRANDIT
shall each take all such actions as may be reasonably necessary or appropriate
in order to effectuate the transactions contemplated hereby and to make the
Reorganization effective as of the Effective Date. If at any time after the
Effective Date any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest UBRANDIT with full title to all of the
Exchanged Shares, the Shareholders, and the officers and directors of GIG and
UBRANDIT, at the expense of UBRANDIT, shall take all such necessary or
appropriate action. To effect the intents and purposes of this Agreement, the
following actions shall be taken at the Closing, shall be deemed to occur
2
<PAGE>
simultaneously, and the accomplishment of which actions by the parties whose
duty it is to perform such actions is duly acknowledged by the execution of this
Agreement by the parties hereto:
1.3.1 Negotiation of Employment Agreements. As soon as
practicable after the Closing, but in no event longer than 60 days after the
Closing Date, UBRANDIT agrees to negotiate in good faith with respect to
entering into employment agreements, to be approved by the Board of Directors
of UBRANDIT, by and between UBRANDIT, as employer, and Mike Fagan, J. Eric
Arterburn, Mark Cullivan, and Will Childers as employees, all of whom are
currently employed by GIG.
1.3.2 Delivery of Exchanged Shares to UBRANDIT; Delivery of
the UBRANDIT Shares to the Shareholders. In consideration of the tender by the
Shareholders of their Exchanged Shares, copies of which are attached hereto as
Exhibit "C," UBRANDIT shall deliver irrevocable orders to UBRANDIT's transfer
agent, Pacific Stock Transfer Company, ("PSTC") to issue the UBRANDIT Shares to
the Shareholder Representative, on behalf of the Shareholders, in such amounts
as set forth in Exhibit "A."
ARTICLE II
EXCHANGE OF SHARES
2.1 Exchange of Shares. Subject to the terms and conditions of this
Agreement, on the Closing Date, by virtue of the Reorganization and without any
further action on the part of the Shareholders, GIG, or UBRANDIT, all of the
Exchanged Shares shall be exchanged for the UBRANDIT Shares in the amounts to
the Shareholders as set forth in Exhibit "'A." Each share of the UBRANDIT
Shares shall be validly issued, duly authorized, fully paid, and nonassessable
shares of the Common Stock of UBRANDIT as of the Closing Date.
2.2 Exchange of Certificates. At the Closing, UBRANDIT shall present
and deliver to the Shareholders an irrevocable direction to PSTC to issue
stock certificates representing the UBRANDIT Common Shares to be issued GIG
shareholders pursuant to the Schedule set forth in Exhibit"A". Upon delivery
3
<PAGE>
thereof, the Shareholders shall present and deliver to UBRANDIT all of the
certificates representing the Exchanged Shares.
2.3 No Further Rights. From and after the Closing Date, holders of
certificates formerly evidencing the Exchanged Shares shall cease to have any
rights as shareholders of GIG, except as provided herein or by law.
2.4 Conditions Precedent to Closing.
2.4.1 The Closing shall be contingent upon the agreement of
Shareholders holding a minimum of 80% of the outstanding Exchange Shares. At
such time as Shareholders holding a minimum of 80% of the Exchanged Shares have
entered into this Agreement, the parties shall proceed with the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OFGIG
GIG represents and warrants to, and covenants with, UBRANDIT, as of
the date hereof and as of the Closing Date, as follows:
3.1 Organization and Corporate Power. GIG is a corporation duly
organized, in good standing, and validly existing under the laws of California.
GIG has all requisite corporate power and authority to conduct its business as
now being conducted and to own and lease the properties which it now owns and
leases. The charter documents of GIG as amended to date, the Bylaws of GIG as
amended to date, which have previously been provided to UBRANDIT by GIG, are
true and complete copies thereof as currently in effect.
3.2 Authorization. GIG has full corporate power, legal capacity, and
authority to enter into this Agreement, to execute all attendant documents and
instruments contemplated hereby, and to perform all of its obligations
hereunder. This Agreement, and each and every other agreement, document and
instrument to be executed by GIG in connection herewith, has been effectively
authorized by all necessary action on the part of GIG, including without
4
<PAGE>
limitation the approvals of GIG's Board of Directors, which authorizations
remain in full force and effect, have been duly executed and delivered by GIG.
No other authorizations or proceedings on the part of GIG or the Shareholders,
or otherwise, are required to authorize this Agreement and/or the transactions
contemplated hereby. This Agreement constitutes the legal, valid and binding
obligation of GIG and each of the Shareholders and is enforceable against each
of them in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, priority or other laws or court
decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
3.3 No Conflicts; No Consents. Neither the execution and delivery of
this Agreement, nor the consummation by GIG or the Shareholders of any of the
transactions contemplated hereby, or compliance with any of the provisions
hereof, will (i) conflict with or result in a material breach of, violation of,
or default under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, license, lease, credit agreement or other
agreement, document, instrument, permit, authorization, or obligation
(including, without limitation, any of its charter documents) to which GIG is a
party or by which it or any of its assets or properties may be bound, or (ii)
violate any judgment, order, injunction, decree, statute, rule or regulation
applicable to GIG or its assets or properties, the violation of which would
have a material adverse effect upon the business, properties, or assets, or in
the condition (financial or otherwise) of GIG. No authorization, consent or
approval of any public body or authority was or is necessary for the
consummation by GIG or the Shareholders of the transactions contemplated by
this Agreement.
3.4 Capitalization. The authorized capital stock of GIG consists of
10,000 shares of common stock, no par value. As of the date hereof, there are
1,000 shares of common stock issued and outstanding. There are no outstanding
contracts or other rights to subscribe for or purchase, or contracts or
obligations to issue or grant any rights to acquire any equity security of
GIG. GIG does not have any contracts or obligations to redeem, repurchase, or
otherwise reacquire any equity security of GIG. All of the Exchanged Shares
are duly authorized, validly issued and outstanding, fully paid, and
nonassessable and have been issued in conformity with all applicable laws.
5
<PAGE>
3.5 No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or, to the best knowledge of GIG,
threatened against or affecting GIG affecting the Shareholders' rights in the
Exchanged Shares (including actions, suits or proceedings where liabilities may
be adequately covered by insurance) at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, court,
board, bureau, agency or instrumentality, domestic or foreign, or affecting any
of the officers, directors of GIG or the Shareholders in connection with the
business, operations or affairs of either of them, which might reasonably be
expected to result in any material adverse change in the business, properties
or assets, or in the condition (financial or otherwise) of GIG, or which
question or challenge the Reorganization. GIG is not subject to any voluntary
or involuntary proceeding under federal bankruptcy laws and has not made an
assignment for the benefit of creditors.
3.6 Liabilities. Attached hereto as Exhibit "B" is a schedule of the
material liabilities of GIG, other than then the Contracts and Commitments that
GIG is party to set forth in Paragraph 3.16 of this Agreement, and the
Creditors willing to discharge GIG debt for shares of UBRANDIT Common Stock.
The parties to this Agreement have agreed to pay certain of the creditors of
GIG with common shares of UBRANDIT. Said creditors have agreed to discharge
$.50 of GIG debt in exchange for one share of UBRANDIT restricted Common Stock.
Exhibit "B" fairly and accurately reflects the material liabilities of GIG.
3.7 Applicable Permits.GIG holds all licenses, franchises, permits,
and authorizations necessary for the lawful conduct of its business as
presently conducted and which the failure to so hold would have a material
adverse effect upon the business, properties, or assets, or the condition
(financial or otherwise) of GIG.
3.8 Disclosure. Neither GIG nor, to its knowledge, any of the
Shareholders has any knowledge of any fact which has not been disclosed in
writing to UBRANDIT which may reasonably be expected to materially and
adversely affect the business, properties, or assets, or the condition
(financial or otherwise) of GIG or title of the Shareholders to the Exchanged
Shares or their ability to perform all of the obligations to be performed by
6
<PAGE>
them under this Agreement and/or any other agreement between GIG, the
Shareholders, and UBRANDIT to be entered into pursuant to any provision of this
Agreement.
3.9 Ownership of GIG. GIG issued each Shareholder that number 'Of
Shares set forth opposite the Shareholder's respective name on Exhibit "A,"
which shares together constitute all of the issued and outstanding shares of
the capital Stock, common and preferred, of GIG. The Shares are duly
authorized, validly issued and outstanding, fully paid and nonassessable and
were issued by GIG in conformity with all applicable laws.
3.10 Subsidiaries. GIG has no subsidiaries and no investments,
directly or indirectly, or other financial interest in any other corporation or
business organization, joint venture or partnership of any kind.
3.11 Real Property. GIG has no real property owned by it or under
long term lease to or subleased by it.
3.12 Tangible Personal Property. GIG owns the tangible personal
property set forth in Exhibit "C "
3.13 Tax Matters. GIG has, since its inception, duly filed all
material federal, state, municipal, local, and other tax returns. Copies of all
such tax returns have been made available for inspection by UBRANDIT prior to
the execution hereof. All federal, state, municipal, local, and other taxes
shown to be due on such returns have been paid or will be paid prior to the
time they become delinquent.
3.14 Accounts Receivable. GIG has the accounts receivable set forth
in Exhibit "D".
3.15 Inventory. GIG has no inventories of raw materials,
work-in-process, or finished goods.
3.16 Contracts and Commitments. GIG has no contract, agreement,
obligation or commitment, written or oral, expressed or implied, which involves
a commitment or liability of GIG in excess of $5,000, (except obligations set
forth in Exhibit "E") and no union contracts, employee or consulting contracts,
financing
7
<PAGE>
agreements, debtor or creditor arrangements, licenses, franchise,
manufacturing, distributorship or dealership agreements, leases, or bonus,
health or stock option plans. As of the date hereof, to the best of their
knowledge, there exist no circumstances which would affect the validity or
enforceability of any of such contracts and other agreements in accordance with
their respective terms. GIG has performed and complied in all material respects
with all obligations required to be performed by it to date under, and is not
in default (without giving effect to any required notice or grace period)
under, or in breach of, the terms, conditions or provisions of any of such
contracts and other agreements. The validity and enforceability of any contract
or other agreement described herein has not been and shall not be materially
and adversely affected by the execution and delivery of this Agreement without
any further action.
3.17 Proprietary Information and the intellectual property. The
Intellectual property, work product, computer code, and proprietary systems and
procedures owned and/or developed by GIG are set forth in Exhibit "F".
3.18 Insurance. GIG maintains no insurance policies.
3.19 Arrangements with Employees; Labor Relations. There are no
bonus, pension, profit sharing, commission, deferred compensation or other
plans or arrangements in effect as of the date of this Agreement. GIG has no
obligations under any collective bargaining agreement or other contract, under
any employment contract or consulting agreement, or under any executive's
compensation plan, agreement or arrangement.
3.20 Bank Accounts. All bank and savings accounts, and other accounts
at similar financial institutions, of GIG existing at date of Closing are
listed on Exhibit "G." Exhibit "G" contains a list of the name of each person
or entity authorized to sign on the bank accounts, borrow money, or incur or
guarantee indebtedness on behalf of GIG.
3.21 Powers of Attorney. No valid powers of attorney from GIG to any
person or entity exist as of the date of this Agreement.
8
<PAGE>
3.22 Relationships with Customers and Suppliers. No present
substantial customer or substantial supplier to GIG has indicated an intention
to terminate or materially and adversely alter its existing business
relationship therewith, and, to the best knowledge of GIG, none of the present
customers of or substantial suppliers to GIG intends to do so.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF UBRANDIT
UBRANDIT hereby represents and warrants to, and covenants with, each
of the Shareholders and GIG as follows:
4.1 Organization and Corporate Power. UBRANDIT is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. UBRANDIT has all requisite corporate power and authority to conduct its
business as now being conducted and to own and lease the properties which it
now owns and leases. The Articles of Incorporation as amended to date,
certified by the Secretary of State of Nevada, the Bylaws of UBRANDIT as
amended to date, and the resolutions of UBRANDIT's directors authorizing the
execution, delivery, and performance of this Agreement, all certified by the
President and the Secretary of UBRANDIT, which have previously been provided to
GIG by UBRANDIT, are true and complete copies thereof as currently in effect.
4.2 Authorization. UBRANDIT has full corporate power, legal capacity
and corporate authority to enter into this Agreement, to execute all attendant
documents and instruments contemplated hereby, to enter into this
Reorganization, and to perform all of its obligations hereunder. This
Agreement, and each and every other agreement, document and instrument to be
executed by UBRANDIT in connection herewith, has been effectively authorized by
all necessary action on the part of UBRANDIT, including without limitation the
approvals of UBRANDIT's Board of Directors which authorizations remain in full
force and effect, have been duly executed and delivered by UBRANDIT, and no
other authorizations or proceedings on the part of UBRANDIT, or otherwise, are
required to authorize this Agreement and/or the transactions contemplated
9
<PAGE>
hereby. This Agreement constitutes the legal, valid, and binding obligation of
UBRANDIT and is enforceable against UBRANDIT in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
priority or other laws or court decisions relating to or affecting generally
the enforcement of creditors' rights or affecting generally the availability of
equitable remedies.
4.3. No Conflicts; No Consents. Neither the execution and delivery of
this Agreement, nor the consummation by UBRANDIT of any of the transactions
contemplated hereby, or compliance with any of the provisions hereof, will (i)
conflict with or result in a material breach of, violation of, or default
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, license, lease, credit agreement or other agreement,
document, instrument or obligation (including, without limitation, any of its
charter documents) to which UBRAND1T is a party or by which it or any of its
assets or properties may be bound, or (ii) violate any judgment, order,
injunction, decree, statute, rule or regulation applicable to UBRANDIT or its
assets or properties, the violation of which would have a material adverse
effect upon the business, properties, or assets, or in the condition (financial
or otherwise) of UBRANDIT. No authorization, consent or approval of any public
body or authority was or is necessary for the consummation by UBRANDIT of the
transactions contemplated by this Agreement.
4.4 Capitalization. The authorized capital stock of UBRANDIT consists
of 25,000,000 shares of common stock, par value one hundredth of $.001. As of
the date hereof, there are 6,930,000 shares of common stock issued and
outstanding. All of the shares of common stock issued and outstanding are
validly issued, fully paid, and nonassessable. Additionally non-statutory stock
options to purchase 995,000 have been granted to key employees and directors
for an exercise price of $.50 to $1.00 per share pursuant to the vesting
schedules of the respective agreements. Except for said options there are no
outstanding options, warrants, contracts or other rights to subscribe for or
purchase, or contracts or obligations to issue or grant any rights to acquire
any equity security of UBRANDIT. All of the UBRANDIT Shares, when issued to the
Shareholders, will be duly authorized, validly issued and outstanding, fully
paid and nonassessable and were issued in conformity with all applicable laws.
10
<PAGE>
4.5 Financial Statements of UBRANDIT; Absence of Undisclosed
Liabilities; No Adverse Changes. Attached hereto as Exhibit "H" are the audited
financial statements of UBRANDIT dated December 31, 1998. Such financial
statements (and the notes related thereto) are herein sometimes collectively
referred to as the "UBRANDIT Financial Statements." The UBRANDIT Financial
Statements are derived from the books and records of UBRANDIT, which books and
records have been consistently maintained in a manner which reflects, and such
books and records do fairly and accurately reflect, the assets and liabilities
of UBRANDIT and fairly and accurately present the financial condition of
UBRANDIT on the date of such statements and the results of its operations for
the periods indicated, except as may be disclosed in the notes thereto.
4.6 Tax Matters. UBRANDIT has, since its inception, accurately
prepared and duly filed all federal, state, county and local tax returns
required to have been filed by it in those jurisdictions where the nature or
conduct of its business requires such filing and where the failure to so file
would be materially adverse to UBRANDIT.
4.7 No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or, to the best knowledge of UBRANDIT,
threatened against or affecting UBRANDIT (including actions, suits or
proceedings where liabilities may be adequately covered by insurance) at law or
in equity or before or by any federal, state, municipal or other governmental
department, commission, court, board, bureau, agency or instrumentality,
domestic or foreign, or affecting any of the shareholders, officers or
directors of UBRANDIT in connection with the business, operations or affairs of
UBRANDIT, which might result in any material adverse change in the business,
properties or assets, or in the condition (financial or otherwise) of UBRANDIT,
or which question or challenge the Reorganization. UBRANDIT is not subject to
any voluntary or involuntary proceeding under applicable bankruptcy laws and
has not made an assignment for the benefit of creditors.
4.8 Permits and Authorizations. UBRANDIT (i) holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business as presently conducted and which the failure to so hold would have a
11
<PAGE>
material adverse effect upon the business, properties, or assets, or the
condition (financial or otherwise) of UBRANDIT.
4.9 Disclosure. UBRANDIT has no knowledge of any fact which has not
been disclosed in writing to GIG or the Shareholders which may reasonably be
expected to materially and adversely affect the business, properties,
operations, and/or prospects of UBRANDIT or the ability of UBRANDIT to perform
all of the obligations to be performed by UBRANDIT under this Agreement and/or
any other agreement between GIG and UBRANDIT to be entered into pursuant to any
provision of this Agreement.
4.10 Subsidiaries. UBRANDIT has no subsidiaries and no investments,
directly or indirectly, or other financial interest in any other corporation or
business organization, joint venture or partnership of any kind whatsoever
except as reflected in the UBRANDIT Financial Statements.
4.11 Offering. Subject to the accuracy of the Shareholders
representations in Section 5.4 hereof, the offer, sale, and issuance of the
UBRANDIT Shares to be issued in conformity with the terms of this Agreement and
the transactions contemplated hereby, constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and from all applicable state registration or qualification
requirements.
4.12 Reporting Requirements. UBRANDIT has complied with and will
maintain its compliance with all of the reporting requirements under the Act
and the Securities Exchange Act of 1934, as amended, through the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each of the Shareholders, severally and not jointly, represent and
warrant to and covenant with UBRANDIT, as of the date hereof, as follows:
5.1 Authority. The Shareholder has full rights, power, and authority
to enter into this Agreement; the execution, delivery, and performance of this
12
<PAGE>
Agreement by the Shareholder and the consummation by the Shareholder of the
transactions contemplated hereby will not conflict with or result in a breach
of any agreement to which the Shareholder is a party.
5.2 Title. The Shareholder has valid and marketable title to the
number of Shares set forth opposite such Shareholder's name on Exhibit "A,"
free and clear of any pledge, lien, security interest, or encumbrance other
than pursuant to this Agreement. As of the Closing Date there is no lien,
charge, mortgage, pledge, conditional sale agreement, or other encumbrance of
any kind or nature recorded in the book of registry of shareholders of GIG with
respect to any of the Exchanged Shares owned by the Shareholder and the
Exchanged Shares set forth in Exhibit "A" are duly registered in the name of
the Shareholders as set forth in Exhibit "A."
5.3 Restricted Stock. The Shareholder acknowledges that the Exchanged
Shares being issued to the Shareholders hereunder will be issued by UBRANDIT
without registration or qualification or other filings being made under the
Act, or the securities or "blue sky" laws of any state, in reliance upon
specific exemptions therefrom, and in furtherance thereof the Shareholder
represents that he is acquiring and will hold the shares to be delivered
hereunder for his own account, for investment only, and not for distribution
within the meaning of the U.S. federal securities laws. The Shareholder
acknowledges that a legend, substantially in the following form, shall be
placed upon the face of each certificate representing any of UBRANDIT Shares
being delivered to the Shareholders hereunder:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT.
ARTICLE VI
MISCELLANEOUS
6.1 Taxes and Expenses.
13
<PAGE>
6.1.1 Except as otherwise expressly provided in 6.1.2 immediately
below, GIG and UBRANDIT shall pay all of their own respective taxes, attorneys'
fees and other costs and expenses payable in connection with or as a result of
the transactions contemplated hereby and the performance and compliance with
all agreements and conditions contained in this Agreement respectively to be
performed or observed by each of them. The parties represent and warrant that
no brokerage, finders' or other similar fees are being paid by any of the
parties in connection with this Agreement.
6.1.2 The Shareholders shall pay all income taxes, if any, which
become due on account of the sale and transfer of the Exchanged Shares to
UBRANDIT.
6.1.3 The representations and warranties of GIG, the Shareholders,
and UBRANDIT contained herein and in any other document or instrument delivered
by or on behalf of GIG and/or the Shareholders or on behalf of UBRANDIT
pursuant hereto shall survive the Closing.
6.2 Payment of Certain Debts of GIG. All parties to this Agreement
have agreed to the payment by separate agreements of certain debts of GIG with
common shares of UBRANDIT. Certain creditors have agreed to discharge GIG debt
at an exchange formula of $.50 of GIG debt for one share of UBRANDIT restricted
Common Stock. Exhibit "B" sets forth the Creditors of GIG willing to accept
shares in UBRANDIT.
6.3 Other Documents. Each of the parties hereto shall execute and
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
6.4 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, the heirs, personal
representatives, successors and assigns of UBRANDIT, the Shareholders, and GIG,
but shall not confer, expressly or by implication, any rights or remedies upon
any other party.
14
<PAGE>
6.5 Governing Law. This Agreement is made and shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
State of Nevada.
6.6 Notices. Any notice or the delivery of any item to be delivered
by a party hereto shall be delivered personally, by U.S. mail, return receipt
requested, or by Federal Express, next-day delivery. Any personal delivery made
shall be deemed to have been made upon the execution of a receipt for the item
to be delivered by the party to whom delivery is made. Delivery by U.S. mail or
Federal Express shall be deemed to have been made when delivered by Federal
Express to the party to whom addressed. All such deliveries shall be made to
the following addresses, or such other addresses as the parties may have
instructed the others in accordance with the provisions of this Paragraph:
(a) If to UBRANDIT: UBRANDIT.COM
3651 Lindell Road
Suite A, Las Vegas
Nevada, 89103
(b) If to GIG
or the Shareholders: GLOBAL INVESTORS GUIDE
1130 Camino Del Mar,
Suite J, Del Mar,
California, 92014
Any party hereto may change its address by written notice to the other party
given in accordance with this Section 6.5.
6.7 Entire Agreement. This Agreement and the exhibits attached hereto
contains the entire agreement between the parties and supersede all prior
agreements, understandings and writings between the parties with respect to the
subject matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting with authority on behalf of any party,
which are not embodied herein or in an exhibit hereto, and that no other
agreement, statement or promise may be relied upon or shall be valid or
binding. Neither this Agreement nor any term hereof may be changed, waived,
15
<PAGE>
discharged or terminated orally. This Agreement may be amended or any term
hereof may be changed, waived, discharged or terminated by an agreement in
writing signed by UBRANDIT, GIG, and the Shareholders.
6.8 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any court, department, offficial,
political subdivision, agency or other instrumentality of any government,
whether state, local or federal, the remaining provisions of this Agreement to
the extent permitted by aw, the parties hereto waive any provision of law that
renders any provision hereof invalid or unenforceable in any respect.
6.9 Headings. The captions and headings used herein are for
convenience only and shall not be construed as a part of this Agreement.
6.10 Attorney's Fees. In the event of any litigation between the
parties, the non-prevailing part shall pay the reasonable expenses, including
the attorney's fees, of the prevailing party in connection therewith.
6.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
6.12 Rule 144 Opinions. The parties agree that after the Closing
UBRANDIT shall reasonably cooperate with respect to requests for opinions of
counsel or authorization of officers of UBRANDIT to facilitate the sale of
unrestricted shares of common stock of UBRANDIT being made in reliance on the
terms and conditions of Rule 144 under the Securities Act of 1933 sales.
6.13 Gender. Whenever the content of this Agreement requires, the
masculine gender shall include the feminine or neuter, and the singular number
shall include the plural.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
16
<PAGE>
Exhibit "A"
List of GIG Shareholders
Shareholder Number of GIG Shares Number of UBRANDIT Shares
to Receive
- --------------------------------------------------------------------------------
Jeff Phillips 880 1,606,880
Mike Fagan 30 54,780
J. Eric Arterburn 30 54,780
Mark Cullivan 30 54,780
Will Childers 30 54,780
<PAGE>
Exhibit "B"'
Liabilities of GIG
Creditor: Bloomington Corporate Services
Debt: $150,000
Creditor: Market Publishing
Debt: $100,000
<PAGE>
<TABLE>
Exhibit "C"
Schedule of Tangible Personal Property
<CAPTION>
Computers
Processor RAM (MBs) Hard Drive (GIG's) 0/s Monitor
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Workstations
P11300 MMX 64 4 Win98 4.10.1998 CyberVision C112 21"
PPro 180 128 3.7 Win95 4.00.950B CyberVision DS95 21"
P120 32 1.5 Win98 4.10.1998 Shamrock 17"
P233 MMX 32 1.5 Win98 4.10.1998 Shamrock 17"
P233 MMX 32 1.5 Win98 4.10.1999 Micron 17"
P166 32 2 Win95 4.00.950C NEC XV-17 17"
P133 48 1.5 Win98 4.00.1998 Impressions 7 Plus 17"
File Servers
P200 MMX 64 3.7, 1.2 WinNT 4.00.1381 SP3 Shamrock 15"
P90 32 4.5 WinNT 4.00.1381 SP3
Web Servers
P11300 MMX 128 8 VVinNT 4.00.1381 SP3
P166 64 6 WinNT 4.00.1381 SP3
P11300 MMX 256 8 WinNT 4.00.1381 SP3
P11350 MMX 128 10 WinNT 4.00.1281 SP3
P11350 MMX 256 10.0, 10.0 WinNT 4.00.1381 SP4
</TABLE>
Printers
HP Office Jet 570
Rena DA590
Epson Stylus Color 800
HP Laster Jet 4+
HP Laser Jet 5
HP Laser Jet 5
Other Miscellaneous Office Equipment
Toshiba 2060 Copier
MBM 3802 Shredder
ASCOM Hasler System 220 Postage Meter
Sharp UX-1100 Fax Machine
HP Fax-700
HP Fax-750
HP Scan Jet 4C
Zip Drive
HP SureStore T4
Nitsuko NX7NA-824 Phone System
<PAGE>
Exhibit "'D"
Global Investors Guide, Inc. has no accounts receivable
<PAGE>
Exhibit "E"
Contracts and Commitments of GIG
1. Agreement with S&P Comstock Financial to provide GIG with financial data for
a fee of $3,500 pre month 3month left on contract automatic renewal 2.
Agreement with Tal Software license payment of $1,000 per month.
Agreement expires in July.
3. Agreement with Muze, Inc. $3500 per month beginning March 15, 1999 one year
term.
<PAGE>
Exhibit "F"
Proprietary Information and Intellectual Property
1) Web sites (active and inactive)
a. gigweb.com
b. newsletterz.com
c. ubrandit.com
d. junglejeff.com
e. bmvs.com
f. bookmusicvideostore.com
g. irpackage.com
All HTML files, .GIF and .JPG images, and any CGI/PERL/ASP scripts or other
executable code modules necessary to implement the functionality of the sites.
Along with servers housing these web sites and files.
<PAGE>
Exhibit "G"
List of GIG Bank Accounts and Signatures
Account Name Account # Signers
------------ --------- -------
Financial Newsletters 23514-07583 Mark Cullivan
Jeff Phillips
The Book, Music, Video Store 23518-07581 Mark Cullivan
Jeff Phillips
Global Investors Guide Checking 23517-06624 Mike Fagan
Jeff Phillips
<PAGE>
Exhibit "H"
Financial Statements of UBRANDIT
<PAGE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
TABLE OF CONTENTS
Page Number
-----------
ACCOUNTANT'S REPORT........................................................1
FINANCIAL STATEMENT:
Balance Sheet......................................................2
Statement of Operations and Deficit
Accumulated During the Development Stage...........................3
Statement of Changes in Stockholders' Equity.......................4
Statement of Cash Flows............................................5
Notes to the Financial Statements..................................6
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. - Suite H Las Vegas. NV
89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
To the Board of Directors and Stockholders
of Mount Merlot Estates, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheet or Mount Merlot
Estates, Inc. (a development stage company) as of December 31, 1998 and the
related statements of operations, cash flow and changes in Stockholders' equity
for the period from December 19, 1997 (date of inception) to December 31. 1998.
These financial statements are the responsibility of Mount. Meriot Estates,
Inc.'s manaqement. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with qenerallyy accepted
auditing Standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial Statements care 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 wel1 as evaluating the overall financial
statement presentation. I believe that my audit of the financial statements
provide a reasonable basis for my opinion.
In my opinion, the accompanying financial statements present
fairly, in all material respects, the lfinancial position of Mount Merlot
Estates, Inc. as of December 31, 1998 and the results of operations, cash flows
arid changes in stockholders' equity for the year then ended in conformity with
generally accepted accounting principles. David Coffey C.P.A. February 3, 1999
/s/David Coffey
---------------
David Coffey C.P.A.
February 3, 1999
-1-
<PAGE>
MOUNT MERLOT ESTATES INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Cash $ 44,187
Organizational costs less accumulated
amortization of SAO 320
--------
Total Assets $ 44,507
========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 400
--------
Total Liabilities 400
Stockholders' Equity
Common stock, authorized 25.000,000 shares
at S.001 par value, issued and outstanding
5,040.000 shares 5,040
Paid-in capital 39,160
Deficit accumulated during
the development stage (93)
--------
Total Stockholders' Equity 44,107
Total Liabilities and Stockholders' Equity $ 44,507
========
The accompanying notes are an inteqral part of
these financial statements.
-2-
<PAGE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED December 31. 1998
(With Cumulative Figures From Inception)
Inception
Year ended Dec. 19, 1997
Dec. 31, 1998 To Date
------------- -------------
Sales $ 0 $ 0
Expenses
Amortization 80 80
office expenses 13 13
----- -----
Total expenses 93 93
Net loss 0 $ (93)
===== =====
Deficit accumulated,
beginning of year 0
-----
Deficit accumulated during
the development stage $ (93)
=====
The accompanying notes are an integral part of
these financial statements.
-3-
<PAGE>
MOUNT MERLOT ESTATES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM December 19, 1991 (Date of Inception)
To December 31, 1998
Additional
Common Stock Paid-in
Shares Amount Capital Total
---------- ---------- ---------- ----------
Balance,
December 19, 1997 $ -- $ -- $ -- $ --
Issuance of common
stock for cash 40,000 40 360 400
---------- ---------- ---------- ----------
December 31, 1997 40,000 40 360 400
ISSUANCE Of common
stock for cash 5,000,0000 5,000 45,000 50,000
Less offering costs 0 0 (6,200) (6,200)
Less net loss 0 0 0 (93)
---------- ---------- ---------- ----------
Balance,
December 31, 1998 $5,040,000 $ 5,040 $ 39,160 44,107
========== ========== ========== ==========
The accompanying notes are an Integral part of
these financial statements.
-4-
<PAGE>
MOUNT MERLOT ESTATES. INC.
(A DEVLOPEMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED December 31, 1998
(with Cumulative Figures From Inception)
Inception
Year ended Dec.19, 1997
Dec. 31, 1998 To Date
-------- --------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (.93) $ (.93)
Noncash expenses included in net loss
Amortization 80 80
increase in accounts payable 0 400
-------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (13) 387
CASH FLOWS USED 13Y INVESTING ACTIVITIES
organizational Costs 0 400
-------- --------
NET CASH USED BY
INVESTING ACTIVITIES 0 400
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 5,000 5,040
Paid-in capital 45,000 45,360
Less offering costs (6,200) (6,200)
-------- --------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 43,800 44,200
-------- --------
NET INCREASE IN CASH 43,787 $ 44,187
-------- --------
CASH AT BEGINNING OF PERIOD 400 400
-------- --------
CASH AT END OF PERIOD $ 44,187 $ 44,187
======== ========
The accompanying notes are an integral part of
these financial statements.
-5-
<PAGE>
MOUNT MERLOT ESTATES, INC. (A DEVELOPMENT
STAGE COMPANY) NOTES TO The FINANCIAL
STATEMENTS December 31. 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on December 19, 1997 under the laws of the
State of Nevada. The business purpose of the Company is to engage in the
development. of a Merlot viliculture operation in Santa Ynez County.
California. The Company will adopt accounting policies and procedures
based upon the nature of future transactions.
NOTE B ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60 months
NOTE C STOCK OFFERING
On February 20, 1998, the Company prepared a stock offering for 5,000.000
shares of common stock $.01 per share. pursuant to Regulation 504 of the
Securities Act of 1993, as Amended, the "Act") . The Company sold
5,000,000 shares of common stock at. S.01 and received net proceeds of
$50.000.
NOTE D SUBSEQUENT EVENTS - STOCK OPTION AND INCENTIVE PLAN
On January 4, 1999, the Board of directors adopted the Stock Option and
Incentive Plan". The aggregate number of shares which may he issued as
awards under the plan is 2,500,000 shares. As of February 3, 1999, the
non statutory stock options to purchase 1,275,000 shares have been
granted to key employees and directors for the exercise price of $.50 per
share. The options expire January 25, 2004.
-6-
FILED
IN THE OFFICE OFTHE
SECRETARY OF STATE OF THE
STATE OF NEVADA
FEB 22, 1999
NO.C28591-97
------------
/s/Dean Heller
- ---------------
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION
VIRTUAL BRAND, INC.
JEFFREY PHILLIPS and GREGORY GIBSON certify that:
1. They are President and Secretary, respectively of Virtual
Brand, Inc., a Nevada corporation incorporated on December 19,
1997.
2. Article First of the Articles of Incorporation of this
corporation is amended to read as follows
ARTICLE FIRST.
FIRST. The name shall be: UBrandit.com
3. The foregoing Amendment of Articles of Incorporation has been
duly approved by the Board of Directors,
4. The corporation is a corporation that has issued stock.
5. The foregoing Amendment of Articles of Incorporation has been
duly approved by the required vote of shareholders in accordance
with Section 78.320 and 78.390 of the Nevada Revised Statutes. In
excess of 50% of the outstanding shares of the corporation voted
in favor of the Amendment that equaled or exceeded the vote
required.
We further declare under penalty of perjury under the laws of the
Stateof Nevada the matters set forth in this certificate are true
and correct of our own knowledge.
Date: February 18, 1999
/s/Jeffery Phillips /s/Gregory Gibson
---------------------------- -------------------------
JEFFERY PHILLIPS , President GREGORY GIBSON, Secretary
State of California
County of San Diego
This instrument was acknowledged befor me on
February 13, 1997 by
Jeff Phillips
as President Jamie L. Phillips
of UBrandit.com Commission #1189374
/s/Jamie L. Phillips Monterey Pacific, California
- -------------------- San Diego, County
Jamie L. Phillips My Comm. expires July 9, 2002
<PAGE>
SECRETARY OF STATE
[Seal of Nevada]
STATE OF NEVADA
CORPORATE CHARTER
1, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that MOUNT MERLOT ESTATES, INC. did on December 19, 1997 file in
this office the original Articles of Incorporation; that said Articles are now
on file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my
hand and affixed the Great Seal of State, at
my office, in Carson City, Nevada, on
December 22, 1997.
/s/Dean Heller
------------------
Dean Heller
Secretary of State
By: Kelly R. Davenport
----------------------
Kelly R. Davenport
Certification Clerk
THE GREAT SEAL OF THE STATE OF NEVADA [Raised Seal]
<PAGE>
CERTIFICATION AMENDING ARTICLES OF INCORPORATION
OF
MOUNT MERLOT ESTATES, INC.
The undersigned, being President and Secretary of MOUNT MERLOT ESTATES,
INC. a Nevada corporation, hereby Certify that by majority vote of the Board of
Directors and majority of the shareholders at a meeting held on January 5, 1999,
it was agreed by unanimous vote than the CERTIFICATION AMENDING ARTICLES OF
INCORPORATION be filed..
The undersigned further certify that the Original Articles of Incorporation
of MOUNT MERLOT ESTATES, INC. were filed with the Secretary of the State of
Nevada on the 19th. Day of December 1997. The undersigned further certify that
Articles First of the Original Articles of incorporation filed on December 19,
1997, herein is amended to read as follows:
ARTICLE FIRST
FIRST The name shall be:
VIRTUAL BRAND, INC.
The undersigned hereby certify that they have on this 6th day of January
1999., executed this Certificate Amending the Original Articles of Incorporation
hereto for filing with the Secretary of the State of Nevada.
/s/ Patricia Wiate
------------------
Patricia Wiate
State of California)
County of San Diego)ss
On this 6th day of January, 1999, before me the undersigned, a Notary Public in
and for the County of San Diego, State of California. Personally appeared
Patricia Wiate, known to be the person whose name is subscribed to the foregoing
Certificate Amending Articles of Incorporation and acknowledged to me that they
executed the same.
/s/ Ranji Patel
- -----------------
Notary Public
<PAGE>
FILED
In THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 19, 1997
No. C28591-97
---------------
/s/Dean Heller
--------------
Dean Heller, Secretary of State
ARTICLES OF INCORPORATION
-------------------------
OF
--
MOUNT MERLOT ESTATES, INC.
--------------------------
KNOW ALL MEN BY THESE PRESENTS, that we the undersigned, do hereby
associate into a corporation under and pursuant to the provisions and by
virtue of the laws of the State of Nevada, as provided in the Corporation Act
of 1925, and all acts amendatory and supplemental thereto, and for that
purpose do hereby make, subscribe, acknowledge, certify and set forth as
follows:
FIRST: That the name of the corporation shall be:
MOUNT MERLOT ESTATES, INC.
SECOND: The corporation may maintain offices, agencies and places of
business in any state in the United States and in foreign countries without
restriction as to place; and the corporation may keep such books, papers and
records of the corporation as are not required by law to be kept within the
State of Nevada, and as the Directors may find convenient, in such offices,
agencies and places of business.
THIRD: The nature of the business to be transacted and the objects and
purposes to be promoted and carried on by the corporation shall be as follows:
a) The provisions in the clauses contained in this Article are to be
construed both as purposes and powers and shall, except when
otherwise expressed in this Article be in no wise limited or
restricted by reference to or inference from the terms of any clause
of this, or of any other Article of these Articles, but each of the
purposes and powers specified in this Article shall
<PAGE>
be regarded as independent purposes and powers; and the
specification herein contained of particular powers is not intended
to be, and shall not be held to be, in limitation of the general
powers herein contained, or in limitation of the powers granted to
corporations under the laws of the State of Nevada, but is intended
to be, and shall be held to be, in furtherance thereof.
b) To perform services of every kind and nature authorized by law
for any person, firm, association or corporation. To enter into,
make, perform and carry out contracts of every kind and character
with any person, firm, association or corporation.
c) To engage in and conduct every type of building and/or
contracting and/or mining work in the State of Nevada and in every
state and territory of the United States, and/or in any foreign
country, including, but not limited to the construction of all types
of buildings, highways, mining developments, irrigation works, naval
and military installations, docks, piers, airports, ranching and
farming projects, and also to engage in every type and manner of
activity incidental thereto; and in connection with or independently
of the above, to own, lease and rent and/or in any manner deal with
and trade in every type and manner of motor vehicles, machinery,
equipment, merchandise and supplies, and to manage, operate and
conduct every type and manner of business in which such may be
employed; to enter into every kind and manner of contract and
agreement concerning such work; to give and post bond for the
faithful performance thereof; and without limitation, except as may
be imposed by law, to do every act and thing necessary and/or
required in the carrying on, operating and conducting of a general
contracting business; to engage in the transportation of passengers
and commodities both
<PAGE>
intrastate and interstate, and within the State of Nevada, and in
any other state - and territory in the United States and/or in any
foreign country; to build, rent, lease, buy, sell, own, operate and
manage machine shops, foundries, garages, service stations, depots,
hotels, restaurants, taxi cabs, stages, bus lines, freight lines,
passenger and transportation lines, railroads and steamships, and
airlines.
d) To manufacture, purchase, sell and deal in, export and import
personal property of all kinds other than and in addition to goods,
wares and merchandise hereinbefore set forth and described, and to
pledge, hypothecate, or to otherwise encumber the same in any manner
whatsoever, or to borrow thereon, in such ways and to such extent as
may be prescribed or required by the laws of any state of the United
States or any other country.
e) To mortgage, pledge, hypothecate and trade in all manner of
goods, wares, merchandise, commodities and products, including
machinery and mechanical appliances of every description.
f) To acquire by purchase, lease or otherwise, the good will,
business., property, assets, franchises and rights, in whole or in
part of any person, firm, association or corporation; and to assume
all or any of the liabilities thereof and to pay for the same in
cash, with the stock of this corporation or its debentures, or
bonds, or otherwise, and to hold, maintain, operate and conduct, as
well as in any manner to dispose of, the whole or any part of the
property so acquired, but always in accordance with, and subject to,
the laws of the State of Nevada.
g) To borrow money and contract debts when necessary for the
transaction of the business of the corporation, for the exercise of
its corporate rights, privileges or franchises, or for any
<PAGE>
other purpose of its incorporation; also to issue bonds, promissory
notes, bills of exchange, debentures and other obligations and also
evidences of indebtedness, payable at specified time or times, or
payable upon the happening of a specified event or events, and when
necessary to secure the same by mortgage, pledge or otherwise, for
money borrowed or goods purchased or for payment of property bought
or acquired or for any other lawful obligation; also to issue, sell
and dispose of certificates of investment or participation
certificates, upon such terms and under such conditions as are or
may be prescribed by the laws of the State of Nevada, or by the
by-laws of the corporation.
h) To loan the funds of the corporation upon notes, bonds,
mortgages, deeds of trust, debentures or other securities, or
property, real, personal or mixed, or otherwise.
i) To receive, collect and dispose of principal and interest,
dividends, income, increment and profits upon or from all or any
notes, stocks, bonds, deeds of trust, debentures, securities,
obligations and other property held, owned or possessed by the
corporation, or any other person, firm or corporation as escrow or
trustee or for the use and benefit of the corporation and to
exercise in respect of all such stocks, bonds, mortgages, deeds of
trust, notes, debentures, obligations, securities and all other
property and any and all bonds, any and all rights of individual
ownership thereof.
J) To purchase, acquire and to hold, use, operate, introduce, sell,
assign or otherwise dispose of, hire, let or license, any patents,
patent rights, licenses, trademarks, trade names, privileges,
formulas, secret processes, and any and all inventions, improvements
and processes used in connection with or
<PAGE>
secured under letters patent and grants of the United States of
America or any other country or government, and which may appear
likely to be advantageous or useful to the corporation, and to use,
exercise, develop, and grant licenses in respect of and to turn to
account, manufacture, build and construct under such patents,
licenses, processes and the like, inventions and improvements with
the view of working and developing the same and effectuating the
foregoing objects or any part thereof.
k) To act as agent, attorney in fact, trustee, or in any other
representative capacity for other persons, firms or corporations.
l) To guarantee, purchase, hold, sell, transfer, assign, mortgage,
pledge or otherwise dispose of the shares of the capital stock, or
of any bonds, securities or evidences of indebtedness, created by
any other corporation or corporations of the State of Nevada, or of
any other state or government, and while owner of such stocks to
exercise all rights, powers and privileges of ownership, including
the right to vote thereon.
m) To purchase, hold, sell, transfer and re-issue shares of its own
stock, but always in accordance with, and as permitted by, the laws
of the State of Nevada, and the by-laws of the corporation.
n) To enter into, make and perform contracts of every kind with any
person, firm, association or corporation, public, private or
municipal; or anybody politic, and with any state of with the
government of the United States or any dependency thereof, as well
as any foreign government; and in general to carry on and conduct
and engage in any business in connection with the foregoing,
<PAGE>
either as manufacturer, dealer, principal, agent, or otherwise
permitted to corporations organized under the laws of Nevada.
o) To establish, maintain, operate, conduct and carry on in the
State of Nevada and in any or all of the several states,
territories, possessions and dependencies of the United States, the
District of Columbia, and in any foreign country, its business or
any part or parts thereof, and as many other businesses, stores,
plants, factories, mills, warehouses, offices, and agencies as may
be necessary or deemed expedient for the corporation and its
business, as well as for the extension, expansion and exploitation
of the affairs, operation and benefit of the corporation.
p) To elect not to be taxed as a corporation, but as a Subchapter S
Corporation under the United States Internal Revenue Code.
q) And generally to do all and everything necessary, suitable,
convenient or proper for the accomplishment of any of the purposes
or the attainment of any of the objects or the furtherance of any of
the powers hereinbefore set forth, either alone or in association
with other corporations, firms, or individuals, and to do every
other act or thing incidental or pertaining to or growing out of the
aforesaid purposes or powers, and/or any of them, provided the same
be not inconsistent with the laws of the State of Nevada; and also
to exercise any and all of the powers conferred upon corporations by
the laws of the State of Nevada which now exist or which may be
hereafter conferred upon or granted to corporations by the laws of
the said State of Nevada.
r) In furtherance and not in limitation of the powers conferred by
the laws of the State of Nevada, the Board of Directors is
<PAGE>
expressly authorized from time to time to determine whether and to
what extent and at what times and places and under what conditions
and regulations the books and accounts of this corporation, or any
of them other than the stock ledger, shall be open to inspection of
the stockholders, and no stockholder shall have the right to inspect
any account or book or document of the corporation, except as
conferred by law or authorized by Resolution of the Directors or of
the Stockholders.
FOURTH: This corporation is authorized to issue Twenty-Five Million
(25,000,000) common shares of stock at one tenth of one cent ($.001) par value
rights and privileges to be set by the Board of Directors and no other class of
stock shall be authorized. All or part of the shares of the capital stock may
be issued by the corporation from time to time and for such consideration as
may be determined upon and fixed by the Board of Directors as provided by law.
FIFTH: The initial members of the Governing Board -shall be known as
Directors and the number thereof shall be One. A different number of Directors
may be fixed by the By-laws. provided, that the number may be increased or
decreased within the limit above specified from time to time pursuant to the
By-laws.
The names of the First Board, consisting of one (1) Directors, shall be
as follows:
NAMES: Delbert Marshall
--------
ADDRESS: 1000 Saliman Drive #A104 Carson City, Nevada 89701
--------
SIXTH: The capital stock, after the value thereof has been paid in, shall
be subject to no further assessment to pay debts of the corporation.
SEVENTH: The name of the incorporators signing these Articles of
Incorporation is as follows:
NAMES: Delbert Marshall
--------
ADDRESS: 1000 Saiman Drive #A104 Carson City, Nevada 89701
--------
<PAGE>
EIGHTH: This corporation is to have perpetual existence.
NINTH: 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;
From time to time, to determine whether, and to what extent, and at
what times and places, and under what conditions and regulations,
the accounts and books of this corporation (other than the original
or duplicate stock ledger), or any of them, shall be open to
inspection of stockholders, and no stockholder shall have any right
of inspecting any account, book or document of this corporation
except as conferred by statute, unless authorized by a Resolution of
the stockholders or directors; By Resolution, or Resolutions, passed
by a majority of the whole board, to designate one or more
committees, each committee to consist of two or more of the
directors of the corporation, which, to the extent provided in said
Resolution, or Resolutions, 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 affairs of the corporation, and may
have power to authorize the sea[ of the corporation to be affixed to
all papers which may require it. Such committee, or committees,
<PAGE>
shall have such name, or names, as may be stated in the By-laws of
the corporation, or as may be determined by resolution adopted by
the Board of Directors; Pursuant to the affirmative vote of the
stockholders, of at least a majority of the stock issued and
outstanding, having voting power, given at a stockholders' meeting
duly 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 this corporation, including its good will and
its corporate -franchises, upon such terms and conditions as its
Board of Directors deem expedient and for the best interests of the
corporation.
This corporation may, in its By-laws, confer powers upon its Directors in
addition to the foregoing, and in addition to the powers and authorities
expressly conferred upon them by statute.
TENTH: Both Stockholders and Directors shall have power, if the By-laws
so provide, to hold their meetings, and to have one or more offices within or
without the State of Nevada, and to keep the books of this corporation (subject
to the requirements of the statutes) outside the State of Nevada at such places
as may from time to time be designated by the Board of Directors.
ELEVENTH: This corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation, in the
manner now or hereafter prescribed by statute or by these Articles of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
TWELFTH: Bruce Thompson whose address is 128 Fortune Drive Dayton,
Nevada 89403 will be the Resident Agent of the corporation.
<PAGE>
1. Bruce Thompson, hereby accept appointment as Resident Agent for the
above named corporation.
Dated this 16th day of December, 1997. /s/ Bruce Thompson
----------------------
We, THE UNDERSIGNED, being the original incorporators hereinbefore named
for the purpose of forming a corporation to do business both within and
without the State of Nevada, and in pursuance of the Corporation Laws of
the State of Nevada, being Chapter 177 of the Laws of 1925, and the acts
amendatory thereof and supplemental thereto, do make and file this
Certificate, hereby declaring and certifying that the facts herein stated
are true.
/s/Delbert Marshall
-------------------
Delbert Marshall
State of Nevada )
Carson City )
On this 16th day of December, 1997, in Carson City, Nevada, before me the
undersigned, a Notary Public in and for Carson City, State of Nevada
personally appeared:
Delbert Marshall
Known to me to be the person whose name is subscribed to the foregoing
document and acknowledged to me that he executed the same.
/s/Beverly Thompson
-------------------
Beverly Thompson
Notary Public
(Seal)
BEVERLY THOMPSON
NOTARY PUBLIC - NEVADA
CARSON CITY
My Appt. Exp. March 1, 1998
BY-LAWS OF
MOUNT MERLOT ESTATES, INC.
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders shall
be held at such date and time as shall be designated by the board of directors
and stated in the notice of the meeting or in a duly-executedwaiver of notice
thereof. If the corporation shall fail to provide notice of the annual meeting
of the shareholders as set forth above, the annual meeting of the shareholders
of the corporation shall be held during the month of November or December of
each year as determined by the Board of Directors, for the purpose of electing,
directors of the corporation to serve during the ensuing year and for the
transaction of such other business as may properly come before the meeting. If
the election of the directors is not held on the day designated herein for any
annual meeting, of the shareholders, or at any adjournment thereof, the
president shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the shareholders may be
called by the president or the Board of Directors and shall be called by the
president at the written request of the holders of not less than 51 % of the
issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
Section 1.03 Place of Meetings. Any meeting, of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all shareholders of
record written or printed notice of any meeting at least ten (10) days,
but not more than sixty (60) days, before the date of such meeting; which
notice shall state the place, date and time of the meeting the general
nature of the business to be transacted, and, in the case of any meeting
at which directors are to be elected, the names of nominees, if any, to be
presented for election.
Page 1
<PAGE>
(b) In the case of any meeting, any proper business may be presented for
action, except that the following items shall be valid only if the general
nature of the proposal is stated in the notice or written waiver of notice:
(1) Action with respect to any contract or transaction between the
corporation and one or more of its directors or another firm, association,
or corporation in which one or more of its directors has a material
financial interest;
(2) Adoption of amendments to the Articles of Incorporation, or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution of the
corporation.
(c) The notice shall be personally delivered or mailed by first class
mail to each shareholder of record at the last known address thereof. as the
same appears on the books of the corporation, and the giving of such notice
shall be deemed delivered the date the same is deposited in the United States
mail, postage prepaid. If the address of any shareholder does not appear upon
the books of the corporation, it will be sufficient to address any notice to
such shareholder at the principal office of the corporation.
(d) The written certificate of the person calling any meeting, duly
sworn, setting forth the substance of the notice, the time and place the notice
was mailed or personally delivered to the several shareholders, and the
addresses to which the notice was mailed shall be prima, facie evidence of the
manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such meeting
shall be valid for all purposes without call or notice, and at such meeting any
corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
(a) The Board of Directors may at any time fix a future date as a record
date for the determination of the shareholders entitled to notice of any
meeting or to vote or entitled to receive payment of any dividend or other
distribution or allotment of any rights or entitled to exercise any rights in
respect of any other lawful action. The record date so fixed shall not be more
than sixty (60) days prior to the date of such meeting nor more than sixty (60)
days prior to any other action. When a record date is so fixed, only
shareholders of record on that date are entitled to notice of and to vote at
the meeting or to receive the dividend, distribution or allotment of rights, or
to exercise their rights, as the case may be, notwithstanding any transfer of
any shares on the books of the corporation after the record date.
Page 2
<PAGE>
(b) If no record date is fixed by the Board of Directors, then (1) the
record date for determining shareholders entitled to notice of or to vote.at a
meeting of shareholders shall be at the close of business on the business day
next preceding the day on which notice is given or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining shareholders entitled to give consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day on which written consent is
given; and (3) the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(a) At any meeting of the shareholders, a majority of the issued and
outstanding shares of the corporation represented in person or by proxy, shall
constitute a quorum.
(b) If less than a majority of the issued and outstanding shares are
represented, a majority of shares so represented may adjourn from time to time
at the meeting, until holders of the amount of stock required to constitute a
quorum shall be in attendance. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might have been
transacted as originally called. When a shareholders' meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless the adjournment is for more than ten (10) days in which event
notice thereof shall be given.
Section 1.08 Voting
(a) Each shareholder of record, such shareholder's duly authorized proxy
or attomey-in-fact shall be entitled to one (1) vote for each share of stock
standing registered in such shareholder's name on the books of the corporation
on the record date.
(b) Except as otherwise provided herein, all votes with respect to shares
standing. in the name of an individual on the record date (included pledged
shares) shall be cast only by that individual or such individuars duly
authorized proxy or attorney-in-fact. With respect to shares held by a
representative of the estate of a deceased shareholder, guardian, conservator,
custodian or trustee, votes may be cast by such holder upon proof of capacity,
even though the shares do not stand in the name of such holder. In the case of
shares under the control of a receiver, the receiver may cast votes carried by
such shares even though the shares do not stand in the name of the receiver
provided that the order of the court of competent jurisdiction which appoints
the receiver contains the authority to cast votes carried by such shares. If
shares stand in the name of a minor, votes may be cast only by the
duly appointed guardian of the estate of such n-dnor if such guardian has
provided the corporation with written notice and proof of such appointment.
Page 3
<PAGE>
(c) With respect to shares standing in the name of a corporation on the
record date, votes may be cast by such officer or agents as the by-laws of such
corporation prescribe or, in the absence of an applicable by-law pro-vision, by
such person as may be appointed by resolution of the Board of Directors of such
corporation. In the event no person is so appointed. such votes of the
corporation may be cast by any person (including the officer making the
authorization) authorized to do so by the Chairman of the Board of Directors,
President or any Vice President of such corporation.
(d) Notwithstanding anything to the contrary herein contained, no votes may
be cast by shares owned by this corporation or its subsidiaries, if any. If
shares are held by this corporation or its subsidiaries, if any, in a fiduciary
capacity, no votes shall be cast with respect thereto on any matter except to
the extent that the beneficial owner thereof possesses and exercises either a
right to vote or to give the corporation holding the same binding instructions
on how to vote.
(e) With respect to shares standing in the name of two or more persons.
whether fiduciaries, members of a partnership, joint tenants, tenants in
common, husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a shareholder voting agreement or
otherwise and shares held by two or more persons (including proxy holders)
having the same fiduciary relationship respect in the same shares, votes may be
cast in the following manner:
(1) If only one such person votes, the votes of such person
binds all.
(2) If more than one person casts votes, the act of the
majority so voting binds all.
(3) If more than one person casts votes, but the vote is
evenly split on a particular matter, the votes shall be
deemed cast proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast a portion
of the votes in favor of such matter and refrain from casting the remaining,
votes or cast the same against the proposal, except in the case of elections of
directors. if such holder entitled to vote fails to specify the number of
affirmative votes, it will be conclusively presumed that the holder is casting
affirmative votes with respect to all shares held.
(g) If a quorum. is present the affirmative vote of holders of a majority
of the shares represented at the meeting and entitled to vote on any matter
shall be the act of the shareholders, unless a vote of greater number or voting
by classes is required by the laws of the State of Nevada, the Articles of
Incorporation and these By-Laws.
Page 4
<PAGE>
Section 1.09 Proxies. At any meeting of shareholders, any holder of shares
entitled to vote may authorize another person or persons to vote by proxy with
respect to the shares held by an instrument in writing and subscribed to by the
holder of such shares entitled to vote. No proxy shall be valid after the
expiration of six (6) months from the date of execution thereof, unless coupled
with an interest or unless otherwise specified in the proxy. In no event shall
the term of a proxy exceed seven (7) years from the date of its execution.
Every proxy shall continue in full force and effect until its expiration or
revocation. Revocation may be effected by filing an instrument revoking the
same or a duly-executed proxy bearing a later date with the secretary of the
corporation.
Section 1.10 Order of Business. At the annual shareholders meeting. the
regular order of business shall be as follows:
(1) Determination of shareholders present and existence of
quorum;
(2) Reading and approval of the minutes of the previous
meeting or meetings;
(3) Reports of the Board of Directors, the president,
treasurer and secretary of the corporation, in the
order named,
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1. 11 Absentees Consent to Meetings Transactions of any meeting of
the shareholders are as valid as though had at a meeting duly-held after
regular call and notice if a quorum is present, either in person or by proxy,
and if, either before or after the meeting. each of the persons entitled to
vote, not present in person or by proxy (and those who, although present
either object at the beginning of the meeting to the transaction of any
business because the meeting has not been lawfully called or convened or
expressly object at the meeting to the consideration of matters not included
in the notice which are legally required to be included therein), signs a
written waiver of notice and/or consent to the holding of the meeting or an
approval of the minutes thereof All such waivers, consents, and approvals
shall be filed with the corporate records and made a part of the minutes of
the meeting. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person objects at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
Page 5
<PAGE>
any right to object to the consideration of matters not included in the notice
if such objection is expressly made at the beginning. Neither the business to
be transacted at nor the purpose of any regular or special meeting of
shareholders need be specified in any written waiver of notice, except as
otherwise provided in Section 1.04(b) of these By-Laws.
Section 1. 12 Action Without meeting. Any action which may be taken by the
vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or
such greater proportion as may be required by the laws of the State of Nevada,
the Articles of Incorporation, or these By-Laws. Whenever action is taken by
written consent a meeting of shareholders needs not be called or noticed.
ARTICLE 11
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, who shall be elected at the
annual meeting of the shareholders of the corporation and who shall hold office
for one (1) year or until their successors are elected and qualify.
Section 2.02 Resignation . Any director may resign effective upon giving
written notice to the chairman of the Board of Directors, the president, or the
secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board
or the shareholders may elect a successor to take office when the resignation
becomes effective.
Section 2.03 Reduction in Number. No reduction of the number of directors
shall have the effect of removing any director prior to the expiration of his
term of office.
Section 2.04 Removal.
(a) The Board of Directors or the shareholders of the
corporation, by a majority vote, may declare vacant the office of
a director who has been declared incompetent by an order of a
court of competent jurisdiction or convicted of a felony.
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise
may be filled by the shareholders at any regular or special
meeting or any adjourned meeting thereof or the remaining
director(s) by the affirmative vote of a majority thereof. A
Board of Directors consisting of less than the maximum number
authorized in Section 2.01 of ARTICLE 11 constitutes -vacancies
on the Board of Directors for purposes of this paragraph and may
Page 6
<PAGE>
be filled as set forth above including by the election of a
majority of the remaining directors. Each successor so elected
shall hold office until the next annual meeting of shareholders
or until a successor shall have been duly-elected and qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the
shareholders shall constitute less than a majority of the
directors then in office, any holder or holders of an aggregate
of five percent (5%) or more of the total number of shares
entitled to vote may call a special meeting of shareholders to be
held to elect the entire Board of Directors. The term of office
of any director shall terminate upon such election of a
successor.
Section 2.06 Regular Meeting. Immediately following the adjournment of,
and at the same place as, the annual meeting of the shareholders, the Board of
Directors, including directors newly elected, shall hold its annual meeting
without notice, other than this provision, to elect officers of the corporation
and to transact such further business as may be necessary or appropriate. The
Board of Directors may provide by resolution the place, date and hour for
holding additional regular meetings.
Section 2.07 Special Meeting. Special meetings of the Board of Directors
may be called by the chairman and shall be called by, the chairman upon the
request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting
Section 2.09 Notice of Meetings. Except as otherwise provided in Section
2.06, the chairman shall deliver to all directors written or printed notice of
any special meeting, at least three (3) days before the date of such meeting,
by delivery of such notice personally or mailing such notice first class mail,
or by telegram. If mailed, the notice shall be deemed delivered two (2)
business days following the date the same is deposited in the United States
mail, postage prepaid Any director may waive notice of any meeting, and the
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, unless such attendance is for the express purpose of objecting to
the transaction of business threat because the meeting is not properly called
or convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall
constitute a quorum.
(b) At any meeting of the Board of Directors where a quorum is
not present, a majority of those present may adjourn, from time
to time., until a quorum is present, and no notice of such
adjournment shall be required At any adjourned meeting where a
quorum is present any business may be transacted which could have
been transacted at the meeting originally called.
Page 7
<PAGE>
Section 2.11 Action Without Meeting . Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if a written consent thereto is signed by all of the
members of the Board of Directors or of such committee Such written consent or
consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same
force and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meeting . Meetings of the Board of Directors may
be held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the time of such meeting. Participation in such a meeting
constitutes presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of Incorporation
or the laws of the State of Nevada, the Board of Directors is
invested with the complete and unrestrained authority to manage
the affairs of the corporation, and is authorized to exercise for
such purpose as the general agent of the corporation, its entire
corporate authority in such manner as it sees fit. The Board of
Directors may delegate any of its authority to menace, control or
conduct the current business of the corporation to any standing
or special committee or to any officer or agent and to appoint
any persons to by agents of the corporation with such powers,
including the power to sub-delegate, and upon such terms as may
be deemed fit.
(b) The Board of Directors shall present to the shareholders at
annual meetings of the shareholders, and when called for by a
majority vote of the shareholders at a special meeting of the
shareholders, a full and clear statement of the condition of the
corporation, and shall, at request, furnish each of the
shareholders with a true copy thereof.
(c) 'Me Board of Directors, in its discretion, may submit any
contract or act for approval or ratification at any annual
meeting of the shareholders or any special meeting properly
called for the purpose of considering any such contract or act,
provided a quorum is present. The contract or act shall be valid
and binding upon the corporation and upon all the shareholders
thereof, if approved and ratified by the affirmative vote of a
majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers conferred
by the laws of the State of Nevada, the Board of Directors is
expressly authorized and empowered to issue
Page 8
<PAGE>
stock of the Corporation for money, property, services rendered,
labor performed, cash advanced, acquisitions for other
corporations or for any other assets of value in accordance Arith
the action of the Board of Directors without vote or consent of
the shareholders and the judgment of the Board of Directors as to
the value received and in return therefore shall be conclusive and
said stock when issued, shall be fully-paid and non-assessable.
Section 2.15 Compensation . The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board.
Section 2.16 Board Officers.
(a) At its annual meeting, the Board of Directors shall elect,
from among its members, a chairman to preside at the meetings of
the Board of Directors. The Board of Directors may also elect-
such other board officers and for such term as it may, from time
to time, determine advisable.
(b) Any vacancy in any board office because of death, resignation,
removal or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at any meeting, of
the Board of Directors shall be as follows:
(1) Determination of members present and existence
of quorum;
(2) Reading- and approval of the minutes of any
previous meeting or meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
Page 9
<PAGE>
ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors. at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and until
their successors are elected and qualify. Any person may hold two or more
offices. The Board of Directors may, from time to time, by resolution, appoint
one or more Nice presidents, assistant secretaries, assistant treasurers and
transfer agents of the corporation as it may deem advisable; prescribe their
duties; and fix their compensation.
Section 3.02 Removal: Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to which
the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 President. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, vNith full
power to execute all resolutions and orders of the Board of Directors not
especially entrusted to some other officer of the corporation. The president
shall preside at all meetings of the shareholders and shall sign the
certificates of stock issued by the corporation, and shall perform such other
duties as shall be prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the shareholders of any corporation in which the
corporation may hold stock and, at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer like powers
on any person or persons in place of the president to represent the corporation
for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or more
Vice presidents who shall be vested with all the powers and perform all the
duties of the president whenever the president is absent or unable to act
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed
by the Board of Directors.
Section 3.06 Secretary. The secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in books provided for
that purpose. The secretary shall
Page 10
<PAGE>
attend to the giving and service of all notices of the corporation, may sign
with the president in the name of the corporation all contracts authorized by
the Board of Directors or appropriate committee, shall have the custody of the
corporate seal, shall affix the corporate seal to all certificates of stock
duly issued by the corporation, shall have charge of stock certificate books,
transfer books and stock ledgers, and such other books and papers as the Board
of Directors or appropriate committee may direct, and shall, in general perform
all duties incident to the office of the secretary. All corporate books kept by
the secretary shall be open for examination by any director at any reasonable
time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may
be prescribed for him by the secretary of the corporation or by the Board of
Directors.
Section 3.08 Treasurer. The treasurer shall be the chief financial officer
of the corporation, subject to the supervision and control of the Board of
Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper. the treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligations, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the treasurer shall sign with the
president all bills of exchange and promissory notes of the corporation, shall
also have the care and custody of the stocks, bonds, certificates, vouchers,
evidence of debts, securities and such other property belonging to the
corporation as the Board of Directors shall designate, and shall sign all
papers requiredby- law, by these By-laws or by the Board of Directors to be
signed by the treasurer. The treasurer shall enter regularly in the books of
the corporation, to be kept for that purpose, full and accurate accounts of all
monies received and paid on account of the corporation and whenever required by
the Board of Directors, the treasurer shall render a statement of any or all
accounts. The treasurer shall at all reasonable times exhibit the books of
account to any directors of the corporation and shall perform all acts incident
to the position of treasurer subject to the control of the Board of Directors.
The treasurer shall, if required by the Board of Directors, give a bond to the
corporation in such sum and with such security as shall be approved by the
Board of Directors for the faithful performance of all the duties of the
treasurer and for restoration to the corporation in the event of the
treasurer's death, resignation, retirement, or removal from office, of all
books, records, papers, vouchers, money and other property belonging to the
corporation. The expense of such bond shall be borne by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may
be prescribed by the treasurer of the corporation or by the Board of Directors,
and the Board of Directors may require the assistant treasurer to give a bond
to the corporation in such sum and with such security as it may approve, for
the faithful performance of the duties of assistant treasurer, and for the
restoration to the corporation, in the event of the assistant treasurer's
death, resignation, retirement or removal from office, of all books. records,
papers, vouchers, money and other property belonging to the corporation. The
expense of such bond shall be borne by the corporation.
Page 11
<PAGE>
ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be evidenced
11), certificates for shares of stock in such form as shall be prescribed by
the Board of Directors, shall be under the seal of the corporation and shall be
signed by the president or the Nice president and also by the secretary or an
assistant secretary. Each certificate shall contain the name of the record
holder, the number, designation, if any, class or series of shares represented,
a statement of summary of any applicable rights, preferences, privileges, or
restrictions thereon, and a statement that the shares are assessable, if
applicable. All certificates shall be consecutively numbered. The name and
address of the shareholder, the number of shares, and the date of issue shall
be entered on the stock transfer books of the corporation.
Section 4.03 Surrender: Lost or Destroyed Certificate . All certificates
surrendered to the corporation, except those representing shares of treasury
stock. shall be canceled and no new certificates shall be issued until the
former certificate for a like number of shares shall have been canceled, except
that in case of a lost, stolen, destroyed or mutilated certificate, a new one
may be issued therefor. However, any shareholder applying for the issuance of a
stock certificate in lieu of one alleged to have been lost, stolen, destroyed
or mutilated shall, prior to the issuance of a replacement, provide the
corporation with his, her or its affidavit of the facts surrounding the loss,
theft, destruction or mutilation and an indemnity bond in an amount and upon
such terms as the treasurer, or the Board of Directors, shall require. In no
case shall the bond be in amount less than twice the current market value of
the stock and it shall indemnify the corporation against any loss, damage, cost
or inconvenience arising as a consequence of the issuance of a replacement
certificate.
Section 4.04 Replacement Certificate. When the Articles of Incorporation
are amended in any way affecting, the statements contained in the certificates
for outstanding shares of capital stock of the corporation or it becomes
desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue
a new certificate therefor conforming to the rights of the holder, the Board of
Directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time
to be fixed by the Board of Directors. The order may provide that a holder of
any certificate(s) ordered to be surrendered shall not be entitled to vote,
receive dividends or exercise any other rights of shareholders until the holder
has complied with the order provided that such order operates to suspend such
rights only after notice and until compliance.
Page 12
<PAGE>
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the
certificate, therefor, accompanied by an assignment or transfer by the
registered owner made either in person or under assignment. Whenever any
transfer shall be expressly made for collateral security and not absolutely,
the collateral nature of the transfer shall be reflected in the entry of
transfer on the books of the corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or
more transfer agents and registrars of transfer and may require all
certificates for shares of stock to bear the signature of such transfer agent
and such registrar of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be
closed for a period of ten (10) days prior to all meetings of the shareholders
and shall be closed for the payment of dividends as provided in Article V
hereof and during such periods as, from time to time, may be fixed by the Board
of Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power
and authority to make such rules and regulations not inconsistent herewith as
it may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of the
laws of the State of Nevada and the Articles of Incorporation, by the Board of
Directors at any regular or special meeting and may be paid in cash, property,
shares of corporate stock, or any other medium. The Board of Directors may fix
in advance a record date, as provided in Section 1.06 of these By-laws, prior
to the dividend payment for the purpose of determining shareholders entitled to
receive payment of any dividend The Board of Directors may close the stock
transfer books for such purpose for a period of not more than ten (10) days
prior to the payment date of such dividend
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation in
the State of Nevada shall be as designated by the Board of Directors and so
filed with the State of Nevada, and the corporation may also have an office in
any other state or territory as the Board of Directors may designate.
Page 13
<PAGE>
Section 6.02 Records. The stock transfer books and a certified copy of the
By-laws, Articles of Incorporation, any amendments thereto, and the minutes of
the proceedings of the shareholders, the Board of Directors, and committees of
the Board of Directors shall be kept at the principal office of the corporation
for the inspection of all who have the right to see the same and for the
transfer of stock. All other books of the corporation shall be kept at such
places as may be prescribed by the Board of Directors.
Section 6.03 Financial Report on Request . Any shareholder or shareholders
holding at least five percent (5%) of the outstanding shares of any class of
stock may make a written request for an income statement of the corporation for
the three (3) month, six (6) month, or nine (9) month period of the current
fiscal year ended more than thirty (30) days prior to the date of the request
and a balance sheet of the corporation as of the end of such period. In
addition, if no annual report for the last fiscal year has been sent to
shareholders, such shareholder or shareholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement
of changes in financial position for such fiscal year. The statement shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any shareholder demanding an examination
of them or a copy shall be mailed to each shareholder. Upon request by any
shareholder, there shall be mailed to the shareholder a copy of the last
annual, semiannual or quarterly income statement which it has prepared and a
balance sheet as of the end of the period. The financial statements referred to
in this Section 6.03 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that such financial statements were
prepared without audit from the books and records of the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of proceedings
of the shareholders and the Board of Directors and committees of
the Board of Directors shall be open to inspection upon the
written demand of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours
for a purpose reasonably related to such holder's interest as a
shareholder or as the holder of such voting trust certificate.
This right of inspection shall extend to the records of the
subsidiaries, if any, of the corporation- Such inspection may be
made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
(b) Every director shall have the absolute right at any
reasonable time to inspect and copy all books, records and
documents of every kind and to inspect the physical properties of
the corporation and/or its subsidiary corporations. Such
inspection may be made in person or by agent or attorney, and the
right of inspection includes the right to copy and make extracts.
Page 14
<PAGE>
Section 6.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal my be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall be
the calendar year or such other term as may be fixed by resolution of the Board
of Directors.
Section 6.07 Reserves. The Board of Directors may create, by resolution,
out of the earned surplus of the corporation such reserves as the directors
may, from time to time, in their discretion, think proper to pro-tide for
contingencies, or to equalize dividends or to repair or maintain any property
of the corporation, or for such other purpose as the Board of Directors may
deem beneficial to the corporation, and the directors may modify or abolish any
such reserves in the manner in which they were created.
ARTICLE V11
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall. unless prohibited by
Nevada Law. indemnify any person (an "Indemnitee") who is or was in olved in
any manner (including, without limitation, as a party or a witness or is
threatened to be so involved in any threatened, pending or completed action
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgement in its
favor (collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other entity or enterprise, against all Expenses and Liabilities actually
and reasonably incurred by him in connection with such Proceeding. The right to
indemnification conferred in this Article shall be presumed to have been relied
upon by the directors, officers, employees and agents of the corporation and
shall be enforceable as a contract right and inure to the benefit of heirs,
executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific
rights of indemnification in addition to the rights provided hereunder to the
fullest extent permitted by Nevada Law. Such agreements or arrangements may
provide (i) that the Expenses of officers and directors incurred in defending
a civil or criminal action, suit or proceeding, must be paid by the
corporation as they are incurred and in advance of the final disposition of
any such action, suit or proceeding provided that if required by Nevada Law at
the time of such advance, the officer or director provides an undertaking to
repay such amounts if it is ultimately determined
Page 15
<PAGE>
by a court of competent jurisdiction that such individual is not entitled to be
indemnified against such expenses, (iii) that the Indemnitee shall be presumed
to be entitled to indemnification under this Article or such agreement or
arrangement and the corporation shall have the burden of proof to overcome that
presumption, (iii) for procedures to be followed by the corporation and the
Indemnitee in making any determination of entitlement to indemnification or for
appeals therefrom and (iv) for insurance or such other Financial Arrangements
described in Paragraph 7.02 of this Article, all as may be deemed appropriate
by the Board of Directors at the time of execution of such agreement or
arrangement.
Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnity
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article: Expenses. The word
"Expenses" shall be broadly construed and, without limitation, means (i) all
direct and indirect costs incurred, paid or accrued, (ii) all attorneys' fees,
retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, food and lodging, expenses while traveling, duplicating costs,
printing, and binding costs, telephone charges, postage, delivery service,
freight or other transportation fees and expenses, (W) all other disbursements
and out-of-pocket expenses, (iv) amounts paid in settlement, to the extent
permitted by Nevada Law, and (v) reasonable compensation for time spent by the
Indemnitee for which he is otherwise not compensated by the corporation or any
third party, actually and reasonably incurred in connection with either the
appearance at or investigation, defense, settlement or appeal of a Proceeding
or establishing or enforcing a right to indemnification under any agreement or
arrangement, this Article, the Nevada Law or otherwise; provided, however, that
"Expenses" shall not include any judgments or fines or excise taxes or
penalties imposed under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or other excise taxes or penalties.
Liabilities. "Liabilities"means liabilities of any type whatsoever,
including, but not limited to, judgments or fines, ERISA or other excise
taxes and penalties, and amounts paid in settlement.
Nevada Law. Nevada Lau," means Chapter 78 of the Nevada Revised
Statutes as amended and in effect from time to time or any successor or
other statutes of Nevada having, similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through 7.04 of these
By-Laws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04. including this
Paragraph of these By-Laws may be amended by the stockholders only by vote of
the holders of sixty-six and two-thirds percent (66 2/3%) of the entire number
of shares of each class, voting separately, of the outstanding capital stock of
the corporation (even though the right of any class to vote is otherwise
restricted or denied); provided, however, no amendment or repeal of this
Article shall adversely affect any right of any Indemnitee existing at the time
such amendment or repeal becomes effective.
Page 16
<PAGE>
Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph of
these By-Laws may be amended or repealed by the Board of Directors only by vote
of eighty percent 80% of the total number of Directors and the holders of
sixty-six and two-thirds percent (66 2/3) of the entire number of shares of
each class, voting separately, of the outstanding capital stock of the
corporation (even though the night of any class to vote is otherwise restricted
or denied); provided, however, no amendment or repeal of this Article shall
adversely affect any right of any Indemnitee existing, at the time such
amendment or repeal becomes effective.
ARTICLE V111
BY-LAWS
Section 8.01 Amendment. Amendments and changes of these By-Laws may be
made at -any regular or special meeting of the Board of Directors by a vote of
not less than all of the entire Board, or may be made by a vote of, or a
consent in writing signed by the holders of a majority of the issued and
outstanding capital stock
Section 8.02 Additional by-laws . Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board
of Directors at which a quorum is present by an affirmative vote of a majority
of the directors present or by the unanimous consent of the Board of Directors
in accordance with Section 2. 11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the Corporation,
do hereby certify that the foregoing By-laws were adopted by the Board of
Directors on the 24th th day of December 1997.
/s/ Patricia Wiate
-----------------------------
Secretary
Page 17
VIRTUAL BRAND, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
<PAGE>
VIRTUAL BRAND, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
PAGE
I. PURPOSE ............................................................ 1
II. DEFINITIONS.......................................................... 1
III. EFFECTIVE DATE....................................................... 3
IV. ADMINISTRATION....................................................... 3
V. PARTICIPATION........................................................ 4
5.1 Eligibility................................................. 4
5.2 Ten Percent Shareholders.................................... 4
5.3 Stock Ownership............................................. 4
5.4 Outstanding Stock........................................... 4
VI. STOCK SUBJECT TO THE PLAN............................................ 5
II. OPTIONS ............................................................ 5
7.1 Stock Option Agreements..................................... 5
7.2 Number of Shares............................................ 5
7.3 Exercise Price.............................................. 5
7.4 Medium and Time of Payment.................................. 5
7.5 Term and Transferability of Options......................... 5
7.6 Modification, Extension, and Renewal of Options............. 6
7.7 Limitation on Grant of Incentive Stock Options.............. 6
7.8 Other Provisions............................................ 6
7.9 Specific Awards Approved by the Shareholders................ 6
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS
AND BENEFICIARIES.................................................... 6
8.1 Employee Status............................................. 6
8.2 No Employment Contract...................................... 6
8.3 No Transferability.......................................... 6
8.4 Plan Not Funded............................................. 7
8.5 Adjustments upon Recapitalizations and Corporate Changes.... 7
8.6 Termination of Employment................................... 7
8.7 Death of Participant........................................ 8
8.8 Disability of Participant................................... 8
8.9 Retirement of Participant................................... 8
8.10 Rights as a Stockholder..................................... 8
8.11 Deferral of Payments........................................ 8
8.12 Acceleration of Awards...................................... 8
IX. MISCELLANEOUS........................................................ 9
9.1 Termination, Suspension and Amendment....................... 9
9.2 No Fractional Shares........................................ 9
9.3 Tax Withholding............................................. 9
9.4 Restrictions of Elections Made by Participants.............. 9
9.5 Limitations on the Corporation's Obligations................10
9.6 Compliance with Laws........................................10
9.7 Governing Law...............................................10
9.8 Securities Law Requirements.................................10
9.9 Execution...................................................11
i
<PAGE>
VIRTUAL BRAND, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
I. PURPOSE
The Plan is intended to provide incentive to key employees and
directors of, and key consultants, vendors, customers, and others expected to
provide significant services to, the Corporation, to encourage proprietary
interest in the Corporation, to encourage such key employees to remain in the
employ of the Corporation and its Subsidiaries, to attract new employees with
outstanding qualifications, and to afford additional incentive to consultants,
vendors, customers, and others to increase their efforts in providing
significant services to the Corporation.
II. DEFINITIONS.
2.1 "Award" shall mean an Option, which may be designated an Incentive
Stock Option or a Nonstatutory Stock Option, in each case as granted pursuant to
the Plan.
2.2 "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing an Award.
2.3 "Beneficiary" shall mean the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive the benefits
specified under the Plan in the event of a Participant's death.
2.4 "Board" shall mean the Board of Directors of the Corporation.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Committee" shall mean the committee, if any, appointed by the
Board in accordance with Section 4 of the Plan, or the Board if no Committee has
been appointed.
2.7 "Common Stock" shall mean the Common Stock, $.001 par value, of
the Corporation.
2.8 "Corporation" shall mean Mount Merlot Estates, Inc., a Nevada
corporation, and its Subsidiaries.
2.9 "Disability" shall mean the condition of a Participant who is
unable to perform his or her substantial and material job duties due to injury
or sickness or such other condition as the Board or Committee may determine in
its sole discretion and/or engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
2.10 "Effective Date" shall mean the date that the Plan was adopted by
the shareholders of the Company.
2.11 "Eligible Employee" shall mean an individual who is employed
(within the meaning of Code Section 3401 and the regulations thereunder) by the
Corporation. Additionally for purposes of this Plan, a Participant who is a
director or a consultant, vendor, customer, or other provider of significant
services to the Corporation or a Subsidiary shall be deemed to be an Eligible
Employee, and service as a director, consultant, vendor, customer, or other
1
<PAGE>
provider of significant services to the Corporation or a Subsidiary shall be
deemed to be employment, except that no Incentive Stock Option may be granted to
a non-employee director or non-employee consultant, vendor, customer, or other
provider of significant services to the Corporation or a Subsidiary.
2.12 "Event" shall mean any of the following:
(a)......Any person or entity (or group of affiliated persons
or entities) acquires in one or more transactions, whether before or after the
effective date of the Plan, ownership of more than 50% of the outstanding shares
of stock entitled to vote in the election of directors of the Corporation; or
(b)......The dissolution or liquidation of the Corporation or
a reorganization, merger or consolidation of the Corporation with one or more
entities, as a result of which the Corporation is not the surviving entity, or a
sale of all or substantially all of the assets of the Corporation as an entirety
to another entity.
For purposes of this definition, ownership does not include ownership
(i) by a person owning such shares merely of record (such as a member of a
securities exchange, a nominee or a securities depository system), (ii) by a
person as a bona fide pledgee of shares prior to a default and determination to
exercise powers as an owner of the shares, (iii) by a person who is not required
to file statements on Schedule 13D by virtue of Rule 13d-1(b, or (iv) by a
person who owns or holds shares as an underwriter acquired in connection with an
underwritten offering pending and for purposes of resale.
2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2.14 "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or the Committee, at which an Award may be exercised.
2.15 "Fair Market Value" shall mean the value of one Share of Common
Stock, determined as follows:
(i) If the Shares are traded on an exchange, the price at
which Shares traded at the close of business on the date of valuation; or
(ii) If the Shares are traded over-the-counter on the
NASDAQ System, the closing price if one is available, or the mean between the
bid and asked prices on said System at the close of business on the date of
valuation; or
(iii) If neither (i) nor (ii) above applies, the fair market
value as determined by the Board or the Committee in good faith. Such
determination shall be conclusive and binding on all persons.
2.16 "Incentive Stock Option" shall mean an option described in Section
422A(b) of the Code.
2.17 "Nonstatutory Stock Option" shall mean an option not described in
Section 422(b), 422A(b), 423(b) or 424(b) of the Code.
2.18 "Option" shall mean either an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.
2.19 "Participant" shall mean Eligible Employee who has received an
Award under the Plan.
2.20 "Plan" shall mean the Virtual Brand, Inc.1999 Stock Option and
Incentive Plan, as it may be amended from time to time.
2
<PAGE>
2.21 "Purchase Price" shall mean the Exercise Price times the number of
Shares with respect to which an Award is exercised.
2.22 "Restricted Stock Awards" shall mean any Award of shares of Common
Stock that may be subject to certain restrictions and to a risk of forfeiture.
2.23 "Retirement" shall mean the voluntary termination of employment by
an Employee upon the attainment of age 65 and the completion of not less than 20
years of service with the Corporation or a Subsidiary.
2.24 "Rule 16b" shall mean Rule 16b of the Securities and Exchange Act
of 1934.
2.25 "Share" shall mean one share of Common Stock, adjusted in
accordance with Section 8.5 of the Plan (if applicable).
2.26 "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
2.27 "Stock Appreciation Right" shall mean the right granted to a
Participant to be paid an amount measured by the appreciation in the Fair Market
Value of the Common Stock from the date of grant to the date of exercise of the
right, with payment to be made in cash, Common Stock, or property as specified
in the Award or determined by the Board or the Committee.
2.28 "Stock Option Agreements" shall mean an Award Agreement granting
Options under the Plan.
2.29 "Stock Purchase Agreement" shall mean an agreement to exercise
Options under the Plan.
2.30 "Subsidiary" shall mean any corporation at least 50% of the total
combined voting power of which is owned by the Corporation or by another
Subsidiary.
2.31 "Tax Date" shall have the meaning set forth in Section 9.3 hereof.
III. EFFECTIVE DATE
The Plan was adopted by the Board January 4, 1999, subject to the approval by
the Corporation's shareholders. The Plan is being submitted for shareholder
approval pursuant to a shareholder's action without a meeting in which holders
of a majority of the shares of Common Stock must approve of the adoption of the
Plan pursuant to the Corporations Bylaws and Nevada Corporate Law. The effective
date of the Plan shall be January 4, 1999 (the "Effective Date"), provided that
the Plan receives shareholder approval.
IV. ADMINISTRATION
The Plan shall be administered by the Board in compliance with Rule
16b-3, or by a Committee appointed by the Board, which Committee shall be
constituted to permit the Plan to comply with Rule 16b-3, and which shall
consist of not less than two members. The Board shall appoint one of the members
of the Committee, if there be one, as Chairman of the Committee. If a Committee
has been appointed, the Committee shall hold meetings at such times and places
as it may determine. Acts of a majority of the Committee at which a quorum is
present, or acts reduced to or approved in writing by a majority of the members
of the Committee, shall be the valid acts of the Committee. The Board, or the
3
<PAGE>
Committee if there be one, shall from time to time at its discretion select the
Eligible Employees and consultants who are to be granted Awards, determine the
number of Shares to be applicable to such Award, and designate any Options as
Incentive Stock Options or Nonstatutory Stock Options, except that no Incentive
Stock Option may be granted to a non-employee director or a non-employee
consultant. A member of the Board or a Committee member shall in no event
participate in any determination relating to Awards held by or to be granted to
such Board or Committee member; however, a member of the Board or a Committee
member shall be entitled to receive Awards which are duly approved in accordance
with the provisions of Rule 16b-3. The interpretation and construction by the
Board, or by the Committee if there be one, of any provision of the Plan or of
any Award granted thereunder shall be final. No member of the Board or of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Award granted thereunder. In addition to any
right of indemnification provided by the Articles of Incorporation or Bylaws of
the Corporation, such person shall be indemnified and held harmless by the
Corporation from any loss, cost, liability or expense that may be imposed upon
or reasonably incurred by him in connection with any claim, suit, action or
proceeding to which he may be a party by reason of any action or omission under
the Plan.
V. PARTICIPATION
5.1 Eligibility. Subject to the terms and conditions of Section 5.2
below, the Participants shall be such persons as the shareholders may approve or
as the Board or the Committee may select from among the following classes of
persons: (i) Employees of the Corporation or of a Subsidiary (who may be
officers, whether or not they are directors); and (ii) Consultants, vendors,
customers, and others expected to provide significant services to the
Corporation or a Subsidiary.
For purposes of this Plan, a Participant who is a director or a
consultant, vendor, customer, or other provider of significant services to the
Corporation or a Subsidiary shall be deemed to be an Eligible Employee, and
service as a director, consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
employment, except that no Incentive Stock Option may be granted to a
non-employee director or non-employee consultant, vendor, customer, or other
provider of significant services to the Corporation or a Subsidiary, and except
that no Nonstatutory Stock Option may be granted to a non-employee director or
non-employee consultant, vendor, customer, or other provider of significant
services to the Corporation or a Subsidiary other than upon a vote of a majority
of disinterested directors finding that the value of the services rendered or to
be rendered to the Corporation or a Subsidiary by such non-employee director or
non-employee consultant, vendor, customer, or other provider of services is at
least equal to the value of the Awards granted.
5.2 Ten-Percent Shareholders. An Eligible Employee who owns more than
10% of the total combined voting power of all classes of outstanding stock of
the Corporation, its parent or any of its Subsidiaries shall not be eligible to
receive an Award for an Incentive Stock Option unless (i) the Exercise Price of
the Shares subject to such Award is at least 110% of the Fair Market Value of
such Shares on the date of grant; and (ii) such Award by its terms is not
exercisable after the expiration of 5 years from the date of grant.
5.3 Stock Ownership. For purposes of Section 5.2 above, in determining
stock ownership an Eligible Employee shall be considered as owning the stock
owned, directly or indirectly, by or for his brothers, sisters, spouses,
ancestors, and lineal descendants. Stock owned, directly or indirectly, by or
for a corporation, partnership, estate, or trust shall be considered as being
owned proportionately by or for its shareholders, partners, or beneficiaries.
Stock with respect to which such Eligible Employee holds an Award shall not be
counted.
5.4 Outstanding Stock. For purposes of Section 5.2 above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
4
<PAGE>
the grant of the Award to the Participant. "Outstanding stock" shall not include
shares authorized for issue under outstanding Options or Purchase Rights held by
the Participant or by any other person.
VI. STOCK SUBJECT TO THE PLAN
The stock subject to Awards granted under the Plan shall be Shares of
the Corporation's authorized but unissued or reacquired Common Stock. The
aggregate number of Shares which may be issued as Awards or upon exercise of
Awards under the Plan shall not exceed 2,500,000 shares. The number of Shares
subject to unexercised Options (plus the number of Shares previously issued
under the Plan) shall not at any time exceed the number of Shares available for
issuance under the Plan. In the event that any unexercised Option, or any
portion thereof, for any reason expires or is terminated, the unexercised or
unvested Shares allocable to such Option may again be made subject to any Award.
Any Shares withheld by the Corporation pursuant to Section 9.3 shall not be
deemed to be issued. The number of withheld Shares shall be deducted from the
applicable Award and shall not entitle the Participant to receive additional
Shares. The limitations established by this Article VI shall be subject to
adjustment in the manner provided in Section 8.5 hereof upon the occurrence of
an event specified therein.
VII. OPTIONS
7.1 Stock Option Agreements. Options shall be evidenced by written
Stock Option Agreements in such form as the Board or the Committee shall from
time to time determine. Such agreements shall comply with and be subject to the
terms and conditions set forth below.
7.2 Type and Number of Shares. Each Option shall state the type of
Award and the number of Shares to which it pertains and shall provide for the
adjustment thereof in accordance with the provisions of Section 8.5 hereof.
7.3 Exercise Price. Each Option shall state the Exercise Price
thereof. The Exercise Price in the case of any Incentive Stock Option shall not
be less than the Fair Market Value on the date of grant and, in the case of any
Option granted to an Optionee described in Section 5.2 hereof, shall not be less
than 110% of the Fair Market Value on the date of grant. The Exercise Price in
the case of any Nonstatutory Stock Option shall not be less than 85% of the Fair
Market Value on the date of grant.
7.4 Medium and Time of Payment. The Purchase Price shall be payable in
full in United States dollars upon the exercise of the Option; provided,
however, that if the applicable Stock Option Agreement so provides the Purchase
Price may be paid (i) by the surrender of Shares in good form for transfer,
owned by the Participant and having a Fair Market Value on the date of exercise
equal to the Purchase Price, or in any combination of cash and Shares, as long
as the sum of the cash so paid and the Fair Market Value of the Shares so
surrendered equal the Purchase Price, (ii) by cancellation of indebtedness owed
by the Corporation to the Participant, (iii) with a full recourse promissory
note executed by the Participant, or (iv) any combination of the foregoing. The
interest rate and other terms and conditions of such note shall be determined by
the Board of Directors. The Board of Directors may require that the Participant
pledge his or her Shares to the Corporation for the purpose of securing the
payment of such note. In no event shall the stock certificate(s) representing
such Shares be released to the Participant until such note is paid in full.
7.5 Term and Nontransferability of Options. Each Option shall state
the time or times which all or part thereof becomes exercisable. No Option shall
be exercisable after the expiration of five years from the date it was granted.
During the lifetime of the Participant, the Option shall be exercisable only by
the Participant and shall not be assignable or transferable. In the event of the
5
<PAGE>
Participant's death, the Option shall not be transferable by the Participant
other than by will or the laws of descent and distribution.
7.6 Modification, Extension, and Renewal of Option. Within the
limitations of the Plan, the Board of Directors may modify, extend or renew
outstanding Options or accept the cancellation of outstanding Options (to the
extent not previously exercised) for the granting of new Options in substitution
therefor. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Participant, alter or impair any rights or
obligations under any Option previously granted.
7.7 Limitation on Grant of Incentive Stock Options. In the case of
Incentive Stock Options granted hereunder, the aggregate Fair Market Value
(determined as of the date of the grant thereof) of the Shares with respect to
which Incentive Stock Options become exercisable by any Participant for the
first time during any calendar year (under this Plan and all other Plans
maintained by the Corporation, its parent, or its Subsidiaries) shall not exceed
$100,000. The Board or Committee may, however, with the Participant's consent
authorize an amendment to the Incentive Stock Option which renders it a
Nonstatutory Stock Option.
7.8 Other Provisions. The Stock Option Agreements authorized under the
Plan may contain such other provisions not inconsistent with the terms of the
Plan (including, without limitation, restrictions upon the exercise of the
Option) as the Board of Directors shall deem advisable.
7.9 Specific Awards Approved by the Shareholders. Subject to
shareholder approval and pursuant to the Board of Director's approval January 4,
1999, the individuals whose names are set forth in Exhibit "A," a copy of which
is attached hereto and incorporated herein by this reference, shall be deemed
granted Nonstatutory Stock Options as of the Effective Date, in the amounts and
for the exercise price specified by the Board of Directors, all in accordance
with the provisions set forth in this Article VII of the Plan. The provisions of
this Section 7.9 shall not be amended more than once every six months, other
than to comply with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder, and are intended to be
construed in accordance with the provisions pertaining to "formula awards" under
Paragraph (c)(2)(ii) of Rule 16b-3.
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS, AND BENEFICIARIES
8.1 Employee Status. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under the Plan to an
Eligible Employee or to Eligible Employees generally.
8.2 No Employment Contract. Nothing contained in the Plan (or in the
Award Agreements or in any other documents related to the Plan or to Awards)
shall confer upon any Eligible Employee or any Participant any right to continue
in the employ of the Corporation or constitute any contract or agreement of
employment, or interfere in any way with the right of the Corporation to reduce
such person's compensation or to terminate the employment of such Eligible
Employee or Participant, with or without cause, but nothing contained in the
Plan or any document related thereto shall affect any other contractual right of
any Eligible Employee or Participant. Nothing contained in the Plan (or in the
Award Agreements or in any other documents related to the Plan or the Awards)
shall confer upon any director of the Corporation any right to continue as a
director of the Corporation.
8.3 No Transferability. Awards may be exercised only by, and amounts
payable or shares issuable pursuant to an Award shall be paid only to or
registered only in the name of, the Participant or, in the event of the
Participant's death, to the Participant's Beneficiary or, in the event of the
Participant's Disability, to the Participant's Personal Representative or, if
there is none, to the Participant. Other than by will or the laws of descent and
distribution, no right or benefit under the Plan or any Award, including,
without limitation, any Option or share of Restricted Stock that has not vested,
6
<PAGE>
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge and any such attempted action shall
be void and no such right or benefit shall be, in any manner, liable for, or
subject to, debts, contract, liabilities, engagements, or torts of any Eligible
Employee, Participant, or Beneficiary, in any case except as may otherwise be
expressly required by applicable law. The Board or the Committee shall disregard
any attempt at transfer, assignment, or other alienation prohibited by the
preceding sentence and shall pay or deliver such cash or shares of Common Stock
in accordance with the provisions of the Plan. Notwithstanding the foregoing,
the Board or the Committee may authorize exercise by or transfers or payments to
a third party in a specific case or more generally; provided, however, with
respect to any option or similar right (including any Stock Appreciation Right),
such discretion may only be exercised to the extent that applicable rules under
Section 16 of the Exchange Act would so permit without disqualifying the Plan
from certain benefits thereunder.
8.4 Plan Not Funded. No Participant, Beneficiary, or other person
shall have any right, title, or interest in any fund or in any specific asset
(including shares of Common Stock) of the Corporation by reason of any Award
granted hereunder. There shall be no funding of any benefits which may become
payable hereunder. Neither the provisions of the Plan (or of any documents
related hereto), nor the creation or adoption of the Plan, nor any action taken
pursuant to the provisions of the Plan shall create, or be construed to create,
a trust of any kind or a fiduciary relationship between the Corporation and any
Participant, Beneficiary, or other person. To the extent that a Participant, a
Beneficiary, or other person acquires a right to receive an Award hereunder,
such right shall be no greater than the right of any unsecured general creditor
of the Corporation. Awards payable under the Plan shall be paid in shares of
Common Stock or from the general assets of the Corporation, and no special or
separate fund or deposit shall be established and no segregation of assets or
shares shall be made to assure payment of such Awards.
8.5 Adjustment Upon Recapitalizations and Corporate Changes. If the
outstanding shares of Common Stock are changed into or exchanged for cash or a
different number or kind of shares or securities of the Corporation, or if the
outstanding shares of the Common Stock are increased, decreased, exchanged for,
or otherwise changed, or if additional shares or new or different shares or
securities are distributed with respect to the outstanding shares of the Common
Stock, through a reorganization or merger in which the Corporation is the
surviving entity or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation, or other capital change or adjustment, an appropriate adjustment
shall be made in the number and kind of shares of other consideration that is
subject to or may be delivered under the Plan and pursuant to outstanding
Awards. A corresponding adjustment to the consideration payable with respect to
Awards granted prior to any such change and to the price, if any, to be paid in
connection with Restricted Stock Awards shall also be made as appropriate.
Corresponding adjustments shall be made with respect to Stock Appreciation
Rights related to Options to which they are related. In addition, the Board or
the Committee may grant such additional rights in the foregoing circumstances as
the Board or the Committee deems to be in the best interest of any Participant
and the Corporation in order to preserve for the Participant the benefits of an
Award.
8.6 Termination of Employment, Except by Death, Disability, or
Retirement. If a Participant ceases to be an Employee for any reason other than
his or her death, Disability or Retirement, such Participant shall have the
right, subject to the restrictions of Section 8.3 above, to exercise any Award
at any time within three months after termination of employment, but only to the
extent that, at the date of termination of employment, the Participant's right
to exercise such Award had accrued pursuant to the terms of the applicable
agreement and had not previously been exercised; provided, however, that if the
Participant was terminated for cause (as defined in the applicable agreement),
any Award not exercised in full prior to such termination shall be canceled. For
this purpose, the employment relationship shall be treated as continuing intact
while the Participant is on military leave, sick leave, or other bona fide leave
of absence (to be determined in the sole discretion of the Board or the
Committee). The foregoing notwithstanding, in the case of an Incentive Stock
Option, employment shall not be deemed to continue beyond the 90th day after the
Participant's reemployment rights are guaranteed by statute or by contract.
7
<PAGE>
8.7 Death of Participant. If a Participant dies while an Employee, or
after ceasing to be an Employee but during the period while he or she could have
exercised the Award under this Section 8.7, and has not fully exercised the
Award, then the Award may be exercised in full at any time within 12 months
after the Participant's death (but not later than the date of termination fixed
in the applicable agreement), by the executors or administrators of his or her
estate or by any person or persons who have acquired the Award directly from the
Participant by bequest or inheritance, but only to the extent that, at the date
of death, the Participant's right to exercise such Award had accrued and had not
been forfeited pursuant to the terms of the applicable agreement and had not
previously been exercised.
8.8 Disability of Participant. If a Participant ceases to be an
Employee by reason of Disability, such Participant shall have the right to
exercise the Award at any time within 12 months after termination of employment
(but not later than the termination date fixed in the applicable Agreement), but
only to the extent that, at the date of termination of employment, the
Participant's right to exercise such Award had accrued pursuant to the terms of
the applicable Award Agreement and had not previously been exercised.
8.9 Retirement of Participant. If a Participant ceases to be an
Employee by reason of Retirement, such Participant shall have the right to
exercise the Award at any time within three months after termination of
employment (but not later than the termination date fixed in the applicable
Award Agreement), but only to the extent that, at the date of termination of
employment, the Participant's right to exercise such Award had accrued pursuant
to the terms of the applicable Award Agreement and had not previously been
exercised.
8.10 Rights as a Stockholder. A Participant, or a transferee of a
Participant, shall have no rights as a stockholder with respect to any Shares
covered by his or her Award until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities, or other property), distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 8.5 hereof.
8.11 Deferral of Payments. The Board or the Committee may approve the
deferral of any payments that may become due under the Plan. Such deferrals
shall be subject to any conditions, restrictions, or requirements as the Board
or the Committee may determine.
8.12 Acceleration of Awards. Immediately prior to the occurrence of an
Event, (i) each Option and Stock Appreciation Right under the Plan shall become
exercisable in full; (ii) Restricted Stock delivered under the Plan shall
immediately vest free of restrictions; and (iii) each other Award outstanding
under the Plan shall be fully vested or exercisable, unless, prior to the Event,
the Board or the Committee otherwise determines that there shall be no such
acceleration or vesting of an Award or otherwise determines those Awards which
shall be accelerated or vested and to the extent to which they shall be
accelerated or vested, or that an Award shall terminate, or unless in connection
with such Event the Board provides (A) for the assumption of such Awards
theretofore granted; or (B) for the substitution for such Awards of new awards
covering securities or obligations (or any combination thereof) of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices; or (C) for the payment of the fair
market value of the then outstanding Awards. In addition, the Board or the
Committee may grant such additional rights in the foregoing circumstances as the
Board or the Committee deems to be in the best interest of the Participant and
the Corporation in order to preserve for the Participant the benefits of an
Award. For purposes of this Section 8.12 only, Board shall mean the Board of
Directors of the Corporation as constituted immediately prior to the Event. In
addition, the Board may in its sole discretion accelerate the exercisability or
vesting of any or all Awards outstanding under the Plan in circumstances under
which the Board or the Committee determines such acceleration appropriate.
8
<PAGE>
IX. MISCELLANEOUS
9.1 Termination, Suspension, and Amendment. The Board or the Committee
may, at any time, suspend, amend, modify, or terminate the Plan (or any part
thereof) and may, with the consent of a Participant, authorize such
modifications of the terms and conditions of such Participant's Award as it
shall deem advisable; provided that, except as permitted under the provisions of
Section 8.5 hereof, no amendment or modification of the Plan may be adopted
without approval by a majority of the outstanding shares of Common Stock
pursuant to a shareholder's action taken without a meeting or by a majority of
the shares of the Common Stock represented (in person or by proxy) at a meeting
of stockholders at which a quorum is present and entitled to vote thereat, if
such amendment or modification would:
(i) materially increase the benefits accruing to
Participants under the Plan or materially increase the aggregate number of
shares which may be delivered pursuant to Awards granted under the Plan if such
action would require of the Company's shareholders pursuant to Rule 16b-3 under
the Exchange Act or any successor provision; or
(ii) materially modify the requirements of eligibility for
participation in the Plan.
Neither adoption of the Plan nor the provisions hereof shall limit the authority
of the Board to adopt other Plans or to authorize other payments of compensation
and benefits under applicable law. No Awards under the Plan may be granted or
amended during any suspension of the Plan or after its termination. The
amendment, suspension or termination of the Plan shall not, without the consent
of the Participant, alter or impair any rights or obligations pertaining to any
Awards granted under the Plan prior to such amendment, suspension, or
termination.
9.2 No Fractional Shares. No Award or installment thereof shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded.
9.3 Tax Withholding. As required by law, federal, state, or local
taxes that are subject to the withholding of tax at the source shall be withheld
by the Corporation as necessary to satisfy such requirements. The Corporation is
entitled to require deduction from other compensation payable to each
Participant or, in the alternative: (i) the Corporation may require the
Participant to advance such sums; or (ii) if a Participant elects, the
Corporation may withhold (or require the return of) Shares having the Fair
Market Value equal to the sums required to be withheld. If the Participant
elects to advance such sums directly, written notice of that election shall be
delivered prior to such exercise and, whether pursuant to such election or
pursuant to a requirement imposed by the Corporation, payment in cash or by
check of such sums for taxes shall be delivered within 10 days after the
exercise date. If the Participant elects to have the Corporation withhold Shares
(or be entitled to the return of Shares) having a Fair Market Value equal to the
sums required to be withheld, the value of the Shares to be withheld (or
returned) will be equal to the Fair Market Value on the date the amount of tax
to be withheld (or subject to return) is to be determined (the "Tax Date").
9.4 Restrictions on Elections Made by Participants. Elections by
Participants to have Shares withheld (or subject to return) for this purpose
will be subject to the following restrictions: (i) the election must be made
prior to the Tax Date; (ii) the election must be irrevocable; (iii) the election
will be subject to the Board's disapproval; and (iv) if the Participant is an
"officer" within the meaning of Section 16 of the Exchange Act, the election
shall be subject to such additional restrictions as the Board or the Committee
may impose in an effort to secure the benefits of any regulations thereunder.
9.5 Limitations on the Corporation's Obligations. The Corporation
shall not be obligated to issue shares and/or distribute cash to the Participant
upon any Award exercise until such payment has been received or Shares have been
9
<PAGE>
withheld, unless withholding (or offset against a cash payment) as of or prior
to the exercise date is sufficient to cover all such sums due or which may be
due with respect to such exercise. In addition, the Board or the Committee may
grant to a Participant a cash bonus in any amount required by federal, state, or
local tax law to be withheld with respect to an Award.
9.6 Compliance with Laws. The Plan, the granting of Awards under the
Plan, the Stock Option Agreements and Stock Purchase Agreements and the delivery
of Options, Shares, and Awards (and/or the payment of money or Common Stock)
pursuant thereto and the extension of any loans hereunder are subject to such
additional requirements as the Board or the Committee may impose to assure or
facilitate compliance with all applicable federal and state laws, rules and
regulations (including, without limitation, securities laws and margin
requirements) and to such approvals by any regulatory or governmental agency
which may be necessary or advisable in connection therewith. In connection with
the administration of the Plan or the grant of any Award, the Board or the
Committee may impose such further limitations or conditions as in its opinion
may be required or advisable to satisfy, or secure the benefits of, applicable
regulatory requirements (including those rules promulgated under Section 16 of
the Exchange Act or those rules that facilitate exemption from or compliance
with the Securities Act or the Exchange Act), the requirements of any stock
exchange upon which such shares or shares of the same class are then listed, and
any blue sky or other securities laws applicable to such shares.
9.7 Governing Laws. The Plan and all Awards granted under the Plan and
the documents evidencing Awards shall be governed by, and construed in
accordance with, the laws of the State of Nevada as the Corporation's principle
place of business.
9.8 Securities Law Requirements.
(a) Legality of Issuance. The issuance of any Shares upon the
exercise of any Option and the grant of any Option shall be contingent upon the
following:
(i) the Corporation and the Participant shall have taken
all actions required to register the Shares under the Securities Act of 1933, as
amended (the "Securities Act"), and to qualify the Option and the Shares under
any and all applicable state securities or "blue sky" laws or regulations, or to
perfect an exemption from the respective registration and qualification
requirements thereof;
(ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed shall have been satisfied; and
(iii) any other applicable provision of state or Federal law
shall have been satisfied.
(b) Restrictions on Transfer. Regardless of whether the offering
and sale of Shares under the Plan has been registered under the Securities Act
or has been registered or qualified under the securities laws of any state, the
Corporation may impose restrictions on the sale, pledge, or other transfer of
such Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Corporation and its counsel, such
restrictions are necessary or desirable in order to achieve compliance with the
provisions of the Securities Act, the securities laws of any state, or any other
law. In the event that the sale of Shares under the Plan is not registered under
the Securities Act but an exemption is available which required an investment
representation or other representation, each Participant shall be required to
represent that such Shares are being acquired for investment, and not with a
view to the sale or distribution thereof, and to make such other representations
as are deemed necessary or appropriate by the Corporation and its counsel. Any
determination by the Corporation and its counsel in connection with any of the
matters set forth in this Section 9.6(b) shall be conclusive and binding on all
persons. Stock certificates evidencing Shares acquired under the Plan pursuant
to an unregistered transaction shall bear the following restrictive legend and
such other restrictive legends as are required or deemed advisable under the
provisions of any applicable law:
10
<PAGE>
THESE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON
EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS. THESE SHARES OR ANY
INTEREST HEREIN MAY NOT, BE OFFERED, SOLD OR TRANSFERRED UNLESS
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE
STATE SECURITIES LAWS IS AVAILABLE.
(c) Registration or Qualification of Securities. The Corporation
may, but shall not be obligated to register or qualify the issuance of Awards
and/or the sale of Shares under the Securities Act or any other applicable law.
The Corporation shall not be obligated to take any affirmative action in order
to cause the issuance of Awards or the sale of Shares under the Plan to comply
with any law.
(d) Exchange of Certificates. If, in the opinion of the
Corporation and its counsel, any legend placed on a stock certificate
representing shares issued under the Plan is no longer required, the holder of
such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of Shares but lacking such legend.
9.9 Execution. To record the adoption of the Plan in the form set
forth above by the Board effective as of January 25, 1999, the Corporation has
caused this Plan to be executed in the name and on behalf of the Corporation
where provided below by an officer of the Corporation thereunto duly authorized.
VIRTUAL BRAND, INC.
By: /s/ Jeff Phillips
----------------------------
President
ATTEST:
/s/Gregory V. Gibson
- --------------------------
Secretary
11
<PAGE>
EXHIBIT "A"-1
S&P COMSTOCK INFORMATION DISTRIBUTION
LICENSE AGREEMENT
AGREEMENT, made as of 1-16-98, by and between S&P ComStock, Inc. a
corporation having offices at 600 Mamaroneck Avenue, Harrison, New York 10528,
and Global investor's Guide ("Distributor"), having an office at 1130 Camino
Del Mar, Suite 1, Del Mar, CA 92014
WHEREAS, S&P ComStock, Inc. gathers, formats and distributes an
information service comprised of certain securities and commodities prices and
other data which is known as the S&P ComStock Service. ("ComStock") and
WHEREAS, S&P ComStock, Inc. is licensed to distribute information from
various Stock Exchanges, Commodity Exchanges, and other sources (collectively,
"Sources") as part of S&P ComStock; and
WHEREAS, the parties desire that certain delayed information from S&P
ComStock ("the ComStock Information") as specified in Exhibit A (Part I),
attached hereto, be made available to Distributor for display by Distributor on
its Internet World Wide Web site (collectively, the "Distributor Service"), as
described fully in Exhibit B, attached hereto.
NOW, THEREFORE, the parties mutually agree as follows:
1. Distribution License.
(a) Distributor is hereby granted for the term of this Agreement a
nonexclusive, nontransferable right and license to distribute electronically
the ComStockInformation via the Distributor Service solely for access by
Internet users of the Distributor Service (such users referred to herein as
"Subscribers"), provided that the ComStock Information is supplied to the
Subscribers by means (such as data encryption, or packet
transmissiondigitizing) which prevent unauthorized reception, use or
retransmission and further provided that Distributor has executed in advance
any and all necessary documents with the various Sources, which documents have
been accepted and approved by the Sources. Notice of such Sources' acceptance
and approval must be supplied to S&P ComStock, Inc. prior to Distributor's use
or distribution of the ComStock Information.
(b) Distributor agrees and understands that it is not permitted to
sublicense, transfer, or assign its rights hereunder and that it shall not
permit the redistribution of the ComStock Information by any Subscriber or by
any other third party without the express prior authorization of S&P ComStock,
Inc. pursuant to a separate agreement or by mutually agreeable amendment
executed and attached hereto.
<PAGE>
2. ComStock Equipment.
(a) During the term of this Agreement, S&P ComStock, Inc. shall
provide Distributor the equipment listed in Exhibit C, attached hereto ("the
ComStock Equipment"), for installation only at the site(s) specified therein.
Distributor shall not relocate the ComStock Equipment without the written
permission of S&P ComStock, Inc.
(b) S&P ComStock, Inc. shall, at Distributor's expense and request,
install, furnish, and maintain necessary modems and/or communications interface
equipment.
(c) Distributor shall not attach, or permit or cause to be attached,
any nonComStock equipment to the ComStock communications line or the ComStock
Equipment without the prior written permission of S&P ComStock, Inc..
(d) Distributor shall have no right in or to any of the ComStock
Equipment except for the Tights of use herein granted. Distributor shall pay
all extraordinary costs for repair or replacement of the ComStock Equipment,
over and above ordinary maintenance which shall be performed by S&P ComStock,
Inc.. Such extraordinary maintenance includes electrical work external to the
ComStock Equipment, maintenance of accessories or attachments, and repair of
damage to the ComStock Equipment resulting from accident, neglect, misuse,
failure of electrical power or causes other than ordinary use. Distributor
shall promptly return the ComStock Equipment in good condition, ordinary wear
and tear excepted, upon termination of this Agreement for any reason.
3. ComStock Information.
(a) The furnishing to Distributor of the ComStock Information is
conditioned upon strict compliance with the provisions of this Agreement, the
applicable policies of the Sources, and with all local, state and federal
regulations which might pertain to the use of the ComStock Information. It
shall be the sole responsibility of Distributor to confirm with the applicable
Sources whether or not all of the ComStock Information may be distributed by
Distributor to its Subscribers. S&P ComStock, Inc. may discontinue provision of
the ComStock Information hereunder, without notice, whenever the terms of its
agreements with the Sources require such discontinuance, or if in its
reasonable judgment S&P ComStock, Inc. finds a breach by Distributor of any of
the provisions of this Agreement.
(b) Neither S&P ComStock, Inc., nor any of its affiliates, nor any
Sources make any express or implied warranties (including, without limitation,
any warranty of merchantability or fitness for a particular purpose or use).
Neither S&P ComStock, Inc., any of its affiliates, or any Sources warrant that
the ComStock information will be uninterrupted or error-free. Distributor
expressly agrees that its use and distribution of the ComStock Information and
its use of the ComStock Equipment is at the sole risk of Distributor and its
Subscribers. S&P ComStock, Inc., its affiliates, and all Sources involved in
2
<PAGE>
creating or providing the ComStock Information will in no way be liable to
Distributor or any of its Subscribers for any inaccuracies, errors or
omissions, regardless of cause, in the ComStock Information or for any defects
or failures in the ComStock Equipment, or for any damages (whether direct or
indirect, or consequential, punitive or exemplary) resulting therefrom. The
liability of S&P ComStock, Inc. and its affiliates in any and all categories,
whether arising from contract, warranty, negligence, or otherwise shall, in the
aggregate, in no event exceed one month's ComStock Information Delivery Fee.
(c) Distributor agrees that it shall not display the ComStock
Information in the Distributor Service without a prominent notice indicating
that the ComStock Information is being displayed on a minimum fifteen (15)
minute delayed basis.
(d) Distributor also agrees to include S&P Comstock's Terms and
Condition of Use, a copy of which is attached hereto as Exhibit E, within the
Distributor Service in a manner which alerts Subscribers of the applicability
thereof
(e) Distributor shall clearly and prominently identify S&P ComStock as
the source of the ComStock Information by display of the S&P ComStock logo (the
"Logo") in a manner to be agreed to by the parties. Distributor shall also
create a hypertext or other computer link from the Logo to the S&P ComStock
site on the World Wide Web.
(f) Distributor represents and war-rants that it has and will employ
adequate security procedures to prevent the unauthorized access to the ComStock
information or corruption of the ComStock Information.
(g) Distributor agrees to indemnify and hold S&P ComStock, Inc. and
its affiliates harmless from and against any and all losses, damages,
liabilities, costs, charges and expenses, including reasonable attorneys' fees,
arising out of (i) any liability of S&P ComStock, Inc. to any Subscriber where
Distributor has failed to include the Terms and Conditions of Use in the
Distributor Service pursuant to Section 3(d) above; or (ii) any breach or
alleged breach on the part of Distributor or any Subscribers with respect to
its/their obligations to obtain prior approvals from appropriate Sources and to
comply with any applicable conditions, restrictions or limitations impose by
any Source.
(h) S&P ComStock, Inc. represents that it has the rights and licenses
necessary to transmit the ComStock Information to Distributor, and that to the
best of S&P ComStock, Inc.'s knowledge, the license granted to Distributor
hereunder does not infringe any proprietary right or any third party right at
common law or any statutory copyright.
(i) S&P ComStock, Inc. shall deliver the ComStock Information to
Distributor at the site(s) set forth in Exhibit C or at such other locations as
Distributor may designate within the continental United States or Canada.
3
<PAGE>
4. Payments.
In consideration for the license granted to Distributor by S&P
ComStock, Inc. under this Agreement, Distributor shall make the following
payments to S&P ComStock, Inc.:
(a) Distributor shall pay to S&P ComStock, Inc. a one-time,
non-refundable Distribution License Fee of $500 due and payable upon execution
of this Agreement by both parties. Such fee is payable regardless of whether or
not distributor actually distributes the ComStock Information to any
Subscriber.
(b) Distributor shall pay to S&P ComStock, Inc. a basic ComStock
Information Delivery Fee of $ 720 per month, including all recurring charges
for ComStock network connection, modem/line interface equipment, and standard
equipment maintenance services as determined by S&P ComStock, Inc.'s standard
price list. These charges, plus any applicable Source fees and state/local
taxes, will be billed monthly in advance. Nonrecurring charges such as
installation, relocation and removals of ComStock Equipment will be separately
billed in accordance with S&P ComStock, Inc.'s then-current standard rates.
(c) Distributor shall pay to S&P ComStock Inc. a monthly
Redistribution Fee, as calculated using the Schedule of Fees attached hereto as
Exhibit D.
(d) Distributor shall be responsible for the payment of any and all
applicable fees billed to S&P ComStock, Inc. or directly to Distributor by
Sources, which fees result from Distributor's use and distribution of the
ComStock Information. Distributor shall also be responsible for payment of any
Subscriber's Source fees which must be paid directly by Distributor to the
Sources. Distributor shall provide to S&P ComStock, Inc. a copy of its monthly
Source fee reports when and as filed with the Sources.
(e) Any amounts payable to S&P ComStock, Inc. by Distributor hereunder
which are more than thirty (30) days past due shall bear interest at the rate
of 1-1/2% per month.
(f) S&P ComStock, Inc. may, in its sole discretion and at any time
following the initial term of this Agreement, change the Redistribution fee
payment schedule and/or the ComStock Information Delivery Fee as specified
herein after having provided written notice to Distributor at least ninety (90)
days in advance of such changes.
(h) Once each calendar quarter, Distributor shall furnish S&P ComStock
with information regarding the number of quotes requested by Subscribers for
the previous quarter and such other additional information regarding use of the
ComStock Information as the parties agree.
4
<PAGE>
5. Information Enhancements; Changes to Data Specification.
(a) Any additions of new Sources or other enhancements to the ComStock
Information which may be made by S&P ComStock, Inc. during the term of this
Agreement, while unidentified at this time, will be offered to Distributor
under terms and conditions to be negotiated, provided that (i) S&P ComStock,
Inc. has the necessary rights to convey such new information to Distributor for
redistribution; and (ii) Distributor and S&P ComStock, Inc. execute a separate
agreement or an amendment to this Agreement.
(b) S&P ComStock, Inc. shall have the right, on at least six (6)
months prior written notice, to change the ComStock Data Format Specification,
provided that any such change shall be made effective generally by S&P
ComStock, Inc. to its customers. Distributor shall be responsible at its own
expense for making any modifications to its software necessitated by such
change.
6. Term.
(a) This Agreement shall take effect upon its execution by an
authorized representative of S&P ComStock, Inc. and of Distributor.
(b) The term of this Agreement shall be for an initial term of three
(3) years commencing on the first day of service operation and shall continue
thereafter for additional consecutive twelve (12) month terms, unless written
notice of termination shall have been received by either party from the other
at least ninety (90) days prior to the end of the initial term or of any
additional twelve-month term. If S&P ComStock, Inc. increases charges to
Distributor pursuant to Paragraph 4(f), above, Distributor shall have the
option to terminate this Agreement by written notice to S&P ComStock, Inc.
within sixty (60) days of Distributor's receipt of notice of such increases;
such termination will become effective no sooner than thirty (30) days from the
last day of the month in which notice of termination by Distributor is received
by S&P ComStock, Inc..
7. Marketing.
Distributor may not use the names "ComStock", "SPC.", or "S&P
ComStock, Inc.", which are proprietary to S&P ComStock, Inc., or refer to the
ComStock Information in marketing or advertising materials without the prior
written consent of S&P ComStock, Inc., such consent not to be unreasonably
withheld. Upon S&P ComStock Inc.'s written request, Distributor shall notify
Subscribers by a display in the service itself that S&P ComStock is the source
of the quote information and any sales literature discussing ComStock provided
quotes shall list S&P ComStock as the provider of the service.
8. Fights to Data Specification; Other Confidential Information.
(a) Distributor agrees and acknowledges that the Data Specification is
a confidential and proprietary trade secret belonging to ComStock, and nothing
5
<PAGE>
in this Agreement conveys any proprietary rights whatsoever with regard to the
Data Specification to Distributor. The Data Specification is provided to the
Distributor strictly and solely for the purpose of developing inInternaltemal
computer software to receive the ComStock Information. Distributor may not use
the Data Specification for any other purpose whatsoever, including, but not
limited to, the development of systems for the receipt or transmission of
computer data. Distributor may not give, transmit, or provide access to the
ComStock Data Specification to any Subscriber or other third party. On any
termination of this Agreement, regardless of cause, Distributor shall promptly
return the Data Specification to S&P ComStock, Inc. and shall provide a written
certification by an officer that no copies have been retained by Distributor.
(b) In addition to the duties imposed on Distributor pursuant to
Paragraph 8(a), above, S&P ComStock, Inc. and Distributor agree to hold
confidential any and all of each other's trade secrets, procedures, formulae,
financial data, Subscriber lists, and future plans, which may be learned before
and during the term of this AgreementNotwithstanding the foregoing, however,
such duty of confidentiality shall not extend to information which is or comes
into the public domain, is rightfully obtained from third parties not under a
duty of confidentiality, or which is independently developed without reference
to the other party's confidential information.
(c) The duties of confidentiality imposed herein shall survive any
termination of this Agreement.
9. Prevention of Performance.
Neither party shall be liable for any, failure in performance of this
Agreement if such failure is caused by acts of God, war, governmental decree,
power failure, judgment or order, strike, or other circumstances, whether or
not similar to the foregoing, beyond the reasonable control of the party so
affected. Neither party shall have any liability for any default resulting from
force majeure, which shall be deemed to include any circumstances beyond its
control. Such circumstances shall include, but are not limited to acts of the
government, fires, flood, strikes, power failures or communications line or
network Mures.
10. Right of Termination in the Event of Breach or Bankruptcy-, Fight to
Injunctive Relief
(a) Either party shall have the right to terminate this Agreement for
material breach by the other party by giving thirty (30) days prior written
notice, such termination to take effect unless the breach is cured or corrected
within such notice period.
(b) If a receiver is appointed for either party's business or if
either party petitions under the Bankruptcy Act and is adjudicated a bankrupt,
declared an insolvent, or makes an assignment for the benefit of creditors,
then the other party shall, upon thirty (30) days prior written notice, have
the right to terminate this Agreement.
6
<PAGE>
(c) Upon termination of this Agreement for any reason, Distributor
shall cease all use and distribution of any of the ComStock Information.
(d) In addition to and notwithstanding the above, if Distributor, or
any of its employees, agents or representatives, shall attempt to use or
dispose of the ComStock Information or the Data Specification in a manner
contrary to the terms of this Agreement, S&P ComStock, Inc. shall have the
right, in addition to such other remedies as may be available to it, to
injunctive relief enjoining such acts or attempt, it being acknowledged that
legal remedies are inadequate.
11. Assignment.
This Agreement may not be assigned, sublicensed or otherwise
transferred by either party without the written consent, except to a wholly
owned subsidiary, of the other party, such consent not to be unreasonably
withheld, provided, however, that no such consent shall be required with
respect to any assignment by S&P ComStock, Inc. to its parent company, or to
any S&P ComStock, Inc. affiliate. Any attempted transfer or assignment of this
Agreement in violation of this provision shall be null and void.
12. Entire Agreement.
This Agreement and its Exhibits embodies the entire agreement between
the parties hereto. There are no promises, representations, conditions or terms
other than those herein contained. No modification, change or alteration of
this Agreement shall be effective unless in writing and signed by the parties
hereto.
13. Non-Waiver.
The failure of either party to exercise any of its rights under this
Agreement for a breach thereof shall not be deemed to be a waiver of such
rights nor shall the same be deemed to be a waiver of any subsequent breach.
14. Notices.
All notices under this Agreement shall be given in writing to the
parties as follows:
To: S&P ComStock, Inc.
600 Mamaroneck Avenue
Harrison, New York 10528
Attn.: Paul Zinone
To: Global Investor's Guide
1130 Camino Del Mar
Suite 1
Del Mar, CA 92014
Attn: Mike Fagan
7
<PAGE>
15. Governing Law.
This Agreement shall be governed by the laws of the State of New York and
the parties agree to select New York jurisdiction for any claims or disputes
which may arise hereunder.
IN WITNESS WHEREOF, Distributor and S&P ComStock, Inc. have caused this
Agreement to be executed by their duly authorized respective officers, as of
the day and year above written.
S&P COMSTOCK, INC.
By: /s/ Paul C. Finn
Title: V.P. of Sales
Date: Feb 2, 1998
DISTR1BUTOR
By: /s/ Mike Fagan
Title: PRESIDENT, Global Investors Guide
Date: January 21, 1998
8
COMPUTER SOFTWARE LICENSE AGREEMENT
Townsend Analytics, Ltd. ("TAL") (100 S. Wacker Dr., Suite 2040, Chicago, IL
60606), in consideration of the terms and conditions herein set forth, hereby
grants to Customer and Customer accepts. a Personal. non-transferable, and
non-exclusive license to use the TAL software package named in Schedule A
below, the security key, and any related documentation (collectively known as
the 'Licensed Product") subject to the following conditions,
1. LICENSE. The Licensed Product contains computer programs and related
documentation. which are copyrighted and remain the Property Of TAL. The
Licensed Product is supplied by TAL and is intended solely for Customer's
internal business purposes on the single Quote Source specified in Schedule A
below. The Number of Licenses granted to Customer is specified in Schedule A
below. Customer agrees to use no more than the number of licenses granted. No
right. title or interest in Or to the Licensed Product is conveyed to Customer
by this Agreement. The license granted hereunder shall not be assigned,
sublicensed or otherwise transferred by Customer. Customer shall not after or
modify the Licensed Product.
2. LIMITED PERMISSION TO Copy LICENSED FORMAT, Customer shall not copy, in
whole or iln part, the software of the Licensed Product in machine readable
form except that Customer has limited permision (a) to make one copy of the
Licensed Product for archive or emergency backup purposes; and (b) to install
the Licensed Product on a single Computer hard disc, Customer agrees that it
shall not allow the Licensed Product to be subjected to reverse engineering,
decompiling. disassembling or modification. Customer shall not make copies of
the Licensed Product for use by or sale to others. Customer agrees that the
licensed Product, its components, and related materials, are trade secrets of
TAL's. are protected by copyright law, and constitute valuable property of
TAL's. Customer agrees that unauthorized copies or disclosure of the License
Product will cause great damage to TAL which damage far exceeds the value of
the copies involved.
3. TERM. The term of this Agreement shall be for a Minimum Term as described in
Schedule A below ;ornmeocing on the Effective Date. The Effective Date shall be
defined as (he date upon which the licensed software is authorized by TAL to
access the data feed. This Agreement shall automatically renew at the end of
each period for another Minimum Term, unless either party sends written notice
expressing its intention to terminate the Agreement as provided in Paragraph
Four (4).
4. TERMINATION. Neither TAL nor Customer shall terminate this Agreement except
as follows. The applicable party must receive all notices of termination at
least thirty (30) days prior to the end of the term. TAL may, in its sole
discretion, terminate this Agreement without further notice, upon failure of
Customer to pay any charges as described in Schedule A below. TAL may also, in
its sole discretion, terminate this Agreement upon the material failure of
Customer to comply with any of the other terms and conditions of this Agreement
when such failure, other than payment default, shall not be substantially cured
within thirty (30) days after TAL sends written notice to Customer specifying
the default. Upon any and all termination, TAL shall not be liable for any
damages, which may be sustained by Customer, including, but not limited to,
loss of profits, business interruption, loss of data, or pecuniary loss. Upon
termination of this Agreement for any reason, all unpaid charges due TAL shall
become immediately due and payable and Customer agrees to return the Licensed
Product to TAL.
5. FEES.
A. The Initial License Fee set forth in Schedule A will be billed in
advance upon the installation of the 5ervice, Thereafter. Customer will be
billed based on the term of the license for the duration of the Minimum Term
set forth in Schedule A. Customers who elect to prepay annually are eligible
for a discount described in Schedule A.
B. The charges set forth in Schedule A shall remain unchanged during the
initial Minimum Term. However. upon written notice to Customer at least thirty
(30) days prior to the end of each Term, including the initial Minimum Term,
TAL may change any and all charges for succeeding terms.
C. All charges billed will be due and payable in full Within ten (10) days
of receipt of invoice. If Customer falls to pay any amount due under this
Agreement. Customer shall upon demand pay interest on the unpaid balances at a
rate of 29% per month from the due date.
D. Customer agrees to pay all data vendor fees, exchange fees. personal
property taxes, sales taxes. value -added taxes, and all other taxes, which
are Customer's legal responsibility to pay.
E. Setup charges include the initialization and delivery of the Licensed
Product. These charges do not include on site installation unless expressly
listed in Schedule A.
6. ADDITIONAL CHARGES. Customer is responsible for obtaining Quote Source
approval for the subscription to a Quote Source for the integration of the
Licensed Product. All charges and fees including Exchange Fees, communication
charges,, taxes, and Quote Source's service charges are the responsibility of
Customer. Customer is responsible for providing all equipment used with the
Licensed Product.
<PAGE>
7. MAINTENANCE. TAL, or its agent. shall be available to provide non-toll free
phone and fax support during the hours of 9:00 AM to 5:00 PM CST. Monday
through Friday, excluding trading holidays. Customers will receive normal
maintenanceupgrades during the term of the license at no additional charge.
Customers who have unusual support requirements such as the need for on-site
support shall contract separately for those requirements.
8. DATA AUTHORIZATION. Customer acknowledges that TAL may be required to report
data related to the number of users, (he electronic information provider's
services it has available for use, and the data feeds from which the
information is received, to various agencies. To enable TAL to meet its
obligation in this regard, Customer agrees to inform TAL in writing whenever
its usage of the data changes materially. Such changes shall include. but are
not limited to, an increase in the number of simultaneously operable computers
with access to the data feed.
9. DISCLAIMER. TAL expressly disclaims all warranties, express or inplied, with
respect to the Licensed Product and related materials and its quality of
performance, including warranties of merchantability and fitness for a
particular purpose. TAL snakes no representation concerning the likelihood of
profitable trading using the Licensed Product The Licensed Product is licensed
"as is" and "with all faults". The sales personnell, employees, and dealers of
TAL art not authorized to make warranties binding on TAL about the Licensed
Product. Accordingly, additional oral statement do not constitute warranties
and should not be relied upon and are not part of this Agreement This paragraph
shall survive the termination of this Agreement.
10. LIMITS OF LIABILITY. TAL shall not be liable under this Agreement for any
money damages resulting from claims made by Customer or third party(s) for
errors, omissions, interruptions. or delays in the Licensed Product or for the
unavailability of the services provided or to be provided. regardless of the
cause. In no event shall TAI be responsible for special, indirect, incidental,
exemplary, or consequential damages, which Customer may incur in entering into
this Agreement. even if TAL has been advised of the possibility of such
damages. Customer waives all claims against TAL. its directors, officers, and
employees for special, indirect, or consequential damages &rising out of or in
connection with the use or performance of the Licensed Product. If the
foregoing disclaimer and waiver of liability should be deemed invalid or
ineffective, TAL. its directors, officers, and employees shall not be liable n
any event beyond the Amount of one month's license fee paid by Customer for one
copy of the Licensed Product. This paragraph shall survive the, termination of
this Agreement.
11. GENERAL. The laws of the State of Illinois shall govern this Agreement. If
any provision of this Agreementt shall be held invalid under applicable law,
the remaining provisions shall remain in full force and effect.
Customer: Global Investor's Guide Date:4-21-98
----------------------- -------
BY: Michael Fagan
-------------
Title: President
---------
1794645
SECRETARY OF STATE
CORPORATION DIVISION
1, BILL JONES, Secretary of State of the State of California, hereby
certify:
That the annexed transcript lids been compared with the corporate record
on file in this; office, of which It purports to be a copy, and that same is
full, true and correct.
IN WITNESS WHEREOF, I
execute this certificate
and affix the Great Sea]
of the State of
California this
DEC 3 1996
------------------------
/s/ Bill Jones
Secretary of State
<PAGE>
1794645
ARTICLES OF INCORPORATION
I
The name of this corporation is GLOBAL INVESTORS GUIDE
II
The purpose of this corporation is to engage in any lawful ad of activity for
Which a corporation may be organized Under the GENERAL CORPORATION LAW of
California other than the banking business the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III
The name and address in the State of California of this corporation's initial
&,get for service of proem is;
Peter S. Griffith, CPA
41 East Foothill Blvd. Suite 204
Arcadia California 91006
IV
This corporation is authorized to issue only one class of shares of stock, and
the tow number of shares which this corporation is authorized to issue is 10,000
DATE: 12-2-96 /s/ Peter S. Griffith
--------------------- ---------------------------------
Peter S. Griffith,
Incorporator
BYLAWS
OF
GLOBAL INVESTORS GUIDE
SHAREHOLDERS
1. ANNUAL MEETING. Unless the Board of Directors of the President of the
Corporation selects a different time or date, the annual meeting of
shareholders shall be held at 11:00 A.M. on the first Tuesday of the third
month following the end of the corporation's fiscal year. The annual meeting
shall be for the purpose of electing a Board of Directors and transacting such
other business as may properly be brought before the meeting.
2. SPECIAL MEETING. Special meetings of shareholders may be called at any
time by the Board of Directors, the Chairman of the board, the President or the
holders of shares entitled to cast not less than one-tenth of the votes at the
meeting.
3. PLACE. Meetings of shareholders shall be held at the principal
executive office of the corporation or at any other place, within or without
California, which may be designated by the Board of Directors.
4. NOTICE.
(a) Annual and Special Meetings. A written notice of each meeting
of shareholders shall be given not more than 60 days and, except as provided
below, not less than 10 (or, if sent by third class mail, 30) days before the
date of the meeting to each shareholder entitled to vote at the meeting. The
notice shall state the place, date and hour of the meeting and, if directors
are to be elected at the meeting, the names of the nominees intended to be
presented by the Board of Directors for election. The notice shall also state
(i) in the case of an annual meeting, those matters which the Broad of
Directors intends to present for action by the shareholders, and (H) in the
case of a special meeting, the general nature of the business to be transacted
and that no other business may be transacted. Notice shall be delivered
personally, by first class mail or other written means addressed to each
shareholder at the address of such shareholder appearing on the books of the
corporation or given by the shareholder to the corporation for the purpose of
notice or as otherwise provided by law. Upon written request to the Chairman of
the Board, the President, the Secretary or any Vice President of the
corporation by any person (other than the Board of Directors) entitled to call
a special meeting of shareholders, the person receiving such request shall
cause notice to be given to the shareholders entitled to vote that a meeting
will be held at a time requested by the person calling the meeting not less
than 35 nor more than 60 days after the receipt of the request.
<PAGE>
(b) Adjourned Meetings. Notice of an adjourned meeting need not
be given if (i) the meeting is adjourned for 45 days or less, (ii) the time and
place of the adjourned meeting are announced at the meeting at which the
adjournment is taken, and (iii) no new record date is fixed for the adjourned
meeting. Otherwise, notice of the adjourned meeting shall be given as the case
of an original meeting.
5. RECORD DATE. The Board of Directors may fix in advance a record date
for the determination of the shareholders entitled to notice of any meeting, to
vote, to receive payment of any dividend or other distribution or allotment of
rights or to exercise any rights. Such record date shall not be more than 60
nor less than 10 days prior to the date of the meeting nor more than 60 days
prior to any other action. Except as otherwise provided by law, if no record
date is so fixed, the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be the day next
preceding the day on which notice is given, or if notice is waived, the close
of business on the business day next preceding the day on which the meeting is
held. The record date for determining shareholders entitled to give consent to
corporate action in writing without a meeting, when no prior action of the
Board of Directors has been taken, shall be the day on which the first written
consent is given. The record date for determining shareholders for any other
purpose shall be at the close of day prior to the date of such other action,
whichever is later. Except as otherwise provided in the Articles of
Incorporation, by law or by agreement, only shareholders at the close of
business on the record date are entitled to notice and to vote, to receive the
dividend, distribution or allotment of rights or to exercise rights, as the
case may be, notwithstanding any transfer of shares on the books of the
corporation after the record date. Except as otherwise provided by law, the
corporation shall be entitled to treat the holder of record of any shares as
the holder in fact of such shares and shall not be bound to recognize any
equitable or other claim to or interest in such shares on the part of any other
person, whether or not the corporation shall have express or other notice of
such claim or interest. A determination of shareholders of record entitled to
notice of or to vote as a meeting shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date. The Board of Directors
shall fix a new record date if the adjourned meeting takes place more than 45
days from the date set for the original meeting.
6. MEETING WITHOUT REGULAR CALL AND NOTICE. The actions of any meeting of
shareholders, however called and noticed and wherever held, are as valid as
though taken at a meeting duly held after regular call and notice if a quorum
is present in person or by proxy, and if, either before or after the meeting,
each of the persons entitled to vote who is not present at the meeting in
person or by proxy signs a written waiver of notice, a consent to the holding
of the meeting or an approval of the minutes of the meeting. For such purposes,
even though a shareholder attends such a meeting, the shareholder shall not be
<PAGE>
considered present at the meeting if at the beginning of the meeting, the
shareholder objects to the transaction of any business because the meeting was
not lawfully called or convened or, with respect to the consideration of a
matter required by law to be included in the notice of the meeting which was
not so included, the shareholder expressly objects to such consideration at the
meeting.
7. QUORUM AND REQUIRED VOTE. A majority of the shares entitled to vote,
represented in person or by proxy, constitutes a quorum for the transaction of
business. No business may be transacted at a meeting in the absence of a quorum
other than the adjournment of such meeting, except that if a quorum is present
at the commencement of a meeting, business may be transacted until the meeting
is adjourned even through the withdrawal of shareholders leaves less than a
quorum. If a quorum is present at a meeting, the affirmative vote of a majority
of the shares represented and voting at a duly held meeting shall be the act of
the shareholders unless the vote of a larger number or voting by classes is
required by law or the Articles of Incorporation. If a quorum is present at the
commencement of a meeting by the withdrawal of shareholders results in less
than a quorum, the affirmative vote of at least a majority of the shares
required to constitute a quorum shall be the act of the shareholders unless the
vote of a larger number or voting by classes is required by law of the Articles
of Incorporation. Any meeting of shareholders, whether or not a quorum is
present, may be adjourned by the vote of a majority of the shares represented
at the meeting.
8. PROXIES. A shareholder may be represented at any meeting of
shareholders by a written proxy signed by the person entitled to vote or by
such person's duly authorized attorney-in-fact. A proxy must bear a date within
I I months prior to the meeting, unless the proxy specifies a different length
of time. A revocable proxy is revoked by a writing delivered to the corporation
stating that the proxy is revoked, or by a subsequent proxy executed by the
person executing the prior proxy and presented to the meeting, or by attendance
at the meeting and voting in person by the person executing the proxy.
9. VOTING, REPORT OF RESULTS. Except as provided below or as otherwise
provided by the Articles of Incorporation or by law, a shareholder shall be
entitled to one vote for each share held of record on the record date fixed for
the determination of the shareholders entitled to vote at a meeting or, if no
such date is fixed, the date determined in accordance with law. Upon the demand
of any shareholder made at a meeting before the voting begins, the election of
directors shall be by ballot. At every election of directors, shareholders may
cumulate votes and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which the
shareholder's shares are normally entitled or distribute the shareholder's
votes according to the same principle among as many candidates as desired;
however, no shareholder shall be entitled to cumulate votes for any one or more
candidates unless such candidate or candidates' names have been placed in
<PAGE>
nomination prior to the voting and at least one shareholder has given notice at
the meeting prior to the voting of such shareholder's intention to cumulate
votes. Upon written request of any shareholder made within 60 days of any
meeting of shareholders, the corporation shall forthwith inform such
shareholder of the result of any particular vote of shareholders taken at the
meeting, including the number of shares voting for, the number of shares voting
against, and the number of shares abstaining or withheld from voting. If the
matter voted on was the election of directors, the corporation shall report to
the shareholder the number of shares (or votes if voted cumulatively) cast for
each nominee for director. If more than one class or series of shares voted,
the report shall state the appropriate numbers by class or series of shares.
10. ELECTION INSPECTORS. One or three election inspectors may be appointed
by the Board of Directors in advance of a meeting of shareholders or at the
meeting by the chairman of the meeting. If not previously chosen, one or three
inspectors shall be appointed by the chairman of the meeting if a shareholder
or proxy holder so request. When inspectors are appointed at the request of a
shareholder or proxy holder, the majority of shares represented in person or by
proxy shall determine whether one or three inspectors shall be chosen. The
election inspectors shall determine all questions concerning the existence of a
quorum and the right to vote, shall tabulate and determine the results of
voting and shall do other acts as may be proper to conduct the election or vote
with fairness to all shareholders. If there are three inspectors, the decision,
act or certificate of a majority of the inspectors is effective as if made by
all.
11. ACTION WITHOUT MEETING. Except as provided below, by the Articles of
Incorporation or by law, any action which may be taken at any meeting of
shareholders may be taken without a meeting and without prior notice if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes which
would be necessary to authorize or take such action were present and voted.
Unless the consents of all shareholders entitled to vote have been solicited in
writing, the corporation shall give, to those shareholders entitled to vote who
have not consented in writing, a written notice of (i) any shareholder approval
obtained without a meeting pursuant to those provisions of the California
Corporation Code set forth in Subsection 603(b)(1) of such Code at least 10
days before the consummation of the action authorized by such approval and (ii)
the taking of any other action approved by shareholders without a meeting by
less than unanimous written consent, which notice shall be given promptly after
such action is taken. Subject to Section 305(b) of the California Corporations
Code, directors may not be elected by written consent except by unanimous
written consent of all shares entitled to vote for the election of directors.
<PAGE>
12. REPORTS. The annual report to shareholders specified in Section 1501
of the California Corporations Code is dispensed with, except as the Board of
Directors may otherwise determine, as long as there are fewer than 100 holders
of record of the corporation's shares. Any such annual report sent to
shareholders shall be sent at least 15 (or, if sent by third class mail, 35)
days prior to the next annual meeting of shareholders.
13. LOST STOCK CERTIFICATES. The corporation may cause a new stock
certificate to be issued in place of any certificate previously issued by the
corporation alleged to have been lost, stolen or destroyed. The corporation
may, at its discretion and as a condition precedent to such issuance, require
the owner of such certificate or the owner's legal representative to deliver an
affidavit stating that such certificate was lost, stolen or destroyed or to
give the corporation a bond or other security sufficient to indemnify it
against any claim that may be made against it, including any expense or
liability, on account of the alleged loss, theft or destruction or the issuance
of a new certificate.
DIRECTORS
14. NUMBER. The number of directors of this corporation shall be one until
such number is changed by an amendment of this Bylaw, provided that, if the
number of directors is set forth in the Articles of Incorporation, such number
may only be changed by an amendment of the Articles of Incorporation. After the
issuance of shares, a bylaw specifying or changing a fixed number of directors
or the maximum or minimum number or changing from a fixed to a variable board
or vice versa may only be adopted by the affirmative vote of a majority of the
outstanding shares entitled to vote; provided, however, that a bylaw or
amendment of the Articles of Incorporation reducing the fixed number or the
minimum number of directors to a number less than five cannot be adopted if the
votes cast against its adoption at a meeting or the shares not consenting in
the case of action by written consent are equal to more than 16 2/3 percent of
the outstanding shares entitled to vote.
15. POWERS. Subject to the limitations imposed by law or contained in the
Articles of Incorporation, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction
of the Board of Directors.
16. ELECTION, TERM OF OFFICE AND VACANCIES. At each annual meeting of
shareholders, directors shall be elected to hold office until the next annual
meeting. Each director, including a director elected to fill a vacancy, shall
hold office until the expiration of the term for which the director was elected
and until a successor has been elected and qualified. The Board of Directors
may declare vacant the office of a director who has been declared to be of
unsound mind by court order or convicted of a felony. Unless otherwise provided
<PAGE>
by the Articles of Incorporation, vacancies on the Board of Directors not
caused by removal may be filled by a majority of the directors then in office,
or if the number of directors then in office is less than a quorum, by the
affirmative vote of a majority of the directors then in office at a meeting
held pursuant to notice or waivers of notice complying with Section 307 of the
California Corporation Code, or by a sole remaining director. The shareholders
my elect a director at any time to fill any vacancy not filled, or which cannot
be filled, by the Board of Directors. Not reduction in the authorized number of
directors shall have the effect of removing any director prior to the
expiration of the director's term of office.
17. REMOVAL. Except as described below, any or all of the directors may be
removed without cause if such removal is approved by the affirmative vote of a
majority of the outstanding shares entitled to vote. Unless the entire Board of
Directors is so removed, no director may be removed if (i) the votes cast
against removal, or not consenting in writing to such removal, would be
sufficient to elect such director if voted cumulatively at an election at which
the same total number of votes were cast or, if such action is taken by written
consent, all shares entitled to vote were voted, and (ii) the entire number of
directors authorized at the time of the director's most recent election were
then being elected. When the Articles of Incorporation provide that the holders
of the shares of any class or series, voting as a class or series, are entitled
to elect one or more directors, any director so elected may be removed only by
the applicable vote of the holders of the shares of that class or series.
18. RESIGNATION. Any director may resign by giving written notice to the
Chairman of the Board, the President, the Secretary or the Board of Directors.
Such resignation shall be effective when given unless the notice specifies a
later time. The resignation shall be effective regardless of whether it is
accepted by the corporation.
19. COMPENSATION. If the Board of Directors so resolves, the directors,
including the Chairman of the board, shall receive compensation and expenses of
attendance for meetings of the Board of Directors and of committees of the
Board. Nothing herein shall preclude any director from serving the corporation
in another capacity in accordance with the law and receiving compensation for
such service.
20. COMMITTEES. The Board of Directors may, by resolution adopted by the
majority of the authorized number of directors, designate one or more
committees, each consisting of two or more directors, to serve at the pleasure
of the Board. The Board may designate one or more directors as alternate
members of a committee who may replace any absent member at any meeting of the
committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Except
<PAGE>
as otherwise provided by Section 311 of the California Corporations Code, to
the extent permitted by the resolution of the Board of Directors, a committee
may exercise all of the authority of the Board.
21. INSPECTION OF RECORDS AND PROPERTIES. Each director may inspect all
books, records, documents and physical properties of the corporation and its
subsidiaries at any reasonable time. Inspections may be made either by the
director or the director's agent or attorney. The right of inspection includes
the right to copy and make extracts.
22. TIME AND PLACE OF MEETINGS AND TELEPHONE MEETINGS. Unless otherwise
provided in the Articles of Incorporation or unless the Board of Directors
otherwise determines, the Board shall hold a regular meeting during each
quarter of the corporation's fiscal year. One such meeting shall take place
immediately following the annual meeting of shareholders. All meetings of
directors shall be held at the principal executive office of the corporation or
at such other place, within or without California, as shall be designated in
the notice for the meeting or in a resolution of the Board of Directors.
Directors may participate in a meeting through use of conference telephone or
similar communications equipment, so long as all members so participating can
hear each other.
23. CALL. Unless otherwise provided in the Articles of Incorporation,
meetings of the Board of Directors, whether regular or special, may be called
by the Chairman of the Board, the President, the Secretary, and Vice President
or any two directors.
24. NOTICE. Unless otherwise provided in the Articles of Incorporation,
regular meetings of the Board of Directors may be held without notice if the
time and place of such meetings have been fixed by the Board. Special meetings
shall be held upon four days' notice by mail or 48 hours' notice delivered
personally or by telephone or telegraph, and regular meetings shall be held
upon similar notice if notice is required for such meetings. Neither a notice
nor a waiver of notice need specify the purpose of any regular or special
meeting. If a meeting is adjourned for more than 24 hours, notice of the
adjourned meeting shall be given prior to the time of such meeting to the
directors who were not present at the time of the adjournment.
25. MEETING WITHOUT NOTICE TO ALL DIRECTORS. Unless otherwise provided in
the Articles of Incorporation, notice of a meeting need not be given to any
director who, wither before or after the meeting, signs a written waiver of
notice or a consent to holding the meeting or an approval of the minutes of the
meeting or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such director. All such waivers, consents
and approvals shall be filed with the corporate records or made a part of the
Minutes of the Meeting.
<PAGE>
26. ACTION WITHOUT MEETING. Unless otherwise provided in the Articles of
Incorporation, any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, if all of the members of the Board
individually or collectively consent in writing to such action.
27. QUORUM AND REQUIRED VOTE. Unless otherwise provided in the Articles of
Incorporation, a majority of the directors shall constitute a quorum for the
transaction of business, provided that unless the authorized number of
directors is one, the number constituting a quorum shall not be less than the
greater of one-third of the authorized number of directors or two directors.
Except as otherwise provided by Subsection 307(a)(8) of the California
Corporations -Code, the Articles of Incorporation or these Bylaws, every act or
decision done or made by a majority of the directors present at a meeting duly
held at which a quorum is present is the act of the Board of Directors. A
meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for such meeting. A
majority of the directors present at a meeting, whether or not a quorum is
present, may adjourn a meeting to another time and place.
28. COMMITTEE MEETINGS. The principles set forth in Section 22 through 27
of these Bylaws shall apply to committees of the Board of Directors and to
actions by such committees.
29. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Indemnification. To the fullest extent permissible under
California law, and, to the extent authorized by the Articles of Incorporation,
in excess of that which is expressly permitted by Section 317 of the California
Corporations Code, the corporation shall indemnify its directors and officers
against all expenses, judgments, fines, settlements and other amounts actually
and reasonable incurred by them in connection with any proceeding, including an
action by or in the right of the corporation, by reason of the fact that such
director or officer is or was serving as a director, officer, trustee, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, trustee, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise
(including service with respect to employee benefit plans). To the fullest
extent permissible under California law, expenses incurred by a director or
officer seeking indemnification under this Bylaw in defending any proceeding
shall be advanced by the corporation as they are incurred upon receipt by the
corporation of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that the director or
officer is not entitled to be indemnified by the corporation for those
expenses. The rights granted by this Bylaw are contractual in nature and, as
such, may not be altered (other than prospectively in connection with acts and
<PAGE>
liabilities not occurring or arising prior to the date of alteration) with
respect to any present or former director or officer without the written
consent of that person.
(b) Procedure. Upon written request to the Board of Directors by
person seeking indemnification under this Bylaw, the Board shall promptly
determine in accordance with Section 317(e) of the California Corporations Code
whether the applicable standard of conduct has been met and, if so, the Board
shall authorize indemnification. If the Board cannot authorize indemnification
because the number of directors who are parties to the proceeding with respect
to which indemnification is sought prevents the formation of a quorum of
directors who are not parties to the proceeding, then, upon written request by
the person seeking indemnification, independent legal counsel (by means of a
written opinion obtained at the corporation! s expense) or the corporation's
shareholders shall determine whether the applicable standard of conduct has
been met and, if so, shall authorize indemnification.
(c) Definitions. The term "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative. The term "expenses" includes, without
limitation, attorneys' fees and any expenses of establishing a right to
indemnification.
OFFICERS
30. TITLES AND RELATION TO BOARD OF DIRECTORS. The officers of the
corporation shall include a Chairman of the Board, a President, a Secretary and
a Chief Financial Officer. The Board of Directors may also choose a Treasurer
and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurer or
other officers. Unless otherwise provided in the Articles of Incorporation, any
Chairman of the Board and President shall be the same person. All officers
shall perform their duties and exercise their powers under the ultimate
direction of the Board of Directors.
31. ELECTION, TERM OF OFFICE AND VACANCIES. Unless otherwise provided in
the Articles of Incorporation, at its reg ular meeting after each annual
meeting of shareholders, the Board of Directors shall choose the officers of
the corporation. No officer need be a member of the Board of Directors except
the Chairman of the Board. The officers shall hold off ice until their
successors are chosen. Subject to the rights, if any, of an officer tinder any
contract employment, the Board of Directors may remove any officer at any time.
If an office becomes vacant for any reason, the vacancy shall be filled by the
Board.
32. RESIGNATION. Any officer may resign at any time upon written notice to
the corporation without prejudice to the rights, if any, of the corporation
<PAGE>
under any contract to which the officer is a party. Such resignation shall be
effective regardless of whether it is accepted by the corporation.
33. SALARIES. The Board of Directors shall fix the salaries of the
Chairman of the Board and President and may fix the salaries of other employees
of the corporation including the other officers. If the Board does not fix the
salaries of the other officers, the President shall fix such salaries.
34. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside over
all meetings of the Board of Directors.
35. PRESIDENT. Unless otherwise provided in the Articles of Incorporation,
the President shall be the general manager and chief executive officer of the
corporation, shall preside at all meetings of shareholders, shall effectuate
orders and resolutions of the Board of Directors and shall exercise such other
powers and perform such other duties as the Board of Directors shall prescribe.
36. SECRETARY. The Secretary shall have the following powers and duties:
(a) Record of Corporate Proceedings. The Secretary shall attend
all meetings of the Board of Directors and its committees and shareholders and
shall record all votes and the minutes of such meetings in a book to be kept
for that purpose at the principal executive office of the corporation or at
such other place as the Board of Directors may determine. The Secretary shall
keep at the corporation's principal executive office, if in California, or at
its principal business office in California if the principal executive office
is not in California, the original or a copy of the Bylaws, as amended.
(b) Record of Shares. If a transfer agent or registrar is
appointed by the Board of Directors to keep a share register, the share
register shall be kept at the office of the transfer agent or registrar. If no
such appointment is made, the Secretary shall keep at the principal executive
office of the corporation a share register showing the names of the
shareholders and their addresses, the number and class of shares held by each,
the number and date of certificates issued and the number and date of
cancellation of each certificate surrendered for cancellation.
(c) Notices. The Secretary shall give such notices as may be
required by law or these Bylaws.
(d) Additional Powers and Duties. The Secretary shall exercise
such other powers and perform such other duties as the Board of Directors shall
prescribe.
<PAGE>
37. CHIEF FINANCIAL OFFICER. Unless otherwise determined by the Board of
Directors, the Chief Financial Officer shall have custody of the corporate
funds and securities and shall keep adequate and correct accounts of the
corporation's properties and business transactions. The Chief Financial Officer
shall disburse such funds of the corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, shall render to the
President and directors, at regular meetings of the Board of Directors or
whenever the Board may require, an account of all transactions and the
financial condition of the corporation and shall exercise such other powers and
perform such other duties as the Board of Directors shall prescribe,
38. OTHER OFFICERS. The other officers of the corporation, if any, shall
perform such duties as the Board of Directors shall prescribe.
AMENDMENT OF
BYLAWS
39. Except as provided by law or the Articles of Incorporation, Bylaws may
be adopted, amended or repealed by the affirmative vote of a majority of the
outstanding shares entitled to vote or by the approval of the Board of
Directors, except that an amendment changing the authorized number of directors
may only be adopted as provided in Section 14.
40. RELATION TO ARTICLES. These Bylaws shall be subject to any provision
of the Articles of Incorporation, as the same may be amended or restated from
time to time, to the extent that the California Corporations Code permits such
provision, if set forth in the Articles of Incorporation, to supervene, to
modify or to constitute an exception or supplement to any provision of these
Bylaws.
This is to certify that the foregoing is a true and correct copy of
the Bylaws of the corporation named in the title of these Bylaws and that such
Bylaws were duly adopted by the incorporator of such corporation on December 6,
1996.
Dated:
/s/ Jeff Phillips
-----------------------
Jeff Phillips Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001082384
<NAME> UBRANDIT.COM
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1998
<PERIOD-START> OCT-01-1998 OCT-01-1997
<PERIOD-END> MAR-31-1999 SEP-30-1998
<EXCHANGE-RATE> 1 1
<CASH> 941566 45604
<SECURITIES> 0 0
<RECEIVABLES> 10097 18820
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 953712 65449
<PP&E> 83281 42195
<DEPRECIATION> (19434) (10935)
<TOTAL-ASSETS> 1023809 100089
<CURRENT-LIABILITIES> 322922 200333
<BONDS> 0 0
0 0
0 0
<COMMON> 8756 2726
<OTHER-SE> (102970) 692131
<TOTAL-LIABILITY-AND-EQUITY> 1023809 100089
<SALES> 51060 341887
<TOTAL-REVENUES> 51060 341887
<CGS> 0 0
<TOTAL-COSTS> 224141 443481
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1188 13063
<INCOME-PRETAX> (174269) (114657)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (174269) (114657)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (174269) (114657)
<EPS-BASIC> (0.05) (0.21)
<EPS-DILUTED> 0 0
</TABLE>
