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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
_______________________
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
eMajix.com, Inc.
(Exact name of Small Business Issuer in its charter)
Oklahoma 73-1561191
(State of Incorporation) (I.R.S. Employer Identification No.)
7450 South Winston Ave.
Tulsa, Oklahoma 74136
(Address of executive offices, including zip code.)
Registrant's telephone number: (918) 494-0004
Copies to: Conrad C. Lysiak, Esq.
601 West First Avenue
Suite 503
Spokane, Washington 99201
(509) 624-1475
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
__________________________________________
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
__________________________________________
(Title of Class)
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This Registration Statement contains certain forward looking
statements. These forward looking statements include statements
regarding (i) the Registrant's research and development plans,
marketing plans, capital and operations expenditures, and results of
operations; (ii) potential financing arrangements; (iii) potential
utility and acceptance of the Registrant's existing and proposed
products; and (iv) the need for, and availability of, additional
financing.
The forward looking statements included herein are based on
current expectations and involve a number of risks and uncertainties.
These forward looking statements are based on assumptions regarding the
Registrant's business which involve judgments with respect to, among
other things, future economic and competitive conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Registrant.
Although the Registrant believes that the assumptions underlying the
forward looking statements are reasonable, any of the assumptions could
prove inaccurate and, therefore, actual results may differ materially
from those set forth in the forward looking statements. In light of
the significant uncertainties inherent in the forward looking
information contained herein, the inclusion of such information should
not be regarded as any representation by the Registrant or any other
person that the objectives or plans of the Registrant will be achieved.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
THE BUSINESS
eMajix.com, Inc. (the "Company") is a development stage enterprise
formed under the laws of the State of Oklahoma on March 30, 1999 as
Southern Wireless, Inc. to engage in the business of developing,
manufacturing and marketing software for use in connection with the
wireless transmission of computer data. The Company changed its name
to eMajix.com, Inc. on April 6, 2000.
The Product
The Company has acquired a license to manufacture and market
copyrighted and trademarked software, denoted herein as "ClearVideo."
Clearview is desinged for fractal digitization and compression of video
images with quality audio synchronization.
The License
On March 17, 2000 the Company acquired an exclusive world-wide
license from Iterated Systems, Inc. ("ISI") to:
1. Compile, display, use copy and modify ClearVideo Source
Codes.
2. Use the ClearVideo Source Codes, its run-time versions and
the derivatives to create and manufacture products and
services.
3. Use the products and services created and manufactured for
the purpose of distributing and sub-licensing the products
and services to end users.
4. Sublicense the rights granted under the licensing agreement.
The consideration of the license is as follows:
1. Initial payment of $100,000 which has been paid to ISI and
297,500 restricted shares of the Company's common stock which
have been delivered to ISI.
2. $150,000 which was due by May 15, 2000 which has been paid.
At any time in the future should the Company file a registration
statement, with the Securities and Exchange Commission, to register
additional shares of its Common Stock and it doesn't include all shares
of Common Stock issued to ISI in a successful effort, then and only
then will the Company will be required to use its best efforts to file
a registration statement with the Securities and Exchange Commission
registering the shares issued to ISI. As of the date hereof, the
Company has not filed a registration statement to register any
additional shares or the shares issued to ISI.
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The Technology
ClearVideo utilizes fractal digitization creating the smallest
file possible while virtually duplicating the quality of the original.
All computers and software work with only zeros and ones, nothing more,
nothing less. The size and speed of files are dependent upon how they
are written and with what they are written. Fractal digitization takes
a formula for video and or audio, finds the comparable areas,
determines the length of those areas, and then writes one formula that
works throughout the file. Video files are very large, requiring a lot
of bandwidth and time to transmit in their original format.
ClearVideo is designed to overcome the limited bandwidth of the
Internet, which leads to unrealistic download times and poor quality
video when run across the Internet. ClearVideo achieves a very high
compression rate, thus producing a much faster download while
maintaining the quality of the original video file. It can be
seamlessly integrated into existing multimedia frameworks, including
Windows 95, Windows 98, Windows NT, MacIntosh QuickTime, Activemovie,
Video for Windows, Windows Multimedia Player and RealMedia. It can be
plugged into Adobe Premier, Ulead Media Studio Pro, Microsoft's
VidEdit, Premiere, Director, Avid, Media 100 and many other video
editing and capturing packages. ClearVideo simply becomes a
compression option in that editing system. This means that a user can
maintain the investment in the technology they currently own.
ClearVideo compresses video at data rates as low as 16 kilobits (2
kilobytes) per second for limited motion video, up to 80 kilobits to 1
megabit per second for action filled video that demands higher data
rates for viewing quality. Compression rates are completely scalable
so that a user can customize the video quality, frame rate and frame
size to their audience's bandwidth and computer system. ClearVideo
works with MMX technology and delivers much larger frame sizes at much
faster frame rates.
ClearVideo compression allows high quality video "HQV" files to be
easily received and viewed in HQV quality by most users on the Internet
with a computer running Windows 95, Windows 98, Windows NT or MacIntosh
QuickTime. The decoder ("codec") software required for a user to run
a ClearVideo file is already a part of Windows 95, Windows 98, Windows
NT and MacIntosh QuickTime. The Company will provide the codec on disc
or by direct download over the Internet to those that do not have one
of the above listed operating systems. No special hardware or
software, other than the readily available codec, is required to view
ClearVideo files.
ClearVideo should revolutionize how audio and video files are
transmitted over both narrow and broadband lines. With its outstanding
compression capabilities, depending upon the users parameters, can
deliver HQV type and quality audio files to almost any Internet user
over ordinary analog connections or digital connections.
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By defining and using ClearVideo's parameters, a user can place
approximately three hours or more of film, video or audio on one side
of a standard CD-ROM disc. Quality comparable to NY|TSC (standard
television viewing quality) can be achieved or exceeded, depending upon
the users demands and parameter settings. In the case of audio only
files, ClearVideo can compress approximately 900 minutes of quality
audio on one standard CD-ROM. Full motion video with synching audio
can also be transmitted on the Internet and clearly received by viewers
with the ClearVideo codec installed on their computer systems.
Additionally, a ClearVideo compressed 120 minute film can be
downloaded over the Internet in much less time than the hours it now
requires, the greater the bandwidth of the line, the higher quality the
connection, and the faster the computer, the shorter the download time.
Also, with ClearVideo, compressed HQV and audio files considerable hard
drive space is saved on the host file servers.
Another important feature of ClearVideo is that it works equally
well with NTSC, PAL, or SECAM (the three different TV formats used
around the world) television as well as the Internet. It can be
effectively used worldwide for the compression and transmission of
video files for the broadcast industry.
Corley License
On December 22, 1999, the Company and its current president, Ryan
Corley entered into a four year exclusive licensing agreement whereby
Corley, as nominee for a corporation to be formed was granted the right
to use certain technology that the Company may acquire in the future
relating to the compression of video and streaming real time video via
the Internet. Pursuant to the license between the Company and Corley,
the corporation to be formed will receive a limited exclusive license
for the use of the technology solely for video/audio streaming over the
internet of TV type programming, news content and programming, sport
content and programming and non-exclusive use for documentary content
and programming.
Furthermore, during this four year exclusive licensing period, the
Company shall not perform streaming services for any third parties for
TV type programming in the areas of entertainment, sports and news
without the express written permission of the corporation to be formed.
If such permission is granted by either party, all revenues derived
therefrom will be split 75% to the Company and 25% to the corporation
to be formed for the term of the agreement(s) and any and all renewals
of the agreement(s).
Manufacturing
The Company will have limited manufacturing needs for product as
its primary product being offered is processing services that require
computers with a high degree of processing capability, file servers to
be used as Websites, and a means to compress data and place it on CD-
ROMS. As of this date the Company has limited experience in the
compression of videotapes, CD-ROMS, DVD discs or downloaded files and
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there is no assurance that the Company will be able to handle the
volume of business that may come its way internally. However, there
are numerous companies that are capable of provide outsourcing services
should the Company encounter difficulty in meeting its obligations to
customers.
Distribution
The Company intends to distribute ClearVideo by direct shipment
from its offices or by downloading to users on the Internet.
Marketing
The Company intends to market ClearVideo initially by licensing
the technology to third parties, offering compression services to
customers and offering downloading and streaming services. At this
time the Company plans to market its product through an in-house sales
force and by advertising on the Internet.
Licenses will be granted to third parties for limited application
which will allow for accurate accounting of usage on a negotiated "per
use" royalty basis and may be paid in cash or a combination of a
negotiated equity position with a per use cash fee.
Compression services will be offered whereby the Company will
receive files in many different forms, such as videotapes, CD-ROM or
DVD discs or downloaded files. The Company will then digitize and
compress these files and deliver them to the customer, either in the
form of downloaded files or CD-ROMS. The Company will charge a set-up
fee, a compression fee, and when appropriate, a usage fee for each time
the file is used or sent to an end user.
Downloading and streaming services will be offered to various
customers whereby the Company will accept video files for digitization
and compression that are designed to be downloaded or streamed on
request over the Internet. These files will be stored on the Company's
file servers and delivered on request by an end user by "mirroring."
The end user will not "see" the Company's Website, but will only see
the client's Website. This method of delivery frees up the client's
server space and provides a low-cost revenue center for the Company,
along with control over accounting for usage fees.
Patents
Iterated Systems, Inc., the developer and licensor of ClearVideo
software has twenty four U.S. Patents and various international patents
covering the methods, apparatus and processes used in compressing
digital data, fractal encoding of data streams, fractal transformation
of data, fractal compression of data, protecting the technology. The
Company believes that these patents afford protection under existing
patent laws against infringement for a period of time ranging from
seven years to seventeen years. There is no assurance, however, that
third parties will not infringe on the ClearVideo patents.
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Competition
There are numerous companies offering video compression,
downloading and streaming services, most of which have more financial
and technical resources than the Company and there can be no assurance
that in the future, the Company will be able to compete successfully
with other video compression, downloading and streaming service
companies. The Company is a small participant within the compression,
downloading and streaming service arena. The Company will compete with
other video compression, downloading and streaming service companies,
all of whom have more resources than the Company.
Governmental Regulation
The Company is not aware of any governmental regulations which
effect the manufacture, development or sale of ClearVideo other than
those imposed applicable to technical data included in Export/Import
Regulations imposed by the United States government and those
controlling regulations and regulations of countries into which any
products may be imported.
Company's Office
The Company's offices are located at 7450 South Winston Avenue,
Tulsa, Oklahoma 74136 and its telephone number is (918) 494-0004.
Employees
The Company has one full time employee and two part time
employees.
Risk Factors
1. No Operating History and Revenues and Development Stage
Operation. The Company is recently formed and is subject to all the
risks inherent in the creation of a new business. Since the Company is
a new venture, it has no record of operations and there is nothing at
this time upon which to base an assumption that the Company's plans
will ultimately prove successful. The Company's Independent Certified
Public Accountant's report on the Company's March 31, 2000 financial
statements contained an explanatory paragraph which expressed
substantial doubt about the Company's ability to continue as a going
concern due to the Company's loss from operations and lack of revenue.
2. Lack of Market Research. The Company has conducted limited
research and has not engaged other entities on its behalf to conduct
market research to provide management with assurance that market demand
exists for the business contemplated by the Company. See "Business."
3. Securities are Subject to Penny Stock Rules. The Company's
shares are "penny stocks" consequently they are subject to Securities
and Exchange commission regulations which impose sales practice
requirements upon brokers and dealers to make risk disclosures to
customers before effecting any transactions therein.
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4. Lack of Key Personnel Insurance. The Company has not obtained
key personnel life insurance on the lives of any of the officers or
directors of the Company. The death or unavailability of one or all of
the officers or directors of the Company could have a material adverse
impact on the operation of the Company. See "Management."
5. No Insurance Coverage. The Company, like other companies in
its industry, is finding it difficult to obtain adequate insurance
coverage against possible liabilities that may be incurred in
conducting its business activities. At present, the Company has not
secured any liability insurance. The Company has potential liability
from its general business activities, and accordingly, it could be
rendered insolvent by a serious error or omission.
6. Uninsured Risks. The Company may not be insured against all
losses or liabilities which may arise from operations, either because
such insurance is unavailable or because the Company has elected not to
purchase such insurance due to high premium costs or other reasons.
7. Need for Subsequent Funding. The Company believes it will need
to raise additional funds in order to achieve profitable operations.
The Company's continued operations therefore will depend upon the
availability of cash flow, if any, from its operations or 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. See "Business."
8. Need for Additional Key Personnel. At the present time, the
Company employs one full time employee and two part time employees.
Additionally, the Company employees three software engineers on a
consulting basis. The success of the Company's proposed business will
depend, in part, upon the ability to attract and retain qualified
employees. The Company believes that it will be able to attract
competent employees, but no assurance can be given that the Company
will be successful in this regard. If the Company were unable to engage
and retain the necessary personnel, its business would be materially
and adversely affected. See "Business."
9. Reliance upon Directors and Officers. The Company is wholly
dependent, at the present, upon the personal efforts and abilities of
its Officers and employees who will exercise control over the day-to-
day affairs of the Company, and upon its Directors, most of whom are
engaged in other activities, and will devote limited time to the
Company's activities. Accordingly, while the Company may solicit
business through its Officers, there can be no assurance as to the
volume of business, if any, which the Company may succeed in obtaining,
nor that its proposed operations will prove to be profitable. As of the
date hereof, the Company does not have any commitments regarding its
proposed operations and there can be no assurance that any commitments
will be forthcoming. See "Business" and "Management."
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10. Issuance of Additional Shares. As of May 16, 2000,
approximately 178,626,500 shares of Common Stock or 89.31% of the
200,000,000 authorized shares of Common Stock of the Company remain
unissued. The Board of Directors has the power to issue such shares,
without shareholder approval. The Company may also issue additional
shares of Common Stock pursuant to a plan and agreement of merger with
a private corporation. Although the Company presently has no
commitments, contracts or intentions to issue any additional shares to
other persons, the Company may in the future attempt to issue shares to
raise capital, acquire products, equipment or properties, or for other
corporate purposes. See "Description of Securities - Shares Eligible
for Future Sale."
11. Non-Arms' Length Transaction. The number of shares of Common
stock issued to present shareholders of the Company was arbitrarily
priced and may not be considered the product of arm's length
transactions. See "Principal Shareholders."
12. Indemnification of Officers and Directors for Securities
Liabilities. The Articles of Incorporation of the Company provide that
the Company may indemnify any Director, Officer, agent and/or employee
as to those liabilities and on those terms and conditions as are
specified in the Oklahoma Business Corporation Act. Further, the
Company may purchase and maintain insurance on behalf of any such
persons whether or not the corporation would have the power to
indemnify such person against the liability insured against. The
foregoing could result in substantial expenditures by the Company and
prevent any recovery from such Officers, Directors, agents and
employees for losses incurred by the Company as a result of their
actions. Further, the Company has been advised that in the opinion of
the Securities and Exchange Commission, indemnification is against
public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable.
13. Competition. The Company believes that it will have
competitors and potential competitors, many of which may have
considerably greater financial and other resources than the Company.
See "Business - Competition."
14. No Public Market for Securities. At present, no public market
exists for the Company's securities and there is no assurance that a
trading market will develop in the future, or if developed, that it
will be sustained. A shareholder of the Company's securities may,
therefore, be unable to resell the securities should he/she desire to
do so. Furthermore, it is unlikely that a lending institution will
accept the Company's securities as pledged collateral for loans unless
a regular trading market develops.
15. Cumulative Voting, Preemptive Rights and Control. There are
no preemptive rights in connection with the Company's Common Stock.
Cumulative voting in the election of Directors is not provided for.
Accordingly, the holders of a majority of the shares of Common Stock,
present in person or by proxy, will be able to elect all of the
Company's Board of Directors.
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16. No Dividends Anticipated. At the present time the Company
does not anticipate paying dividends, cash or otherwise, on its Common
Stock in the foreseeable future. Future dividends will depend on
earnings, if any, of the Company, its financial requirements and other
factors. Investors who anticipate the need of an immediate income from
their investment in the Company's Common Stock should refrain from the
purchasing the Company's securities. See "Dividend Policy."
17. Anti-Dilution Provisions. There is an anti-dilution
provision contained in the agreement with Iterated Systems, Inc. that
provides for the issuance of additional shares of Common Stock under
certain conditions. Although the Company has no obligation to issue
additional shares at this time, the Company may be required to issue
additional shares at a future date. See "Rights of Shareholders."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
During the next twelve months, the Company plans to enter into
contracts to license its technology and complete agreements for
compression services with various customers whereby the Company will
commence providing services and generating revenue.
The Company has inadequate cash to maintain operations during the
next twelve months. In order to meet its cash requirements the Company
will have to raise additional capital through the sale of securities or
borrowings from the Company's shareholders. There is no assurance that
it will be able to raise additional capital through the sale of
securities in the future. Additionally, the Company has a demand note
payable to Ryan Corley, the Company's President in the amount of
$100,000. In the event that the Company is unable to raise additional
capital, it may have to suspend or cease operations.
The Company does intend to conduct additional product research or
development primarily to provide enhancements to increase operating
efficiency or to enhance its capabilities. The Company believes that
ClearVideo is ready for manufacturing and marketing in its current
status. As a result, the Company is in the process of seeking
licensees for its product and customers to provide compression
services, downloading and streaming services.
The Company does not intend to purchase a plant, it does however
intend to purchase additional computer equipment and lease additional
office space as the need arises.
The Company will hire employees on an as needed basis. The
Company, however, does not expect any significant changes in the number
of employees.
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Results of Operations - Period from Inception (March 30, 1999) through
March 31, 2000.
The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards No. 7. There
have been no revenues since incorporation. For the year ended March
31, 2000, the Company incurred a net loss of $10,144, or $(0.002) per
share, which is primarily the result of payment of consulting fees,
travel and office expense.
Liquidity and Capital Resources.
Through May 16, 2000, the Company has issued 21,373,500 shares of
its Common Stock to officers, directors and others. The Company has no
operating history and no material assets other than the license
agreement for ClearVideo. The Company has $27,060 in cash as of March
31, 2000.
At March 31, 2000, the Company had net deferred tax assets of
approximately $3,500 and has established a valuation allowance equal to
the net deferred tax assets as management of the Company cannot
determine that it is more likely then not that the Company will realize
the benefit of the net deferred tax asset.
The Company has received funds of $202,000 from the sale of
capital stock to officers, directors and others and $100,000 from Ryan
Corley upon the execution of a demand note executed on March 30, 2000.
Because the Company is in its initial stages of development and has not
commenced operations or generated revenues, the Company intends to
finance its operations by the entering into licensing agreements with
potential customers and by the sale of additional shares of its common
stock. Other than the foregoing, there are no additional sources for
cash for operating, investing and financing activities.
The Company has been in the development stage since its inception.
The Company has had no recurring source of revenue and has incurred
operating losses since inception. These factors raise substantial
doubt about the Company's ability to continue as a going concern. As
a result of these factors, the Company's independent certified public
accountants have included an explanatory paragraph in their report on
the Company's March 31, 2000 financial statements which expressed
substantial doubt about the Company's ability to continue as a going
concern.
At the present time, the Company has no material commitments for
capital expenditures. If capital expenditures are required after
operations commence, the Company will pay for the same through the sale
of common stock; or through loans from third parties. There is no
assurance, however, that such financing will be available and in the
event such financing is not available, the Company may have to cease
operations.
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Management of the Company has undertaken certain actions to
address these conditions. Management currently plans to enter into
agreements for the licensing of ClearVideo and for the compression
services and downloading and streaming services to third parties within
the next 90 to 180 days. To this end, management is currently in
negotiations with several potential customers for its ClearVideo and
its services. Funds required to carry out management's plans are
expected to be derived from future stock sales or borrowings from the
Company's shareholders. There can be no assurances that the Company
will be successful in executing its plans.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which establishes standards for
reporting and displaying comprehensive income and its components in a
full set of general purpose financial statements. This statement was
effective for the Company during the current year. Comprehensive
income generally represents all changes in stockholders' equity except
those resulting from contributions by stockholders. There was no
impact to the Company as a result of the adoption of SFAS No. 130, as
there were no differences between net loss and comprehensive loss
available to common stockholders for the year ended March 31, 2000.
In December 1999, the Staff of the Securities and Exchange
Commission issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in financial Statements" ("SAB 101"). This SAB summarizes
certain of the Staff's views in applying generally accepted accounting
principles in the United States, to revenue recognition in financial
statements. The Company's revenue recognition policy is in compliance
with SAB 101.
In June 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-up
Activities." SOP 98-5 requires all start-up and organizational costs
to be expensed as incurred. It also requires all remaining
historically capitalized amounts of these costs existing at the date of
adoption to be expensed and reported as the cumulative effect of a
change in accounting principle. SOP 98-5 is effective for all fiscal
years beginning after December 31, 1998. The Company believes that the
adoption of SOP 98-5 on April 1, 1999 had no significant effect on its
financial statements.
In February 1999 the Financial Accounting Standards Board issued
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections." SFAS No. 135 rescinds SFAS No. 75 and amends SFAS No 35.
SFAS No. 135 also amends other existing authoritative literature to
make various technical corrections, clarify meanings, or describe
applicability under changed conditions. SFAS No. 135 is effective for
financial statements issued for fiscal years ending after February 15,
1999. The Company believes that the adoption of SFAS No. 135 had no
significant effect on its financial statements.
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ITEM 3. DESCRIPTION OF PROPERTIES.
The Company does not own any real property. The Company owns
personal property in the form of licenses and office equipment. The
Company currently uses office space provided by Ryan Corley, the
Company's President and major shareholder on a rent free basis. There
is no formal lease agreement for the Company's offices.
The Company's offices are currently adequate and suitable for its
operations. The Company will relocate its offices upon generating
revenues from operations. However, currently the Company has not
entered into any negotiations with anyone to relocate its offices.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership as of
May 17, 2000, of each person known by the Company to be the beneficial
owner of five percent or more of the Company's Common Stock, each
director individually and all officers and directors of the Company as
a group. Each person has sole voting and investment power with respect
to the shares of Common Stock shown, unless otherwise noted, and all
ownership is of record and beneficial.
Percentage
Name and Number of Of Shares
address of owner Shares Position Owned
Ryan Corley 12,402,000 President, Treasurer, 58.03%
P.O. Box 140021 Chief Financial Officer
Austin, TX 78714 and a member of the
Board of Directors
Leon P. Davis [1] 1,280,000 Secretary 5.99%
1516 East 21st Street
Tulsa, Ok 74114-1339
W. H. Walker, Jr. 50,000 Member of the Board 0.23%
3420 East 61st Place of Directors
Tulsa, OK 74136
All officers and 13,732,000 64.25%
directors as a
group (3 persons)
Guy Reidel 3,000,000 14.04%
46 Tenney Ave.
River Edge, NJ 07661
Leonard D. Hilt 1,815,000 8.49%
P.O. Box 140661
Austin, TX 78714
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[1] 440,000 shares are held in the name of The John Allen Corley
Irrevocable Trust dated March 17, 1995 and 440,000 shares are held
in the name of The Maryssa Elonca Corley Irrevocable Trust dated
June 17, 1996, for which Mr. Davis is Trustee.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
Ryan Corley 57 President, Treasurer and a member of the
Board of Directors
Leon P. Davis 58 Secretary
W. H. Walker Jr. 48 Member of the Board of Directors
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors after each annual meeting of the Company's shareholders and
hold office until their death, or until they resign or have been
removed from office.
Ryan Corley - President, Treasurer and a member of the Board of
Directors.
Mr. Corley has served as president and a member of the Board of
Directors of the Company since February 5, 2000. Mr. Corley was the
founder of Tsunami Media Corporation (formerly Gatsby's Coffee Company)
and served as Chairman of the Board of Directors, Chief Executive
Officer and Secretary/Treasurer since its inception September 10, 1998,
until his resignation on February 22, 2000. Mr. Corley served as a
consultant to several startup companies and small public companies
during the period of July 1955 through November 1998. Mr. Corley was
Chairman of the Board of Directors and President of Charge, Inc., and
Charge Entertainment Corporation, its wholly owned subsidiary, from
October 1986 through October 1995. Mr. Corley also was a founder in
1986, a member of the Board of Directors until his resignation on
October 30, 1995, having served as Chairman of the Board of Directors
from 1987 until January 23, 1995, President and Chief Executive Officer
unit his resignation from these positions on May 30, 1995, of U.S.
Technologies Inc., a NASDAQ listed public corporation. In October
1990, Mr. Corley helped found and was the President and principal
Stockholder of the Texas Outlaws Bicycling Team, Inc. of the National
Cycle League until August 1996. Mr. Corley received a Bachelor of
Science in Business Administration and a Masters in Business
Administration from the University of Tulsa.
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Leon P. Davis - Secretary
Mr. Davis is the Secretary of the Corporation, having been
appointed to serve beginning April 1, 2000. Mr. Davis is an
attorney, admitted to the Oklahoma Bar in 1989, in private practice
with his own law firm since April 1993. Mr. Davis currently serves as
a Director for several private companies, Food and Beverage, Inc., Food
& Beverage II, Inc., Food & Beverage IV, Inc. and McGill's 61st, Inc.
In November 1992 Mr. Davis founded and was the President and principle
stockholder of Team Tulsa, Inc., a bicycle racing team in the National
Cycle League, serving until November 1995. Mr. Davis received a
Bachelor of Arts in Economics and History from Northeastern State
University and a Juris Doctorate from the University of Tulsa.
W. H. Walker Jr - Member of the Board of Directors
Mr. Walker is the founder of the Company. He has been a Director
of the Company since its founding and served as its President until
February 5, 2000. For the past five years Mr. Walker has been the
Secretary, a Director, and fifty percent stockholder of Food and
Beverage, Inc., Food & Beverage II, Inc., Food & Beverage IV, Inc., and
McGill's 61st, Inc. These companies are in the restaurant business. Mr.
Walker serves each of these companies in the capacity of Chief
Financial Officer and Co-Manager of Operations. Mr. Walker is a active
investor in commercial real estate and other business ventures.
ITEM 6. EXECUTIVE COMPENSATION.
Summary Compensation.
There was no compensation paid by the Company to any of its
officers since inception.
There are no stock option, retirement, pension, or profit sharing
plans for the benefit of the Company's officers and directors.
Option/SAR Grants.
No individual grants of stock options, whether or not in tandem
with stock appreciation rights ("SARs"), and freestanding SARs have
been made to any executive officer or any director since the inception
of the Company, accordingly, no stock options have been exercised by
any of the officers or directors in fiscal 2000.
Long-Term Incentive Plan Awards.
The Company does not have any long-term incentive plans that
provide compensation intended to serve as incentive for performance to
occur over a period longer than one fiscal year, whether such
performance is measured by reference to financial performance of the
Company or an affiliate, the Company's stock price, or any other
measure.
<PAGE> 16
Compensation of Directors.
The directors did not receive any compensation for serving as
members of the Board of Directors. The Board has not implemented a plan
to award options. There are no contractual arrangements with any member
of the Board of Directors.
The Company did not to pay any salaries to its officers for the
fiscal year-ended March 31, 2000. The Company does not expect to pay
salaries to any of its officers until such time as the Company
generates sufficient cash to do so. The Company does not intend to pay
any compensation to its directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On December 21, 1999, the Company entered into an agreement with
Ryan Corley as nominee for a corporation to be formed "Corporation" for
the purpose of developing and distributing multiple branded networks of
digital content and programming for distribution over the Internet.
Said sub-license provides that the Company is to receive a 15% equity
ownership in the Corporation to be formed and also contains an anti-
dilution clause for a period of five years for the equity ownership.
Additionally, the agreement provides for a limited exclusive license
for the use of the technology solely for video and audio streaming over
the Internet of TV type programming and content on multiple branded
broadcast networks, specifically entertainment content and programming,
news content and programming and sports content and programming. The
sub-license provides for non exclusive use for amateur sports
programming at the high school level or lower, non-exclusive use for
video and audio compression and downloading in developing and operating
broadcast networks, streaming commercial advertising over the Internet
on any wholly owned and operated networks of Corporation. The sub-
license also provides that should the Company sub-license the same
rights, as those limited exclusive rights given to Corporation, to
another party, then the Company will pay Corporation 25% of the
revenues received from those activities.
On March 30, 2000, the Company entered into a funding arrangement
whereby Ryan Corley, president and member of the Board of Directors,
loaned the Company $100,000 payable on demand bearing interest at the
rate of 10% per annum and is unsecured.
On April 6, 1999, the Company issued 2,422,000 shares of Common
Stock to the following pursuant to Reg. 504 of the Securities Act of
1933 (the "Act"):
Total Shares
Name Consideration Acquired
Ryan Corley $ 588 1,177,000
President and Director
<PAGE> 17
Leon P. Davis 50 100,000
Secretary
W. H. Walker, Jr. 25 50,000
Director
Leonard D. Hilt 548 1,095,000
Beneficial Owner
------- ---------
TOTAL $ 1,211 2,422,000
======= =========
On January 28, 2000, and February 4, 2000 the Company issued
15,625,000 shares of Rule 144 restricted Common Stock to the following:
Total Shares
Name Consideration Acquired
Ryan Corley $ 5,603 11,225,000
President and Director
Leon P. Davis 475 1,180,000
Secretary and Director
Leonard D. Hilt 100 220,000
Beneficial Owner
Guy Riedel
Beneficial Owner 1,500 3,000,000
------- ----------
TOTAL $ 7,678 15,625,000
======= ==========
On March 15, 2000, the Company issued 500,000 shares of its
restricted Rule 144 Common Stock to Leonard D. Hilt, a beneficial
owner, for $250.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company currently consists of
200,000,000 shares of Common Stock, $0.00005 par value per share. As of
May 16, 2000, 21,373,500 share of common stock were issued and
outstanding. Of the 21,373,500 shares outstanding, 20,795,500 are
restricted securities and only may be resold in compliance with Rule
144 of the Securities Act of 1933 (the "ACT"). The balance of the
shares (578,000) are freely tradeable.
In general, under Rule 144, a person who has held his shares for
a period of one (1) year, may sell in ordinary market transactions
through a broker or with a market maker, within any three (3) month
period a number of shares which does not exceed the greater of one
percent (1%) of the number of outstanding shares of Common Stock or the
average of the weekly trading volume of the Common Stock during the
<PAGE> 18
four calendar weeks prior to such sale. Sales under Rule 144 require
the filing of Form 144 with the Securities and Exchange Commission. If
the shares of Common Stock have been held for more than two (2) years
by a person who is not an affiliate, there is no limitation on the
manner of sale or the volume of shares that may be sold and no Form 144
is required. Sales under Rule 144 may have a depressive effect on the
market price of the Company's Common Stock.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has been
paid on the Common Stock since inception, and none is contemplated in
the foreseeable future.
Transfer Agent
The Company's transfer agent is Pacific Stock Transfer Company,
5844 South Pecos Road, Suite D, Las Vegas, Nevada 89120 and its
telephone number is (702) 361-3033.
Rights of Shareholders
All shares have equal voting rights and are not assessable. Voting
rights are not cumulative and, therefore, the holders of more than 50%
of the Common Stock could, if they chose to do so, elect all of the
directors of the Company.
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common Stock
is not subject to redemption and carries no subscription or conversion
rights. In the event of liquidation of the Company, the shares of
Common Stock are entitled to share equally in corporate assets after
satisfaction of all liabilities. The shares of Common Stock, when
issued, will be fully paid and non-assessable.
There are no outstanding options, warrants or rights to purchase
shares of the Company's Common Stock, other than as disclosed herein.
The agreement with Iterated Systems, Inc., contains an anti-
dilution clause whereby the percentage of ownership of the Company's
Common Stock by Iterated shall be no less than 1.25% of the total
outstanding shares of the Company's Common Stock at any given time.
This provision shall terminate after the last day of the first sixty
(60) day period during which : (i) the Common Stock of the Company is
traded on NASDAQ, or the American or the New York Stock Exchange and
(ii) the Market Capitalization of the Company dose not fall below fifty
million dollars and (iii) the 297,500 shares of Common Stock that
Iterated received under the agreement become free trading 144 stock or
are covered by a registration statement in compliance with the Act and
(iv) the share price of the Company's shares traded on NASDAQ, the
American Stock Exchange or the New York Stock exchange does not fall
below $2.10. This provision also terminates if Iterated sells or
disposes of the shares that it received under this agreement.
<PAGE> 19
Part II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS.
No market exists for the Company's securities and there is no
assurance that a regular trading market will develop, or if developed,
that it will be sustained. A shareholder in all likelihood, therefore,
will be unable to resell the securities referred to herein should he or
she desire to do so. Furthermore, it is unlikely that a lending
institution will accept the Company's securities as pledged collateral
for loans unless a regular trading market develops.
There are no plans, proposals, arrangements or understandings with
any person with regard to the development of a trading market in any of
the Company's securities. The Company plans to file or have filed the
required forms with the National Association of Securities Dealers,
Inc. (the "NASD") requesting that the Company's common stock be listed
on the Bulletin Board operated by the NASD when this registration
statement is declared effective by the Securities and Exchange
Commission (the "Commission") and the Company has satisfied all
comments made by the Commission.
There are no outstanding options or warrants, or other securities
convertible into, common equity of the Company. Of the 21,373,500
shares of common stock outstanding as of May 17, 2000, 16,732,000
shares were issued to the Company's officers, directors, and beneficial
owners, of more than 10% of the Company's shares, and may only be
resold in compliance with Rule 144 of the Securities Act of 1933.
There are no shares of common stock currently being proposed to be
publicly offered (pursuant to an employee benefit plan or dividend
reinvestment plan) the offering of which could have a material adverse
effect upon the market price of the Company's common stock.
As of May 17, 2000, the Company has 88 holders of record of its
Common Stock.
The Company has not paid any dividends since it is inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
SEC Rule 15g
The Company's shares are covered by Section 15g of the Securities
Act of 1933, as amended that imposes additional sales practice
requirements on broker/dealers who sell such securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 jointly with their spouses). For transactions covered by
the Rule, the broker/dealer must make a special suitability
determination for the purchase and have received the purchaser's
<PAGE> 20
written agreement to the transaction prior to the sale. Consequently,
the Rule may affect the ability of broker/dealers to sell the Company's
securities and also may affect the ability of purchasers to sell their
shares in the secondary market.
Section 15g also imposes additional sales practice requirements on
broker/dealers who sell penny securities. These rules require a one-
page summary of certain essential items. The items include the risk of
investing in penny stocks in both public offerings and secondary
marketing; terms important to in understanding of the function of the
penny stock market, such as "bid" and "offer" quotes, a dealers
"spread" and broker/dealer compensation; the broker/dealer
compensation, the broker/dealers duties to its customers, including the
disclosures required by any other penny stock disclosure rules; the
customers rights and remedies in causes of fraud in penny stock
transactions; and, the NASD's toll free telephone number and the
central number of the North American Administrators Association, for
information on the disciplinary history of broker/dealers and their
associated persons.
ITEM 2. 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 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of this
Registration Statement.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On April 6, 1999, the Company issued 3,000,000 shares of Common
Stock to its officers, directors and 77 other persons in consideration
of $1,500. No commissions were paid to any persons in connection with
such sales, no advertising of any nature was made in connection with
the sale of said shares and all Company information was made available
to said purchasers. The foregoing shares were issued pursuant to Reg.
504 of the Securities Act of 1933, as amended (the "Act").
On January 28, 2000, the Company sold 1,000,000 restricted shares
of its Common Stock to seven persons in consideration of $250. No
commissions were paid to any persons in connection with such sales, no
advertising of any nature was made in connection with the sale of said
shares. The shares were sold pursuant to Section 4(2) of the Act.
<PAGE> 21
On February 4, 2000, the Company sold 15,190,000 restricted shares
of its Common Stock to 10 persons in consideration of $6,836. No
commissions were paid to any person in connection with such sales, no
advertising of any nature was made in connection with the sale of said
shares. The shares were sold pursuant to Section 4(2) of the Act.
On March 3, 2000, the Company sold 800,000 restricted shares of
Common Stock to one person in consideration of $400. No commissions
were paid to any person in connection with such sales, no advertising
of any nature was made in connection with the sale of said shares. The
shares were sold pursuant to Section 4(2) of the Act.
On March 15, 2000, the Company sold 510,000 restricted shares of
Common Stock to two people in consideration of $255. No commissions
were paid to any person in connection with such sales, no advertising
of any nature was made in connection with the sale of said shares. The
shares were sold pursuant to Section 4(2) of the Act.
On March 30, 2000, the Company issued 297,500 restricted shares of
Common Stock to Iterated Systems, Inc., in exchange for an exclusive
license agreement for the ClearVideo software. The shares were issued
pursuant to Section 4(2) of the Act.
On March 31, 2000, the Company issued 75,000 restricted shares of
Common Stock to an accredited individual for $25,000. No commissions
were paid to any person in connection with such sales, no advertising
of any nature was made in connection with the sale of said shares. The
shares were sold pursuant to Section 4(6) of the Act.
On May 11, 2000, the Company issued 501,000 restricted shares of
Common Stock to an accredited individual for $167,000. No commissions
were paid to any person in connection with such sales, no advertising
of any nature was made in connection with the sale of said shares. The
shares were sold pursuant to Section 4(6) of the Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Oklahoma 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 which 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
<PAGE> 22
awarded only after a determination by independent decision of the Board
of Directors, by legal counsel, or by a vote of the shareholders, 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 have not been adjudged liable for negligence or
misconduct.
Indemnification may also be granted pursuant to the terms of
agreements which may be entered into in the future or pursuant to a
vote of shareholders 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.
PART F/S
INDEX TO FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants . . F-1
Balance Sheet . . . . . . . . . . F-2
Statement of Loss . . . . . . . . . F-3
Statement of Changes in Stockholders' Equity . . . . F-4
Statement of Cash Flows . . . . . . . . F-5
Summary of Accounting Policies . . . . . F-6
Notes to Financial Statements . . . . . . F-7
<PAGE> 23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
eMajix.com, Inc.
We have audited the accompanying balance sheet of eMajix.com, Inc. (a
development stage company), as of March 31, 2000, and the related
statements of loss, changes in stockholders' equity and cash flows for
the year ended March 31, 2000. We have also audited the statements of
loss, changes in stockholders' equity and cash flows from inception
(March 30, 1999) through March 31, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of eMajix.com,
Inc. as of March 31, 2000, and the results of its operations and its
cash flows for the year ended March 31, 2000, and the period from
inception (March 30, 1999) through March 31, 2000, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1
to the financial statements, the Company has no recurring source of
revenue and has incurred losses since inception. These conditions
raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Brown, Graham and Company P.C.
Georgetown, Texas
April 8, 2000, except for Note 6
which is as of May 17, 2000
F-1
<PAGE> 24
eMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
ASSETS
March 31, 2000
Current assets:
Cash $ 27,060
---------
Total current assets 27,060
---------
Equipment 2,416
Other assets:
Licenses (Note 2) 252,975
---------
Total assets $ 282,451
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,620
Notes payable - current (Note 4) 250,000
---------
Total current liabilities 254,620
---------
Commitments and contingencies
(Notes 1, 4 and 5)
Stockholders' equity:
Common stock, $.00005 par value;
200,000,000 shares authorized;
20,872,500 issued and outstanding 1,044
Additional paid-in capital 36,931
Deficit accumulated during the
development stage (10,144)
---------
Total stockholders' equity 27,831
---------
Total liabilities and
stockholders' equity $ 282,451
=========
The accompanying notes are an integral part of these financial
statements.
F-2
<PAGE> 25
eMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
Date from
Inception
Year (10/30/99)
Ended Through
March 31, March 31,
2000 2000
Revenues $ - $ -
--------- ---------
Operating expenses:
Professional services 5,200 5,200
Filing fees 459 459
Office expense 2,145 2,145
Postage & delivery expense 283 283
Telephone expense 452 452
Travel expense 1,605 1,605
--------- ---------
Total operating expenses 10,144 10,144
--------- ---------
Net Loss $ (10,144) $ (10,144)
=========
Net loss per share
basic and diluted $ (0.002)
=========
Weighted average number
of shares basic and diluted 5,603,753
=========
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE> 26
eMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage Total
Common stock issued for
Cash at $0.001 per
share 19,000,000 $ 960 $ 8,385 - $ 9,345
Common stock issued for
Cash at $0.0005 per
share 1,500,000 65 590 - 655
Cash at $0.333 per
share 75,000 4 24,996 - 25,000
Common stock issued for
License agreement at
$0.01 per share 297,500 15 2,960 - 2,975
Net loss - - - (10,144) (10,144)
---------- ------- -------- --------- ---------
Balance
March 31, 2000 20,872,500 $ 1,044 $ 36,931 $ (10,144) $ 27,831
========== ======= ======== ========= =========
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE> 27
eMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Date from
Inception
Year March 30, 1999
Ended Through
March 31, March 31,
2000 2000
Cash flows from operating activities:
Net loss $ (10,144) $ (10,144)
Changes in assets and liabilities:
Accounts payable 4,620 4,620
---------- ---------
Net cash used in operating activities (5,524) (5,524)
---------- ---------
Cash flows from investing activities:
Cash paid to purchase equipment (2,416) (2,416)
---------- ---------
Net cash used in investing activities (2,416) (2,416)
---------- ---------
Cash flows from financing activities:
Note payable - related party 100,000 100,000
Net proceeds from sale of common stock 35,000 35,000
Cash paid on note payable (100,000) (100,000)
---------- ---------
Net cash provided by financing
activities 35,000 35,000
---------- ---------
Net increase (decrease) in cash 27,060 27,060
Cash, beginning of period - -
---------- ---------
Cash, end of period $ 27,060 $ 27,060
========== =========
Supplemental disclosures of
cash flow information:
Cash paid during the period for:
Interest $ - $ -
========== =========
Income taxes $ - $ -
========== =========
Noncash financing activities:
Issuance of common stock in
exchange for ClearVideo $ 2,975 $ 2,975
Issuance of note payable in
exchange for ClearVideo license 250,000 250,000
---------- ---------
$ 252,975 $ 252,975
========== =========
The accompanying notes are an integral part of these financial
statements.
F-5
<PAGE> 28
EMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF ACCOUNTING POLICIES
Nature of Business
eMajix.com, Inc. ("the Company") is a development stage enterprise
which holds an exclusive license to 1) compile, display, use, copy and
modify ClearVideosource code and create enhancements to the source
code, 2) use the ClearVideo source code, its run-time versions and any
derivatives created by the Company, 3) the right to manufacture for the
purpose of distributing and sub-licensing products and services created
by any derivatives to end users in run time versions, 4) the right to
sublicense the rights granted by the licensor to the Company, 5) and
the right to enter into a research and development agreement with
another entity for developing new products provided that the Company
will own at least (50%) or more of the voting securities of such
entity. The Company intends to offer video compression services
primarily for downloading and streaming HQV and quality audio for use
on the Internet and various advertising applications for radio,
television, and cable broadcasting companies. The Company was
incorporated pursuant to the laws of the state of Oklahoma on March 30,
1999 as Southern Wireless, Inc. The Company changed its name to
eMajix.com, Inc. on April 5, 2000.
Cash Equivalents
For financial reporting purposes, the Company considers all highly
liquid investments with an original maturity of three months or less
when purchased to be a cash equivalent. Financial instruments, which
potentially subject the Company to a concentration of credit risk,
consist of cash and cash equivalents. Cash and cash equivalents
consist of funds deposited with various high credit quality financial
institutions.
Equipment
Equipment is recorded at cost. Depreciation and amortization are
provided using the straight-line method over the useful lives of the
respective assets. Major additions and betterments are capitalized.
Upon retirement or disposal, the cost and related accumulated
depreciation or amortization are removed from the accounts and any gain
or loss is reflected in operations.
Licenses
The costs associated with acquiring exclusive licensing rights to
patented technology have been capitalized and are being charged to
expense using the straight line method of amortization over ten years,
the estimated remaining useful lives of the patents.
F-6
<PAGE> 29
eMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF ACCOUNTING POLICIES
In accordance with the provisions of Statement of Financial
Accounting Standards("SFAS") No. 121, "Accounting for the Impairment of
Long- lived Assets and for Long-lived Assets to be Disposed of",
management of the Company reviews the carrying value of its intangible
assets on a regular basis. Estimated undiscounted future cash flows
from the intangible assets are compared with the current carrying
value. Reductions to the carrying value are recorded to the extent the
net book value of the property exceeds the estimate of future
discounted cash flows.
Income Taxes
Income taxes are provided based on the liability method of
accounting pursuant to SFAS No. 109, "Accounting for Income Taxes."
Under this approach, deferred income taxes are recorded to reflect the
tax consequences on future years of differences between the tax basis
of assets and liabilities and their financial reporting amounts at each
year end. A valuation allowance is recorded against deferred tax
assets as management does not believe the Company has met the "more
likely than not" standard imposed by SFAS No. 109 to allow recognition
of such an asset.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet as of March 31,
2000 for cash equivalents and accrued expenses approximate fair value
because of the immediate or short-term maturity of these financial
instruments.
Research and Development Costs
Research and development costs are charged to expense as
incurred.
F-7
<PAGE> 30
eMajix.com, Inc.(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF ACCOUNTING POLICIES
Net Loss Per Share
SFAS No. 128 requires dual presentation of basic EPS and diluted
EPS on the face of all income statements for all entities with complex
capital structures. Basic EPS is computed as net income divided by
the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur
from common shares issuable through stock options, warrants and other
convertible securities. The Company had no dilutive potential common
stock at March 31, 2000 and therefore, basic and diluted EPS are the
same for both periods.
New Accounting Pronouncements
Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which establishes standards for
reporting and displaying comprehensive income and its components in a
full set of general purpose financial statements. This statement was
effective for the Company during the current year. Comprehensive
income generally represents all changes in stockholders' equity except
those resulting from contributions by stockholders. There was no
impact to the Company as a result of the adoption of SFAS No. 130, as
there were no differences between net loss and comprehensive loss
available to common stockholders for the year ended March 31, 2000.
In December 1999, the Staff of the Securities and Exchange
Commission issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" ("SAB 101"). This SAB summarizes
certain of the Staff's views in applying generally accepted accounting
principles in the United States, to revenue recognition in financial
statements. The Company's revenue recognition policy is in compliance
with SAB 101.
In June 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-up
Activities." SOP 98-5 requires all start-up and organizational costs
to be expensed as incurred. It also requires all remaining
historically capitalized amounts of these costs existing at the date of
adoption to be expensed and reported as the cumulative effect of a
change in accounting principle. SOP 98-5 is effective for all fiscal
years beginning after December 31, 1998. The Company believes that the
adoption of SOP 98-5 on April 1, 1999, had no significant effect on its
financial statements.
F-8
<PAGE> 31
eMajix.com, Inc.(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF ACCOUNTING POLICIES
In February 1999, the Financial Accounting Standards Board issued
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections." SFAS No. 135 rescinds SFAS No. 75 and amends SFAS No 35.
SFAS No. 135 also amends other existing authoritative literature to
make various technical corrections, clarify meanings, or describe
applicability under changed conditions. SFAS No. 135 is effective for
financial statements issued for fiscal years ending after February 15,
1999. The Company believes that the adoption of SFAS No. 135 had no
significant effect on its financial statements.
F-9
<PAGE> 32
eMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. Development Stage Operations and Going Concern
The Company has been in the development stage since its inception.
The Company has no recurring source of revenue and has incurred losses
since inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial
statements do not include any adjustments that may be necessary if the
Company is unable to continue as a going concern.
Management of the Company has undertaken certain actions to
address these conditions. Management currently plans to commence
production in fiscal 2000. To this end, management is currently in
negotiations with potential customers and with marketing
representatives to establish a product channel. Funds required to
carry out management's plans are expected to be derived from future
stock sales or borrowings from outside parties. There can be no
assurances that the Company will be successful in executing its plans.
2. Licenses
In March 2000, the Company acquired exclusive licensing rights,
from Iterated Systems, Inc., to compile, use, copy and modify
ClearVideo Source Code and to create and manufacture products and
services. Additionally, the license agreement provides that the
Company may sublicense any products and services which it creates using
the technology under the licensing agreement. The license was acquired
for a $250,000 note payable and the issuance of 297,500 shares of
common stock, valued at $2,975.
3. Income Taxes
At March 31, 2000, the Company had net deferred tax assets of
approximately $3,500 principally arising from net operating loss
carryforwards for income tax purposes. As management of the Company
cannot determine that it is more likely than not that the Company will
realize the benefit of the net deferred tax asset, a valuation
allowance equal to the net deferred tax asset has been established at
March 31, 2000. At March 31, 2000, the Company has net operating loss
carryforwards totaling approximately $10,144, which will expire in the
year 2015.
F-10
<PAGE> 33
eMajix.com, Inc.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
4. Notes Payable
Notes payable at March 31, 2000, consist of the following:
Non-interest bearing note payable to Iterated Systems, Inc.,
due on May 15, 2000, secured by all tangible and intangible
assets of the Company $ 150,000
10% unsecured note payable to Ryan Corley, President of
the Company, due on demand 100,000
---------
Total maturities - all current $ 250,000
=========
5. Anti-Dilution Clause
The agreement with Iterated Systems, Inc. "Iterated", contains an
anti-dilution clause whereby the percentage of ownership of the
Company's common stock by Iterated shall be no less than 1.25% of the
total outstanding shares of the Company's common stock at any given
time. This provision shall terminate after the last day of the first
sixty (60) day period during which : (i) the common stock of the
Company is traded on NASDAQ, or the American or the New York Stock
Exchange and (ii) the Market Capitalization of the Company does not
fall below fifty million dollars and (iii) the 297,500 shares of
common stock that Iterated received under the agreement become free
trading Rule 144 stock or are covered by a registration statement in
compliance with the Act and (iv) the share price of the Company's
shares traded on NASDAQ, the American Stock Exchange or the New York
Stock exchange does not fall below $2.10. This provision also
terminates if Iterated sells or disposes of the shares that it received
under this agreement.
6. Subsequent Events
On May 11, 2000, the Company issued 501,000 restricted shares of
Common Stock to an accredited investor for $167,000.
Ob May 15, 2000, the non-interest bearing note payable to Iterate
Systems was paid.
F-11
<PAGE> 34
Part III
Item 1. Index to Exhibits
Exhibit
Number Description
3.1 Articles of Incorporation.
3.2 First Amendment to Articles of Incorporation.
3.3 Second Amendment to Articles of Incorporation.
3.4 Bylaws.
4.1 Specimen Stock Certificate.
10.1 Sub-License Agreement With Ryan Corley as Nominee.
10.2 Licensing Agreement for ClearVideo.
10.3 Licensing Agreement for ClearVideo - Addendum.
27.1 Financial Data Schedule.
<PAGE> 35
SIGNATURES
In accordance with Section 12 of the Securities Ace of 1934, the
registrant caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized:
eMajix.com, Inc.
BY: /s/ Ryan Corley
Ryan Corley, President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Ryan Corley, as true and lawful
attorney-in-fact and agent, with full power of substitution, for his
and in his name, place and stead, in any all capacities, to sign any
and all amendments (including post-effective amendments) to this
registration statement, and to file the same, therewith, with the
Securities and Exchange Commission, and to make any and all state
securities law or blue sky filings, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the
premises, as fully to all intends and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or any substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10SB Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ Ryan Corley Chairman of the Board 05/16/00
Ryan Corley of Directors, President,
Chief Executive Officer,
Treasurer, and Chief Financial
Officer
/s/ Leon P. Davis Secretary 05/16/00
Leon P. Davis
/s/ W. H. Walker, Jr. Member of the Board 05/16/00
W. H. Walker, Jr. of Directors
<PAGE> 36
EXHIBIT 3.1
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[State of Oklahoma Seal]
CERTIFICATE OF INCORPORATION
WHEREAS, the Certificate of Incorporation of
SOUTHERN WIRELESS, INC.
has been filed in the office of the Secretary of State as provided by
the laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the
State of Oklahoma, by virtue of the powers vested in me by law, do
hereby issue this certificate evidencing such filing.
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused to
be affixed the Great Seal of the State of Oklahoma.
Filed in the City of Oklahoma City this 30th day of March, 1999.
/s/ Mike Hunter
Secretary of State
<PAGE> 38
CERTIFICATE OF INCORPORATION
OF OKLAHOMA SECRETARY
OF STATE
SOUTHERN WIRELESS, INC.
FIRST: The name of the corporation is Southern Wireless, Inc.,
SECOND: The address of the corporation's registered office in
the State of Oklahoma is Penthouse Suite, 403 South Cheyenne Avenue,
Tulsa, Oklahoma 74103. The name of the corporation's registered agent
at such address is Lonny Davis.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under
the general corporation law of the State of Oklahoma.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is 100,000,000 shares, each
of the shares having a par value of $0.0001, thereby resulting in the
corporation having total authorized capital stock in the amount of
$10,000.00, all of which shall be Common Stock.
The Board of Directors of the corporation shall have full
authority, to the extent permitted by law, to increase, decrease or
otherwise adjust the capital stock of the corporation, to designate the
classes or series thereof and to determine whether all or any part of
such stock shall have voting power, full or limited, or no voting
powers, and to determine such designations, and such powers,
preferences, relative, participating or optional, or other special
rights and the qualifications, limitations or restrictions thereof as
the Board shall from time to time determine in duly adopted
resolutions.
At any time and from time to time when authorized by resolution of
the Board of Directors and without any action by its shareholders, the
corporation may issue or sell any shares of its capital stock of any
class or series, whether out of the unissued shares thereof authorized
by the Certificate of Incorporation of the corporation as originally
filed or by an amendment thereof or out of shares of its capital stock
acquired by it after the issue thereof, and whether or not the shares
thereof so issued or sold shall confer upon the holders thereof the
right to exchange or convert such shares for or into other shares of
capital stock of the corporation of any class or classes or any series
thereof. When similarly authorized but without any action by its
shareholders, the corporation may issue or grant rights, warrants or
options, in bearer or registered or such other form as the Board of
Directors may determine, for the purchase of shares of the capital
stock of any class or series of the corporation within such period of
time, or without limit as to time, to such aggregate number of shares,
and at such price per share, as the Board of Directors may determine.
Such rights, warrants or options may be issued or granted separately or
in connection with the issue of any bonds, debentures, notes,
obligations or other evidences of indebtedness or shares of the capital
stock of any class or series of the corporation and for such
<PAGE> 39
consideration and on such terms and conditions as the Board of
Directors in its sole discretion may determine. In such case the
consideration to be received by the corporation for any such shares so
issued or sold shall be such as shall be fixed from time to time by
resolution of the Board of Directors. Notwithstanding the above, the
shares of stock of the Corporation shall have pre-emptive rights so
that no Stockholder's share can be diluted without the consent of the
Stockholder.
FIFTH: The name and mailing address of the incorporator is as
follows:
Leon P. Davis
Penthouse Suite
403 South Cheyenne
Tulsa, OK 74103
SIXTH: In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized:
(a) To adopt amend or repeal the Bylaws of the corporation;
(b) To authorize and cause to be executed or granted mortgages,
security interests and liens upon the real and personal property of the
corporation;
(c) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose
and to abolish any such reserve in the manner in which it was created;
(d) By a majority of the whole Board of Directors, to designate
one or more committees, each committee to consist of one (1) or more of
the directors of the corporation. The Board may designate one (1) or
more directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee. Any
such committee, to the extent provided in the resolution or in the
Bylaws of the corporation, shall have and may exercise the powers of
the Board of Directors in the management of the business and affairs of
the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; provided, however, the
Bylaws may provide that in the absence or disqualification of any
member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
he, she or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
(e) When and as authorized by the affirmative vote of the holders
of a majority of the stock issued and outstanding having voting power
given at a shareholders' meeting duly called upon such notice as is
required by law, or when authorized by the written consent of the
holders of a majority of the voting stock issued and outstanding, to
sell, lease or exchange all or substantially all of the property and
assets of the corporation, including its goodwill and its corporate
<PAGE> 40
franchises, upon such terms and conditions and for such consideration,
which may consist, in whole or in part, of money or property including
shares of stock in, and/or other securities of, any other corporation
or corporations, as its Board of Directors shall deem expedient and for
the best interests of the corporation.
SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors, or any class of them,
and/or between this corporation and its shareholders, or any class of
them, any court of equitable jurisdiction within the State of Oklahoma,
on the application in a summary way of this corporation, or of any
creditor or shareholder thereof, or on the application of any receiver
or receivers appointed for this corporation under the provisions of
Section 1106 of Title 18 of the Oklahoma Statutes or on the application
of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 1100 of Title 18
of the Oklahoma Statutes, order a meeting of the creditors or class of
creditors, and/or the shareholders or class of shareholders of this
corporation, as the case may be, to be summoned in such manner as the
court directs. If a majority in number representing three-fourths
(3/4ths) in value of the creditors or class of creditors, and/or of the
shareholders or class of shareholders of this corporation, as the case
may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such compromise or
arrangement, the compromise or arrangement and the reorganization
shall, if sanctioned by the court to which the application has been
made, be binding on all the creditors or class of creditors and/or on
all the shareholders or class of shareholders of this corporation, as
the case may be, and also on this corporation.
EIGHTH: Meetings of shareholders may be held within or without
the State of Oklahoma as the Bylaws may provide. The books of the
corporation may be kept (subject to applicable law) inside or outside
the State of Oklahoma at such place or places as may be designated from
time to time by the Board of Directors or in the Bylaws of the
corporation. Elections of directors need not be by written ballot
unless the Bylaws of the corporation shall so provide. One-third (1/3)
of the shares entitled to vote, present or represented by proxy at a
meeting, shall constitute a quorum.
NINTH: To the extent permitted by law no contract or
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any other corporation,
partnership, association or other organization in which one or more of
its directors or officers are directors or officers or have a financial
interest, shall be void or voidable solely for this reason or solely
because the directors or officers are present at or participate in the
meeting of the board or committee thereof which authorizes the contract
or transaction or solely because the directors or officers or their
votes are counted for such purpose.
<PAGE> 41
TENTH: The Board of Directors is expressly authorized to
indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending, or completed action, suit or
proceedings, whether civil, criminal, administrative or investigative,
other than action by or in the right of the corporation, by reason of
the fact that such person 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 or other enterprise
against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement to the extent and in the manner permitted by
the laws of the State of Oklahoma.
A director of the corporation shall not be liable to the
corporation or its shareholders for monetary damages for an act or
omission in the director's capacity as a director, except to the
extent the director is round liable for (1) a breach of the
director's duty or loyalty to the corporation or its shareholders or
members; (2) an act or omission not in good faith that constitutes a
breach or duty or the director to the corporation or in act or
omission that involves intentional misconduct or a knowing violation
of the law, (3) a transaction from which the director received an
improper benefit. whether or not tile benefit resulted from an
action taken within the scope of the directors office. or (5) an act
or omission (or which tile liability or a director is expressly
provided by an applicable statute,
ELEVENTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Oklahoma, the Board of Directors
is expressly authorized to adopt, amend or repeal the Bylaws of the
corporation.
TWELFTH: The corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by law, and
all rights conferred upon the shareholders herein are granted subject
to this reservation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the Oklahoma General
Corporation Act, makes this Certificate hereby declaring and certifying
that this is the act and deed of the undersigned and that the facts
herein stated are true as of March 2, 1999.
/s/ Leon P. Davis
Leon P. Davis
<PAGE> 42
EXHIBIT 3.2
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[State of Oklahoma Seal]
AMENDED
CERTIFICATE OF INCORPORATION
WHEREAS, the Amended Certificate of Incorporation of
SOUTHERN WIRELESS, INC.
has been filed in the office of the Secretary of State as provided
by the laws of the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the
State of Oklahoma, by virtue of the powers vested in me by law, do
hereby issue this certificate evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hand and cause to be
affixed the Great Seal of the State of Oklahoma.
Filed in the City of Oklahoma City this 20th day of March,
2000.
/s/ Mike Hunter
Secretary of State
[ Seal of Oklahoma]
<PAGE> 43
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
SOUTHERN WIRELESS, INC.
PURSUANT TO a Resolution of the Stockholders which was
approved and passed February 2, 2000 by a majority of more that 2/3
of the shares issued and outstanding, and by a Resolution approved
and passed unanimously by the Board of Directors February 2, 2000,
the Certificate of Incorporation is hereby amended in that the Par
Value of the common stock is changed to $0.00005 and the number of
authorized shares is increased to 200,000,000. Pursuant to the
aforementioned Resolutions, this amendment is effective at the
closed of business March 21, 2000.
THE UNDERSIGNED, being all of the Directors of the
Corporation, hereby declare and certify that this amendment is
pursuant to a Resolution of a majority of the shareholders and of
a Resolution of all of the Directors and that the amendment has
been duly adopted in accordance with the provisions of Title 18
subsection 1077 of the General Corporation Act.
/s/ W. A. Walker
W. A. Walker, Jr. Director
/s/ Ryan Corley
Ryan Corley, Director
<PAGE> 44
EXHIBIT 3.3
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[State of Oklahoma Seal]
AMENDED
CERTIFICATE OF INCORPORATION
WHEREAS, the Amended Certificate of incorporation of
EMAJIX.COM, INC.
has been filed in the office of the Secretary of State as provided
by the laws of the State of Oklahoma.
NOW THEREFORE, 1, the undersigned, Secretary of State of the
State Of Oklahoma, by virtue of the powers vested in me by law, do
hereby issue this certificate evidencing such filing.
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused
affixed the Great Seal of the State of Oklahoma.
Filed in the City of Oklahoma City this 6th day of April,
2000.
/s/ Mike Hunter
Secretary of State
[ Seal of Oklahoma]
<PAGE> 45
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
EMAJIX.com, Inc.
PURSUANT TO a Resolution of the Stockholders of Southern
Wireless, Inc. which was approved and passed March 28, 2000 by a
majority of more that 2/3 of the shares then outstanding, and by a
Resolution approved and passed unanimously by the Board of
Directors of Southern Wireless, Inc. March 28, 2000, the
Certificate of Incorporation is hereby amended in that the name of
the Corporation is changed to EMAJIX.com, Inc.. Pursuant to the
aforementioned Resolutions, this amendment is effective upon
filing.
THE UNDERSIGNED, being all of the Directors of the
Corporation, hereby declare and certify that this amendment is
pursuant to a Resolution of a majority of the shareholders and of
a Resolution of all of the Directors and that the amendment has
been duly adopted in accordance with the provisions of Title 18
subsection 1077 of the General Corporation Act.
Dated this 28th day of March, 2000
/s/ W. A. Walker
W. A. Walker, Jr. Director
/s/ Ryan Corley
Ryan Corley, Director
<PAGE> 46
EXHIBIT 3.4
BY-LAWS
OF
SOUTHERN WIRELESS, INC.
ARTICLE I - OFFICE
1.1 REGISTERED OFFICE AND AGENT
The registered office of the Corporation maintained in the
State of Oklahoma, may be, but need not be, identical with the
principal business office in the State of Oklahoma, and the address
of the registered office may be changed from time to time by the
Board of Directors.
1.2 PRINCIPAL OFFICE
The principal office of the Corporation in the State of
Oklahoma shall be located in the County of Tulsa. The Corporation
may have such other offices, either within or without the State of
Oklahoma, as the Board of Directors may designate or as the
business of the Corporation may require from time to time.
1.3 OTHER OFFICES
The Corporation may also have offices at such other places both
within and without the State of Oklahoma as the Board of Directors
may from time to time determine or the business of the Corporation
may require.
ARTICLE 11 - MEETINGS OF SHAREHOLDERS
2.1 ANNUAL MEETING
Annual meetings of stockholders, commencing with the year
2000, is to be set by the Board of Directors and shall be held no
less than ten (10) days after the close of each fiscal year and no
longer the nine (9) months after the close of any fiscal year. The
date, time and place within or without the State of Oklahoma, as
shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting or in a duly executed waiver of
notice thereof, at which meeting the stockholders shall elect a
Board of Directors, and transact such other business as may
properly be brought before the meeting.
2.2 FAILURE TO HOLD ANNUAL MEETING
Failure to hold any annual meeting shall not work a
dissolution of the Corporation. If the annual
meeting is not held within any thirteen (13) month period, any
court of competent jurisdiction in the county in which the
principal office of the Corporation is located may, on application
of any shareholder, summarily order a meeting to be held.
<PAGE> 47
2.3 SPECIAL MEETINGS
Special meetings of the shareholders for any purpose or purposes
may be called by the President or by the Secretary at the request
in writing of a majority of the Board of Directors, or at the
request of shareholders owning not less than thirty (30%) percent
of all the shares entitled to vote for the purpose of the proposed
meeting. Business transacted at any such special meeting of
shareholders shall be limited to the purposes stated in the notice.
2.4 NOTICE AND WAIVERS OF NOTICE
(a) Written notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not
less than ten (10) nor more than sixty (60) days before the date of
the meeting, either personally or by mail, by or at the direction
of the President, the Secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such
meeting.
(b) Notice may be waived in writing signed by the person or
persons entitled to such notice. Such waiver may be executed at
any time before or after the holding of such meeting. Attendance
at a meeting shall constitute a waiver of notice, except where the
person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not
lawfully called.
2.5 RECORD DATE
For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment
thereof, or entitled to receive payment of any dividend, the Board
of Directors may in advance establish a record date which must be
at least ten (1 0) but not more than fifty (50) days prior to such
meeting. If the Board of Directors fail to establish a record
date, the record date shall be the date on which notice of the
meeting is mailed.
2.6 VOTING LIST
(a) The officer or agent having charge of the stock transfer
books for shares of the Corporation shall make, at least ten (1 0)
days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment
thereof, arranged in alphabetical order, with the address of and
the number of shares held by each, which list, for a period of ten
(1 0) days prior to such meeting, shall be kept on file at the
registered office of the Corporation and shall be subject to
inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time
<PAGE> 48
and place of the meeting and shall be subject to the inspection of
any shareholder during the whole time of the meeting. The original
stock transfer book shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to
vote at any meeting of shareholders.
(b) Failure to comply with the requirements of this section
shall not affect the validity of any action taken at such meeting.
2.7 QUORUM OF SHAREHOLDERS
The holders of one third of the shares issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings
of the shareholders for the transaction of business except as
otherwise provided by a statute or by the Articles of
Incorporation. If, however, a quorum shall not be present or
represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned
meeting, provided a quorum shall be present or represented
thereat, any business may be transacted which might have been
transacted if the meeting had been held in accordance with the
original notice thereof.
2.8 WITHDRAWAL OF QUORUM
If a quorum is present at any meeting, the vote of holders of
a majority of the shares entitled to vote, present in person or
represented by proxy, shall decide any question brought before such
meeting unless the question is one upon which a different vote is
required by express provision of the statutes or by the Articles of
Incorporation or these By-Laws. The shareholders present at a
meeting at which a quorum is present may continue to transact
business until the adjournment, despite the withdrawal of
shareholders after the commencement of the meeting, which
withdrawal leaves less than a quorum remaining at the meeting.
2.9 PROXIES
No proxy shall be valid after eleven (11) months from the date
of its execution, unless otherwise expressly provided in the proxy.
Each proxy shall be revocable unless expressly provided therein to
be irrevocable and unless otherwise made irrevocable by law.
<PAGE> 49
2.10 VOTING OF SHARES
Each outstanding share, regardless of class, shall be entitled
to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of any
class or classes are limited or denied by the Articles of
Incorporation. A shareholder may vote either in person or by proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact.
2.11 ACTION WITHOUT MEETING OR BY USE OF CONFERENCE TELEPHONE
Any action required by the Oklahoma Business Corporation Act
to be taken at a meeting of the shareholders, or any action which
may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the shareholders entitled to vote
with respect to the subject matter thereof, and such consent shall
have the same force and effect as a unanimous vote of shareholders,
and may be stated as such in any articles or document filed with
the Secretary of State. Subject to the provisions of the Oklahoma
Business Corporation Act and these By-Laws for notice of meetings,
shareholders may participate in and hold a meeting of such
shareholders by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and participation
in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the
express purpose of objecting to the transaction of any business on
the ground that the meeting is not lawfully called or convened.
ARTICLE III - DIRECTORS
3.1 POWERS
The business and affairs of the Corporation and all corporate
powers shall be managed by the Board of Directors, subject to any
limitation imposed by statute, the Articles of Incorporation, or
these ByLaws as to action which requires authorization or approval
by the shareholders.
3.2 NUMBER, TENURE AND QUALIFICATIONS.
The number of Directors of the Corporation shall be not
greater than fifteen and shall be set annually by resolution of the
Corporation's Board of Directors. Each Director shall hold office
until the next annual meeting of Shareholders and until his or her
successor shall have been elected and qualified. Directors need
not be residents of the State of Oklahoma or Shareholders of the
Corporation.
<PAGE> 50
3.3 ELECTION
The Directors shall be elected at the annual meeting of the
shareholders, and each Director elected shall serve until his
successor shall have been elected and qualified.
3.4 VOTING
Every shareholder entitled to vote shall have the right to
vote the number of voting shares owned
by such shareholder for as many persons as there are directors to
be elected and for whose election the shareholder has the right to
vote. Shareholders may not cumulate their votes.
3.5 REMOVAL OF DIRECTORS
At any meeting of shareholders called expressly for the
purpose of removing a Director, any Director or the entire Board of
Directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares then entitled to vote at an
election of Directors.
3.6 VACANCIES
(a) Any vacancy in the Board of Directors caused by death,
resignation, removal or otherwise shall be appointed by a majority
of the remaining Directors. A Director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in
office.
(b) A directorship to be filled by reason of an increase in
the number of directors may be filled by (1) an annual or special
meeting of shareholders called for that purpose; or (2) by the
board of directors for a term of office continuing only until the
next election of one or more directors by the shareholders;
provided that the board of directors may not fill more than two
such directorships during the period between any two successive
annual meetings of shareholders.
3.7 INCREASE OR DECREASE IN NUMBER
The number of Directors may be increased or decreased from
time to time by amendment to these ByLaws, but no decrease shall
have the effect of shortening the term of any incumbent Director.
Any directorship to be filled by reason of an increase in the
number of Directors shall be filled by election at an annual or
special meeting of shareholders.
ARTICLE IV - MEETINGS OF THE BOARD OF DIRECTORS
4.1 PLACE
Meetings of the Board of Directors, regular or special, may
be held either within or without the State of Oklahoma.
<PAGE> 51
4.2 ANNUAL MEETING
Within thirty (30) days after each annual meeting of
shareholders, the Board of Directors elected at such meeting shall
hold an annual meeting at which the Board of Directors shall elect
officers and transact such other business as shall come before the
meeting.
4.3 REGULAR MEETINGS
Regular meetings of the Board of Directors may be held without
notice at such time and at such place as, shall from time to time
be determined by the Board of Directors.
4.4 SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by
the Chief Executive Officer on three days notice to each director.
Special meetings shall be called by the Secretary on the written
request of two (2) or a majority of the Directors, whichever is
less, by giving three days notice to each director.
4.5 NOTICE AND WAIVER OF NOTICE
Attendance of a Director at any meeting shall constitute a
waiver of notice of such meeting, except where a Director attends
for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of notice of
such meeting.
4.6 QUORUM OF DIRECTORS
At all meetings of the Board of Directors, a majority of the
Directors shall constitute a quorum for the transaction of business
and the act of a majority of the Directors present at any meeting
at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of
Directors, the Directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
4.7 ACTION WITHOUT MEETINGS
Unless otherwise restricted by the Articles of Incorporation,
any action required or permitted to be taken at a meeting of the
Board of Directors or any committee designated by the Board of
Directors may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all members of the
Board of Directors or committee, as the case may be. Such consent
<PAGE> 52
shall have the same force and effect as a unanimous vote at a
meeting, and may be stated as such in any document or instrument
filed with the Secretary of State. Subject to the provisions of
the Oklahoma Business Corporation Act and these By-Laws for notice
of meetings, unless otherwise restricted by the Articles of
Incorporation, members of the Board of Directors or members of any
committee designated by the Board of Directors, may participate in
and hold a meeting of the Board of Directors or such committee, as
the case may be, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and participation
in a meeting pursuant to this Section shall constitute presence in
person at such meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called
or convened.
4.8 COMMITTEES
The Board of Directors may from time to time designate members
of the Board to constitute committees, including an Executive
Committee, which shall in each case consist of not less than two
Directors, and shall have and may exercise such power, as the Board
may determine and specify in the respective resolutions appointing
them; except that no such committee shall have the authority of the
Board of Directors in reference to amending the Articles of
Incorporation, approving a plan of merger or consolidation,
recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its
business, recommending to the shareholders a voluntary dissolution
of the corporation or a revocation thereof, amending, altering, or
repealing the By-Laws of the corporation or adopting new By-Laws
for the corporation, filling vacancies in the Board of Directors or
any committee thereof, filling any directorship to be filled by
reason of an increase in the number of directors, electing or
removing officers or members of such committee, fixing the
compensation of any member of such committee, or altering or
repealing any resolution of the Board of Directors which by its
terms provides that it shall not be so amendable or repealable;
and, shall not have the power or authority to declare a dividend or
to authorize the issuance of shares of the corporation. A majority
of all the members of any such committee may determine its action
and fix the time and place of its meeting, unless the Board of
Directors shall otherwise provide. The Board of Directors shall
have power at any time to change the number, subject as aforesaid,
and members of any such committee, to fill vacancies and to
discharge any such committee.
<PAGE> 53
4.9 ORDER OF BUSINESS
At meetings of the Board of Directors, business shall be
transacted in such order as from time to time the Board may
determine. At meetings of the Board of Directors, the Chief
Executive Officer shall preside, and in the absence of the Chief
Executive Officer, a vice chairman shall be chosen by the Board
from among the Directors present. The Secretary of the Corporation
shall act as Secretary of the meetings of the Board of Directors,
but in the absence of the Secretary, the presiding officer may
appoint any person to act as Secretary of the meeting.
4.10 COMPENSATION
Directors, as such, shall not receive any stated salary for
their service, but by resolution of the Board a fixed sum and
expenses of attendance, if any, may be allowed for attendance at
each annual, regular, or special meeting of the Board; provided,
that nothing contained herein shall be construed to preclude any
director from serving the Corporation in any other capacity and
receiving compensation therefor.
ARTICLE V - OFFICERS
5.1 ELECTION, NUMBER, QUALIFICATION, TERM, COMPENSATION
The officers of the Corporation shall be elected by the Board
of Directors at the annual meeting of the Board of Directors
provided for in Article IV, Section 4.2. The officers shall consist
of a President, who is the Chief Executive Officer, and a
Secretary. The Board of Directors may also elect a Treasurer, one
or more Vice-Presidents, Assistant Secretaries and Assistant
Treasurers and such other officers and assistant officers and
agents as it shall deem necessary, who shall hold their offices for
such terms and shall have such authority and exercise such powers
and perform such duties as shall be determined from time to time by
the Board by resolutions not inconsistent with these By-Laws. Two
or more offices may be held by the same person. None of the
officers need be Directors except the Chief Executive Officer. The
Board of Directors shall have the power to enter into contracts of
employment and compensation of officers for such terms as the Board
deems advisable. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
5.2 REMOVAL
The officers of the Corporation shall hold office until their
successors are elected or appointed and qualify, or until their
death or until their resignation or removal from office. Any
officer elected or appointed by the Board of Directors may be
removed at any time by the Board whenever in its judgment the best
<PAGE> 54
interests of the Corporation will be served thereby. Such removal
shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer shall not
of itself create contract rights.
5.3 VACANCIES
Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise shall be filled by the
Board of Directors.
5.4 AUTHORITY
Officers and agents shall have such authority and perform such
duties in the management of the Corporation as may be provided in
these ByLaws or as may be determined by the Board of Directors, not
inconsistent with these ByLaws.
5.5 PRESIDENT
The President shall be the Chief Executive officer of the
Corporation and shall have general charge of the business of the
Corporation. The president shall from time to time obtain
information concerning the affairs and business of the Corporation
and shall promptly lay such information before the Board of
Directors, all matters presented by any officer of the Corporation
for the Corporation's consideration and shall from time to time
communicate to the officers such action of the Board of Directors
as may in the Presidents judgment affect the performance of their
official duties.
The President may execute and deliver on behalf of the
Corporation any deeds, bonds, mortgages, contracts, powers of
attorney, or any other instruments which the Board of Directors
have authorized to be executed, except in cases where the signing
and execution shall be expressly delegated by the Board of
Directors or these bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or
executed. The President may employ all agents and employees of the
Corporation and may discharge any such agent or employee and shall
perform such other duties as may be prescribed by the Board of
Directors from time to time.
5.6 THE VICE-PRESIDENT
In the absence of the President or in the event of the
inability or refusal to act of the President, the Vice-President
(or in the event there be more than one Vice-President, the Vice-
Presidents in the order designated, or in the absence of any
designation, then in the order of their election) shall perform the
duties of the President and when so acting, shall have all the
<PAGE> 55
powers of and be subject to all the restrictions upon the
President. The Vice-President shall perform such other duties and
have such other powers as the Board of Directors may from time to
time prescribe.
5.7 THE SECRETARY
The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the stockholders of the Corporation
and of the Board of Directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice
of all meetings of stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, under whose
supervision the Secretary shall be. The Secretary shall have
custody of the corporate seal of the Corporation and the Secretary,
or an Assistant secretary shall have authority to affix the same to
any instrument requiring it and when so affixed, it may be attested
by the signature of the Secretary or by the signature of such
Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the seat of the Corporation
and to attest the affixing by his signature.
5.8 THE ASSISTANT SECRETARY
The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board of
Directors (or if there be no such determination, then in the order
of their election), shall, in the absence of the Secretary or in
the event of the inability or refusal to act of the Secretary,
perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
5.9 THE TREASURER
The Treasurer, if any, shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation
and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be
designated by the Board of Directors. The Treasurer shall disburse
the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the
Corporation.
<PAGE> 56
5.10 THE ASSISTANT TREASURER
The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order
of their election), shall, in the absence of the Treasurer or in
the event of the inability or refusal to act of the Treasurer,
perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
ARTICLE VI - CERTIFICATES REPRESENTING SHARES
6.1 CERTIFICATES
The shares of the Corporation shall be represented by
certificates signed by the President and the Secretary or an
Assistant Secretary of the corporation, and shall be sealed with
the seal of the Corporation or a facsimile thereof. The signatures
of the President and the Secretary or Assistant Secretary upon a
certificate may be facsimiles if the certificate is countersigned
by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. The
certificates shall be consecutively numbered and shall be entered
in the books of the Corporation as they are issued. Each
certificate shall state on the face thereof the holders name and
the number of shares. Certificates shall be in such form as shall
be prescribed from time to time in conformity with law by the Board
of Directors. The Corporation may appoint from time to time
transfer agents and registrars, who shall perform their duties
under the supervision of the Secretary.
6.2 PAYMENT, ISSUANCE
Shares may be issued for such consideration, not less than the
par value thereof, as may be fixed from time to time by the Board
of Directors. The consideration for the payment of shares shall
consist of money paid, labor done, or property actually received.
Shares may not be issued until the full amount of the consideration
fixed therefor has been paid.
6.3 LOST, STOLEN, OR DESTROYED CERTIFICATES
The Board of Directors may direct a new certificate to be
issued in place of any certificate previously issued by the
Corporation and alleged to have been lost, stolen, or destroyed
upon the making of an affidavit of that fact by the person claiming
the certificate to have been lost, stolen, or destroyed. When
authorizing such issue of a new certificate, the Board of Directors
may, in its discretion and as a condition precedent to the issuance
thereof, prescribe such terms and conditions as it deems expedient
and may require such indemnities as in deems adequate to protect
<PAGE> 57
the Corporation from any claim that may be made against it with
respect to any such certificate alleged to have been lost or
destroyed
6.3 REGISTRATION OF TRANSFER
Shares of stock shall be transferable only on the books of the
Corporation by the holder there of in person or by his duly
authorized attorney. Upon surrender to the Corporation or the
Transfer Agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, a new certificate shall be
issued to the person entitled thereto and the old certificate
canceled and the transaction recorded upon the books of the
Corporation.
ARTICLE VII - DIVIDENDS
7.1 DECLARATION AND PAYMENT
Subject to the Laws of the State of Oklahoma and the Articles
of Incorporation, dividends may be declared by the Board of
Directors, in its discretion, at any regular or special meeting,
pursuant to law and may be paid in cash, in property, or in the
Corporation's own shares.
7.2 RESERVES
Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute
discretion, think proper as a reserve fund for meeting
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, and the Directors may
modify or abolish any such reserve in the manner in which it was
created.
ARTICLE VII - INDEMNIFICATION OF OFFICERS,
DIRECTORS, AND EMPLOYEES
8.1 INDEMNIFICATION
The Corporation shall, to the fullest extent now or hereafter
permitted by law, indemnify any Director or officer or former
Director or officer of the Corporation, or any person who may have
served at its request as a director or officer or former director
or officer of another corporation in which it owns shares of
capital stock or of which it is a creditor, against expenses
actually and necessarily incurred by him in connection with the
defense of any action, suit, or proceeding, whether civil or
criminal, in which he is made a party by reason or being or having
been such Director or officer, except in relation to matters as to
<PAGE> 58
which he shall be adjudged in such action, suit or proceeding to be
liable for negligence or misconduct in performance of duty. The
Corporation shall also reimburse any such Director or officer or
former Director or officer or any such person serving or formerly
serving in the capacities set forth in the first sentence above at
the request of the Corporation for the reasonable cost of
settlement of any such action, suit or proceeding, if it shall be
found by a majority of the Directors not involved in the matter in
controversy, whether or not a quorum, that it was in the best
interest of the Corporation that such settlement be made, and that
such Director or officer or former Director or officer or such
person was not guilty of negligence or misconduct in performance of
duty.
8.2 INSURANCE
The Corporation may purchase and maintain insurance on behalf
of any person who 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, or other enterprise
against any liability asserted against him and incurred by him in
any such capacity or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against
such liability under these By-Laws or the laws of the State of
Oklahoma.
8.3 ADVANCED EXPENSES
The Corporation may pay in advance any expenses which may
become subject to indemnification if the Board of Directors
authorizes the specific payment and the person receiving the
payment undertakes in writing to repay unless it is ultimately
determined that he is entitled to indemnification by the
Corporation.
8.4 OTHER PROTECTION AND INDEMNIFICATION
The protection and indemnification provided hereunder shall
not be deemed exclusive of any other
rights to which such Director or officer or former Director or
officer or such person may be entitled, under any agreement,
Corporate policy, insurance policy or vote of shareholders, or
otherwise.
ARTICLE IX - MISCELLANEOUS PROVISIONS
9.1 FISCAL YEAR
The fiscal year of the Corporation shall be fixed by
resolution for the Board of Directors.
<PAGE> 59
9.2 SEAL
The Corporate seal shall contain the name of the Corporation,
and the word "OKLAHOMA". The seal may be used by causing it or a
facsimile to be impressed or affixed or in any other manner
reproduced. The corporate seal may be altered by order of the
Board of Directors at any time.
9.3 MINUTES
The Corporation shall keep correct and complete books and
records of account and shall keep minutes of the proceedings of its
shareholders and Board of Directors, and shall keep at its
registered office or principal place of business, or at the office
of its transfer agent or registrar, a record of its shareholders,
giving the names and addresses of all shareholders, and the number
and class of the shares held by each.
9.4 RESIGNATIONS
Any director or office may resign at anytime. Such
resignations shall be made in writing and shall take effect at the
time specified therein, or if no time is specified, at the time of
its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
9.5 AMENDMENT
These By-Laws may be altered, amended, or repealed and new By-
Laws may be adopted by the Board of Directors, subject to repeal or
change by action of the shareholders, at any meeting of the Board
of Directors at which a quorum is present, provided notice of the
proposed alteration, amendment, or repeal is contained in the
notice of the meeting.
9.6 NOTICE
Any notice to Directors or shareholders shall be in writing
and shall be delivered personally or mailed to the Directors or
shareholders at their respective addresses appearing on the books
of the Corporation. Notice by mail shall be deemed to be given at
the time when the same shall be deposited in the United States
mail, postage prepaid. Notice to Directors may also be given by
telegram or facsimile. Whenever any notice is required to be given
under the provisions of applicable statutes or of the Articles of
Incorporation or of these By-Laws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent
to the giving of such notice.
/s/ W. H. Walker, Jr
W. H. Walker, Jr., Director
<PAGE> 60
Exhibit 4.1
Numbers eMajix.com, Inc. Shares
Incorporated under the laws of the state
of Oklahoma 200,000,000 shares common
stock authorized $.00005 par value
This
certifies CUSIP 29077Q 10 9
that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARE OF COMMON STOCK OF
eMajix.com, Inc.
transferable on the books of the corporation in person or by duly
authorized attorney upon surrender of this certificate properly
endorsed. This certificate and the shares represented hereby are
subject to the laws of the State of Oklahoma, and to the
Certificate of Incorporation and Bylaws of the Corporation, as
now or hereafter amended. This certificate is not valid unless
countersigned by a Transfer Agent.
WITNESS the facsimile seal of the Corporation and the signature
of it's duly authorized officers.
DATED ___________________________
____________________________ ___________________________
PRESIDENT SECRETARY
<PAGE> 61
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with the rights of Survivorship
and not as tenants in Common
UNIF GIFT
MIN ACT ____________________ Custodian ______________
(Minor) _____________ ACT
Additional abbreviations may also be used though not in the above
list.
For value received ________________ hereby sell, assign and
transfer unto:
(Please insert social security or other identifying number of
assignee)
_________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP
CODE AND, OF ASSIGNEE)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
__________________________________________________________shares
of the capital stock represented by the within certificate, and
do hereby irrevocably constitute and appoint ____________________
_______________________________ Attorney to transfer the said
stock on the books of the within named Corporation with full
power of substitution in the premises.
Dated_________________________
X________________________________________________________________
The signature of this agreement must correspond with the names as
written upon the face if this certificate in every particular,
without alteration or enlargement or any change whatsoever. The
signature(s) must be guaranteed by an eligible guarantor
institution (banks, stockbroker, savings and loan association and
credit union.)
SIGNATURE GUARANTEED:
TRANSFER FEE WILL APPLY
<PAGE> 60
Exhibit 10.1
License Agreement
THIS DEVELOPMENT AND LICENSE AGREEMENT ("Agreement") is made and
entered into this 22nd day of December, 1999 by and between Southern
Wireless, Inc. (SWI) and Ryan Corley as nominee for a corporation to
be formed.
WHEREAS SWI intends to acquire certain technology that will
compress video and stream real time video via the internet and
desires to grant certain limited licenses for use of same;
WHEREAS Ryan Corley, is acting as nominee for a corporation to
be formed for the purpose of developing and distributing multiple
branded networks of digital content and programming for distribution
over the Internet, herein referred to as Internet Broadcasting
Networks ("IBN");
WHEREAS Ryan Corley on behalf of IBN acknowledges that SWI does
not currently own or have the rights to the technology that is the
subject of this agreement and that SWI may never obtain the rights to
said technology, IBN and SWI enter into this agreement subject to the
provision that it only becomes binding on the parties if SWI obtains
the rights to the subject technology;
WHEREAS the parties hereto acknowledge that this agreement is
subordinate to, subject to and incorporates all of the definitions,
conditions, requirements, restrictions and restrictive covenants that
may be included in any contract that SWI may enter into for the
purchase of licencing of the certain technology for video/audio
compression and video/audio streaming.
NOW THEREFORE, in consideration of the covenants set forth
herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged and intending to be legally
bound, the parties hereby agree as follows:
1. Subject to the conditions herein SWI agrees to grant IBN a
limited exclusive license for the uses of the subject technology
solely for video/audio streaming over the internet of TV type
programming and content on multiple branded broadcast networks,
specifically entertainment content and programming, news content and
programming, sports content and programming and a non-exclusive use
for documentary content and programming. Notwithstanding the
foregoing, use of the subject technology for amateur sports
programming at the high school level or lower is granted on a non-
exclusive basis. SWI also agrees to grant IBN a non-exclusive license
for use of the subject technology for video/audio compression and
downloading in developing and operating IBN wholly owned broadcast
networks and a non-exclusive license for streaming commercial
advertising over the Internet on IBN wholly owned and operated
networks. Expressly excluded from the licenses and rights conveyed
under this agreement is use of the technology in conjunction with any
programming or content considered to be rated X, XXX or pornographic.
<PAGE> 61
The limited exclusive license granted herein shall convert to a
limited non-exclusive license after four years. Said four year
period to commence with the date identified in section 6 following
herein.
2. All rights and licenses conveyed under this agreement are
for use of the subject technology with programming and content
delivered solely through IBN owned and operated networks. IBN shall
not use the subject technology in any way to perform any services for
other broadcast networks, web sites, distribution channels or any
third party whatsoever.
3. SWI agrees that during the four-year period commencing on
the date SWI is ready, willing and able to deliver the subject
technology to IBN, it shall not execute or convey in any manner any
license agreements with third parties for the use of the subject
technology for the purpose off streaming TV type programming,
specifically entertainment content and programming, sports content
and programming and news content and programming over the internet
without the express written permission of IBN. Furthermore, during
the aforementioned four-year period, SWI shall not perform streaming
services for any third parties for TV type programming in the areas
of entertainment, sports and news without the express written
permission of IBN. If such permission is granted by either party,
all revenues derived therefrom will be split 75% to SWI and 25% to
IBN for the term of the agreement(s) and any and all renewals of the
agreement(s).
4. SWI may license subject technology for any other purposes
not granted exclusively to IBN in sections 1 and 3 without
restriction and without permission including but not limited to
distribution, downloading and/or streaming of commercial advertising,
feature length motion pictures, MOW's (feature length movies produced
for television), documentary programming, musical performances, stage
performances, educational content streamed directly to educational
institutions and organizations, corporate training and informational
content and programming, amateur sports programming and content at
the high school level or less and for any other purposes not
considered to be entertainment programming and content, sports
programming and content and or news programming and content, that SWI
deems appropriate.
5. Furthermore, SWI retains the right to utilize subject
technology for streaming, downloading and distribution of any content
and programming whatsoever through SWI's wholly owned and operated
Internet broadcast networks should SWI choose to develop and operate
such networks in the future. SWI also retains the right to stream
commercial advertising from SWI wholly owned and operated severs to
any web sites, broadcast networks or distribution channels it deems
appropriate and to license the subject technology to third parties
for streaming commercial advertising without permission from IBN or
revenue split with IBN.
<PAGE> 62
6. SWI will notify IBN in writing of the commencement date of
the four-year period of exclusivity pursuant to section 3. When SWI
is ready, able and willing to deliver the technology to IBN, the four
year period will begin whether or not IBN is prepared to take
delivery of the technology.
7. On the first day following the end of the said four year
period provided for in section 3, SWI may license said technology
without restriction or permission from IBN and without any payments
to IBN.
8. IBN may sell all or part of one or more of the branded
networks developed by IBN incorporating the subject technology and
the licenses granted in section 1 of this agreement only with the
express written permission of SWI. IBN may sell its names, branded
networks and trademarks without SWI permission, but it may not sell
or sub-license its rights to, or the use of, the subject technology
or licenses granted herein without the express written permission of
SWI.
9. As a condition of this agreement, IBN will issue shares of
its common stock to SWI equal to 15% of the total stock outstanding
computed on a fully-diluted basis for a period of 5 years from the
"commencement date" as outlined in paragraph 6 above. At such times
as the number of shares of outstanding Common Stock of IBN increases,
computed on a fully diluted basis, to include stock options, warrants
and other instruments which could be converted into common stock or
any other class of stock, then IBN will issue additional shares of
Common Stock to SWI, at no cost to SWI, so that the shares of SWI's
percentage will be equal to 15% of the outstanding shares computed on
a fully-diluted basis, at that time. If SWI sells any of its shares
during the five year period, the dilution percentage shall be reduced
by a calculation as follows (take number of shares sold divided by
the number of shares held by SWI at the time of sale and reduce the
15% by the same percentage to obtain the new anti-dilution
percentage). Should there be more than one sale, this procedure
should be followed for each sale.
IBN shall not assign, transfer, or pledge this Agreement, in any
manner without the prior written consent of SWI, except as part of a
merger, reorganization or acquisition of all or substantially all of
the assets or stock of the assignor, and upon the written agreement
of the assignee to assume all of the obligations of the assignor.
This agreement will not be effective until SWI has received the
IBN stock herein identified as consideration. SWI is not obligated
to convey the subject technology unless IBN is a corporation
lawfully incorporated under the laws of a State of the United States.
This agreement, and not the completion of any technology
transfer, is full and complete satisfaction for all claims that Ryan
Corley, as an individual has or may have for his efforts in helping
SWI procure the subject technology.
<PAGE> 63
This agreement may be executed in one or more counterparts, all
of which, together, shall constitute one and the same instrument. The
laws of the State of Oklahoma shall govern this Agreement
/s/ Ryan Corley_________________ /s/ W.H. Walker, Jr.,President
Ryan Corley, Individual W. H. Walker, Jr, President
Southern Wireless, Inc.
/s/ Ryan Corley ____________
Ryan Corley, Nominee for IBN
<PAGE> 66
EXHIBIT 10.2
LICENSE
THIS DEVELOPMENT AND LICENSE AGREEMENT ("Agreement') is made and
entered into this 17th day of March 2000 by and between Iterated
Systems, Inc. ("ISI") a corporation formed and existing under the laws
of the State of Georgia, and Southern Wireless, Inc.("SWI"), a
corporation formed and existing under the laws of the State of
Oklahoma.
WHEREAS, SWI desires to license from ISI certain ISI technology;
WHEREAS, ISI desires to license certain of its technology to SWI;
NOW THEREFORE, in consideration of the covenants set forth herein
and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged and intending to be legally bound, the
parties hereby agree as follows:
Section 1. Definitions
1.1 ACT. The ACT is the Securities Act of 1933, as amended
1.2 ClearVideo Source Code. ClearVideo Source Code is the human
readable code that compiles to the personal computer software described
in Exhibit B as delivered by ISI to SWI under its Paragraph 4.1
obligation. The ClearVldeo Source Code includes source code for both
encoder and decoders, which source code can be compiled into run-time
versions.
1.3 ClearVideo Source Code Encoder. ClearVideo Source Code Encoder
is that portion of the ClearVideo Source e which, when compiled takes
digital image data as Input and processes such input data to output
compressed data.
1.4 Common Stock. Common Stock means the common stock of SWI, and
any and all shares, interests, participations or equivalent ownership.
interests of SWI that has the right (whether or not subject to any
prior rights of any other class or series of stock) to participate in
any distribution of the assets or earnings of SWI without effective or
practical limit as to share amount.
1.5 Confidential Information. As used in this Agreement, the term
"Confidential Information shall mean any Technical Information, trade
secrets or other information disclosed by either party which is in
written, graphic, machine readable or other tangible form and is
identified as "Confidential,"Proprietary" or In some other manner to
indicate its confidential nature. Confidential Information may include
oral information disclosed by either party. ClearVideo Source Code and
disclosures made in the course of ISI's obligations herein shall be
deemed Confidential Information of ISI.
<PAGE> 67
1.6 Confidentiality and Non-Circumvention Agreement The
Confidentiality and Non-Circumvention Agreement is the agreement
between the parties attached as Exhibit C to this Agreement.
1.7 End User. End User is defined in Section 2.1.3.
1.8 End User License. End User License is defined in Section
4.2.2.
1.9 Initial Payment. The Initial Payment shall consist of both the
payments described In Paragraph 3.1 (a) and 3. 1 (b).
1.10 Public Offering. Public Offering ("PO") means the sale and
issuance by SWI of shares of Common Stock pursuant to an effective
registration statement filed under the ACT with the Securities and
Exchange Commission.
1.11 Intellectual Property Infringement. An Intellectual Property
Infringement is an infringement of one or more of: (a) United States
patents; (b) patents issued to any person by a European or Japanese
patent office; (c) copyrights; (d) trademarks, service marks, or trade
names; and/or (e) trade secrets.
1.12 ISI Technology. ISI Technology means any and all copyrighted
material, patents, technology or Confidential Information of ISI
licensed by ISI to SWI hereunder.
1.13 Marketing Material. Marketing Material shall consist only of
(1) the name "ClearVideo"; (2) the manual and packaging of ClearVideo,
Version 1.2, but excluding: (a) all references to Iterated Systems Inc.
(in any form including but not limited to Iterated Systems and
Iterated), (b) Iterated Systems' fem logo and (c) general corporate
information of Iterated Systems including but limited to addresses,
phone numbers and other contact information; (3) the ClearVideo logo(s)
as contained in the manual and packaging of ClearVideo Version 1.2; (4)
any ISI trademark rights in the name ClearVideo, or any ISI service
mark rights in the name ClearVideo, to the extent they exist; and (5)
the web addresses: www.clearvideo.com and www.clearvideo.com.uk.
1.14 SWI-Enhancements. SWI-Enhancements are those modifications,
enhancements and derivatives of the ClearVideo Source Code made by SWI
under the licenses granted herein.
1.15 Technical Material. Technical Material is drawings, diagrams,
oral presentations and textual material, which may be provided on any
media, which describes the functionality and use of ISI Technology.
1.16 ClearVideo Decoder. ClearVideo Decoder Is the program which
results from compiling the ClearVideo Source Code which takes certain
compressed data as its input and outputs decompressed data.
<PAGE> 68
Section 2. License
2.1 License Grant. Subject to the terms herein, including without
limitation Section 3 of this Agreement, ISI grants the following
licenses to SWI which are exclusive solely as expressly provided for in
Section 2.2 of this Agreement, and which are non-transferable except as
expressly provided for herein:
2.1.1 ISI grants to SWI a license to compile, display, use,
copy and modify ClearVideo Source Code to create SWI-Enhancements that
are derivatives of ClearVideo Source Code.
2.1.2 ISI grants to SWI a license to use the ClearVideo
Source Code, its run-time versions and the derivatives created In
Paragraph 2.1.1 to create and manufacture products and service.
2.1.3 ISI grants to SWI a license to use the products and
services created and manufactured under Paragraph 2.1.2 for the purpose
of distributing and sub-licensing the products and services created in
this Section 2.1.3 to end users ("End Users") pursuant to a valid End
User License Agreement, provided: (a) such products and services are in
compiled or other run-time form and (b) such products and services are
sub-licensed under the terms set forth herein.
2.1.4 ISI grants to SWI a license to sublicense the right
granted in Section 2.1.3 of this Agreement providing the sublicensee
agrees in writing to be bound by the terms of this Agreement. SWI
agrees that it will provide a copy of such written agreement to ISI
within tan (10) days of its execution.
2.1.5 ISI grants to SWI the right to sublicense the licenses
granted in subsections 2.1.1 and 2.1.2 above to any entity provided:
(a) SWI enters into a written marketing agreement for SWI products with
such entity which restricts the use of ClearVideo Source Code which it
receives from SWI hereunder only to use for support and maintenance of
such SWI products; or (b) SWI enters into a written research and
development agreement with such entity for developing new SWI owned
products or new products jointly owned by SWI; or (c) SWI owns fifty
percent (50%) or more of the voting securities of such entity. The
right granted in this Section 2.14 is limited to only those entities
which agree in writing to be bound by the terms of this Agreement. SWI
agrees that it will provide a copy of such written agreement to ISI
within ten (10) days of its execution.
2.2 Exclusivity
2.2.1 Except as provided for In Section 2.2.3 below, ISI
agrees that during the term of this Agreement it shall not execute or
convey in any manner any license agreements with third parties for the
use of ClearVideo Source Code Encoder, or its run-time forms.
<PAGE> 69
2.2.2 ISI agrees that during the term of this Agreement (a)
It will not use the name "ClearVideo" as the name of a product that it
licenses and (b) it will not grant or convey in any manner any licenses
to any third parties to use the name "ClearVideo" as the name of such
third party's product.
2.2.3 Notwithstanding Section 2.2.1 of this Agreement, ISI
may use and modify the ClearVideo Source Code Encoder, including Its
run-time versions: (a) to integrate into other ISI products and then
license and distribute the other such ISI products; or (b) to license
and distribute materially and substantially modified ClearVideo Source
Code Encoder, Including its run time versions.
2.2.4 Any licenses sold, issued or granted by ISI for the use
of ClearVideo Source Code Encoder or its run-time forms or the
Marketing Material that may exist at the execution of this agreement
are not subject to the exclusivity restrictions herein. Any licenses
for the ClearVideo Source Code Encoder which have not expired or been
terminated and a summary of their general terms and restrictions, are
listed on Exhibit D to this agreement.
2.3 Restrictions.
2.3.1 No Source Code Distribution. In addition to any other
restrictions contained herein, SWI agrees that any product distributed
or sublicensed under the licenses granted in this Section 2 shall not
contain or disclose any ClearVideo Source Code and shall not contain or
disclose any source code for SWI-Enhancements, except as expressly
provided for in Section 2.1.5. The license grant of this Section 2 does
not include either a license to sublicense or distribute ClearVideo
Source Code, or the source code of SWI-Enhancements except as expressly
provided for in Section 2.1.5.
2.3.2 Geography. The rights and licenses granted under
subparagraphs 2. 1.1 through 2. 1.5 above are for exploitation
throughout the world and via any satellite or other system serving
Earth, subject to the terms hereof and compliance by SWI with all
applicable export and legal regulations and laws relating to the export
of the Licensed Products. No less than thirty (30) days prior to
distribution outside of North America, the European Union, Australia,
or Japan, SWI will notify ISI, via certified mail, of its intention to
distribute in each given territory, and ISI will then have fifteen (15)
days after receipt of such notice in which to register any objection to
such distribution in writing to SWI, setting forth the specific basis
of such objection, which basis may only relate to the state of
intellectual property protection in the subject territory. If no
objection Is received in a timely fashion, then ISI will waive any such
objection. If an objection is timely registered, then SWI shall have
ten (10) days in which to provide its response to the objection,
ensuring that reasonable legal protections are available for the
intellectual property of the parties in such territory. ISI shall not
fall thereafter promptly to grant its consent to the distribution
without good reason or cause.
<PAGE> 70
2.3.3 Effectiveness of Licenses Upon Payment. The rights
and licenses granted under subparagraphs 2.1.1 through 2.1.5 shall only
become effective upon ISI's receipt of the Initial Payment as described
in Section 3.1,
2.3.4 No Transfer. The rights and licenses granted herein
are not transferable or assignable, except (a) as expressly provided
for in Section 10.14 of this Agreement, or (b) as agreed to in writing
by ISI.
2.4 License to Marketing Material. ISI grants SWI the exclusive
license to reproduce and use the Marketing Material under any
copyrights or trademarks that ISI may have in the Marketing Material.
2.5 Limitations. Notwithstanding anything else to the contrary in
this agreement, SWI has no right or license with respect to any ISI
intellectual property including, without limitation patents and
copyrights, not existing at the execution of this agreement.
2.6 Term of License. The licenses granted herein shall continue
until the termination of this Agreement pursuant to Section 9.
Notwithstanding anything in this Agreement to the contrary, no license
granted herein with respect to any copyright or patent with respect to
any such technology shall continue in effect beyond the period of time
that the legal rights of ISI, or ISI's successors or assigns, as the
case may be, remain valid under the respective copyright and/or patent.
To the extent a licensing right granted or payment obligation under
this Agreement provides for continuation beyond the period of time that
the legal rights of a designated licensor remain valid under a given
copyright or patent, the parties agree that such continued payment
obligation shall not include any payment obligation with respect to
such expired rights, but the license rights and payment obligations
shall continue to apply with respect to all remaining technical
intellectual property rights granted herein In accordance with the
terms hereof.
Section 3. Payments
3.1 Initial Payment. SWI agrees to deliver to ISI payment of
(a) One Hundred Thousand Dollars ($100,000) and
(b) Two Hundred Ninety Seven Thousand Five Hundred
(297,500) shams of SWI's common stock which SWI hereby represents
and warrants as comprising at least one and one quarter percent
(1.25%) of the number of outstanding shams of SWI, computed on a
fully diluted basis. Said shares will be issued pursuant to Rule
144 of the Act.
3.2 Initial Payment Schedule. The Initial Payment is due on or
before March 31, 2000.
3.3 Additional Payment. SWI agrees to deliver to ISI a payment of
One Hundred Fifty Thousand Dollars ($150,000), In addition to the
Initial Payment, payable on May 15, 2000.
<PAGE> 71
3.4 Non-Refundable Payment. All payments hereunder are
nonrefundable, non-assessable and fully earned when delivered to ISI
and not subject to any right of set-off.
3.5 Payment Method.
3.5.1 Share Payments. SWI shall take all such actions as are
required to transfer shares of SWI Common Stock pursuant to Section 3.1
(b) hereof to ISI on the corporate books of SWI and further remit SWI
share certificates for all such shares to ISI at its address contained
in Section 10.13 by means of certified mail.
3.5.2 Dollar Payments. SWI shall remit all dollar payments
due to ISI hereunder so that ISI receives such amount according to the
following Instructions or other instructions as may be provided by ISI:
Account Name: Iterated Systems, Inc.
Account Number: 3256546914
Bank Name: Bank of America
ABA Number 061000052
Special Instructions: Please Notify Susan Settle @ 404-264-
8000 upon receipt.
3.6 Taxes. All payments set forth in this Section are exclusive
of taxes. SWI shall be responsible for all taxes, levies and
assessments relating to the exercise of its rights, licenses and
obligations hereunder, including but not limited to, sales and use
taxes. Both ISI and SWI shall be governed in their actions in various
worldwide jurisdictions by the relevant tax laws In each such
jurisdiction, and no liability relating to the application of such tax
laws shall exist from one party hereto the other. Not withstanding the
forgoing, ISI is responsible for any United States or Georgia corporate
income taxes or tax liability related to the receipt of the $250,000
license fee set out herein.
3.7 Voting Rights. SWI represents and warrants that all shares
of Common Stock which ISI receives under this Agreement shall have
voting rights as favorable as any granted to any other shareholder of
SWI Common Stock.
3.8 Shares Fully Paid. SWI represents and warrants that all
shares of Common Stock which ISI receives under this Agreement shall be
duly authorized, validly issued in compliance with all applicable
securities laws, pursuant to Rule 144 of the Act, and shall be
outstanding, fully paid and non-assessable and not subject to
preemptive rights.
3.9 Piggy-back Registration Rights. If SWI does a PO, SWI shall
use its best efforts to file and have declared effective a registration
statement in compliance with the ACT which includes all shares of
Common Stock which ISI receives under this Agreement.
<PAGE> 72
3.10 Registration Rights. At the time of any SWI PO, despite
using its best efforts. Should SWI fail to file and have declared
effective a registration statement in compliance with the ACT which
includes all shares of Common Stock which ISI receives under this
Agreement, then SWI should use its best efforts to file and have
declared effective a registration in compliance with the ACT which
includes all shares of Common Stock which ISI receives under this
Agreement, if SWI should file a subsequent registration statement in
compliance with the ACT, which covers any shares Of SWI's Common Stock.
3.11 Anti-Dilution. The shares given by SWI to ISI under this
Agreement shall be subject to the following anti-dilution provision. At
such times as the number of outstanding shares of Common Stock of SWI,
computed on a fully-diluted basis, increases, then SWI shall Issue
additional shares of Common Stock to ISI, at no cost to ISI, so that
the total number of shares of SWI Common Stock which SWI grants to ISI
under this Agreement Is 1.25% of the then Increased number of
outstanding shares of Common Stock of SWI, computed on a fully-diluted
basis. This provision shall terminate after the last day of the first
sixty (60) day period during which: (i) the Common Stock of SWI is
traded on NASDAQ or American Stock Exchange or New York Stock Exchange
and (11) the Market Capitalization of SWI does not fall below fifty
million dollars ($50,000,000) and (iii) Two Hundred Ninety Seven
Thousand Five Hundred (297,500) shares of Common Stock which ISI
receives under this Agreement become free trading 144 stock or are
covered by a registration statement In compliance with the ACT and (1v)
the share price which shares of SWI are traded on NASDAQ, the American
Stock Exchange or the New York Stock exchange does not fall below
$2.10. This provision shall also terminate if ISI sells or disposes of
the shares of Common Stock which ISI receives under this Agreement. For
the purposes of this Agreement, the Market Capitalization of SWI during
a period is computed by multiplying (A) the smallest number of shares
of SWI outstanding during the period by (B) the lowest price at which
shares of SWI are traded on NASDAQ or American Stock Exchange or New
York Stock Exchange.
3.12 Cash Payment Allocation The Two hundred and fifty thousand
dollars ($250,000) cash payment of the Section 3 payment shall be
deemed a license fee for the use, as provided for herein, of the
ClearVideo Source Code. The remainder of the payments shall be deemed
as payment for the exclusivity as provided for in Section 2.2.
4. Obligations
4.1 ISI Obligations
4.1.1. Provision of Source Codes. ISI agrees to provide
ClearVideo Source Code to SWI upon ISI's receipt of the Initial Payment
of Section 3.1 as follows:
(a) SWI, at its own expense, shall provide a personal
computer meeting the technical specifications of Exhibit A to ISI,
<PAGE> 73
(b) ISI shall load the ClearVideo Source Code and
corresponding run-time encoders and decoders onto the personal
computer described in 4.1.1 (a)
(c) ISI and SWI shall agree upon a date to meet at ISI'S
location and on such date, ISI shall deliver to the SWI
representative(s) the personal computer installed with the
ClearVideo Source Code and demonstrate that the source codes can
be compiled into run-time versions.
(d) During the thirty (30) days following the date
agreed to in (c) above, ISI agrees to provide email support of
SWI.
(e) ISI shall provide, on removable media, a back-up
copy of the software loaded under subparagraph 4.1.1(b) above.
4.1.2 No Support Except as provided for in Section 4.1.1,
ISI shall have no obligations of support, maintenance or training to
SWI, unless in their sole discretion, ISI and SWI agree in writing to
the terms and conditions of such obligation. ISI shall have no
obligation to support SWI I s licensees.
4.2 SWI obligations.
4.2.1 Support. SWI agrees to use commercially reasonable
efforts to support all users of its products and services licensed
hereunder.
4.2.2 User License. With respect to any distribution to End
Users permitted to SWI under this Agreement, SWI agrees that such
distribution shall be accompanied by a license agreement ("End User
License") which: (a) prohibits further copying, disassembly,
decompilation or reverse engineering; (b) includes a statement
substantially similar to the following: "Product(s) provided under this
agreement contains portions of program code and other intellectual
property rights of third parties and each such third party shall be
entitled to enforce this license as an intended third party
beneficiary. ALL SUCH THIRD PARTIES (INCLUDING ITERATED SYSTEMS, INC.)
EXPRESSLY DISCLAIM ALL WARRANTIES AND CONDITIONS WITH RESPECT TO THE
USE OF SUCH PRODUCTS, INCLUDING (WITHOUT LIMITATION) ANY WARRANTIES OR
CONDITIONS OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. In
no event shall any such third party, including Iterated Systems, Inc.,
have any liability whether direct, indirect, Incidental, consequential,
statutory, exemplary or otherwise to Licensee arising in connection
with this License, the use of the Product(s), or the inability to use
Product(s); (c) includes a provision that terminates the End User
License and right to maintain possession of the product and program
code upon End User, a breach of any material provision of such
agreement; (d) reserves to licensors all rights, title and interest in
and to program code; and (e) restricts the transfer of the product only
to third parties who agree to be bound by the license terms set forth
in this Section 4.2.2 In addition, SWI agrees that the End User License
will not (I) impose any liabilities upon ISI, (Ii) grant any warranty
to the End User on behalf of ISI.
<PAGE> 74
4.2.3 Distribution to U.S. Government. When information or
products are provided to the United States federal governmental
authorities as users or customers, SWI will add a legend substantially
as follows:
The material Is confidential property of Iterated Systems,
Inc., as to which affixing the following notice is not an
admission of the intention to, or fact of, publication. COPYRIGHT
ITERATED SYSTEMS, INC. ALL RIGHTS RESERVED. PATENT(S) PENDING,
ITERATED SYSTEMS. U.S. GOVERNMENT RESTRICTED RIGHTS. The programs
within, accompanying documentation and/or other products are
provided with RESTRICTED RIGHTS. Use, duplication or disclosure by
the Government Is subject to restrictions as set forth in
subparagraph (c)(1) the Rights in Technical Data and Computer
Software clause at DFARS 252.227-7013 or subparagraph (c)(1) and
(2) of the Commercial Computer Software B Restricted Rights at 48
CFR 52.227-19 of FAR, or Clause 18-52.227-86(d) of NASA Supplement
to the FAR, as applicable. Contractor/manufacturer is Iterated
Systems, Inc. 3525 Piedmont Road, Seven Piedmont Center, Suite
600, Atlanta, Georgia, 30305."
4.2.4 Review of Records. SWI shall maintain accurate records
regarding use, licensing and distribution permitted under this
Agreement. ISI shall have the right, upon reasonable notice, to engage
a certified public accountant ("CPA") to review such records, and
records of SWI's Common Stock, during SWI's normal business hours,
providing however that such reviews shall be separated by at least six
months. Such CPA shall agree in writing to maintain the confidentiality
of SWI records according to the terms of Section 5.1 and 5.2.
4.2.5 Export Compliance. SWI acknowledges and understands
that ClearVIdeo Source Code contains technical data and is therefore
subject to United States export control regulations and regulations of
countries into which any products may be imported ("Export/Import
Regulations"). SWI shall comply with all such Export/import Regulations
and obtain at its expense any and all licenses, permits and regulatory
approvals required by any and all governmental authorities and agencies
having jurisdiction over export, re export and import of technical
data. To the extent permitted by applicable law, SWI will defend,
indemnify, and hold ISI and its officers and directors harmless from
and against any and all damages and expenses, including legal and
professional fees, Incurred directly or indirectly as a consequence of
any failure of SWI to comply with any such Export/Import Regulations.
This obligation will survive termination of this Agreement.
4.3 Joint Obligations.
4.3.1 ISI and SW I will promptly notify the other party
hereto of any and all known infringements or misappropriations or known
attempted infringement or misappropriation of any ISI Technology
licensed hereunder.
<PAGE> 75
4.3.2 ISI reserves the right to Initiate legal action
against any party allegedly committing infringement or misappropriation
of any ISI Technology. At the request and cost of ISI, SWI shall
provide reasonable assistance to ISI in connection therewith.
4.3.3 SWI reserves the right to pursue and initiate legal
action for infringements or misappropriation of ClearVideo If ISI
refuses or fails to proceed. In such a case and at the request and cost
of SWI, ISI will provide assistance at reasonable costs to SWI in
connection therewith.
Section 5. Confidentiality
5.1 Terms of Confidentiality. ISI and SWI agree to treat as
confidential all Confidential Information of the other party, not to
disclose or use such Confidential Information except as expressly
permitted in this Agreement, and to ensure that only those employees
having a need to know such Confidential Information shall be privy to
such Confidential Information. All such employees shall be required in
writing to abide by the obligations of this Section 5. Unless autho6zed
in writing, each party shall not disclose the other party, s
Confidential Information to any third party. Each party shall promptly
notify the other of any actual or suspected misuse or unauthorized
disclosure of Confidential Information. With regard to Confidential
Information deemed a trade secret under applicable law, the obligations
in this section shall continue for so long as such Information
constitutes a trade secret. With regard to all other Confidential
Information, the obligations in this section shall continue for the
term of this Agreement and for a period of five (5) years thereafter.
5.2 Exceptions to Confidentiality Restrictions. Notwithstanding
the above, Confidential Information shall not include any information
which 1he party receiving such information can demonstrate:
(i) was in the public domain at the time it was disclosed, or
has entered the public domain through no fault of the parties;
(ii) was known to both parties, without restriction, at the
time of disclosure, as demonstrated by files or documents in
existence at the time of disclosure;
(iii) was publicly disclosed with the prior written approval
of the party whose Confidential Information was disclosed;
(iv) was Independently developed without any use of the
Confidential Information, as demonstrated by evidence created at
the time of such independent development;
(v) became known to both parties, without restrictions, from
a source other than each party or any of its employees, without
breach of this Agreement and otherwise in a manner not in
violation of each party's rights;
<PAGE> 76
(vi) was disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided
however, that each party shall provide prompt, written, and
sufficient advance notice thereof to the other party to enable
such other party to seek a protective order or otherwise prevent
or restrict such disclosure; or
(vii) was disclosed to the extent required by law or
regulation, including applicable securities, corporate and other
laws or regulations of applicable jurisdictions.
5.3 Identification of Certain Confidential Information. SWI and
ISI agree that this Agreement is Confidential Information of both ISI
and SWI, except however, the parties agree to issue a press release
announcing this Agreement within six (6) months of signing this
Agreement. SWI and ISI agree riot to either (a) issue other press
releases mentioning the name of the other party without the written
permission of such other party, except as Is required under Section
5.2(vii); or (b) use the name of the other party in sales and marketing
literature. SWI and ISI further agree that (a) all confidential
information disclosed between the parties covered by their
Confidentiality and Non-Circumvention Agreement shall be considered as
Confidential Information under this Agreement and (b) the
Confidentiality and Non-Circumvention Agreement signed on January 22,
2000 is terminated as of the execution date of this Agreement.
Section 6. Warranty and Indemnification
6.1 Warranty Disclaimer. Except as otherwise expressly provided
herein: (a) SWI ACKNOWLEDGES AND AGREES THAT ANY CLEARVIDEO SOURCE CODE
AND ALL OTHER MATERIAL WHICH MAY BE PROVIDED BY ISI HEREUNDER ARE
PROVIDED "AS IS". (b) ISI MAKES NO EXPRESS OR IMPLIED WARRANTIES OR
CONDITIONS To SWI WITH RESPI~CT TO CLEARVIDEO SOURCE CODE ANY
DOCUMENTATION THERETO, AND ANY SERVICES PROVIDED HEREUNDER OR OTHERWISE
REGARDING THIS AGREEMENT, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTY OR CONDITION OF
MERCHANTABILITY AND THE IMPLIED WARRANTY OR CONDITION OF FITNESS FOR A
PARTICULAR PURPOSE. WITHOUT LIMITING THE FOREGOING, SWI AND ISI
ACKNOWLEDGE THAT ISI DOES NOT WARRANT THE QUALITY OR ACCURACY OF THE
DELIVERABLES.
6.2 Warranty.
(a) ISI makes no warranty that the ClearVideo Source
Code does not infringe upon the patents and copyrights of others,
except ISI warrants that as of the date hereof it has no present
knowledge of any such patent or copyright infringement or of any
claim of such patent or copyright infringement.
(b) ISI warrants that it will deliver ClearVideo Source
Code which (a) compiles to a run-time encoder and run-time decoder
as described in Exhibit B and (b) is the latest complete version
of ClearVideo.
<PAGE> 77
6.3 Indemnification. In addition to any other obligations of
indemnification set forth in this Agreement, SWI agrees to the
following obligations of indemnification:
6.3.1 Indemnification by SWI.
(a) If notified In writing within ten (10) calendar days
of any claim of infringement against ISI alleging that SWI's
manufacture, use, sale or other disposition of ClearVideo Source
Code SWI-Enhancements and products or services based thereon is an
Intellectual Property Infringement, and such allegation is based
on (1) designs, modifications or selections made by SWI, or (ii)
products or services created or manufactured by SWI or the use of
the ClearVideo, Source Code or SWI-Enhancements in combination
with other products or technology not furnished by ISI, or (ill)
use of the ClearVideo Source Code or SWI-Enhancements except as
authorized herein, then SWI will defend such action at its expense
and will pay, when due, the costs and damages awarded against ISI
in such action.
(b) SWI agrees to defend, indemnify and hold ISI
harmless from all liabilities, losses, costs and damages
(including reasonable attorneys fees) arising from any actions or
omissions on the part of SWI in distributing, marketing and
sublicensing of any products created from ClearVideo Source Code,
or SWI-Enhancements or any statements, claims or warranties made
by SWI in connection therewith.
6.3.2 Indemnification by ISI. If notified in writing within
ten (10) calendar days of any claim of infringement against SWI
alleging that exercise of its rights with respect to the ClearVideo
Source Code as set forth herein Is an Intellectual Property
Infringement, and such allegation Is based solely and directly on the
ClearVideo Source Code then ISI will defend, indemnify and hold SWI
harmless from liabilities, losses, costs and damages (including
reasonable attorney's fees) arising out of such action. Notwithstanding
the foregoing, ISI shall have no obligation under this Section 6.3.2
for any Infringement attributable to (a) designs, modifications or
selections made by SWI, or (b) products or services created or
manufactured by SWI or the use of the ClearVideo Source Code or SWI
Enhancements in combination with other products or technology not
furnished by ISI or (c) use of the Clear Video Source Code or
SWI-Enhancements except as authorized herein.
6.3.3 Procedure. Indemnification set forth herein is
contingent upon the party providing the Indemnification (the
"Indemnifying Party") having sole control of the defense of such
action, and all negotiations and agreements for its settlement or
compromise of any claim above. No settlement or compromise shall be
made by the Indemnifying Party without the prior consent of the party
to be indemnified (the "Indemnified Party"), which shall not be
unreasonably withheld or delayed. The Indemnified Party agrees to
cooperate with the Indemnifying Party in the defense of any such action
and the Indemnifying Party agrees to reimburse the Indemnified Party
<PAGE> 78
for any reasonable costs associated with such cooperation. The
Indemnified Party at its own expense shall be permitted to participate
in such defense, subject however to the control thereof by the
Indemnifying Party.
Section 7. Limitation of Liability
7.1 Limitation on SWI Damages. SWI further acknowledges and
agrees that in no event will ISI, its affiliates or any of their
respective officers, directors, employees, shareholders or
representatives be liable to SWI or any third party for any, special,
general, indirect, incidental, punitive or consequential damages, in
any way pertaining to this Agreement or the rights or obligations
created under this Agreement, even if ISI has been notified of the
possibility or likelihood of such damages occurring.
7.2 Limitation on ISI Damages. ISI acknowledges and agrees that
in no event will SWI, its affiliates or any of their respective
officers, directors, employees, shareholders or representatives be
liable to ISI or any third party for any special, general, indirect,
Incidental, punitive or consequential damages in any way pertaining to
this Agreement or the rights and obligations created under this
Agreement, even if SWI has been notified of the possibility or
likelihood of such damages occurring.
7.3 Liability Cap. In no event shall ISI or SWI be liable to the
other under this Agreement for any sums in excess of those cash sums
paid by SWI to ISI under this Agreement (the "Liability Cap"). Each
party shall promptly notify the other of the allegation by a third
party of liability on the part of such party under this Agreement. This
Liability Cap shall survive even if any of the remedies set forth in
this Agreement fall of their essential purpose. The limitations of
liability set forth in Section 7 shall not apply to any indemnification
amounts arising under Section 6.3 above or any amounts arising from a
breach of Section 2 or 5.
Section 8. Proprietary Rights
8.1 Reservation of Rights. SWI acknowledges and agrees that,
except for the licenses granted herein, ISI shall retain all right,
title and Interest in and to the ISI Technology including, but not
limited to the ClearVideo Source Code and portions thereof, including
but not limited to its worldwide patents, patent applications,
copyright, trademarks, trade secrets and other intellectual property
rights and Interests therein. This Agreement does not provide SWI with
title or ownership of the ClearVideo Source Code or Technical Material
but only a license to use the same in accordance with the provisions of
the Agreement. SWI agrees that, except for such license, it shall not
assert any right title or interest in or to the ClearVideo Source Code
or portions thereof. SWI will include and not remove any proprietary
and copyright notices and legends included by ISI in its products
licensed hereunder. This Agreement does not restrict ISI from
developing licensing or distributing its technology except as expressly
provided for in Paragraph 2.2. SWI agrees that it has no rights or
<PAGE> 79
licenses with respect to, and that ISI is under no restrictions with
respect to, ISI's technology other than ClearVideo Source Code
including but not limited to ISI's iv Source Code, modifications of iv
Source Code or run-time versions of iv Source Code, ISO's real-time low
bitrate codec (called ClearVideoLive) or its modifications or run-time
versions.
8.2 Equitable Remedies. The parties acknowledge that each
provision in this Agreement providing for the protection of copyrights,
Confidential Informational and other proprietary rights is material to
this Agreement. The parties acknowledge that any threatened or actual
breach of such rights shall constitute immediate, irreparable harm to
the non-breaching party for which monetary damages is an inadequate
remedy and for which equitable remedies may be awarded by a court of
competent jurisdiction without requiring the non-breaching party to
post any bond.
Section 9 Term and Termination
9.1 Term. The term of this Agreement will commence once the
Agreement has been signed by an authorized representative of each party
and shall continue until terminated by mutual agreement of the parties
or as set forth herein.
9.2 Termination.
(a) Either party may terminate this Agreement if the
other party commits a material breach, other than as regards the
payments of Section 3 of this A6reement which is not cured by the
breaching party within sixty (60) calendar days of the receipt of
written notice of such breach.
(b) Any dispute, except as regards the payments of
Section 3 of this Agreement, among the parties as to whether a
material breach has been committed or whether a material breach
has been cured, shall be settled according to the provisions of
Section 10.7, prior to the effectiveness of any termination under
(a) above.
Notwithstanding the foregoing, ISI may terminate this Agreement by
written notice without further opportunity to cure, if ISI does not
receive either the One hundred thousand dollar ($100,000) payment of
Section 3.1 on or before March 31, 2000, or the Section 3.1 (b) payment
within (10) days of the date indicated in Section 3, or the One hundred
and fifty thousand dollar ($150,000) payment of Section 3.3 on or
before May 15, 2000.
9.3 Effect of Termination. Upon termination for any reason other
than ISI's breach, (a) all licenses will be terminated and cease
immediately; (b) SWI shall promptly return to ISI the ClearVideo Source
Code and all copies thereof in its possession, (c) ISI shall have no
obligations under either Section 2 or Section 4 of this Agreement, and
(d) each party shall promptly return to the other such party's
Confidential Information and copies thereof.
<PAGE> 80
9.4 Survival, Upon termination of this Agreement, Sections 2.3,
3, 5, 6.1, 6.3, 7, 8. 9.3, 9.4 and 10 shall survive in full force and
effect.
Section 10. General Terms
10.1 Independent Principals. ISI and SWI are independent
principals in all relationships and actions under and contemplated by
this Agreement. This Agreement shall not be construed to create any
employment relationship, partnership, joint venture or agency
relationship between the parties or to authorize any party to enter
into any commitment or agreement binding on the other party. Each party
is responsible for its own costs in exercising its rights and
obligations under this Agreement.
10.2 No Waiver. Any failure by either party to detect or protest
a breach of any term or condition of this Agreement shall not
constitute a waiver or impairment of any such term or condition, or the
right of such party at any time to seek such remedies as may be
available for any breach or breaches of such term or condition. A
waiver, including a waiver of this provision, will be effective only if
given in writing signed by an authorized officer of such party.
10.3 Severability. If any provision of this Agreement is held
invalid, Illegal or unenforceable by a tribunal or court of competent
jurisdiction, such Invalidity shall not affect the enforceability of
any other provisions contained In this Agreement, and the remaining
portions of this Agreement shall be valid and enforceable to the
fullest extent permitted by applicable law.
10.4 Force Majeure. Except for any payment and delivery
obligations hereunder, no party shall be In default of any obligation
hereunder if such failure Is due to causes beyond such party's
reasonable control; and such party acts diligently in attempting to
remedy the cause; and such party promptly gives written notice to the
other party of the event of force majeure. In any such event, such
party shall be given an additional time to perform equal to the delay
caused directly by such event.
10.5 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, proposals, representations,
discussions, and under-standings, whether verbal or written, including
the Confidentiality and NonCircumvention Agreement which is hereby
terminated in all respects. This Agreement may be amended only by a
subsequent writing signed by both parties.
10.6 Non-Solicitation. Each party acknowledges and agrees to the
other that during the term of this7kgreement and for one (1) year
thereafter, it will not solicit any employee of the other party, or any
person who has been an employee within the prior applicable six month
period, for the purposes of employment, independent contractor duties
or other work relationship. The forgoing restrictions may be waived in
writing.
<PAGE> 81
10.7 Dispute Resolution Any dispute arising out of or relating to
this Agreement which cannot be amicably resolved by the parties, shall
be settled before three (3) arbitrators, under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce,
the said arbitrators to be appointed by said rules. Judgment upon the
award rendered by the arbitrators may be entered into any court having
jurisdiction thereof. A dispute shall be deemed to have arisen when
either party notifies the other party in writing at the addresses set
forth in Paragraph 10. 13 of such dispute.
10.8 Governing Law. This Agreement shall be governed by, construed
and interpreted In accordance with the laws of the State of Georgia,
without regard to the principles of conflicts of law thereof.
10.9 Dollars. All amounts referencing Dollars shall mean United
States currency.
10.10 Days. All references to days and Days are calendar days
unless specified otherwise.
10.11 Headings. Headings used in this Agreement are for
convenience only and shall not be considered in construing or
interpreting this Agreement.
10.12 Binding Effect. This Agreement and the transactions
provided for herein shall be binding upon and inure to the benefit of
the parties, their legal representatives, and their permitted
transferees, successors and assigns.
10.13 Notices. All communications required or permitted under
this Agreement shall be In writing and either mailed first class,
postage pre-paid, sent by reputable overnight delivery services (with
request for written confirmation of receipt), hand-delivered to the
parties at the addresses shown below, or at such other addresses as one
party may notify the other of from time to time:
If to ISI: President and CEO
John Bacon
Iterated Systems, Inc.
3525 Piedmont Road
Building Seven, Suite 600
Atlanta, Georgia 30305
If to SWI: Ryan Corley, President
Southern Wireless, Inc.
The Penthouse
403 South Cheyenne Avenue
Tulsa, Oklahoma 74104
<PAGE> 82
10.14 No Assignment. Neither party shall assign, transfer or
pledge this Agreement, in any manner without the prior written consent
of the other party, which consent shall not be unreasonably withheld,
except as part of a merger, reorganization or acquisition of all or
substantially all of the assets or stock of the assignor, and upon the
written agreement of the assignee to assume all the obligations of the
assignor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives.
SOUTHERN WIRELESS, INC. ITERATED SYSTEMS, INC.
BY: /s/ Ryan Corley BY: /s/ Alan Sloan
Printed Name Ryan Corley Printed Name Alan Sloan
Position: President Position: Executive Vice President
Date: 3-17-2000 Date: 3-17-2000
Address: The Penthouse Address: 3525 Piedmont Road
403 South Cheyenne Building Seven, Ste 600
Tulsa, OK 74104 Atlanta, GA 30305
EXHIBIT LIST
Exhibit A PC Specifications
A personal computer with a Pentium 111733 MHz processors with
Microsoft NT 4.0 Service Pack 4 installed and with the following
hardware installed:
a. 40X CD ROM/DVD
b. 32 MB 3D Graphics Card
c. 512 MB RAM
d. 20 GIG LVD SCS13 RAIDO Hard Drive
e. Adobe Premier 5.1
Exhibit B ClearVideo Description
ClearVideo is computer software that runs on Pentium processors
inside personal computers which have compatible configurations
including compatible memory, graphics and input/output resources.
ClearVideo includes both encoder and decoder functionality. The encoder
is not a stand-alone program but requires a compatible video editor
such as Adobe Premier 4.0. The ClearVideo encoder encodes video only,
but a compatible video editor and personal computer environment will
provide the ability to encode audio as well. The ClearVideo Source Code
Will compile to version 1.2 provided to SWI for evaluation prior to the
execution of this Agreement
<PAGE> 83
Exhibit C Confidentiality and Non-Circumvention Agreement
CONFIDENTIALITY AND NON-CIRCUMVENTION AGREEMENT
THIS AGREEMENT, entered into on the date of the signature of the
parties hereto as entered below, is by and between Iterated Systems,
Inc., ("ISI") a Georgia Corporation and two individuals, ("RCTO"), one
which is Ryan Corley residing at P.O. Box 140021, Austin, Texas 78714
and the other of which is Timothy Hargreaves-Oliver residing at 1612
So. Boston Avenue, Townhome 1, Tulsa, Oklahoma 74119.
IT IS THE INTENTION OF THIS AGREEMENT TO PROVIDE ALL PARTIES
HERETO EQUAL PROTECTION OF CONFIDENTIAL MATERIALS AND BUSINESS CONTACTS
THAT MAY BE DISCLOSED DURING EVALUATION OF POTENTIAL BUSINESS
OPPORTUNITIES.
1. The parties hereto may furnish and disclose confidential
nonpublic information and business contacts to each other to provide
assistance in evaluating and financing possible business arrangement
involving RCTO and ISI. As a condition to each party's furnishing such
information to the other party hereto, the party, furnishing such
information shall be hereinafter referre8 to, with respect to such
information, as the "Disclosing Party" and the party receiving such
information shall be hereinafter referred to, with respect to such
information, as the "Receiving Party". Each party agrees, as set forth
below, to treat any and all information (herein collectively referred
to as the "Evaluation Material") so provided (whether prepared by the
Disclosing Party or its agents or advisors or otherwise) which is
furnished to the Receiving Party by the Disclosing Party In accordance
with the provisions of this Agreement and to take or abstain from
taking certain other actions herein set forth.
2. The term "Evaluation Material" includes all information,
whatever its source, provided by Disclosing Party to Receiving Party
Including but not limited to, computer software and related
documentation in all forms and on whatever media, all Information about
the Disclosing party's projects, present and ongoing research,
developments, processes, technologies, and inventions, as well as its
methods of engineering, financing, manufacturing, producing,
purchasing, marketing and selling of the Disclosing Party's products,
processes, services, and technologies; and shall include all business
contacts revealed.
The term "Evaluation Material" also Includes all analyses,
compilations, studies and other materials prepared by the Receiving
Party or its directors, officers, employees, agents. advisors and
representatives of advisors (collectively, the "Representatives")
containing, based on or reflecting any Information furnished by the
Disclosing Party or any of Its Representatives.
<PAG> 84
Not withstanding the definition above, the term "Evaluation
Material" does not include information which (I) is already in the
possession of the Receiving Party, provided that such Information is
not known by such Receiving Party to be subject to another
confidentiality agreement with or other obligation of secrecy to the
Disclosing Party or third party, or (H) is or becomes generally
available to the public other than as a result of a disclosure by the
Receiving Party or any of its Representatives in violation of this
Agreement, or (111) becomes available to the Receiving Party from a
source other than the Disclosing Party or Its Representatives, provided
that such source is not known by such Receiving Party to be in breach
of a confidentiality agreement with or other obligation of secrecy to
the Disclosing Party or a third party.
3. The parties hereby agree that the Evaluation Material will be
used solely for the purpose of evaluating a possible business
arrangement involving RCTO and ISI and that such information will be
kept confidential by such Receiving Party; provided, however, that (1)
any such information may be disclosed to officers, directors, employees
and other representatives of Receiving Party who have an existing legal
obligation to maintain the confidentiality of Disclosing Party's
Evaluation material and where such obligation Is written or is implied
by operation of law, and (11) any such information may be disclosed to
third parties who signed a written agreement materially the same as
this agreement and such written agreement Is received by Disclosing
Party prior to such disclosures, (III) any disclosure of such
information may be made to which the Disclosing Party consents in
writing and (Iv) any disclosures of such Information may be made as
otherwise required by law in the written opinion of counsel to the
Receiving Party (including, without limitation, pursuant to any federal
or state securities laws or pursuant to any legal, regulatory or
legislative proceedings) or as contemplated by the following sentence
(the "Legal Exception"), In the event that the Receiving Party or
anyone to whom such Receiving Party supplies the Evaluation Material
receives a request to disclose all or any part of the information
contained in the Evaluation Materials under the terms of a subpoena,
order, civil investigative demand or similar process or other oral or
written request issued by a court of competent jurisdiction or by a
federal, state or local, foreign or domestic, governmental or
regulatory body or agency, such Receiving Party agrees to the extent
practicable to: (A) promptly notify the Disclosing Party of the
existence, terms and circumstances surrounding such request; (B)
consult with the Disclosing Party on the advisability of taking legally
available steps to resist or narrow such request; and, (C) only
disclose such information after complying with clauses (A) and (B) and
exercising reasonable effort, if so requested by the Disclosing Party
and at the Disclosing Party's sole expense, to obtain, to the extent
practical, an order or other reliable assurance that confidential
treatment will be accorded to such portion o( any disclosed information
which the Disclosing Party so designates. The Receiving Party shall be
responsible for ensuring that all persons to whom the Evaluation
Material is disclosed under this Agreement shall keep such information
confidential and shall not disclose or divulge the same to any
unauthorized person.
<PAGE> 85
4. In consideration of the disclosure referred to In Paragraph 1
hereof, the Receiving Party agrees that the Evaluation Material shall
be kept strictly confidential for a period of ten (10) years from the
date of signature of this Agreement and shall not be sold, traded,
published, used or otherwise disclosed to anyone In any manner
whatsoever, including by means of photocopy or reproduction, without
the Disclosing Party's written consent, except as provided in paragraph
5 below.
5. The Receiving Party hereby acknowledges that it Is aware, and
that it will advise its Representatives who are informed as to the
matters which are subject to this Agreement, that the United States and
certain foreign securities laws prohibit any person who has received
from an issuer material, nonpublic Information concerning the matters
which are the subject of this Agreement from purchasing or selling
securities of such issuer or from communicating such information to any
other person under circumstances In which it is reasonably foreseeable
that such person is likely to purchase or sell such securities.
6. This Agreement and as well as any fact that negotiations are
taking place under this Agreement shall be treated as Evaluation
Material of both parties under this Agreement. Notwithstanding this
Agreement, each party shall be allowed to disclose with any that they
are negotiating with an unnamed third party regarding the exclusive use
of technology, Including possible limitations of such use, provided
such third party is bound to maintain the confidentiality of such
disclosure by a written confidentiality agreement.
7. For a two-year period commencing on the date hereof each of
RCTO and ISI shall not solicit to employ any person who is, at the time
of such solicitation, an employee of the other or any subsidiaries of
the other.
8. The Evaluation Material shall remain the property of the
Disclosing Party and the Receiving Party agrees to promptly redeliver
to the Disclosing Party upon request all written or otherwise tangible
Evaluation Material provided to it by the Disclosing Party or its
Representatives and will not retain any copies, extracts or other
reproductions in whole or In part of such written or otherwise tangible
material. All other Evaluation Material and documents, memoranda,
notes, computer discs or files or tapes, other writings and otherwise
tangible materials whatsoever prepared by the Receiving Party or its
Representatives based upon the information in the Evaluation Material
which were not provided to the Receiving Party or Its Representatives
shall be destroyed, and such destruction shall be certified in writing
to the Disclosing Party by an authorized officer supervising such
destruction.
9. In the event the parties hereto elect to participate in a
business arrangement, then this Agreement shall be replaced with such
terms and conditions as are contained in the written agreement
establishing such arrangement,
<PAGE> 86
10. The Disclosing Party hereby represents and warrants that it
has the right and authority to disclose the Evaluation Material to the
Receiving Party. The Disclosing Party, however, makes no
representations or warranties, expressed or implied, as to the quality,
accuracy, and completeness of the Evaluation Material disclosed
hereunder, and the Receiving Party expressly acknowledges the inherent
risk in development of new technologies. The Disclosing Party, its
Affiliated Companies, their officers, directors and employees shall
have no liability whatsoever with respect to the use or reliance upon
the Evaluation Material by the Receiving Party or by any further
persons or parties referred to in Paragraph 5 hereof.
11. The Receiving Party believes it is free to enter into this
Agreement and perform in accordance therewith. If, however, the
Receiving Party finds, upon and as a result of receipt of Evaluation
Material from the Disclosing Party, that a conflict appears likely to
occur because of Receiving Party's previous and continuing obligations
or commitments to other parties, the Receiving Party will promptly so
advise the Disclosing Party in writing and, unless otherwise then
agreed by the parties, will return to the Disclosing Party all
documents and other materials containing Evaluation Material without
copying or summarizing them in any way and immediately cease proceeding
with the evaluation contemplated by this Agreement.
12. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Oklahoma, without regard to
the conflict of laws principles thereof. Venue shall reside in the City
of Tulsa, County of Tulsa, State of Oklahoma, United States of America.
Any dispute arising out of or relating to this Agreement, including any
question regarding its existence, validity or termination, which cannot
be amicably resolved by the Parties, shall be settled before three (3)
arbitrators, under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce, the said arbitrators to be appointed
in accordance with said Rules. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. A
dispute shall be deemed to have arisen when either Party notifies the
other Party in writing at the address as first set forth herein to that
effect.
13. It Is further understood and agreed that the execution of this
Agreement creates only the relationship recited herein and convoys no
right to use any of the Evaluation Material disclosed for any purpose
whatsoever beyond the contemplated evaluation without the express
written authorization of the Disclosing Party. Termination of this
Agreement shall not in itself operate to terminate obligations of the
parties arising under the Agreement. Nothing contained herein is
intended to confer upon the Receiving Party any right whatsoever to the
Disclosing Party's technologies.
14. Each party hereto acknowledges and agrees that money damages
would not be a sufficient remedy for any breach of this Agreement. RCTO
and ISI, as the case may be, shall be entitled to equitable relief
Including, without limitation, injunction, and specific performance, as
a remedy for any breach and that the party hereto which is in breach
<PAGE> 87
hereby shall not oppose the granting of such relief. Such remedy shall
not be deemed to be the exclusive relief for a breach of this
Agreement, but shall be in addition to all other remedies available to
a party hereto for ail damages, costs and expenses (including
reasonable attorneys' fees), Incurred by it in this regard.
15. Each party hereto agrees that unless and until a definite
agreement with respect to any transaction referred to herein has been
executed and delivered, neither it nor the other party hereto will be
under any legal obligation of any kind whatsoever with respect to such
transaction by virtue of this or any written or oral expression with
respect to such a transaction by any of its Representatives, except, in
the case of this Agreement, for the matters specifically agreed to
herein.
16. No amendments, changes or modifications of this Agreement
shall be valid except if the same are in writing and signed by a duly
authorized representative of each of the parties hereto.
17. Each party hereto acknowledges and agrees that no failure or
delay by the other party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any right, power or privilege hereunder.
18. This Agreement shall be binding upon the respective successors
and assigns of the parties hereto and shall inure to the benefit of,
and be enforceable by, the respective successors and assigns of the
parties hereto. In addition, this Agreement shall Inure to the benefit
of, and be enforceable by, each of the respective financial advisors of
RCTO and ISI as to any portion of the Evaluation Material prepared by
each such financial advisor.
19. Regarding business contacts disclosed by Disclosing Party to
Receiving Party as Evaluation Material herein, Receiving Party agrees
that, for a period of one (I)-year following the execution of this
Agreement, It and its employees will not enter Into any business
relationship regarding ISI's ViO and ClearVideo computer software with
such business contact unless (a) Receiving Party has known such
business contact prior to such disclosure or (b) mutually agreeable
terms are negotiated, described In writing and signed by all parties
hereto, These terms may include, but are not limited to cash
compensation, royalty interests, equity shares, expenses or other
compensatory arrangements.
20. Any notice, request, demand, or other communication required
or permitted to be made under this Agreement shad be in writing and
shall be delivered personally, sent by courier, sent by registered or
certified mail or shall be sent by facsimile transmission. Any notice,
request demand, or other communication will be deemed to have been
given as of the date so delivered personally or sent by facsimile. Any
such notice shall be deemed given when so delivered personally, sent by
courier, sent by registered or certified mail or sent by facsimile
transmission (and confirmed to have been received) to the address or
<PAGE> 89
number set forth above each party's signature hereto (or to any other
address or number subsequently furnished In writing by any party to the
other party hereto, as the case may be, in accordance with this
paragraph):
21. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, the
remainder of the provisions of this Agreement shall remain in full
force and effect. The Parties hereto shall endeavor In good faith
negotiations to replace any Invalid, Illegal or unenforceable provision
with a valid, legal and enforceable provision, the effect of which
comes as close as possible to that of the invalid, illegal or
unenforceable provision.
22. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute the same Agreement.
24. This Agreement comprises the full and complete agreement of
the parties hereto with respect to the disclosure of the Evaluation
Material and supersedes and cancels all prior communication,
understandings and agreements between the parties hereto, whether
written or oral, expressed or implied.
25. This Agreement shall terminate ninety (90) days after its
execution unless the term is extended by written agreement of the
parties.
IN WITNESS WHEREOF, the duly authorized representatives of the
parties have caused this Agreement to be executed on the date the last
party has signed this Agreement below.
Timothy Hargreaves-Oliver Iterated Systems, Inc.
P. 0. Box 700514 3525 Piedmont Rd.,
Bldg. 7, Suite 600
Tulsa, Oklahoma 74170 Atlanta, Georgia, 30305
P 918-494-0004 P 404-264-0000
F 918-494-6663 F 404-264-8313
By: Ryan Corley Date By: Alan Sloan Date
Iterated Systems, Inc.
By: Timothy Hargreaves-Oliver Date
Exhibit D - Licenses issued by ISI which have not been terminated or
expired for the use of ClearVideo Source Code Encoder
<PAGE> 90
Exhibit E - ISI United States Patents
United States Patents
Patent No. Patent Title
4,941,193 Method & Apparatus for Image Compression By Iterated
Function System
5,065,447 Method & Apparatus For Processing Digital Data
5,347,600 Method & Apparatus for Compression & Decompression of
Digital Image Date
5,384,867 Fractal Transform Compression Board
5,430,812 Fractal Transform Compression Board - R80 Continuation
5,754,704 Method & Apparatus for Compression & Decompression of
Three Dimension Digital Data Using Fractal Transform
5,838,832 Method & System for Representing a Data Set with a Data
Transforming Function and Data Mask
5,717,788 Method & System for Analyzing Data
5,740,282 System & Method for Contractive Mapping
Resynchronization of a Data Transmission
5,721,543 System & Method for Modeling Discrete Data Sequences
5,867,603 Method for Transmitting Fractal Transform Data to
Support Different Compression/Decompression Designs
5,822,721 Method & Apparatus for Fractal-Excited Linear Predictive
Coding of Digital Signals
5,982,441 System & Method for Representing a Video Sequence
5,857,036 System & Method for Fractal Encoding of Data Streams
5,867,221 Method & System for Fractal Compression of Data Using an
Integrated Circuit for Discrete Cosine Transform
Compression/ Decompression
5,923,376 2nd Patent from above
5,790,131 System & Method for Lossy Compression of Data with
Output File Size Control
5,821,999 Method & System for Fractally Interpreting Intensity
Values for a Single Color Component Array Obtained from
a Single Color Sensor
5,805,217 Method & System for Interpreting Missing Picture
Elements in a Single Color Component Array Obtained from
a Single Color Sensor
5,835,037 Method & Apparatus for Modeling Discrete Data Sequences
by Multi Vector Representation
5,923,785 System & Method for Compressing Data
5,982,938 System & Method for Compressing Data Using Differential
Coding of Coefficient Addresses
5,990,950 Method & System for Color Filter Array Multifactor
Interpolation
5,923,376 Method & System for Fractal Compression of Data Using an
Integrated Circuit for DCT - CIP
<PAGE> 90
EXHIBIT 10.3
ADDENDUM
To
Development and License Agreement
Between
Southern Wireless, Inc. and Iterated Systems, Inc.
Executed March 17, 2000
This Addendum is executed for the mutual benefit of both
parties.
The definitions, abbreviations and section numbers used in the
Development and License Agreement between Southern Wireless, Inc. and
Iterated Systems, Inc., and executed on March 17, 2000, are
incorporated herein.
1. Replacement Sections. The numbered sections below replace, in
their entirety, the corresponding numbered sections in the Agreement.
Exhibit B below replaces, in its entirety, Exhibit B from the
Agreement.
1.2 ClearVideo Source Code. ClearVideo Source Code is the human
readable code that compiles to the personal computer software described
in Exhibit B as delivered by ISI to SWI under its Section 4.1.1
obligation. The ClearVideo Source Code includes source code for both
encoder and decoder, which source code can be compiled into run-time
versions. For the purposes of the Agreement, the ClearVideo Source
Code includes source code for ClearFusion as delivered by ISI to SWI
under its Section 4.1.1(f) obligation, which source code can be
compiled into a browser plug-in
1.13 Marketing Material. Marketing Material shall consist of (1)
the names "ClearVideo" and "ClearFusion"; (2) the manual and packaging
of ClearVideo Version 1.2, but excluding: (a) all references to
Iterated Systems, Inc. (in any form including but not limited to
Iterated Systems and Iterated), (b) Iterated Systems' fern logo and (c)
general corporate information of Iterated Systems including but not
limited to addresses, phone numbers and other contact information; (3)
the ClearVideo logo(s) as contained in the manual and packaging of
ClearVideo Version 1.2; (4) any ISI trademark rights in the name
ClearVideo or ClearFusion, or any ISI service mark rights in the name
ClearVideo and the name ClearFusion, but only to the extent, if any,
such rights exists; and (5) the web addresses: www.clearvideo.com and
www.clearvideo.com.uk.
Exhibit B
ClearVideo Description
ClearVideo is computer software that runs on Pentium processors
inside personal computers which have compatible configurations
including compatible memory, graphics, operating systems, browser, and
input/output resources. ClearVideo includes both encoder and decoder
functionality. The encoder is not a stand-alone program but requires
a compatible video editor such as Adobe Premier 4.0. The ClearVideo
<PAGE> 91
encoder encodes video only, but a compatible video editor and personal
computer environment will provide the ability to encode audio as well.
The ClearVideo Source Code will compile to version 1.2 provided to SWI
for evaluation prior to the execution of the Agreement. For the
purposes of the Agreement, ClearVideo also includes ClearFusion.
ClearFusion is a plug-in for certain versions of browsers which was
distributed by ISI under the name ClearFusion. ClearFusion is distinct
from, and not part of, the ClearVideo Source Code Encoder.
2. Additional Sections. The numbered sections below are to be
added to the sections indicated below.
The following section is added to Section 1 of the Agreement:
1.17 ClearFusion Source Code. ClearFusion Source Code is that
portion of the ClearVideo Source Code which compiles to the ClearFusion
plug-in provided to SWI by ISI under ISI Section 4.1.1(f) obligation.
The following section is added to Section 2 of the Agreement:
2.1 (a) ClearFusion License. All of the rights, benefits and
provisions of the licenses granted to SWI for ClearVideo are also
granted to SWI for ClearFusion. All of the reservations and
restrictions of the licenses granted to SWI for ClearVideo also apply
to ClearFusion.
The following section are added to Section 4.1 of the Agreement:
4.1.1 (f) Within five (5) days of the execution date of this
Addendum, ISI will provide Southern Wireless with ClearFusion Source
Code.
EMajix.com, Inc. formally
SOUTHERN WIRELESS, INC. ITERATED SYSTEMS, INC.
BY: /s/ Ryan Corley BY: /s/ Alan Sloan
Ryan Corley, President Alan Sloan, Executive V.P.
Dated May 8, 2000 Dated May 8, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Condition at March 31, 2000 Audited and the Statement
of Loss for the year ended March 31, 2000 Audited and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 27,060
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,060
<PP&E> 2,416
<DEPRECIATION> 0
<TOTAL-ASSETS> 282,451
<CURRENT-LIABILITIES> 254,620
<BONDS> 0
0
0
<COMMON> 1,044
<OTHER-SE> 26,767
<TOTAL-LIABILITY-AND-EQUITY> 27,831
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,144
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,144)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,144)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,144)
<EPS-BASIC> (0.002)
<EPS-DILUTED> (0.002)
</TABLE>
