<PAGE>
As filed with the Securities and Exchange Commission on November 15, 1999
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
Commission File No. 000-26363
bamboo.com, Inc.
(Exact name of Registrant as specified in its charter)
_____________
Delaware 52-2129710
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
124 University Avenue
Palo Alto, CA 94301
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (650) 325-6787
_____________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), Yes [X] No [ ], and (2) has been subject to such
filing requirements for the past 90 days, Yes [ ] No [X].
21,408,589 shares of $0.001 par value common stock outstanding as of
September 30, 1999.
================================================================================
Page 1
Exhibit Index on Page 22
<PAGE>
BAMBOO.COM, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets at
September 30, 1999 and September 30, 1998........................ 3
Condensed Consolidated Statements of Operations
for the three and nine month periods ended September 30, 1999
and September 30, 1998........................................... 4
Condensed Consolidated Statements of Cash Flows
for the nine month periods ended September 30, 1999
and September 30, 1998........................................... 5
Notes to Condensed Consolidated Financial Statements............. 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................19
Item 2. Changes in Securities and Use of Proceeds........................19
Item 3. Defaults Upon Senior Securities..................................19
Item 4. Submission of Matters to a Vote of Security Holders..............20
Item 5. Other Information................................................20
Item 6. Exhibits and Reports on Form 8-K.................................20
Signatures.................................................................21
Exhibit Index..............................................................22
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BAMBOO.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------
<S> <C> <C>
ASSETS
Cash $ 27,461 $ 430
Accounts receivable, net 126 19
Property and equipment, net 2,402 212
Other assets 1,141 119
-------- ------
TOTAL ASSETS $ 31,130 $ 780
======== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities $ 1,372 $ 141
Accrued liabilities 2,268 122
Deferred revenue 1,857 -
Obligations under capital lease 602 -
-------- ------
Total liabilities 6,099 263
Shareholders' equity $ 25,031 $ 517
-------- ------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 31,130 $ 780
======== ======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Page 3
<PAGE>
BAMBOO.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1999 September 30, 1999
1999 1998 1999 1998
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue $ 1,262 $ 21 $ 1,798 $ 60
Cost of Revenue 1,006 16 1,456 54
----------- ---------- ---------- ----------
Gross profit 256 5 342 6
Operating expenses:
Sales and marketing 6,257 18 11,048 108
General and administrative 2,372 11 4,642 60
Research and development 389 38 685 64
Stock Compensation expense 6,248 - 14,810 906
----------- ---------- ---------- ----------
Total operating expenses 15,266 66 31,185 1,138
----------- ---------- ---------- ----------
Operating loss (15,010) (61) (30,947) (1,132)
Interest Expense (6,442) - ( 6,629) -
Other income 151 - 278 -
----------- ---------- ---------- ----------
Net loss (21,301) (61) (37,194) (1,132)
Beneficial conversion feature of
Series B convertible preferred stock - - (1,000) -
----------- ---------- ---------- ----------
Net loss attributable to
Common stockholders $ (21,301) $ (61) $ (38,194) $ (1,132)
=========== ========== ========== ==========
Basic and diluted net loss
Per share (1.55) (0.01) (3.88) (0.20)
Shares used in the net loss
Per share calculation 13,768 6,919 9,840 5,553
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Page 4
<PAGE>
BAMBOO.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------
1999 1998
---- ----
<S> <C>
Operating activities:
Net loss (37,194) (1,132)
Items not affecting cash:
Depreciation and amortization 444 5
Bad debt expense 2 1
Accretion of dividend on Series C mandatorily redeemable preferred stock 6,629 -
Issuance of common stock in exchange for services - 370
Issuance of Series B convertible preferred stock in
settlement of interest payable 9 -
Issuance of options for common stock for services 2,916 536
Stock based compensation 11,894 -
Changes in assets and liabilities
Accounts receivable, net (137) (3)
Prepaid expenses and other current assets (915) (2)
Other assets (143) -
Accounts payable 1,199 3
Accrued liabilities 2,254 -
Deferred revenue 1,857 -
------- -------
Net cash used in operating activities (11,185) (222)
------- -------
Investing activities:
Purchase of capital assets
(2,172) (29)
------- -------
Net cash used in investing activities (2,172) (29)
------- -------
</TABLE>
Page 5
<PAGE>
<TABLE>
<S> <C> <C>
Financing activities:
Notes payable to stockholders (8) (27)
Proceeds from capital lease obligation 205 -
Repayment of capital lease principal (66) -
Repayment of Series C (11,000) -
Proceeds from issuance of convertible notes payable 1,800 -
Proceeds from issuance of common stock, net of issuance
costs 33,333 387
Proceeds from exercise of common stock options 142 5
Proceeds from issuance of Series B convertible preferred
stock, net of issuance costs 11,597 -
Proceeds from issuance of Series C convertible preferred
stock, net of issuance costs 4,371 -
Proceeds from issuance of warrants - 23
------- -------
Net cash provided by financing activities 40,374 388
------- -------
Effect of exchange rate changes on cash 14 (3)
Increase (decrease) in cash during the period 27,031 134
Cash and cash equivalents at beginning of period 430 4
------- -------
Cash and cash equivalents at end of period 27,461 138
------- -------
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Page 6
<PAGE>
BAMBOO.COM, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Business
-------------------------
Bamboo.com ("the Company") was incorporated on March 26, 1998 as
Jutvision Corporation under the laws of the State of Delaware. The
Company has a wholly owned subsidiary bamboo.com Canada Inc ("bamboo
Canada"). The Company and its subsidiary generate revenue from the sale
of virtual tours of real estate properties on the Internet. Tours are
produced by videotaping the inside and outside of the home or other
property, processing the videotape into a complete virtual tour and
distributing the virtual tour to sites on the Internet. The Company's
markets are the United States and Canada.
2. Basis of Presentation
---------------------
The condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
The condensed consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission ("SEC") applicable to interim financial information. Certain
information and footnote disclosures included in financial statements
prepared in accordance with generally accepted accounting principles have
been omitted in these interim statements pursuant to such SEC rules and
regulations. Management recommends that these interim financial statements
be read in conjunction with the audited financial statements of the
Company for the year ended December 31, 1998 and the notes thereto
contained in the Company's Registration Statement on Form S-1,
Registration, in the form declared effective by the Securities and
Exchange Commission on August 25, 1999. Interim results are not
necessarily indicative of the results to be expected for the full year.
The December 31, 1998 balance sheet was derived from audited financial
statements, but does not include all disclosures required by Generally
Accepted Accounting Standards.
In management's opinion, the condensed consolidated financial statements
include all adjustments necessary to present fairly the financial
position and results of operations for each interim period shown. Interim
results are not necessarily indicative of results to be expected for a
full fiscal year.
3. Recent Accounting Pronouncements
--------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, or SFAS 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS 133 establishes new
standards of accounting and reporting for derivative instruments and
hedging activities. SFAS 133 requires that all derivatives be recognized
at fair value in the statement of financial position, and that the
corresponding gains or losses be reported either in the statement of
operations or as a component of comprehensive income, depending on the
type of hedging relationship that exists. SFAS 133 will be effective for
fiscal years beginning after June 15, 2000. The Company does not
currently hold derivative instruments or engage in hedging activities.
4. Net Loss Per Share
------------------
Basic net loss per common share is computed by dividing net loss
available to common stockholders by the weighted average number of vested
common shares outstanding for the period. Diluted net loss per common
share is computed giving effect to all dilutive potential common shares,
including options, warrants and preferred stock. Options, warrants and
preferred stock were not included in the computation of diluted net loss
per common share because the effect would be antidilutive. A
reconciliation of the numerator and denominator used in the calculation
of basic and diluted net loss per common share follows (in thousands,
except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Historical net loss per common share, basic and diluted:
Net loss $(21,301) $(61) $(37,194) $(1,132)
Beneficial Conversion feature of
Series B convertible (1,000)
-------- -------- -------- --------
Numerator for net loss, basic and diluted (21,301) (61) (38,194) (1,132)
-------- -------- -------- --------
Denominator for basic and diluted loss per common share:
Weighted average common shares
outstanding 13,768 7,004 9,940 5,553
Common Stock not yet vested -- (85) (100) --
------- -------- -------- --------
Shares used in Net loss per share calculation 13,768 6,919 9,840 5,553
-------- -------- -------- --------
Net loss per common share basic and diluted (1.55) (0.01) (3.88) (0.20)
======== ======== ======== ========
Antidilutive securities
Options to purchase common stock 213 5,928 5,035 53
Common stock not yet vested -- 85 100 --
Warrants -- 254 228 --
-------- -------- -------- --------
213 6,267 5,363 53
-------- -------- -------- --------
</TABLE>
5. Initial Public Offering
-----------------------
On August 25, 1999 the Company completed the initial public offering of
4,000,000 shares of its common stock at a price of $7 per share. Proceeds
of the offering, net of underwriting discount and other direct costs of the
offering, were approximately $24.3 million.
On September 7, 1999 under the terms of the underwriting agreement covering
the Initial Public offering the underwriters exercised their over allotment
option for 376,000 shares of the common stock of the Company. Proceeds
received, net of underwriting discount, from exercise of the over allotment
option were approximately $2.4 million.
Upon completion of the company's public offering and in accordance with the
respective preferred stock purchase agreements 231,250 and 2,324,774 shares
of the Company's Series A and Series B convertible preferred stock
converted into 647,500 and 6,509,367 shares of common stock of the Company
respectively.
In accordance with the terms of the original option grants upon completion
of the Initial Public offering options to purchase 1,780,184 shares of the
Company's common stock became fully vested. As a result additional
compensation expense of $1.8 million has been recorded in the quarter ended
September 30, 1999.
On August 31, 1999 the Company used $11.0 million of the proceeds of the
Initial Public offering to redeem 110 shares of the Company's Series C
mandatorily redeemable ("Series C") preferred stock. As a result of this
redemption the Company recorded a charge to interest expense of
approximately $6.6 million representing the difference between the carrying
value of the Series C preferred stock and its redemption value.
6. Subsequent Events
-----------------
The Company and Interactive Pictures Corporation ("IPIX") have entered into
an Agreement and Plan of Merger dated as of October 25, 1999 (the "Merger
Agreement"). Pursuant to the merger agreement, IPIX will become a wholly-
owned subsidiary of a newly-formed bamboo.com, Inc. subsidiary. In exchange
for IPIX common stock, the Company will issue 1.369 shares of its common
stock for every share of IPIX common stock outstanding immediately prior to
the Effective Time (as defined in the merger agreement) of the merger.
All outstanding options to purchase IPIX common stock will be assumed by
the Company and will become options to purchase shares of the Company's
common stock. The transaction is intended to be accounted for as a pooling
of interest and qualify as a tax-free reorganization. The merger has been
approved by the board of directors of the Company and IPIX, but is still
subject to approval by the shareholders of IPIX and other conditions to
closing.
The merger agreement obligates the Company or IPIX to pay to the other
party a termination fee of $16 million if the merger is not consummated as
a result of certain specified events.
In connection with the merger agreement, the Company and IPIX entered into
two stock option agreements. IPIX granted the Company an option to purchase
19.9% of IPIX's common shares at a price of $2.25 per shares, and the
Company granted IPIX an option to purchase 19.9% of the Company's common
shares at a price of $16.25 per share. The stock options become exercisable
in the event that the issuer of the option becomes the subject of a
publicly announced third party takeover proposal. Neither the Company or
IPIX may realize more than a total of $20 million from the payment of both
the $16 million termination fee and the exercise of the stock option and
subsequent sale of the option shares. Both options terminate either upon
consummation of the merger, 30 days after termination of the merger
agreement (other than as a result of a proposal by a third party to acquire
30% or more of the equity or assets, or to undertake a merger involving 30%
of the net assets, net revenue or net income of the issuer) or 180 days
after the termination of the merger agreement.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes to those statements
included elsewhere in this prospectus. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in these forward-
looking statements. Risks and uncertainties to which these statements are
subject include those set forth herein below under "Other Factors Affecting
Operating Results, Liquidity and Capital Resources" as well as those note in
our amended registration statement on Form S-1 (File No. 333-80639). We
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
Overview
- --------
We are a provider of 360-degree virtual tours of real estate properties on
the Internet. We provide a comprehensive service to real estate agents and
other entities that includes videotaping the inside and outside of homes
or other property, processing the videotape into a complete virtual tour, and
distributing the virtual tour to sites on the Internet. Our virtual tours allow
users to look around a room or specific area of a home or other property as if
they were actually present. Our virtual tours provide enhanced visual content,
and certain of our virtual tours are integrated with multiple listing service
information by real estate Web sites, thereby adding significant value to home
buyers, home sellers and real estate agents. Users are able to quickly view our
virtual tours over a basic dial up connection to the Internet using a standard
Java-enabled Web browser and without special plug-in software to download or
install. If a user's Web browser is unable to view Java applets, our bamboo.com
ViewAlways system will automatically display still images in HTML. We also
distribute our virtual tours via email in one convenient self-contained file.
In November 1995, we incorporated in Ontario, Canada as Visual Dynamics
Software Corporation. From inception through December 1996, we focused on the
development of our proprietary hardware and software technology. We changed our
name to Visdyn Software Corporation in December 1996. During 1997, we continued
our product development efforts and began deriving initial revenues from the
sale of virtual tours, primarily of city locations in Toronto, Canada.
During 1998, we began providing a comprehensive virtual tour service for the
residential real estate market in Canada. In September 1998, we changed our name
to Jutvision Corporation, moved our headquarters from Toronto to Palo Alto,
California and began implementing a service provider network of videographers
throughout the United States. On January 1, 1999, Jutvision Corporation
reorganized its business as a Delaware corporation and began deriving revenues
from the sale of virtual tours to the real estate industry in the United States.
We changed our name from Jutvision Corporation to bamboo.com, Inc. in April
1999.
All of our revenues are derived from the sale of our virtual tours.
Revenues are recognized at the time a virtual tour is delivered. We calculate a
provision for returns based on historical experience and make appropriate
reserves at the time revenues are recognized. To date, returns have been
immaterial. In the existing home resale market, we sell our comprehensive
virtual tour service to real estate agents. Our service includes videotaping the
property, processing the videotape into a virtual tour, distributing the virtual
tour to Web sites on the Internet and delivering it by e-mail to the real estate
agent. Our virtual tours can then be viewed for free by consumers, including
homebuyers and home sellers.
Our cost of revenues consists primarily of the costs of videographers used
to capture virtual tour images, video tape shipping charges, virtual tour
processing and Internet hosting activities.
Page 8
<PAGE>
Our research and development expenses consist primarily of compensation and
related costs for research and development personnel. Costs incurred in the
research and development of new releases and enhancements of our virtual tour
product are expensed as incurred. We expect that research and development costs
will continue to increase in the future as we further develop and enhance our
virtual tour products including those intended for sales channels other than
real estate.
Our sales and marketing expenses consist primarily of compensation and
related costs for sales and marketing personnel, marketing programs, public
relations, promotional materials, travel and related expenses for attending
trade shows. We also include costs relating to third party sponsorship fees. We
expect our sales and marketing expenses to increase substantially as we continue
to promote awareness of bamboo.com. We plan to continue advertising through
print and Internet-based media outlets, engaging in direct marketing campaigns,
providing complimentary virtual tours to targeted potential customers from time
to time and hiring additional sales and marketing personnel. We expect that
sales and marketing expenses will also increase as we expand our domestic sales
efforts and develop our international sales channels. Sales and marketing
expenses may also increase as we continue to develop relationships with
additional third party sales channels.
General and administrative expenses consist primarily of compensation and
related expenses for administrative, information technology personnel, finance
and accounting personnel, professional services and related fees, occupancy
costs and other expenses. General and administrative expenses may increase in
the future as we expand in existing facilities or relocate to new facilities
that better address any growth that we may experience. We also expect general
and administrative expenses to increase as we hire additional personnel and
incur costs related to the anticipated growth in our business and cost of
operating as a public company.
As of September 30, 1999, we had an accumulated deficit of $40.2 million.
We have yet to achieve significant revenues and our ability to generate
significant revenues is uncertain. Therefore, we believe that period-to-period
comparisons of our financial results are not necessarily meaningful and you
should not rely upon them as an indication of our future performance. We have
incurred substantial costs to create, introduce and enhance our virtual tour
service infrastructure, to build brand awareness and to establish our strategic
relationships. We expect operating losses and negative cash flows to continue
for the foreseeable future, as we intend to significantly increase our operating
expenses to grow our business. We may also incur additional costs and expenses
related to entrance into new markets, future marketing, branding, and
acquisition of new businesses or technology to respond to our rapidly changing
industry. These costs could adversely affect our future financial condition or
operating results.
From time to time in the past, we have granted stock options to employees
and consultants, and expect to do so in the future. As of September 30, 1999, we
recorded aggregate unearned employee stock-based compensation of $15.8 million
in connection with the grant of options to employees and directors. This amount
is being amortized over the vesting period, generally two, three or four years,
of the underlying options. Amortization of the amount during the nine months
ended September 30, 1999 amounted to $11.3 million. The remaining charge as of
September 30, 1999 will be amortized as follows: $1.4 million for the remainder
of 1999; $1.6 million in 2000; $1.2 million in 2001; $280,000 in 2002 and
$20,000 in 2003. Additionally, during the nine months ended September 30, 1999,
we recorded unearned stock-based compensation for restricted common stock
granted to a service provider of approximately $1,269,000. Amortization of the
fair value of this restricted common stock resulted in stock-based compensation
of approximately $605,000 during the nine months ended September 30, 1999.
Quarterly amortization associated with the restricted common stock is subject to
significant increase or decrease in future quarters based upon future changes in
the fair value of our common stock.
Page 9
<PAGE>
Results of Operations
- ---------------------
Comparison of Statement of Operations for the Three Month Period Ended September
30, 1999 to the Three Month Period Ended September 30, 1998
Net Revenues
Net revenues increased $1,241,000 to $1,262,000 for the three month period
ended September 30, 1999 from $21,000 for the three month period ended September
30, 1998. This increase is primarily attributable to significantly higher
volumes of virtual tour deliveries.
Cost of Revenues
Cost of revenues increased $990,000 to $1,006,000 for the three month
period ended September 30, 1999 from $16,000 for the three month period ended
September 30,1998. This increase is directly attributable to higher volumes of
virtual tour deliveries and our continued investment in scaling operations to
support anticipated future volume growth.
Research and Development
Research and Development increased $351,000 to $389,000 for the three month
period ended September 30, 1999 from $38,000 for the three month period ended
September 30,1998. The net increase results primarily from an increase in
personnel expenses.
Sales and Marketing
Sales and Marketing increased $6.2 million to $6.3 million for the three
month period ended September 30, 1999 from $18,000 for the three month period
ended September 30,1998. This increase is primarily attributable to the hiring
of additional sales and marketing personnel, the costs relating to our third
party partner programs and various media buys for advertising and promotional
events.
General and administrative
General and administrative expenses increased to $2.4 million for the
three month period ended September 30, 1999 from $11,000 for the three month
period ended September 30, 1998. This increase was primarily attributable to
hiring of administrative management, information technology staff, finance and
accounting personnel and expansion of leased facilities.
Amortization of Deferred Stock Compensation
Amortization of deferred stock compensation increased to $6.2 million for
the three month period ended September 30, 1999. There was no deferred stock
compensation expense for the three month period ended September 30, 1998. This
amount represents the allocated portion of the difference between the deemed
fair value of our common stock and the exercise price of stock options granted
by us to employees and consultants.
Net loss
Net loss increased $21.2 million to $21.3 million for the three month
period ended September 30, 1999 from $61,000 for the three month period ended
September 30, 1998. The increase is primarily attributable to the investment in
developing the infrastructure necessary to execute our business plan.
Page 10
<PAGE>
Comparison of the Nine Month Period Ended September 30, 1999 to the Nine Month
Period Ended September 30, 1998
Net Revenues
Net revenues increased $1.7 million to $1.8 million for the nine month
period ended September 30, 1999 from $60,000 for the nine month period ended
September 30, 1998. This increase is attributable to moving our corporate
headquarters to the U.S., putting in place a direct sales forces and
the focused execution of our business plan across the U.S. and Canada.
Cost of Revenues
Cost of revenues increased $1.4 million to $1.5 million for the nine month
period ended September 30, 1999 from $54,000 for the nine month period ended
September 30, 1998. The increase in cost of revenues for the nine month period
ended September 30, 1999 is attributable to our increased tour volume during the
same period.
Research and Development
Research and Development increased $621,000 to $685,000 for the nine month
period ended September 30, 1999 from $64,000 for the nine month period ended
September 30, 1998. The net increase is primarily attributable to an increase in
personnel costs associated with expanding our research and development efforts.
Sales and Marketing
Sales and marketing increased $10.9 million to $11.0 million for the nine
month period ended September 30, 1999 from $108,000 for the nine month period
ended September 30, 1998. This increase is primarily attributable to the hiring
of additional sales and marketing personnel, the costs relating to our third
party partner programs and advertising and branding through various media
outlets.
General and Administrative
General and administrative expenses increased $4.5 million to $4.6 million
for the nine month period ended September 30, 1999 from $60,000 for the nine
month period ended September 30, 1998. This increase was primarily attributable
to increases in professional services and related fees, increased personnel and
related costs, and expansion of leased facilities.
Amortization of Deferred Stock Compensation
Amortization of deferred stock compensation increased $13.9 million to
$14.8 million for the nine month period ended September 30, 1999, from $1.0
million for the nine month period ended September 30, 1998. This amount
represents the allocated portion of the difference between the deemed fair value
of our common stock and the exercise price of stock options granted by us to
employees and the fair value of options and restricted stock granted to
consultants.
Other Income (Expense), Net
Net other income increased to $278,000 for the nine month period ended
September 30, 1999. There was no net other income for the nine month period
ended September 30, 1998. The increase
Page 11
<PAGE>
is primarily attributable to the increase in interest income due to the
increased balances in our investment portfolio.
Liquidity and Capital Resources
- -------------------------------
As of September 30, 1999, our principal sources of liquidity include
approximately $27.5 million of cash and cash equivalents. In August 1999, we
sold shares of common stock in our initial public offering, generating net
proceeds of approximately $26.7 million after offering expenses.
We currently anticipate that our current cash, cash equivalents and
investments, which include the net proceeds from our initial public offering,
will be sufficient to meet our anticipated cash needs for working capital and
capital expenditures for at least the next 12 months. Thereafter, cash generated
from operations, if any, may not be sufficient to satisfy our liquidity
requirements. We may therefore need to sell additional equity or raise funds by
other means. Any additional financings, if needed, might not be available on
reasonable terms or at all. Failure to raise capital when needed could seriously
harm our business and operating results. If additional funds are raised through
the issuance of equity securities, the percentage of ownership of our
stockholders would be reduced. Furthermore, these equity securities might have
rights, preferences or privileges senior to our common stock.
Year 2000 Issue
- ---------------
The Year 2000 issue is the potential for system and processing failures of
date-related data and is the result of the computer-controlled systems using two
digits rather than four to define the applicable year. For example, computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities.
Although we do not have formal contingency plans to address Year 2000
issues, we continue to assess our internal readiness for Year 2000. We use
multiple software systems for internal business purposes, including accounting,
email, human resources, sales tracking and customer service. All of these
applications have been purchased within the preceding 12 months, and we have
made inquiries concerning Year 2000 compliance with the vendors of these
systems. Each of these vendors has assured us that its applications are Year
2000 compliant, but we have not done any operational testing to confirm
compliance. We depend on third party providers for Web hosting and payroll
services. While we have received verbal assurance that the applications of these
third parties are Year 2000 compliant, we generally do not have any specific
contractual rights with third party providers should their equipment or software
fail due to Year 2000 issues. If this third party equipment or software does not
operate properly with regard to Year 2000, we may incur unexpected expenses to
remedy any problems.
We are unable to predict to what extent our business may be affected if our
systems or the systems that operate in conjunction with them experience a
material Year 2000 failure. Known or unknown errors or defects that affect the
operation of our software and systems could result in delay or loss of revenue,
interruption of services, cancellation of distribution contracts, diversion of
development resources, damage to our reputation, increased service or warranty
costs, and litigation costs, any of which could harm our business.
Recent Accounting Pronouncements
- --------------------------------
Page 12
<PAGE>
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." Statement of Financial Accounting Standards No. 133
establishes new standards of accounting and reporting for derivative instruments
and hedging activities. Statement of Financial Accounting Standards No. 133
requires that all derivatives be recognized at fair value in the statement of
financial position, and that the corresponding gains or losses be reported
either in the statement of operations or as a component of comprehensive income,
depending on the type of hedging relationship that exists. Statement of
Financial Accounting Standards No. 133 will be effective for fiscal years
beginning after June 15, 2000. We do not currently hold derivative instruments
or engage in hedging activities.
Other Factors Affecting Operating Results, Liquidity and Capital Resources
- --------------------------------------------------------------------------
Our Limited Operating History May Prevent Us From Achieving Success in Our
Business
Because we were incorporated in 1995 and did not focus our virtual tour
business on the real estate industry until January 1998, we have only a limited
operating history upon which you can evaluate us and our potential. The revenues
and income potential of our business and market are unproven. We will encounter
challenges and difficulties frequently encountered by early stage companies in
new and rapidly evolving markets. We may not successfully address any of these
challenges and the failure to do so would seriously harm our business and
operating results. In addition, because of our limited operating history, we
have limited insight into trends that may emerge and affect our business.
We Have Incurred Losses and We Expect Future Losses
Our failure to significantly increase our revenues would seriously harm our
business and operating results. We have experienced operating losses in each
quarterly and annual period since inception and we expect to incur significant
losses in the future. As of September 30, 1999, we had an accumulated deficit of
$40.2 million. We expect to significantly increase our research and development,
sales and marketing and general and administrative expenses. As a result, we
will need to significantly increase our quarterly revenues to achieve and
maintain profitability. We may not be able to sustain our recent revenue growth
rates. In fact, we may not have any revenue growth, and our revenues could
decline.
Fluctuations in our quarterly revenues and operating results may lead to reduced
prices for our stock
We believe that period-to-period comparisons of our operating results
should not be relied upon as indications of future performance. In future
periods our operating results may fall below the expectations of investors,
which could significantly harm or depress the trading price of our common stock.
Among the factors that may influence our operating results are:
- the number of virtual tours we sell, process and deliver;
Page 13
<PAGE>
- the termination of any significant distribution relationship or loss of a
service provider;
- the introduction of new or enhanced imaging products and services by us
or our competitors;
- the rate at which we can recruit, train and integrate employees into our
processing center, call center and field operations;
- the amount and timing of capital expenditures and other costs relating to
the expansion of our processing center, call center and field operations;
- changes in our pricing policy relating to virtual tour service or those
of our competitors;
- economic or other conditions that affect the real estate industry; and
- economic conditions specific to the Internet.
We plan to increase our operating expenses to expand our sales and
marketing programs and to hire more employees in the areas of administration and
research and development. We determine our operating expenses partly based on
anticipated revenue trends. In future periods, we may generate lower than
anticipated revenue due to the termination of a significant distribution
relationship or an adverse change in our pricing policy caused by competition.
The generation of lower than anticipated revenue could result in substantial
operating losses.
The loss of one or more distributors of our virtual tours or the termination of
their relationship with an Internet portal could seriously harm our business
The ability to distribute our virtual tours widely over the Internet is
vital to our business. Our virtual tours can currently be viewed through real
estate destination Web sites such as REALTOR.com, HomeSeekers.com, Homes.com and
LoopNet. These Web sites provide real estate content to Internet portals. As a
result, our virtual tours may also be currently viewed on America Online, @Home
Network, Excite, GO Network/Infoseek, Netscape Netcenter and Yahoo! We do not
have agreements with any Internet portal providing for the distribution of our
virtual tours. If our relationship with a real estate destination site is
terminated, or their relationship with any major Internet portal is terminated,
we would lose access to significant distribution channels and our revenues could
decline.
If online real estate listings or our virtual tours do not achieve widespread
market acceptance, our business will not grow
Our success will depend in large part on widespread market acceptance of
virtual tours to display properties online. If the online market for virtual
tours develops more slowly than expected, or if our services do not achieve
widespread market acceptance, our business will grow more slowly than expected.
Our future growth, if any, will depend on the following critical factors:
- the growth of the Internet as a tool used in the process of buying and
selling residential real estate;
- our ability to successfully and cost-effectively market our virtual tours
to a sufficiently large number of real estate agents or other real estate
professionals; and our ability to consistently deliver high quality
virtual tours and fast and convenient service at competitive prices.
Page 14
<PAGE>
Our revenues will not grow as much as we anticipate if the market for our
services does not continue to develop, our services do not continue to be
adopted or consumers fail to significantly increase their use of the Internet as
a tool in the process of buying and selling homes.
If we cannot successfully grow our operations our business could suffer
Because each virtual tour requires several steps to create, a sharp rise in
demand for our products and services could exceed our capacity to carry out the
functions necessary to create virtual tours. In particular, we will need to
rapidly expand the capacity of our processing center and our customer service
center to meet significant increases in demand. In addition, we would need to
rapidly engage many new videographers in one or more regions in order for us to
continue to offer our turnkey virtual tour service in a timely manner. As the
volume of orders for our virtual tours increases, we may not be able to hire and
train qualified personnel in a timely manner, and the shortage of such personnel
could cause a backlog in the processing of orders, which could lead to dilution
of our brand and long term harm to our reputation.
We operate in a highly competitive market with low barriers to entry which could
limit our market share and harm our financial performance
While the market for online virtual tours is relatively new and rapidly
evolving, it is already competitive and characterized by entrants that may
develop online virtual tour services similar to ours. In addition, there are
relatively low barriers to entry to our business. We do not have patents or
other intellectual property that would preclude or inhibit competitors from
entering the online virtual tours market. Moreover, due to the low cost of
entering the online virtual tours market, competition may intensify and increase
in the future. We compete with traditional methods used by real estate agents to
market properties for sale, including classified ads, brochures and still
photos. We may also compete against companies that have developed virtual tour
technology but are not currently focused on the real estate industry. This
competition may limit our ability to become profitable or result in the loss of
market share.
Most of our employees are not subject to non-competition agreements. In
addition, our business model does not involve the use of a large amount of
proprietary information. As a result, we are subject to the risk that our
employees may leave us and may start competing businesses. The emergence of
these enterprises will further increase the level of competition in our market
and could harm our growth and financial performance.
Our business will suffer if we are unable to establish and maintain brand
recognition for bamboo.com virtual tours
Establishing and maintaining our brand is critical to attracting and
expanding our customer base of real estate agents, solidifying our business
relationships with traditional real estate companies and strategic partners and
successfully implementing our business strategy. We may be unable to establish
or maintain a brand that will be positively accepted by the market.
Promotion and enhancement of our brand will also depend, in part, on our
success in providing a high-quality customer experience to real estate agents,
home sellers and home buyers. We may not be successful in achieving this goal.
Low or inconsistent quality of products or services may significantly damage our
reputation and offset the efforts we make in promoting and enhancing our brand
and may harm our business. If home buyers, home sellers or real estate agents do
not perceive our existing services to be of high quality or if we alter or
modify our brand image, introduce new services or enter
Page 15
<PAGE>
into new business ventures that are not favorably received, the value of our
brand could be damaged, thereby decreasing the attractiveness of our service to
potential customers.
We may not develop new commercial relationships, and our existing
relationships may not result in increased sales of our virtual tours. In
addition to our relationships with real estate destination sites, we depend on
establishing and maintaining commercial relationships with traditional real
estate brokerage companies, multiple listing services, multiple listing services
technology providers and consumers of virtual tour services in other markets. We
expect to continue to encounter competition for these relationships and for
other marketing and endorsement relationships with real estate brokerage
companies and other entities. We cannot assure you that we will be able to
establish new relationships or maintain existing relationships. In addition, we
cannot assure you that our existing relationships with real estate companies,
multiple listing service organizations and other entities will result in orders
of virtual tours. These relationships could be terminated or fail to generate as
many customers as we anticipate, which could cause our revenues to decline.
A failure in the performance of our Web hosting facility systems could harm
our business and reputation
We depend upon a third party Internet service provider to host and maintain
all of our production servers. As part of our service offering, our Web servers
host our virtual tours for some of the sites where our tours can be viewed. Any
system failure, including network, software or hardware failure, that causes an
interruption in the delivery of our virtual tours or a decrease in
responsiveness of our Web site service could result in reduced revenue, and
could be harmful to our reputation and brand. Our Internet service provider does
not guarantee that our Internet access will be uninterrupted, error free or
secure. Any disruption in the Internet access provided by such provider could
significantly harm our business. In the future, we may experience interruptions
from time to time. Our insurance may not adequately compensate us for any losses
that may occur due to any failures in our system or interruptions in our
service. Our Web servers must be able to accommodate a high volume of traffic
and we may in the future experience slower response times for a variety of
reasons. If we were unable to add additional software and hardware to
accommodate increased demand, this could cause unanticipated system disruptions
and result in slower response times. Real estate agents, home sellers and home
buyers may become dissatisfied by any system failure that interrupts our ability
to provide our virtual tours to them or results in slower response time.
If we are not successful in enhancing our virtual tours, our results may suffer
A component of our strategy is to develop, acquire and utilize new
technology that will continually enhance our virtual tours by providing features
such as high-resolution zooming functionality, larger image sizes, audio and
additional compression techniques. We may not be successful in our efforts to
enhance our virtual tours or develop new products and services which may harm
our operating results.
We may develop and implement strategies enabling us to participate in
e-commerce opportunities by making value-added products and services available
online. We may decide not to engage or we may not be successful in these
e-commerce opportunities. Any new product or service we introduce that is not
favorably received could damage our reputation and the perception of our brand
name.
The location of our call center and processing center outside the United States
could result in delays and increased operating expenses and taxes
Our call center and processing center are currently located in Toronto,
Canada. There are risks associated with our operations including the following:
Page 16
<PAGE>
. videotapes could be delayed in customs and cause a backlog of processing;
. our overnight courier service could have problems delivering our
videotapes from the United States to Canada in a consistently timely
fashion;
. future government regulations in the United States or Canada could limit
or increase expenses related to cross-border transactions; and
. tariffs, or currency exchange rates may increase our operating costs.
We are currently studying the extent to which our income may be subject to
Canadian income taxes. Because Canadian income tax rates are generally higher
than U.S. tax rates on corporate income, to the extent our future income is
subject to such Canadian taxes, we may incur higher tax costs than a comparable
company subject only to U.S. taxes.
Key personnel may not remain with bamboo.com in the future
Our success will depend in part on the continued service of key employees,
including John Assaraf, our Senior Vice President of Sales and Mark Searle,
Chief Operating Officer. If we lost the services of one or more of our key
employees who decided to join a competitor or start a company to compete
directly with bamboo.com, this could result in decreased sales and a lower level
of customer satisfaction. The employment of all of our key employees is at will.
We may be liable for infringing the intellectual property rights of others
We have received and may receive in the future, notice of claims of
infringement of other parties' proprietary rights. Infringement or other claims
could be asserted or prosecuted against us in the future, and it is possible
that past or future assertions or prosecutions could harm our business. Any such
claims, with or without merit, could be time consuming, resulting in costly
litigation and diversion of technical and management personnel, cause delays in
the development and release of new products or services, or require us to
develop non-infringing technology or enter into royalty or licensing
arrangements. Such royalty or licensing arrangements, if required, may not be
available on terms acceptable to us, or at all. For these reasons, infringement
claims could harm our business.
We rely heavily on our intellectual property rights which offer only limited
protection against potential infringers
Our success will be dependent in part upon our proprietary technology. We
cannot be sure that the measures that we undertake will be adequate to protect
our proprietary technology, or that they would preclude competitors from
independently developing products with functionality or features similar to our
virtual tours. We cannot be sure that the precautions we take will prevent
misappropriation or infringement of our technology. It is possible that
litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets or to determine the validity and scope of
the proprietary rights of others. Litigation could result in substantial costs
and diversion of our resources.
Cyclical economic swings in the real estate market could decrease demand for our
services and products
Changes in the real estate market may affect demand for our services and
products. The real estate industry traditionally has been subject to cyclical
economic swings, which could harm our business. These cyclical economic swings
may be caused by various factors, such as changes in interest rates,
Page 17
<PAGE>
changes in economic conditions and seasonal changes in various geographic
regions. These cyclical economic swings could hurt our business.
Page 18
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risk, including changes in foreign
currency exchange rates and interest rates. Most of our revenue and capital
spending is transacted in U.S. dollars. However, the expenses and capital
spending of our Canadian subsidiary are transacted in Canadian dollars. Results
of operations from our Canadian subsidiary are not material to the results of
our operations; therefore, we believe that foreign currency exchange rates
should not materially affect our overall financial position, results of
operations or cash flows. Our exposure to market risks for changes in interest
rates relates primarily to our cash and cash equivalent balances and our bank
line of credit. We do not use derivative financial instruments in our investment
portfolio, and our investment portfolio only includes highly liquid instruments
with an original maturity of generally less than three months. We are subject to
fluctuating interest rates that may impact, adversely or otherwise, our results
of operations or cash flows for cash and cash equivalents. The table below
presents principal amounts, related weighted average interest rates and expected
cash flows from market risk sensitive instruments.
Balances as of September 30, 1999: Amount Average Interest Rate
------ ---------------------
Assets
Cash and cash equivalents........ $27,461,000 5.7%
All highly liquid investments with a maturity of three months or less at
the date of purchase are considered to be cash equivalents. The Company does not
invest in instruments with total maturities or remaining maturities at date of
purchase in excess of 90 days. For the nine months ended September 30, 1999, the
weighted average interest rate on our investment portfolio was approximately
4.9%.
Amount Average Interest Rate
------ ---------------------
Liabilities
Bank line of credit (variable;
at prime)........................... $ -- 8.25%
At September 30, 1999, we had not drawn on our $1 million variable rate
bank line of credit.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Since June 30, 1999, we have issued and sold unregistered securities as
follows:
Between June 30, 1999 and September 30, 1999, an aggregate of 648,950
shares of common stock were issued to employees upon exercise of options. The
aggregate consideration received for such shares was $156,217. All sales of
stock pursuant to option exercises were made in reliance on Rule 701.
On August 26, 1999, bamboo.com completed an initial public offering. The
managing underwriters in the offering were Prudential Securities Incorporated;
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated; Volpe Brown &
Whelan & Company, LLC; and E*OFFERING Corp. The shares of common stock sold in
the offering were registered under the Securities Act of 1933, as amended, on a
Registration Statement on Form S-1 (the "Registration Statement") (Reg. No.
333-80639) that was declared effective by the Securities and Exchange Commission
on August 25, 1999.
Pursuant to the Registration Statement, bamboo.com sold 4,376,000 shares of
common stock (which includes 376,000 shares sold pursuant to the underwriters'
exercise of their over-allotment option) at a price of $7.00 per share, for an
aggregate offering price of $30,632,000. bamboo.com incurred expenses of
approximately $3,905,400, of which $2,144,200 represented underwriting discounts
and commissions and approximately $1,761,200 represented other expenses related
to the offering. Offering proceeds to bamboo.com, net of all expenses, were
approximately $28.5 million. In connection with the underwriters' exercise of
their over-allotment option, selling stockholders sold 224,000 shares of common
stock. Three of the selling stockholders are executive officers of bamboo.com.
We used $11.0 million of the offering net proceeds to redeem all
outstanding shares of Series C redeemable preferred stock. We expect to use the
remaining offering net proceeds for working capital and general corporate
purposes, including expansion of sales and marketing activities and enhancement
of our virtual tour technology. In addition, we may use a portion of the net
proceeds to acquire complementary products, technologies or businesses; however,
we currently have no commitments or agreements and are not involved in any
negotiations to do so. We have invested the net proceeds of this offering in
short-term interest-bearing, investment-grade securities or guaranteed
obligations of the U.S. government pending their use.
Simultaneous with the effectiveness of the registration statement relating
to the initial public offering, each outstanding share of bamboo.com's Series A
and Series B convertible preferred stock was automatically converted into 2.8
shares of bamboo.com's common stock without payment of additional consideration.
The common stock issued upon conversion of the preferred stock was exempt from
registration under Section 3(a)(9) of the Act, as securities exchanged by an
issuer with existing security holders.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
bamboo.com's Annual Meeting of Stockholders was held on July 19, 1999 in
Palo Alto, California. Proxies for the meeting were solicited. At bamboo.com's
Annual Meeting, the stockholders approved the following resolutions (all numbers
assume a 2.8 for 1 stock split effected in August 1999):
1) Election of the following persons as directors.
Director In Favor Against Withheld
-------- -------- ------- --------
Duncan Fortier 12,116,818 0 2,921,064
James D. Marver 12,116,818 0 2,921,064
Kevin B. McCurdy 12,116,818 0 2,921,064
Leonard B. McCurdy 12,116,818 0 2,921,064
John Moragne 12,116,818 0 2,921,064
Philip Sanderson 12,116,818 0 2,921,064
2) Adoption of the Company's 1999 Employee Stock Purchase Plan and reservation
of 700,000 shares of the common stock under the Plan.
For: 12,211,318
Against:
Abstain:
3) Approval of amendment and restatement of bamboo.com's 1998 Employee,
Director and Consultant Stock Plan to increase the number of shares reserved for
issuance under the Plan to a total of 8,179,394 shares of common stock.
For: 12,193,818
Against: 17,500
Abstain:
4) Approval of the Company's Restated Certificate of Incorporation filed upon
the closing of its initial public offering.
For: 12,211,318
Against:
Abstain:
5) Approval of the Company's Restated Bylaws effective upon the closing of its
initial public offering.
For: 12,211,318
Against:
Abstain:
6) Ratification of the appointment of PricewaterhouseCoopers LLP as independent
auditors of bamboo.com for the fiscal year ended December 31, 1999.
For: 12,211,318
Against:
Abstain:
On August 6, 1999, bamboo.com solicited written consent from stockholders to
amend bamboo.com's certificate of incorporation to effect a 2.8 for 1 stock
split with respect to bamboo.com's common stock and class B common stock.
For: 11,970,372
Against:
Abstain:
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
2.1+ Agreement and Plan of Merger dated as of October 25, 1999
between bamboo.com and Interactive Pictures Corporation
3.1* Restated Certificate of Incorporation
3.2* Bylaws
4.1* Form of common stock certificate
10.1 Employment Agreement with John Assaraf, as amended by
Amendment to Employment Agreement.
10.2 Registration Rights Agreement dated as of January 22, 1999
among bamboo.com and certain investors.
10.3 Amendment to Employment Agreement with Leonard B. McCurdy.
10.4 Amendment to Employment Agreement with Kevin B. McCurdy.
10.5 Amendment to Employment Agreement with Andrew P. Laszlo.
10.6 Amendment to Employment Agreement with Howard D. Field.
10.7 Amendment to Employment Agreement with Mark R. Searle.
10.8 Amendment to Employment Agreement with Randall I. Bresee.
27.1 Financial Data Schedule (EDGAR version only)
+ Filed with bamboo.com's report on Form 8-K, File No. 000-26363,
filed with the Securities and Exchange Commission on November 1,
1999, incorporated herein by reference.
* Filed with bamboo.com's Registration Statement on Form S-1,
Registration No. 333-80639, declared effective by the Securities
and Exchange Commission on August 25, 1999, incorporated herein by
reference.
b. Reports on Form 8-K
There have been no reports on Form 8-K filed during the three months
ended September 30, 1999.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: November 15, 1999
BAMBOO.COM, INC.
By: /s/ Leonard B. McCurdy
---------------------------------------
Leonard B. McCurdy
Chief Executive Officer and Director
By: /s/ Randall I. Bresee
---------------------------------------
Randall I. Bresee
Chief Financial Officer
Page 21
<PAGE>
BAMBOO.COM, INC.
INDEX TO EXHIBITS FOR FORM 10-Q
FOR QUARTER ENDED SEPTEMBER 30, 1999
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
2.1+ Agreement and Plan of Merger dated as of October 25, 1999
between bamboo.com and Interactive Pictures Corporation
3.1* Restated Certificate of Incorporation
3.2* Bylaws
4.1* Form of common stock certificate
10.1 Employment Agreement with John Assaraf, as amended by
Amendment to Employment Agreement.
10.2 Registration Rights Agreement dated as of January 22, 1999
among bamboo.com and certain investors.
10.3 Amendment to Employment Agreement with Leonard B. McCurdy.
10.4 Amendment to Employment Agreement with Kevin B. McCurdy.
10.5 Amendment to Employment Agreement with Andrew P. Laszlo.
10.6 Amendment to Employment Agreement with Howard D. Field.
10.7 Amendment to Employment Agreement with Mark R. Searle.
10.8 Amendment to Employment Agreement with Randall I. Bresee.
27.1 Financial Data Schedule (EDGAR version only)
+ Filed with bamboo.com's report on Form 8-K, File No. 000-26363, filed with
the Securities and Exchange Commission on November 1, 1999, incorporated
herein by reference.
* Filed with bamboo.com's Registration Statement on Form S-1, Registration No.
333-80639, declared effective by the Securities and Exchange Commission on
August 25, 1999, incorporated herein by reference.
Page 22
<PAGE>
EXHIBIT 10.1
[LETTERHEAD OF BAMBOO.COM APPEARS HERE]
John Assaraf
bamboo.com, Inc.
124 University Avenue
Palo Alto, California 94301
Re: Employment at bamboo.com, Inc.
------------------------------
Dear John:
This letter agreement (the "Letter Agreement") is entered into as of
January 25, 1999 (the "Effective Date"), by and between bamboo.com, Inc., a
Delaware corporation (the "Company"), and John Assaraf, an individual
("Employee").
1. Employment and Duties. Commencing on January 25, 1999 Employee will
---------------------
serve as Senior Vice President, Sales of the Company on a full-time basis.
2. At-Will Employment. Employee's employment with the Company is for no
------------------
specified period and constitutes at-will employment. As a result, Employee is
free to resign at any time, for any reason or for no reason. Similarly, the
Company is free to conclude its employment relationship with Employee at any
time, with or without cause.
3. Salary. For all services to be rendered by Employee pursuant to this
------
Letter Agreement, the Company agrees to pay Employee during Employee's period of
employment a salary at an annual rate of $120,000 (the "Salary"). The Salary
shall be paid in periodic installments in accordance with the Company's regular
payroll practices. The Company agrees to review the Salary annually and to make
increases, if any, as the Company may approve in its sole discretion.
4. Stock Options.
-------------
(a) Base Option. In partial consideration of Employee's services,
-----------
Employee shall receive an option (the "Base Option") to purchase 24,000 shares
(on a pre-split basis) of the Company's Common Stock, vesting as follows,
provided that Employee remains an employee of the Company on each such date:
one-half (1/2) of the shares subject to the Base Option will vest and become
exercisable on January 31, 2000, and an additional one-twenty-fourth (1/24) of
such shares will vest and become exercisable on the last day of each calendar
month thereafter. Notwithstanding
<PAGE>
John Assaraf
Page 2
the foregoing, (i) 50% of the shares subject to Base Option shall accelerate and
become immediately exercisable in the event of an IPO, as defined in Employee's
Stock Option Agreement, and (ii) 100% of such shares shall accelerate and become
immediately exercisable in the event of a Change of Control of the Company or
the involuntary termination of Employee without Cause, as such terms are defined
in Employee's Stock Option Agreement. The exercise price per share shall be
$0.50. The Base Option will be granted pursuant to a Stock Option Agreement
between Employee and the Company, which will include such additional terms and
conditions as are satisfactory to counsel for the Company. The issuance and
terms of the Base Option are subject to approval by the Company's Board of
Directors.
(b) Performance Option. In partial consideration of Employee's
------------------
services, Employee shall receive a second option (the "Performance Option") to
purchase 55,000 shares (on a pre-split basis) of the Company's Common Stock,
vesting in accordance with the following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Performance Criteria (each a "Milestone"): Shares Vested
(Pre-Split Basis)
<S> <C>
US $75,000 in revenue generated through delivery
of virtual tours in April 1999. 5,000
- --------------------------------------------------------------------------------
Direct Sales Force fully in place on or before May 30, 5,000
1999. Note: The force will be considered "fully in place"
when the following members are full-time employees of the
Company: 7 Regional Directors and 62 District Sales Managers
or Account Executives.
- --------------------------------------------------------------------------------
US $120,000 in revenue generated through delivery of
virtual tours in May 1999. 3,750
- --------------------------------------------------------------------------------
Orders received for 3,000 virtual tours in May 1999. 1,250
- --------------------------------------------------------------------------------
US $250,000 in revenue generated through delivery of virtual
tours in June 1999. 7,500
- --------------------------------------------------------------------------------
Orders received for 4,000 virtual tours in June 1999. 2,500
- --------------------------------------------------------------------------------
US $350,000 in revenue generated through delivery of virtual
tours in July 1999. 3,750
- --------------------------------------------------------------------------------
Orders received for 5,000 virtual tours in July 1999. 1,250
- --------------------------------------------------------------------------------
US $500,000 in revenue generated through delivery of virtual
tours in August 1999. 3,750
- --------------------------------------------------------------------------------
Orders received for 6,000 virtual tours in August 1999. 1,250
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
John Assaraf
Page 3
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
US $750,000 in revenue generated through delivery of virtual
tours in September 1999. 3,750
- --------------------------------------------------------------------------------
Orders received for 7,000 virtual tours in September 1999. 1,250
- --------------------------------------------------------------------------------
Fourth Quarter 1999 performance goals to be determined. 15,000
- --------------------------------------------------------------------------------
TOTAL: 55,000
- --------------------------------------------------------------------------------
</TABLE>
In the event that Employee reaches a Milestone specified above for a given
period, all shares subject to the Performance Option corresponding to such
period will vest on the last day of such period. In the event that Employee
fails to reach a Milestone specified above for any given period, no shares
subject to the Performance Option corresponding to such period will vest
during such period or at any time thereafter. The parties agree that the
shares subject to the Performance Option corresponding to April, May, June,
July, August and September 1999 are fully vested. The exercise price per
share shall be $0.50. The Performance Option will be granted pursuant to a
Stock Option Agreement between Employee and the Company, which will include
such additional terms and conditions as are satisfactory to counsel for the
Company. The issuance and terms of the Performance Option are subject to
approval by the Company's Board of Directors.
(c) Option for Internet Marketing Advisory Board. In the event
--------------------------------------------
Employee assembles and fully implements an Internet Marketing Advisory
Board for the Company consisting of a group of real estate professionals
acceptable to the Company, Employee shall receive a third option (the "IMAB
Option") to purchase 10,000 shares (on a pre-split basis) of the Company's
Common Stock. The Company and Employee agree that Employee assembled and
fully implemented the Internet Marketing Advisory Board on or around April
1, 1999. All shares subject to the IMAB Option will be fully vested at the
time of grant. The exercise price per share shall be $0.75. The IMAB Option
will be granted pursuant to a Stock Option Agreement between Employee and
the Company, which will include such additional terms and conditions as are
satisfactory to counsel for the Company. The issuance and terms of the IMAB
Option are subject to approval by the Company's Board of Directors.
5. Other Benefits.
--------------
(a) Cash Allowances. In addition to the Salary, during the
---------------
Employment Period, Employee shall receive the following monthly allowances
on an accountable basis (collectively, the "Cash Allowances"): (i) a
housing allowance not to exceed $2,000; (ii) an airfare allowance not to
exceed $1,000 per month for personal commute from Los Angeles to San
Francisco; and (iii) a car allowance not to exceed $500. In the event the
Company is relocated to the Los Angeles region, the Company shall
immediately cease paying Employee the Cash Allowances.
<PAGE>
John Assaraf
Page 4
(b) General. In addition to the Cash Allowances set forth in Section
-------
5(a), during the Employment Period, Employee shall be entitled to participate in
all other employee benefit plans, programs, insurances, and perquisites of the
Company accorded to other employees of the Company at Employee's same or similar
level of seniority. The Company may modify the benefits it offers to its
employees from time to time as it deems necessary.
6. Vacations and Holidays. Employee shall be entitled to the amount of
----------------------
paid vacation and Company holidays accorded to employees of the Company at
Employee's same or similar level of seniority in accordance with the Company's
policies in effect from time to time; provided, however, that such amount of
paid vacation shall in no event be less than two (2) weeks annually.
7. Termination Benefits. In the event Employee's employment terminates,
--------------------
then Employee shall be entitled to receive severance and other benefits, if any,
in accordance with the Company's written policies, if any, in effect from time
to time for employees of the Company at Employee's same or similar level of
seniority. In addition:
(a) If the Company terminates Employee's employment for Cause or if
Employee voluntarily terminates his employment without Good Reason (as defined
below), the Company's obligation to compensate Employee shall in all respects
cease as of the termination date, except that the Company shall pay Employee the
Salary accrued under Section 3, the value of any accrued vacation time pursuant
to Section 5.1 hereof, and the reimbursable expenses incurred under Section 5(a)
up to such termination date (the "Accrued Obligations");
(b) If Employee's employment is terminated due to the death of
Employee, the Company's obligation to compensate Employee shall in all respects
cease as of the termination date, except that within thirty (30) days after the
termination date, the Company shall pay Employee's estate or legal
representative the Accrued Obligations;
(c) If Employee's employment is terminated upon the permanent
disability of Employee, the Company's obligation to compensate Employee with
respect to the Salary (as in effect on the termination date) shall continue for
twelve (12) months following such termination. In addition, the Company shall
pay Employee any Accrued Obligations; and
(d) If Employee's employment is terminated by the Company without
Cause, or by Employee for Good Reason, the Company's obligation to compensate
Employee shall in all respects cease, except that within thirty (30) days after
the termination date, the Company shall pay Employee the Accrued Obligations and
during the period ending on the expiration of the fourth month following the
termination date the Company shall pay to Employee each month one-twelfth
(1/12th) of the annual Salary of Employee in effect at the termination date
(the "Continuation Payments"). Notwithstanding the foregoing, in the event such
termination without Cause occurs within two (2) years of a Change of Control of
the Company, the full amount of the Continuation Payments will be paid in a lump
sum within ten (10) days of such Change of Control. The Company
<PAGE>
John Assaraf
Page 5
shall be excused from its obligations to make the Continuation Payments if
Employee breaches his obligations under this Agreement or the Confidentiality
Agreement (as defined below).
"Good Reason" means: (1) because the Company has materially reduced the title,
role or responsibilities of Employee; provided, however, that a reduction in
duties, position or responsibilities solely by virtue of the Company being
acquired and made part of a larger entity shall not constitute "Good Reason;"
(2) because the Company has reduced Employee's Salary from the level in effect
immediately prior to such change, with the exception of a company-wide reduction
of compensation due to economic considerations; (3) because the Company has
breached any material term of this Agreement; or (4) because the Company has
relocated its principal place of business more than 35 miles from its current
location.
8. Confidential Information. Employee will be expected to sign and
------------------------
comply with the Company's Employment, Confidential Information, Invention
Assignment and Arbitration Agreement (the "Confidentiality Agreement"), which
requires, among other provisions, the assignment of patent rights to any
invention made during Employee's employment at the Company and nondisclosure of
proprietary information.
9. Miscellaneous. This Letter Agreement, and any written plan or
-------------
agreement referred to herein (including Employee's Stock Option Agreements),
represent the entire agreement and understanding between the parties as to the
subject matter hereof and supersede all prior or contemporaneous agreements,
whether written or oral. No waiver, alteration, or modification of any of the
provisions of this Letter Agreement shall be binding unless in writing and
signed by duly authorized representatives of the parties hereto. Failure or
delay on the part of either party hereto to enforce any right, power, or
privilege hereunder shall not be deemed to constitute a waiver thereof.
Additionally, a waiver by either party or a breach of any promise hereof by the
other party shall not operate as or be construed to constitute a waiver of any
subsequent waiver by such other party. Whenever possible, each provision of this
Letter Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Letter Agreement is held to
be invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Letter
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein. This Letter Agreement shall be governed by and construed in accordance
with the internal substantive laws, and not the choice of law rules, of the
State of California.
<PAGE>
John Assaraf
Page 6
Kindly confirm your agreement with, and acceptance of, all of the foregoing
by signing this Letter Agreement where indicated below.
Very truly yours,
BAMBOO.COM, INC.
By: /s/ Leonard B. McCurdy
----------------------------------
Name: Leonard McCurdy
----------------------------------
Title: Chairman & Chief Executive Officer
----------------------------------
UNDERSTOOD AND AGREED:
JOHN ASSARAF
/s/ John Assaraf
- ------------------------------
Signature
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment"), dated as of
October 22, 1999, between bamboo.com, Inc., a Delaware corporation (formerly
known as Jutvision Corporation) (the "Company"), and John Assaraf, ("Employee"),
amends the Letter Agreement, entered into as of January 25, 1999, between
bamboo.com and Employee (the "Agreement").
IN CONSIDERATION of the mutual promises and covenants contained herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties agree as follows:
1. Base Salary. Effective October 1, 1999, the Base Salary set forth in
-----------
Section 3 of the Agreement is increased to an annual rate of $220,000.
2. Miscellaneous. Except as expressly amended hereby, the Agreement is,
-------------
and shall remain, in full force and effect and each and every term and condition
thereof is hereby confirmed, continued and ratified. All terms defined in the
Agreement, except as otherwise defined herein, shall have the same meanings
where used herein. This Amendment may not be altered, amended or modified in any
way except by a writing signed by both parties. This Amendment may be executed
by exchange of signature pages by facsimile and/or in any number of
counterparts, each of which shall be an original as against the party whose
signature appears thereon and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
BAMBOO.COM, INC. JOHN ASSARAF
By: /s/ Leonard B. McCurdy /s/ John Assaraf
----------------------------- --------------------------
Name: Leonard B. McCurdy
-----------------------------
Title: Chairman and CEO
-----------------------------
<PAGE>
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 22nd day
of January, 1999, by and among Jutvision Corporation, a Delaware corporation
(the "Corporation"), and the persons whose names are listed as purchasers on the
signature pages hereof (with its permitted successors and assigns, individually,
the "Purchaser" and collectively, the "Purchasers").
WHEREAS, the Purchasers have subscribed for 106,383 shares of Series A-l
Convertible Preferred Stock of the Corporation, $.001 par value per share (the
"Shares"), each pursuant to the terms of a Share Subscription, Right of First
Refusal and Voting Agreement of even date herewith (the "Subscription
Agreements");
WHEREAS, pursuant to the terms of the Subscription Agreements, the
Corporation has on the date hereof issued the Shares to the Purchasers;
WHEREAS, all of the Shares are "restricted securities" within the meaning
of the Securities Act of 1933, as amended;
WHEREAS, the Purchasers desire to be able to transfer the Shares from time
to time by making public offers and sales of the Shares; and
WHEREAS, the Corporation is willing to accommodate the Purchasers' desire
to sell the Shares by causing the Shares to be registered for resale from time
to time on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the Subscription Agreements and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall mean the voting common stock of the Corporation, $.001
par value per share.
"Registrable Shares" shall mean (i) shares of Common Stock issued or
issuable upon conversion of the Shares and (ii) any other shares of Common Stock
issued with respect to the Shares by reason of stock dividends, stock splits,
recapitalizations, reorganizations or similar corporate action.
"Registration Expenses" and "Selling Expenses" shall mean the expenses
described in Section 5.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, as the same shall be in
effect from time to time.
SECTION 2. Piggy-Back Registration. (a) If the Corporation for itself or
-----------------------
any of its security holders shall, at any time or times prior to the time at
which all of the Registrable Shares are transferable in one transaction pursuant
to Rule 144 under the Securities Act, without regard
<PAGE>
to the limitations contained in Rule 144(e) on the amount of Registrable Shares
that may be sold pursuant thereto, determine to register under the Securities
Act any shares of its capital stock or other securities (other than the
registration of an offer, sale or other disposition of securities (i) to
employees of, or other persons providing services to, the Corporation or any
subsidiary pursuant to an employee or similar benefit plan, registered on
Form S-8, a comparable or successor form or another form which is used solely
for the purpose of registering such plan, or (ii) relating to a merger,
acquisition or other transaction of the type described in Rule 145 under the
Securities Act or comparable or successor rule, register on Form S-4 or similar
or successor forms), the Corporation will notify the Purchasers of such
determination, and, upon written request received from the Purchasers by the
Corporation within ten (10) business days after the notice is given by the
Corporation, the Corporation will use its reasonable best efforts, as soon as
practicable thereafter, to cause any of the Registrable Shares specified by the
Purchasers to be included in such registration statement to the extent and under
the conditions such registration is permissible under the Securities Act.
Notwithstanding the foregoing, in the event the proposed registration is in
whole or in part an underwritten public offering and if the managing
underwriter(s) determine(s) and advises the Corporation that the inclusion of
some or all of the Registrable Shares requested to be included in the
registration concurrently with the securities being registered by the
Corporation would interfere with the successful marketing of such securities,
then the number of Registrable Shares otherwise to be included in the
registration statement by the Purchasers shall be reduced to the required level
(i) first, in the event that the shares of capital stock being registered in
such proposed registration include original issuance shares of the Corporation
or shares of capital stock to be sold in connection with a securityholder's
exercise of demand registration rights or piggyback registration rights pursuant
to agreements entered into after the date hereof between the Corporation and
certain of its securityholders which provide that such securityholders may
exercise either demand or piggyback registration rights, by reducing or
excluding the Registrable Shares proposed to be sold by the Purchasers; and (ii)
second, by reducing the participation of the Purchasers in such offering pro
rata among such Purchasers requesting such registration, based upon the number
of Registrable Shares then owned by such Purchasers. Notwithstanding the
foregoing provisions, the Corporation may withdraw any registration statement
referred to in this Section 2(a) without thereby incurring any liability to any
Purchaser. If any Purchaser disapproves of the terms of any such underwriting,
such Purchaser may elect to withdraw therefrom by written notice to the
Corporation and the managing underwriter(s). Any Registrable Shares withdrawn
from such underwriting shall be withdrawn from such registration.
SECTION 3. Conditions of Obligation to Register Registrable Shares. As
-------------------------------------------------------
conditions to the Corporation's obligation hereunder to cause a registration
statement to be filed or Registrable Shares to be included in a registration
statement, the Purchasers shall (a) provide such information and execute such
documents as may reasonably be required in connection with such registration,
(b) agree to sell their Registrable Shares on the basis provided in any
underwriting arrangements and (c) complete and execute all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements, which arrangements
shall not be inconsistent herewith.
SECTION 4. Registration Procedures. If and whenever the Corporation is
-----------------------
required by the provisions of this Agreement to use its reasonable best efforts
to include any of the Registrable Shares in a registration statement filed under
the Securities Act, the Corporation shall, as expeditiously as possible:
2
<PAGE>
4.1 Prepare and file with the Commission a registration statement
with respect to such Registrable Shares and use its reasonable best efforts
to cause such registration statement to become and remain effective.
4.2 Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for not more than thirty (30) days from the date of its
effectiveness (plus such additional time during which the Purchasers must
cease making offers and sales, as provided in Section 4.5) or (unless
otherwise required by the Securities Act) until the Registrable Shares
covered thereunder have been sold, whichever is earlier.
4.3 Furnish to the Purchasers such reasonable number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents as any Purchaser may reasonably
request in order to facilitate the disposition of its Registrable Shares.
4.4 Use its reasonable best efforts to register or qualify the
Registrable Shares covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the managing
underwriter(s) shall reasonably request, and use its best efforts to do any
and all other acts and things which may be necessary or advisable so to
register or qualify the Registrable Shares to enable the Purchasers to
consummate the disposition of the Registrable Shares owned by the
Purchasers in such jurisdictions during the period covered in Section 4.2;
provided that the Corporation shall not be obligated to qualify to do
business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to the service of process in suits other
than those arising out of the offer or sale of the securities covered by
the registration statement in any jurisdiction where it is not then so
subject.
4.5 Notify the Purchasers of any Registrable Shares covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing. Each Purchaser agrees upon receipt of such
notice, forthwith to cease making offers and sales of the Registrable
Shares pursuant to such registration statement or deliveries of the
prospectus contained therein for any purpose and to return to the
Corporation, for modification and exchange, the copies of such prospectus
not theretofore delivered by such Purchaser; provided, that the Corporation
shall forthwith prepare and furnish, after securing such approvals as may
be necessary, to the Purchasers a reasonable number of copies of any
supplement to or amendment of such prospectus that may be necessary so
that, as thereafter delivered to the buyers of such Registrable Shares,
such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing.
4.6 Promptly notify the Purchasers of any stop order or similar
proceeding initiated by state or Federal regulatory bodies and use its best
efforts to take all necessary steps expeditiously to remove such stop order
or similar proceeding.
3
<PAGE>
4.7 Furnish, at the reasonable request of any Purchaser, in the event
that such Purchaser is requesting registration of Registrable Shares
pursuant to Section 2, on the date that such Registrable Shares are
delivered to the underwriter for sale in connection with a registration
pursuant to Section 2, if such securities are being sold through
underwriters, or on the date that the registration statement with respect
to such securities becomes effective, if such securities are not sold
through underwriters: (a) an opinion, dated as of such date, of the counsel
representing the Corporation for the purposes of such registration in form
and substance as is customarily given to underwriters, in an underwritten
public offering, addressed to the underwriters, if any, and to such
Purchaser; and (b) a letter, dated as of such date, from the independent
certified public accountants of the Corporation, in form and substance as
is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and, if none, then to such Purchaser.
SECTION 5. Description of Expenses. All expenses incurred by the
-----------------------
Corporation in complying with any of the foregoing provisions of this Agreement,
including, without limitation, all Federal (including Commission and National
Association of Securities Dealers, Inc.) and state registration qualification
and filing fees, printing expenses, any premium involved in securing a policy or
policies of registration insurance (but only if the Corporation in its sole
discretion shall choose to secure such a policy or policies, such policy or
policies to be herein referred to as "registration insurance"), fees and
disbursements of counsel for the Corporation, and accountants fees and expenses
(but excluding the compensation of regular employees of the Corporation which
shall be paid in any event by the Corporation), incident to or required by any
such registration are herein called "Registration Expenses." All underwriting
discounts, selling commissions and transfer taxes applicable to the sale of
Registrable Shares hereunder are herein called "Selling Expenses."
If the Corporation is required by the provisions of this Agreement to use
its reasonable best efforts to effect the registration of any of the Registrable
Shares under the Securities Act, all Selling Expenses incurred in connection
with registration statements covering Registrable Shares shall be borne by the
Purchasers participating in such registration, pro rata, and all Registration
Expenses shall be borne by the Corporation.
SECTION 6. Indemnification; Underwriting Agreements.
-----------------------------------------
Registrations. In the event that the Corporation registers any shares under
-------------
the Securities Act pursuant to the provisions of this Agreement:
6.1 The Corporation agrees to indemnify and hold harmless each
Purchaser against any and all losses, claims, damages, liabilities or
expenses, joint or several, arising out of or based upon any violation of
the Securities Act, the Securities Exchange Act of 1934, as amended, any
rules and regulations promulgated thereunder or any untrue statement or
alleged untrue statement of a material fact in any related registration
statement, prospectus, offering circular, notification or other document or
any omission or alleged omission of any material fact required to be stated
therein or necessary to make the statements therein not misleading, unless
such statement or omission was made in reliance upon a statement in writing
furnished by or on behalf of such Purchaser for inclusion therein or an
omission or failure by such Purchaser to furnish any statement with respect
to such Purchaser required to be included therein. Promptly after receipt
by any Purchaser of notice of the commencement of any action in respect of
which
4
<PAGE>
indemnity may be sought against the Corporation, such Purchaser shall
notify the Corporation in writing of the commencement thereof, and, subject
to the provisions hereinafter stated, receipt of such notice and such
Purchaser's reasonable cooperation, the Corporation shall assume the
defense of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to such Purchaser, and the payment of
expenses and such counsel's fees) insofar as such action shall relate to
any alleged liability in respect of which indemnity may be sought against
the Corporation. Such Purchaser shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but
the fees and expenses of such counsel shall not be at the expense of the
Corporation unless the employment of such counsel has been specifically
authorized by the Corporation or unless such Purchaser shall have in good
faith reasonably concluded that there may be a conflict of interest between
the Corporation and such Purchaser in the conduct of the defense of the
action. In connection with any offering under this Agreement which is to be
underwritten, the Corporation further agrees to enter into an underwriting
agreement in usual and standard form, reasonably satisfactory to the
Purchasers, respecting such offering; provided that the terms of such
--------
underwriting agreement shall not be inconsistent or conflict with the
provisions of this Agreement.
6.2 The obligations of the Corporation under this Agreement are
subject to the following conditions, which each Purchaser hereby agrees to
fulfill: (a) such Purchaser shall agree, in writing, prior to the filing of
such registration or qualification, and hereby does agree, to indemnify and
hold harmless the Corporation, each person, if any, who controls the
Corporation within the meaning of the Securities Act and the officers and
directors of the Corporation, against any and all losses, claims, damages,
liabilities or expenses arising out of or based upon any untrue statement
or alleged untrue statement of a material fact in any related registration
statement, prospectus, offering circular, notification or other document or
alleged omission of any material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to statements or omissions made in reliance upon a statement in
writing furnished by or on behalf of such Purchaser for inclusion therein
and with reference to statements or omissions made in reliance upon an
omission or failure by such Purchaser to furnish any statement with respect
to such Purchaser required to be included therein and (b) if such
registration or qualification relates to an offering which is to be
underwritten, that such Purchaser enters into an underwriting agreement in
usual and standard form respecting such offering; provided, further, that
the terms of such underwriting agreement shall not be inconsistent or
conflict with the provisions of this Agreement. Promptly after receipt of
notice of the commencement of any action in respect of which indemnity may
be sought against a Purchaser, the Corporation will notify such Purchaser
in writing of the commencement thereof, and such Purchaser shall, subject
to the provisions hereinafter stated, assume the defense of such action
(including the employment of counsel, who shall be counsel reasonably
satisfactory to the Corporation, and the payment of expenses and such
counsel's fees) insofar as such action shall relate to the alleged
liability in respect of which indemnity may be sought against such
Purchaser. The Corporation and each such director, officer, or controlling
person shall have the right to employ separate counsel in any such action
and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of such Purchaser unless
employment of such counsel has been specifically authorized by such
Purchaser or unless an Indemnified Party (as defined in Section 6.3, below)
shall have in good faith reasonably concluded that there may be a conflict
of interest between the Indemnified Party and such Purchaser in the conduct
of the defense of the action.
5
<PAGE>
6.3 A party required to indemnify another party pursuant to this
Section 6 ("Indemnifying Party") shall not be liable for any settlement of
any action or claim relating to such liability or expense effected without
its consent, but if any settlement is effected with its consent or if a
final judgment for the plaintiff is entered in any such action, such
Indemnifying Party agrees to indemnify and hold harmless the party so
indemnified ("Indemnified Party") from and against any loss or liability by
reason of any such settlement or judgment. The Indemnifying Party shall
indemnify the Indemnified Party for expenses, including but not limited to
fees and disbursements of counsel, incurred by the Indemnified Party in
connection with the indemnification proceeding as such expenses are
incurred.
SECTION 7. Intentionally omitted.
---------------------
SECTION 8. Market Stand-off. Each Purchaser agrees, if requested by the
----------------
Corporation and/or the representative of the underwriters underwriting an
offering of the Common Stock (or other securities) of the Corporation, not to
sell or otherwise transfer or dispose of any Registrable Shares held by such
Purchaser during the one hundred and eighty (180) day period following the
effective date of a registration statement of the Corporation filed under the
Securities Act.
Such agreement shall be in writing in a form satisfactory to the
Corporation and such representative. The Corporation may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of said one hundred and eighty (180) day period.
SECTION 9. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telecopy or facsimile transmission, (iii) sent by recognized
overnight courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid:
If to the Corporation:
Jutvision Corporation
124 University Avenue
Palo Alto, CA 94103
Attn: President
6
<PAGE>
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Peter S. Lawrence, Esq.
If to a Purchaser at such Purchaser's address set forth in the Company
shareholder registry.
All notices, requests, consents and other communications hereunder shall be
deemed to have been received (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above or as so
designated, (ii) if made by telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service or (iv) if sent by registered or
certified mail, on the fifth business day following the day such mailing is
made.
SECTION 10. Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
SECTION 11. Modifications and Amendments. The terms and provisions of this
----------------------------
Agreement may be amended, modified, supplemented or waived only by written
agreement executed by all parties hereto.
SECTION 12. No Waiver of Rights, Powers and Remedies. No failure or delay
----------------------------------------
by a party hereto in exercising any right, power or remedy under this Agreement,
and no course of dealing between the parties hereto, shall operate as a waiver
of any such right, power or remedy of the party. No single or partial exercise
of any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand. The terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
7
<PAGE>
SECTION 13. Assignment. Neither this Agreement, nor any right or obligation
----------
hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties.
SECTION 14. Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto and their permitted assigns,
and nothing in this Agreement, express or implied, (i) is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement or (ii) shall be construed to create any rights or
obligations except among the parties hereto, and no person shall be regarded as
a third-party beneficiary of this Agreement.
SECTION 15. Governing Law. This Agreement and the rights and obligations of
-------------
the parties hereunder shall be construed in accordance with and governed by the
internal law of the State of Delaware, without giving effect to the conflicts of
law principles thereof.
SECTION 16. Severability. In the event that any court of competent
------------
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court determines
it enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine that any such provision, or portion
thereof, is wholly unenforceable, the remaining provisions of this Agreement
shall nevertheless remain in full force and effect.
SECTION 17. Headings and Captions. The headings and captions of the various
---------------------
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect, or be considered in construing or interpreting the
meaning or construction of any of the terms or provisions hereof.
SECTION 18. Enforcement. Each of the parties hereto acknowledges and agrees
-----------
that the rights acquired by each party hereunder are unique and that irreparable
damage would occur in the event that any of the provisions of this Agreement to
be performed by the other parties were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, in addition to any other
remedy to which the parties hereto are entitled at law or in equity, each party
hereto shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement by the other parties and to enforce specifically the terms and
provisions hereof in any federal or state court of competent jurisdiction.
SECTION 19. Expenses. Except as expressly provided in Section 5 hereof,
--------
each of the parties hereto shall pay its own fees and expenses (including the
fees of any attorneys, accountants, appraisers or others engaged by such party)
in connection with this Agreement and the transactions contemplated hereby
whether or not the transactions contemplated hereby are consummated.
SECTION 20. Publicity. No party hereto may issue any press release or
---------
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement without the prior written consent
of the other parties hereto, except as may be required by applicable law. Prior
to making any public disclosure so required by applicable law, the disclosing
party shall give the other parties a copy of the proposed disclosure and
reasonable opportunity to prescribe or limit the same.
8
<PAGE>
SECTION 21. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the parties hereto in separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
JUTVISION CORPORATION
By:________________________________________
Name: Leonard McCurdy
Title: Chairman and Chief Executive Officer
PURCHASERS
By:________________________________________
Name:
Title:
9
<PAGE>
EXHIBIT 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment"), dated as of
October 15, 1999, between bamboo.com, Inc., a Delaware corporation (formerly
known as Jutvision Corporation) (the "Company"), and Leonard B. McCurdy,
("Employee"), amends the Employment Agreement, dated as of January 1, 1999,
between bamboo.com and Employee (the "Agreement").
IN CONSIDERATION of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
1. Base Salary. Effective October 1, 1999, the Base Salary set forth
-----------
in Section 4.1 of the Agreement is increased to an annual rate of $280,000.
2. Payments Upon Termination of Employment. The period for payment
---------------------------------------
of the Continuation Payments specified in Section 7.1(d) of the Agreement is
increased from six months to twelve months.
3. Miscellaneous. Except as expressly amended hereby, the Agreement
-------------
is, and shall remain, in full force and effect and each and every term and
condition thereof is hereby confirmed, continued and ratified. All terms
defined in the Agreement, except as otherwise defined herein, shall have the
same meanings where used herein. This Amendment may not be altered, amended or
modified in any way except by a writing signed by both parties. This Amendment
may be executed by exchange of signature pages by facsimile and/or in any number
of counterparts, each of which shall be an original as against the party whose
signature appears thereon and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
BAMBOO.COM, INC. LEONARD B. MCCURDY
By: /s/ Andrew P. Laszlo /s/ Leonard B. McCurdy
----------------------------------- ------------------------------
Name: Andrew P. Laszlo
----------------------------------
Title: Senior VP, Business Development
---------------------------------
<PAGE>
EXHIBIT 10.4
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment"), dated as of
October 15, 1999, between bamboo.com, Inc., a Delaware corporation (formerly
known as Jutvision Corporation) (the "Company"), and Kevin B. McCurdy,
("Employee"), amends the Employment Agreement, dated as of January 1, 1999,
between bamboo.com and Employee (the "Agreement").
IN CONSIDERATION of the mutual promises and covenants contained herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties agree as follows:
1. Base Salary. Effective October 1, 1999, the Base Salary set forth in
-----------
Section 4.1 of the Agreement is increased to an annual rate of $240,000.
2. Miscellaneous. Except as expressly amended hereby, the Agreement is,
-------------
and shall remain, in full force and effect and each and every term and condition
thereof is hereby confirmed, continued and ratified. All terms defined in the
Agreement, except as otherwise defined herein, shall have the same meanings
where used herein. This Amendment may not be altered, amended or modified in any
way except by a writing signed by both parties. This Amendment may be executed
by exchange of signature pages by facsimile and/or in any number of
counterparts, each of which shall be an original as against the party whose
signature appears thereon and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
BAMBOO.COM, INC. KEVIN B. MCCURDY
By: /s/ Leonard B. McCurdy /s/ Kevin B. McCurdy
----------------------- --------------------
Name: Leonard B. McCurdy
---------------------
Title: Chairman & CEO
--------------------
<PAGE>
EXHIBIT 10.5
THIS AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment"), dated as of
October 15, 1999, between bamboo.com, Inc., a Delaware corporation (formerly
known as Jutvision Corporation) (the "Company"), and Andrew P. Laszlo,
("Employee"), amends the Employment Agreement, dated as of January 1, 1999,
between bamboo.com and Employee (the "Agreement").
IN CONSIDERATION of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
1. Base Salary; Bonus Compensation. Effective October 1, 1999: (i)
-------------------------------
the Base Salary set forth in Section 4.1 of the Agreement is increased to an
annual rate of $240,000 and (ii) notwithstanding Section 4.2 of the Agreement,
Employee shall receive no Bonus Compensation for the fourth quarter of 1999 or
for any quarter of 2000.
2. Miscellaneous. Except as expressly amended hereby, the Agreement
-------------
is, and shall remain, in full force and effect and each and every term and
condition thereof is hereby confirmed, continued and ratified. All terms defined
in the Agreement, except as otherwise defined herein, shall have the same
meanings where used herein. This Amendment may not be altered, amended or
modified in any way except by a writing signed by both parties. This Amendment
may be executed by exchange of signature pages by facsimile and/or in any number
of counterparts, each of which shall be an original as against the party whose
signature appears thereon and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
BAMBOO.COM, INC. ANDREW P. LASZLO
By: /s/ Leonard B. McCurdy /s/ Andrew P. Laszlo
-------------------------- --------------------------------
Name: Leonard B. McCurdy
------------------------
Title: Chairman and CEO
-----------------------
<PAGE>
EXHIBIT 10.6
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment"), dated as of
October 15, 1999, between bamboo.com, Inc., a Delaware corporation (formerly
known as Jutvision Corporation) (the "Company"), and Howard Field, ("Employee"),
amends the Employment Agreement, dated as of January 1, 1999, between bamboo.com
and Employee (the "Agreement").
IN CONSIDERATION of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
1. Base Salary. Effective October 1, 1999, the Base Salary set forth
-----------
in Section 4.1 of the Agreement is increased to an annual rate of $180,000.
2. Miscellaneous. Except as expressly amended hereby, the Agreement
-------------
is, and shall remain, in full force and effect and each and every term and
condition thereof is hereby confirmed, continued and ratified. All terms
defined in the Agreement, except as otherwise defined herein, shall have the
same meanings where used herein. This Amendment may not be altered, amended or
modified in any way except by a writing signed by both parties. This Amendment
may be executed by exchange of signature pages by facsimile and/or in any number
of counterparts, each of which shall be an original as against the party whose
signature appears thereon and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
BAMBOO.COM, INC. HOWARD FIELD
By: /s/ Leonard B. McCurdy /s/ Howard Field
------------------------------- --------------------------
Name: Leonard B. McCurdy
-----------------------------
Title: Chairman and CEO
----------------------------
<PAGE>
EXHIBIT 10.7
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment"), dated as of
October 15, 1999, between bamboo.com, Inc., a Delaware corporation (formerly
known as Jutvision Corporation) (the "Company"), and Mark Searle, ("Employee"),
amends the Amended and Restated Employment Agreement, dated as of January 25,
1999, between bamboo.com and Employee (the "Agreement").
IN CONSIDERATION of the mutual promises and covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
1. Base Salary. Effective October 1, 1999, the Base Salary set forth
-----------
in Section 3 of the Agreement is increased to an annual rate of $230,000.
2. Miscellaneous. Except as expressly amended hereby, the Agreement
-------------
is, and shall remain, in full force and effect and each and every term and
condition thereof is hereby confirmed, continued and ratified. All terms defined
in the Agreement, except as otherwise defined herein, shall have the same
meanings where used herein. This Amendment may not be altered, amended or
modified in any way except by a writing signed by both parties. This Amendment
may be executed by exchange of signature pages by facsimile and/or in any number
of counterparts, each of which shall be an original as against the party whose
signature appears thereon and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
BAMBOO.COM, INC. MARK SEARLE
By: /s/ Leonard B. McCurdy /s/ Mark Searle
--------------------------- ---------------------------
Name: Leonard B. McCurdy
-------------------------
Title: Chairman and CEO
------------------------
<PAGE>
EXHIBIT 10.8
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment"), dated as of
October 15, 1999, between bamboo.com, Inc., a Delaware corporation (formerly
known as Jutvision Corporation) (the "Company"), and Randy Bresee, ("Employee"),
amends the Letter Agreement, dated as of April 1, 1999, between bamboo.com and
Employee (the "Agreement").
IN CONSIDERATION of the mutual promises and covenants contained herein, and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties agree as follows:
1. Base Salary. Effective October 1, 1999, the Base Salary set forth in
-----------
Section 3 of the Agreement is increased to an annual rate of $210,000.
2. Miscellaneous. Except as expressly amended hereby, the Agreement is,
-------------
and shall remain, in full force and effect and each and every term and condition
thereof is hereby confirmed, continued and ratified. All terms defined in the
Agreement, except as otherwise defined herein, shall have the same meanings
where used herein. This Amendment may not be altered, amended or modified in any
way except by a writing signed by both parties. This Amendment may be executed
by exchange of signature pages by facsimile and/or in any number of
counterparts, each of which shall be an original as against the party whose
signature appears thereon and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
BAMBOO.COM, INC. RANDY BRESEE
By: /s/ Leonard B. McCurdy /s/ Randall I. Bresee
----------------------- ---------------------
Name: Leonard B. McCurdy
---------------------
Title: Chairman and CEO
--------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 27,461
<SECURITIES> 0
<RECEIVABLES> 126
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,728
<PP&E> 2,402
<DEPRECIATION> 0
<TOTAL-ASSETS> 31,130
<CURRENT-LIABILITIES> 6,099
<BONDS> 0
0
0
<COMMON> 25,031
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 31,130
<SALES> 1,798
<TOTAL-REVENUES> 1,798
<CGS> 1,450
<TOTAL-COSTS> 31,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,351
<INCOME-PRETAX> (38,194)
<INCOME-TAX> 0
<INCOME-CONTINUING> (38,194)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,194)
<EPS-BASIC> (3.88)
<EPS-DILUTED> (3.88)
</TABLE>
