<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 1999
REGISTRATION NO. 333-80849
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SUNHAWK.COM CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
WASHINGTON 2741 91-156830
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
223 TAYLOR AVENUE NORTH, SUITE 200
SEATTLE, WASHINGTON 98109
(206) 728-6063
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE
OF BUSINESS)
MARLIN ELLER
CHIEF EXECUTIVE OFFICER AND PRESIDENT
SUNHAWK.COM CORPORATION
223 TAYLOR AVENUE NORTH, SUITE 200
SEATTLE, WASHINGTON 98109
(206) 728-6063
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO BE SENT TO:
<TABLE>
<S> <C>
THE OTTO LAW GROUP, PLLC KELLEY DRYE & WARREN LLP
DAVID M. OTTO, ESQ. M. RIDGWAY BARKER, ESQ.
4553 52ND AVENUE NE TWO STAMFORD PLAZA
SEATTLE, WASHINGTON 98105 281 TRESSER BOULEVARD
(206) 985-1820 STAMFORD, CONNECTICUT 06901
(203) 351-8032
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
-------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 10 of the registrant's Amended and Restated Bylaws
(Exhibit 3.3 hereto) provides for indemnification of the registrant's directors,
officers, employees and agents to the maximum extent permitted by Washington
law. The directors and officers of the registrant also may be indemnified
against liability they may incur for serving in those capacities pursuant to a
liability insurance policy maintained by the registrant for such purpose.
Section 23B.08.320 of the WBCA authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except in certain circumstances involving
intentional misconduct, knowing violations of law or illegal corporate loans or
distributions, or any transaction from which the director personally receives a
benefit in money, property or services to which the director is not legally
entitled. Article VII of the registrant's Amended and Restated Articles of
Incorporation (Exhibit 3.1 hereto) contains provisions implementing, to the
fullest extent permitted by Washington law, such limitations on a director's
liability to the registrant and its shareholders.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnification to
directors and officers on terms sufficiently broad to permit indemnification
under certain circumstances for liabilities (including reimbursement for
expenses incurred) arising under the Securities Act. Article VII of the
registrant's Delaware Certificate of Incorporation (Exhibit 3.2 hereto) and
Article VI of the registrant's Delaware Bylaws (Exhibit 3.4 hereto) provide for
indemnification of the registrant's directors, officers, employees and other
agents to the maximum extent permitted by Delaware law.
The underwriting agreement (Exhibit 1.1 hereto) provides for reciprocal
indemnification between the underwriters and the registrant from and against
certain liabilities arising in connection with the offering which is the subject
of this registration statement.
II-1
<PAGE> 3
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than the
underwriting discounts, payable by the registrant in connection with the sale of
the securities being registered. All amounts are estimates except the Securities
and Exchange Commission registration fee, the NASD filing fee, the Nasdaq
SmallCap(R) listing fee and the Pacific Stock Exchange listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 3,391
NASD Filing Fee............................................. 1,604
Nasdaq SmallCap(R) Listing Fee.............................. 17,500
Pacific Stock Exchange Listing Fee.......................... 23,000
Printing Costs.............................................. 60,000
Legal Fees and Expenses..................................... 200,000
Accounting Fees and Expenses................................ 235,000
Blue Sky Fees and Expenses (including legal fees)........... 70,000
Transfer Agent and Registrar Fees........................... 25,000
Miscellaneous............................................... 38,505
--------
Total............................................. $674,000
========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following is a description of all securities that the registrant has
sold within the past three years without registering the securities under the
Securities Act:
1. On October 9, 1996, the registrant sold 321,058 shares of the
registrant's common stock at a price of $.0000112 per share to one
accredited investor in a private transaction which was exempt from
registration pursuant to Rule 506 of Regulation D under Section 4(2) of the
Securities Act.
2. On December 4, 1996 and October 5, 1998, 12,842 and 25,684 shares
of the registrant's common stock, respectively, were issued to one
individual upon the exercise of stock options granted pursuant to the
registrant's 1996 Stock Option Plan at a per share exercise price of
$.0000096. Such issuances were exempt from registration pursuant to Rule
701 under the Securities Act.
3. On March 10, 1998, the registrant sold 12,331 shares of the
registrant's common stock at a price of $8.11 per share to one accredited
investor in a private transaction which was exempt from registration
pursuant to Rule 506 of Regulation D under Section 4(2) of the Securities
Act.
4. On March 31, 1999, the registrant issued 138,371 shares of the
registrant's common stock pursuant to the distribution agreement by and
between the registrant and Warner Bros. Publications U.S. Inc. ("Warner").
The transaction was exempt from registration pursuant to Section 4(2) of
the Securities Act.
5. On March 31, 1999, the Eller and McConney 1995 Family Living Trust
converted $3,568,406 of debt owed to it by the registrant into 374,257
shares of the registrant's common stock at a price per share of $9.53. On
this same date, the Eller and McConney 1995 Family Living Trust forgave
$1,000,000 of long-term debt owed to it by the registrant and purchased an
additional 157,345 shares of the registrant's common stock for an aggregate
of $1,500,000, at a price per share of $9.53 per share.
II-2
<PAGE> 4
These transactions were exempt from registration pursuant to Section 4(2)
of the Securities Act.
ITEM 27. EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1+ Form of Underwriting Agreement.
1.2+ Form of Representative's Warrant Agreement.
3.1 Amended and Restated Articles of Incorporation.
3.2++ Certificate of Incorporation (Delaware).
3.3 Amended and Restated Bylaws.
3.4++ Form of Bylaws (Delaware).
4.1+ Form of Specimen Stock Certificate.
4.2 See Exhibits 3.1-3.4 for provisions defining the rights of
the holders of common stock.
5.1+ Opinion of The Otto Law Group, PLLC (including the consent
of such firm)regarding legality of the securities being
issued.
10.1+++ 1996 Stock Option Plan.
10.2*++ Distribution Agreement dated May 18, 1998 by and between
Sunhawk.com Corporation and Warner Bros. Publications U.S.
Inc., as amended.
10.3*++ Distribution Agreement dated as of June 12, 1998 by and
between EMI Christian Music Publishing and Sunhawk.com
Corporation.
10.4*++ Music Conversion Agreement dated as of April 1, 1998 by and
between Sunhawk.com Corporation and International Music
Engraving Company, as amended.
10.5 Lease dated August 10, 1998 by and between 223 Taylor Corp.
and Sunhawk.com Corporation.
10.6+ Form of Employment Agreement between Sunhawk.com and Marlin
Eller.
23.1 Consent of Ernst & Young, LLP, Independent Auditors.
23.2 Consent of The Otto Law Group, PLLC (contained in Exhibit
5.1).
24.1 Power of Attorney (See Page II-5).
27.1 Financial Data Schedule.
</TABLE>
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* Confidential treatment to be requested.
+ To be filed by amendment.
++ Filed herewith.
+++ Replaces previously filed exhibit.
ITEM 28. UNDERTAKINGS
The registrant will provide to the underwriters at the closing specified in
the underwriting agreement certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.
II-3
<PAGE> 5
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The registrant will:
For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant under Rule 424(b)(1), or (4), or
497(h) under the Securities Act as part of the registration statement as of
the time the Securities and Exchange Commission declared it effective.
For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of the securities at that time as the initial
bona fide offering of those securities.
II-4
<PAGE> 6
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Amendment No. 1
to the registration statement to be signed on its behalf by the undersigned, in
the City of Seattle, State of Washington, on the 8th day of July, 1999.
SUNHAWK.COM CORPORATION
By: /s/ MARLIN ELLER
-----------------------------------
Marlin Eller,
President and Chief Executive
Officer
In accordance with the requirements of the Securities Act of 1933, this
Amendment No. 1 to the registration statement has been signed by the following
persons in the capacities indicated below on the 8th day of July, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ MARLIN ELLER Chairman of the Board, Chief Executive
- ------------------------------------------------ Officer and President (Principal
Marlin Eller Executive Officer)
/*/ TRICIA PARKS-HOLBROOK Chief Financial Officer (Principal
- ------------------------------------------------ Financial and Accounting Officer)
Tricia Parks-Holbrook
/*/ FRED ANTON Director
- ------------------------------------------------
Fred Anton
/*/ PATRICIA TANGORA Director
- ------------------------------------------------
Patricia Tangora
/*/ LUIS F. TALAVERA Director
- ------------------------------------------------
Luis F. Talavera
*By /s/ MARLIN ELLER
-----------------------------------------------
As Attorney-In-Fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1+ Form of Underwriting Agreement.
1.2+ Form of Representative's Warrant Agreement.
3.1 Amended and Restated Articles of Incorporation.
3.2++ Certificate of Incorporation (Delaware).
3.3 Amended and Restated Bylaws.
3.4++ Form of Bylaws (Delaware).
4.1+ Form of Specimen Stock Certificate.
4.2 See Exhibits 3.1-3.4 for provisions defining the rights of
the holders of common stock.
5.1+ Opinion of The Otto Law Group, PLLC (including the consent
of such firm) regarding legality of the securities being
issued.
10.1+++ 1996 Stock Option Plan.
10.2*++ Distribution Agreement dated May 18, 1998 by and between
Sunhawk.com Corporation and Warner Bros. Publications U.S.
Inc., as amended.
10.3*++ Distribution Agreement dated as of June 12, 1998 by and
between EMI Christian Music Publishing and Sunhawk.com
Corporation.
10.4*++ Music Conversion Agreement dated as of April 1, 1998 by and
between Sunhawk.com Corporation and International Music
Engraving Company, as amended.
10.5 Lease dated August 10, 1998 by and between 223 Taylor Corp.
and Sunhawk.com Corporation.
10.6+ Form of Employment Agreement between Sunhawk.com and Marlin
Eller.
23.1 Consent of Ernst & Young, LLP, Independent Auditors.
23.2 Consent of The Otto Law Group, PLLC (contained in Exhibit
5.1).
24.1 Power of Attorney (See Page II-5).
27.1 Financial Data Schedule.
</TABLE>
- -------------------------
* Confidential treatment to be requested.
+ To be filed by amendment.
++ Filed herewith.
+++ Replaces previously filed exhibit.
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF INCORPORATION
OF
SUNHAWK.COM CORPORATION
ARTICLE I
The name of this corporation is Sunhawk.com Corporation (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is 10,000,000 shares of common stock, $0.0001 par value, all
of which shall be the same class.
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII, nor
the adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article
<PAGE> 2
VII, shall eliminate or reduce the effect of this Article VII, in respect of any
matter occurring, or any action or proceeding accruing or arising or that, but
for this Article VII, would accrue or arise, prior to such amendment, repeal, or
adoption of an inconsistent provision.
ARTICLE VIII
The right to cumulate votes in the election of directors shall not exist
with respect to shares of stock of this Corporation.
1. Number of Directors. The number of directors which constitutes the
whole Board of Directors of the Corporation shall be designated in the Bylaws of
the Corporation. The names and addresses of the initial Board of Directors are:
Marlin Eller 223 Taylor Avenue North, Suite 200
Seattle, WA 98109
Fred Anton 223 Taylor Avenue North, Suite 200
Seattle, WA 98109
Patricia Tangora 223 Taylor Avenue North, Suite 200
Seattle, WA 98109
Luis F. Talavera 223 Taylor Avenue North, Suite 200
Seattle, WA 98109
2. Election of Directors. Elections of directors need not be by written
ballot unless the Bylaws of the Corporation shall so provide.
ARTICLE IX
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Bylaws of the Corporation.
ARTICLE X
No action shall be taken by the stockholders of the Corporation except at
an annual or special meeting of the stockholders called in accordance with the
Bylaws and no action shall be taken by the stockholders by written consent. Any
corporate action for which the General Corporation Law of the State of Delaware,
as then in effect, would otherwise require approval by either a two-thirds vote
of the stockholders of the Corporation or by a two-thirds vote of one or more
voting groups shall be deemed approved by the stockholders or the voting
group(s) if it is approved by the affirmative vote of the holders of a majority
of shares entitled to vote or, if approval by voting groups is required, by the
holders of a majority of shares within each voting group entitled to vote
separately. Notwithstanding this Article, effect shall be given to any other
provision of these Articles that specifically requires a greater vote for
approval of any particular corporate action.
<PAGE> 3
ARTICLE XI
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE XII
Stockholders who hold shares of the Corporation's common stock issued prior
to the date of the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Initial Public Offering") (or have been granted options to purchase shares
of the Corporation's common stock prior to such date), may not, directly or
indirectly, offer, offer to sell, sell, announce an intention to sell, transfer,
contract to sell, assign, transfer, pledge, hypothecate, grant any option to
purchase or otherwise dispose of (collectively, "Transfer") any shares of the
Corporation's common stock (either pursuant to Rule 144 of the regulations under
the Securities Act of 1933, as amended, or otherwise) for a period of 24 months
following the closing of the Initial Public Offering without first receiving the
prior written consent of the lead underwriter (the "Lead Underwriter") of such
Initial Public Offering. The restrictions contained in this Article XII shall
not apply to any of the shares of the Corporation's common stock sold by the
Corporation in the Initial Public Offering or issued subsequent thereto (other
than upon the exercise of options granted prior to the date of the Initial
Public Offering, to which these restrictions do apply).
In the event that the Lead Underwriter consents to a Transfer during the
24-month restriction period, the execution of any order relating to a Transfer
shall be placed through the Lead Underwriter.
To enable the Corporation to enforce the aforesaid provisions, legends
shall be placed on the securities subject to the restrictions of this Article
XII, and stop-transfer orders shall be made with the transfer agent of the
Corporation's securities with respect to the securities subject to the
restrictions of this Article XII.
ARTICLE XIII
The name and mailing address of the incorporator is:
David M. Otto, Esq.
The Otto Law Group, PLLC
4553 52nd Avenue N.E.
Seattle, WA 98105
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying,
under penalties of perjury, that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 30 day of June,
1999.
----------------------------------------
David M. Otto, Esq.
<PAGE> 1
EXHIBIT 3.4
BYLAWS
OF
SUNHAWK.COM CORPORATION
<PAGE> 2
BYLAWS
OF
SUNHAWK.COM CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, either within or
without the State of Delaware, as may be designated by the board of directors or
in the manner provided in these bylaws. In the absence of any such designation,
stockholders' meetings shall be held at the registered office of the corporation
in the State of Delaware.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and
at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the first
Tuesday of March of each year at the hours of 10:00 a.m. However, if such day
falls on a legal holiday, then the meeting shall be held at the same time and
place on the next succeeding business day. At the meeting, directors shall be
elected and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the chief executive
officer, or by the president.
2
<PAGE> 3
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president or the
secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article
II, that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than ten (10) nor more than sixty (60) days after
the receipt of the request. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.6 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
Subject to the rights of holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation,
(i) nominations for the election of directors, and
(ii) business proposed to be brought before any stockholder
meeting may be made by the board of directors or proxy committee appointed by
the board of directors or by any stockholder entitled to vote in the election of
directors generally if such nomination or business proposed is otherwise proper
business before such meeting. However, any such stockholder may nominate one or
more persons for election as directors at a meeting or propose business to be
brought before a meeting, or both, only if such stockholder has given timely
notice in proper written form of their intent to make such nomination or
nominations or to propose such business. To be timely, such stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the corporation not less than one hundred twenty (120) calendar days in
advance of the first anniversary date of mailing of the corporation's proxy
statement released to stockholders in connection with the previous year's annual
meeting of stockholders; provided, however, that in the event that no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than thirty (30) days from the date contemplated at the time of
the previous year's proxy statement, notice by the stockholder to be timely must
be so received a reasonable time before the solicitation is made. To be in
proper form, a stockholder's notice to the secretary shall set forth:
(a) the name and address of the stockholder who
intends to make the nominations or propose the business and, as the case may be,
of the person or persons to be nominated or of the business to be proposed;
3
<PAGE> 4
(b) a representation that the stockholder is a
holder of record of stock of the corporation entitled to vote at such meeting
and, if applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(c) if applicable, a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder;
(d) such other information regarding each nominee or
each matter of business to be proposed by such stockholder as would be required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or intended
to be nominated, or the matter been proposed, or intended to be proposed by the
board of directors; and
(e) if applicable, the consent of each nominee to
serve as director of the corporation if so elected.
The chairman of the meeting shall refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.7 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (i) the Chairman of the meeting or (ii)
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
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2.9 CONDUCT OF BUSINESS
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of business.
2.10 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.13 of these bylaws,
subject to the provisions of Sections 217 and 218 of the Delaware General
Corporation Law (relating to voting rights of fiduciaries, pledgors and joint
owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.
2.11 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law or of the certificate of incorporation or these
bylaws, a written waiver, signed by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or these bylaws.
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
a corporation, or any action that may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the
Delaware General Corporation Law if such action had been voted on by
stockholders at a meeting thereof, then the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of stockholders, that written notice and written consent have been given as
provided in Section 228 of the Delaware General Corporation Law.
2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
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In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the first date on which
a signed written consent is delivered to the corporation.
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.14 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by a written
proxy, signed by such stockholder and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if such stockholder's name is placed on the proxy by any
reasonable means including, but not limited to, by facsimile signature, manual
signature, typewriting, telegraphic transmission or otherwise, by such
stockholder or such stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the Delaware General Corporation Law.
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be
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inspected by any stockholder who is present. Such list shall presumptively
determine the identity of the stockholders entitled to vote at the meeting and
the number of shares held by each of them.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Delaware General Corporation Law and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The board of directors shall consist of five (5) members. The number of
directors may be changed by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation.
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the attention
of the Secretary of the corporation. When one or more directors shall resign
from the board of directors, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
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(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the Delaware General Corporation Law.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the
Delaware General Corporation Law as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of such board of directors, or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting pursuant to this section shall constitute
presence in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least
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forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.
3.8 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute, the certificate of incorporation, or
these bylaws. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law, the certificate of incorporation, or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when such person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.11 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors.
3.12 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided,
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however, that, so long as stockholders of the corporation are entitled to
cumulative voting, if less than the entire board is to be removed, no director
may be removed without cause if the votes cast against his removal would be
sufficient to elect such director if then cumulatively voted at an election of
the entire board of directors or, if there be classes of directors, at an
election of the class of directors of which such director is a part.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of such director's term of
office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the bylaws of the corporation, shall
have and may exercise all the powers and authority of the board of directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers that may require it; but
no such committee shall have the power or authority (i) approving or adopting or
recommending to the stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to stockholders for approval or
(ii) adopting, amending, or repealing any bylaws of the corporation; and, unless
the board resolution establishing the committee, the bylaws or the certificate
of incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting),
with such changes in the context of those bylaws as are necessary to substitute
the committee and its members for the board of directors and its members;
provided, however, that the time of regular meetings of committees may be
determined either by resolution of the board of directors or by resolution of
the committee, that special meetings of committees may also be called by
resolution of the board of directors and that notice of special meetings of
committees shall also be given to
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all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, one or more vice presidents, one or
more assistant vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be appointed by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to appoint,
such other officers and agents as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.5 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time
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to time be assigned to the chairman of the board by the board of directors or as
may be prescribed by these bylaws. If there is no president and no one has been
appointed chief executive officer, then the chairman of the board shall also be
the chief executive officer of the corporation and shall have the powers and
duties prescribed in Section 5.6 of these bylaws.
5.6 CHIEF EXECUTIVE OFFICER
The board of directors shall select a chief executive officer of the
corporation who shall be subject to the control of the board of directors and
have general supervision, direction and control of the business and the officers
of the corporation. The chief executive officer shall preside at all meetings of
the stockholders and, in the absence or nonexistence of a chairman of the board,
at all meetings of the board of directors.
5.7 PRESIDENT
The president shall have the general powers and duties of management
usually vested in the office of president of a corporation and shall have such
other powers and duties as may be prescribed by the board of directors or these
bylaws. In addition and subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if no one has been
appointed chief executive officer, the president shall be the chief executive
officer of the corporation and shall, subject to the control of the board of
directors, have the powers and duties described in Section 5.6.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. The secretary shall keep
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the seal of the corporation, if one be adopted, in safe custody and shall have
such other powers and perform such other duties as may be prescribed by the
board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables
in the name and to the credit of the corporation with such depositories as may
be designated by the board of directors. The chief financial officer shall
disburse the funds of the corporation as may be ordered by the board of
directors, shall render to the president and directors, whenever they request
it, an account of all his transactions as chief financial officer and of the
financial condition of the corporation, and shall have other powers and perform
such other duties as may be prescribed by the board of directors or these
bylaws.
The chief financial officer shall be the treasurer of the corporation.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as may be
prescribed by the board of directors or these bylaws.
5.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the chief financial officer or in the event of his or
her inability or refusal to act, perform the duties and exercise the powers of
the chief financial officer and shall perform such other duties and have such
other powers as may be prescribed by the board of directors or these bylaws.
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
5.14 AUTHORITY AND DUTIES OF OFFICERS
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In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the corporation, which approval shall not be unreasonably
withheld) actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer, employee or
agent of corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) and amounts paid in settlement (if such settlement is approved in advance
by the corporation, which approval shall not be unreasonably withheld) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Notwithstanding any other
provision of this Article VI, no person shall be indemnified hereunder for any
expenses or amounts paid in settlement with respect to any action to recover
short-swing profits under Section 16(b) of the Securities Exchange Act of 1934,
as amended.
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6.3 SUCCESSFUL DEFENSE
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
6.4 DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification of the director, officer, employee
or agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in Sections 6.1 and 6.2. Such
determination shall be made (1) by the Board of Directors or the Executive
Committee by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding or (2) or if such quorum is not
obtainable or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders. Notwithstanding the foregoing, a director, officer, employee or
agent of the Corporation shall be entitled to contest any determination that the
director, officer, employee or agent has not met the applicable standard of
conduct set forth in Sections 6.1 and 6.2 by petitioning a court of competent
jurisdiction.
6.5 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending a civil or criminal action, suit or
proceeding, by an individual who may be entitled to indemnification pursuant to
Section 6.1 or 6.2, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided by or granted
pursuant to the other sections of this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
6.7 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by such person in any such capacity or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Article VI.
6.8 THE CORPORATION
15
<PAGE> 16
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this Article VI (including,
without limitation the provisions of Section 6.4) with respect to the resulting
or surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive officer or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or
16
<PAGE> 17
other agent so to act on behalf of the stockholder. The demand under oath shall
be directed to the corporation at its registered office in Delaware or at its
principal place of business.
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
17
<PAGE> 18
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of such corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
18
<PAGE> 19
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained
in (i) the Delaware General Corporation Law or (ii) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be September 30 of each year
and may be changed by the board of directors.
8.9 SEAL
The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the board of directors, and may use the same by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the Delaware General Corporation Law.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and
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<PAGE> 20
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The bylaws of the corporation may be adopted, amended or repealed by the
stockholders entitled to vote; provided, however, that the corporation may, in
its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors. The fact that such power has been so conferred upon
the directors shall not divest the stockholders of the power, nor limit their
power to adopt, amend or repeal bylaws.
20
<PAGE> 21
CERTIFICATE OF ADOPTION OF
BYLAWS
OF
SUNHAWK.COM CORPORATION
Certificate by Secretary
The undersigned hereby certifies that he is the duly elected, qualified,
and acting Secretary of Sunhawk.com Corporation (the "Corporation") and that the
foregoing Bylaws, comprising ____________ (___) pages, were adopted as the
Bylaws of the Corporation on June ___, 1999 by the Board of Directors of the
Corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this ____ day of June, 1999.
Sunhawk.com Corporation,
a Delaware Corporation
----------------------------------------
David M. Otto, Secretary
21
<PAGE> 1
EXHIBIT 10.1
SUNHAWK CORPORATION
1996 STOCK OPTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Purpose ..................................................................... 1
2. Stock Subject to This Plan .................................................. 1
3. Administration .............................................................. 1
3.1 Powers ............................................................... 1
3.2 Limited Liability .................................................... 2
3.3 Securities Exchange Act of 1934 ...................................... 2
3.4 Committee ............................................................ 2
4. Eligibility ................................................................. 2
5. Awards ...................................................................... 2
5.1 Incentive Stock Options .............................................. 3
5.2 Non-Qualified Stock Options .......................................... 4
5.3 Vesting .............................................................. 4
5.4 Nontransferability ................................................... 4
5.5 Termination of Options ............................................... 5
5.5.1 Generally .................................................... 5
5.5.2 For Cause; Resignation ....................................... 5
5.5.3 Retirement ................................................... 6
5.5.4 Disability ................................................... 6
5.5.5 Death ........................................................ 6
5.5.6 Extension of Exercise Period Applicable to Termination ....... 6
5.5.7 Failure to Exercise Option ................................... 7
5.5.8 Leaves ....................................................... 7
5.6 Exercise ............................................................. 7
5.6.1 Procedure .................................................... 7
5.6.2 Payment ...................................................... 7
5.6.3 Withholding .................................................. 7
5.6.4 Conditions Precedent to Exercise ............................. 8
5.7 Foreign Qualified Grants ............................................. 8
5.8 Corporate Mergers, Acquisitions, Etc ................................. 8
5.9 Holding Period ....................................................... 8
5.10 Option Agreements .................................................... 8
6. Adjustments Upon Changes in Capitalization .................................. 8
6.1 Stock Splits, Capital Stock Adjustments .............................. 8
6.2 Effect of Merger, Sale of Assets, Liquidation or Dissolution ......... 8
6.2.1 Mergers, Sale of Assets, Other Transactions .................. 8
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.2.2 Liquidation; Dissolution ..................................... 9
6.3 Fractional Shares .................................................... 9
6.4 Determination of Board to Be Final ................................... 9
7. Securities Regulations ...................................................... 9
7.1 Compliance With Law .................................................. 9
7.2 Investment Purpose ................................................... 10
8. Amendment and Termination ................................................... 10
8.1 Plan ................................................................. 10
8.2 Options .............................................................. 11
8.3 Automatic Termination ................................................ 11
9. Miscellaneous ............................................................... 11
9.1 Time of Granting Options ............................................. 11
9.2 No Status as Shareholder ............................................. 11
9.3 Status as an Employee ................................................ 11
9.4 Reservation of Shares ................................................ 11
10. Effectiveness of This Plan .................................................. 12
</TABLE>
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<PAGE> 4
SUNHAWK CORPORATION
1996 STOCK OPTION PLAN
1. Purpose. The purpose of the 1996 Stock Option Plan (the "Plan") is to provide
a means by which Sunhawk Corporation (the "Company") may attract, reward and
retain the services or advice of former, current or future employees, officers,
directors, agents and consultants, including members of technical advisory
boards and independent contractors of the Company and to provide added
incentives to them by encouraging stock ownership in the Company.
2. Stock Subject to This Plan. Subject to adjustment as provided below and in
Section 6 hereof, the stock subject to this Plan shall consist of shares of the
Company's common stock (the "Common Stock"), and the total number of shares of
Common Stock to be delivered upon the exercise of all options granted under this
Plan shall not exceed 1,543,000 shares, as such Common Stock was constituted on
the effective date of this Plan. If any option granted under this Plan shall
expire, be surrendered, exchanged for another option, cancelled or terminated
for any reason without having been exercised in full, the unpurchased shares
subject to such option shall again be available for purposes of this Plan,
including for replacement options which may be granted in exchange for such
surrendered, cancelled or terminated options. Shares issued upon exercise of
options granted under this Plan may be subject to such restrictions on transfer,
repurchase rights or other restrictions as may be determined by the Board,
including without restriction provisions relating to maintenance by the Company
of its status as an "S" corporation as defined in Section 1361 of the Internal
Revenue Code of 1986, as amended (the "Code").
3. Administration. This Plan shall be administered by the Board of Directors of
the Company (the "Board"). The Board may suspend, amend or terminate this Plan
as provided in Section 8.
3.1 Powers. Subject to the specific provisions of this Plan, the Board
shall have the authority, in its discretion from time to time: (a) to grant the
stock options described in Section 5, including Incentive Stock Options and
Non-Qualified Stock Options, and to designate each option granted as an
Incentive Stock Option or a Non-Qualified Stock Option; (b) to determine, in
accordance with Section 5. 1 (f) of this Plan, the fair market value of the
shares of Common Stock subject to options; (c) to determine the exercise price
per share of options; (d) to determine the Optionees (as defined herein) to
whom, and the time or times at which, options shall be granted and the number of
shares of Common Stock to be represented by each option; (e) to interpret this
Plan; (f) to prescribe, amend and rescind rules and regulations relating to this
Plan; (g) to determine the terms and provisions of each option granted (which
need not be identical) and, with the consent of the holder thereof,
<PAGE> 5
modify or amend each option; (h) to reduce the exercise price per share of
outstanding and unexercised options; (i) to defer, with the consent of the
Optionee, or to accelerate the exercise date of any option; (j) to waive or
modify any term or provision contained in any option applicable to the
underlying shares of Common Stock; (k) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
option previously granted by the Board; (1) to correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any stock option
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect and (m) to make all other determinations deemed necessary or
advisable for the administration of this Plan. The interpretation and
construction by the Board of any terms or provisions of this Plan, any option
issued hereunder or of any rule or regulation promulgated in connection herewith
and all actions taken by the Board shall be conclusive and binding on all
interested parties. The Board may delegate administrative functions to
individuals who are officers or employees of the Company.
3.2 Limited Liability. No member of the Board of Directors or officer of
the Company shall be liable for any action or inaction of the entity or body, or
another person or, except in circumstances involving bad faith, of himself or
herself. Subject only to compliance with the explicit provisions hereof, the
Board of Directors may act in their absolute discretion in all matters related
to this Plan.
3.3 Securities Exchange Act of 1934. At any time that the Company has a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), this Plan shall be administered by
the Board in accordance with Rule 16b-3 adopted under the Exchange Act, as such
rule may be amended from time to time.
3.4 Committee. The Board by resolution may delegate to a committee of
the Board consisting of one or more members (the "Committee") any or all
authority for administration of the Plan. If a Committee is appointed, all
references to the Board of Directors in the Plan shall mean and relate to such
Committee, except that only the Board of Directors may amend, modify, suspend or
terminate the Plan as provided in Section 8.
4. Eligibility. The Board may award options to any former, current or future
employee, officer, director, agent or consultant, including any member of
technical advisory boards and any independent contractor, of the Company. Any
party to whom an option is granted under this Plan is referred to as an
"Optionee."
5. Awards. The Board, may take the following actions from time to time,
separately or in combination, under this Plan: (a) grant Incentive Stock
Options, as defined in Section 422 of the Code, to any employee of the Company
or its subsidiaries, as provided in Section 5.1 of this Plan; (b) grant options
other than Incentive Stock Options ("Non-Qualified Stock Options"), as provided
in Section 5 2 of this Plan; (c) grant options to officers, employees
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<PAGE> 6
and others in foreign jurisdictions, as provided in Section 5.7 of this Plan;
and (d) grant options in certain acquisition transactions, as provided in
Section 5.8 of this Plan.
5.1 Incentive Stock Options. Incentive Stock Options shall be subject to
the following terms and conditions:
(a) Incentive Stock Options may be granted under this Plan only
to employees of the Company or its subsidiaries, including employees who are
directors.
(b) No employee may be granted Incentive Stock Options under this
Plan to the extent that the aggregate fair market value, on the date of grant,
of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by that employee during any calendar year, under
this Plan and under any other incentive stock option plan (within the meaning of
Section 422 of the Code) of the Company or any subsidiary, exceeds $100,000. To
the extent that any option designated as an Incentive Stock Option exceeds the
$100,000 limit, such option shall be treated as a Non-Qualified Stock Option. In
making this determination, options shall be taken into account in the order in
which they were granted, and the fair market value of the shares of Common Stock
shall be determined as of the time that the option with respect to such shares
was granted.
(c) An Incentive Stock Option may be granted under this Plan to
an employee possessing more than 10% of the total combined voting power of all
classes of stock of the Company (as determined pursuant to the attribution rules
contained in Section 424(d) of the Code) only if the exercise price is at least
110% of the fair market value of the Common Stock subject to the option on the
date the option is granted, as described in Section 5.1(f) of this Plan, and
only if the option by its terms is not exercisable after the expiration of five
years from the date it is granted.
(d) Except as provided in Section 5.5 of this Plan, no Incentive
Stock Option granted under this Plan may be exercised unless at the time of such
exercise the Optionee is employed by the Company or any subsidiary of the
Company and the Optionee has been so employed continuously since the date such
option was granted.
(e) Subject to Sections 5.1(c) and 5.1(d) of this Plan, Incentive
Stock Options granted under this Plan shall continue in effect for the period
fixed by the Board, except that no Incentive Stock Option shall be exercisable
after the expiration of 10 years from the date it is granted.
(f) The exercise price shall not be less than 100% of the fair
market value of the shares of Common Stock covered by the Incentive Stock Option
at the date the option is granted. The fair market value of shares shall be the
closing price per share of the Common Stock on the date of grant as reported on
a securities quotation system or stock exchange. If such shares are not so
reported or listed, the Board shall determine the fair market value of the
shares of Common Stock in its discretion.
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<PAGE> 7
(g) The provisions of clauses (b) and (c) of this Section shall
not apply if either the applicable sections of the Code or the regulations
thereunder are amended so as to change or eliminate such limitations or to
permit appropriate modifications of those requirements by the Board.
5.2 Non-Qualified Stock Options. Non-Qualified Stock Options shall be
subject to the following terms and conditions.
(a) The exercise price may be more or less than or equal to, the
fair market value of the shares of Common Stock covered by the Non-Qualified
Stock Option on the date the option is granted, and the exercise price may
fluctuate based on criteria determined by the Board. The fair market value of
shares of Common Stock covered by a Non-Qualified Stock Option shall be
determined by the Board, as described in Section 5. 1 (f).
(b) Unless otherwise established by the Board, any Non-Qualified
Stock Option shall terminate 10 years after the date it is granted.
5.3 Vesting. To ensure that the Company will achieve the purposes of and
receive the benefits contemplated in this Plan, any option granted to any
Optionee hereunder shall be exercisable according to the following vesting
schedule, except that the Board may waive this vesting schedule, establish a
different vesting schedule or provide for no vesting schedule for such options
as it determines:
<TABLE>
<CAPTION>
Months of Continuous
Employment From the Portion of Total Option
Base Date That is Exercisable
-------------------- ------------------------
<S> <C>
Less than 24 Months None
24 Months or More 25%
30 Months or More 37.5%
36 Months or More 50%
42 Months or More 62.5%
48 Months or More 75%
54 Months or More 87.5%
60 Months or More 100%
</TABLE>
"Base Date" means a reference date established for the specific option
grant and Optionee by the Board.
5.4 Nontransferability. Each option granted under this Plan and the
rights and privileges conferred hereby may not be transferred, assigned, pledged
or hypothecated in any manner (whether by operation of law or otherwise) other
than by will or by the applicable laws of descent and distribution, shall not be
subject to execution, attachment or similar
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<PAGE> 8
process and shall be exercisable during the Optionee's lifetime only by the
Optionee. Any purported transfer or assignment in violation of this provision
shall be void.
5.5 Termination of Options.
5.5.1 Generally. Unless otherwise determined by the Board or
specified in the Optionee's Option Agreement, if the Optionee's employment or
service with the Company terminates for any reason other than for cause,
resignation, retirement, disability or death, and unless by its terms the option
sooner terminates or expires, then the Optionee may exercise, for a three-month
period, that portion of the Optionee's option which was exercisable at the time
of such termination of employment or service (provided the conditions of Section
5.6.4 and any other conditions specified in the Option Agreement shall have been
met by the date of exercise of such option).
5.5.2 For Cause Resignation.
(a) If an Optionee is terminated for cause or resigns in lieu of
dismissal, any option granted hereunder shall be deemed to have terminated as of
the time of the first act which led or would have led to the termination for
cause or resignation in lieu of dismissal, and such Optionee shall thereupon
have no right to purchase any shares of Common Stock pursuant to the exercise of
such option, and any such exercise shall be null and void. Termination for
"cause" shall include (i) the violation by the Optionee of any reasonable rule
or policy of the Board of Directors or the Optionee's superiors or the chief
executive officer or the President of the Company that results in damage to the
Company or which, after notice to do so, the Optionee fails to correct within a
reasonable time; (ii) any willful misconduct or gross negligence by the Optionee
in the responsibilities assigned to him or her; (iii) any willful failure to
perform his or her job as required to meet the objectives of the: Company; (iv)
any wrongful conduct of an Optionee which has an adverse impact on the Company
or which constitutes a misappropriation of the assets of the Company; (v)
unauthorized disclosure of confidential information; or (vi) the Optionee's
performing services for any other company or person which competes with the
Company while he or she is employed by or provides services to the Company,
without the prior written approval of the chief executive officer of the
Company. "Resignation in lieu of dismissal" shall mean a resignation by an
Optionee of employment with or service to the Company if (i) the Company has
given prior notice to such Optionee of its intent to dismiss the Optionee for
circumstances that constitute cause, or (ii) within two months of the Optionee's
resignation, the chief operating officer or the chief executive officer of the
Company or the Board of Directors determines, which determination shall be final
and binding, that such resignation was related to an act which would have led to
a termination for cause.
(b) If an Optionee resigns from the Company, the right of the
Optionee to exercise his or her option shall be suspended for a period of two
months from the date of resignation, unless the President or chief executive
officer of the Company or the Board of Directors determines otherwise in
writing. Thereafter, unless there is a determination that
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<PAGE> 9
the Optionee resigned in lieu of dismissal, the option may be exercised at any
time prior to the earlier of (i) the expiration date of the option (which shall
have been similarly suspended) or (ii) the expiration of three months after the
date of resignation, for that portion of the Optionee's option which was
exercisable at the time of such resignation (provided the conditions of Section
5.6.4 and any other conditions specified in the Option Agreement shall have been
met at the date of exercise of such option).
5.5.3 Retirement. Unless otherwise determined by the Board, if an
Optionee's employment or service with the Company is terminated with the
Company's approval for reasons of age, the Option may be exercised at any time
prior to the earlier of (a) the expiration date of the option or (b) the
expiration of three months after the date of such termination of employment or
service, for that portion of the Optionee's option which was exercisable at the
time of such termination of employment or service (provided the conditions of
Section 5.6.4 and any other conditions specified in the Option Agreement shall
have been met at the date of exercise of such option).
5.5.4 Disability. Unless otherwise determined by the Board, if an
Optionee's employment or relationship with the Company terminates because of a
permanent and total disability (as defined in Section 22(e)(3) of the Code), the
option may be exercised at any time prior to the earlier of (a) expiration date
of the option or (b) the expiration of 12 months after the date of such
termination, for up to the full number of shares of Common Stock covered
thereby, including any portion not yet vested (provided the conditions of
Section 5.6.4 and any other conditions specified in the Option Agreement shall
have been met by the date of exercise of such option).
5.5.5 Death. Unless otherwise determined by the Board, in the
event of the death of an Optionee while employed by or providing service to the
Company, the option may be exercised at any time prior to the earlier of (a) the
expiration date of the option or (b) the expiration of 12 months after the date
of death by the person or persons to whom such Optionee's rights under the
option shall pass by the Optionee's will or by the applicable laws of descent
and distribution, for up to the full number of shares of Common Stock covered
thereby, including any portion not yet vested (provided the conditions of
Section 5.6.4. and any other conditions specified in the Option Agreement shall
have been met by the date of exercise of such option).
5.5.6 Extension of Exercise Period Applicable to Termination. The
Board, at the time of grant or at any time thereafter, may extend the
three-month and 12-month exercise periods to any length of time not longer than
the original expiration date of the option, and may increase the portion of an
option that is exercisable, subject to such terms and conditions as the Board
may determine; provided, that any extension of the exercise period or other
modification of an Incentive Stock Option shall be subject to the written
agreement and acknowledgment by the Optionee that the extension or modification
disqualifies the option as an Incentive Stock Option.
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5.5.7 Failure to Exercise Option. To the extent that the option
of any deceased Optionee or of any Optionee whose employment or service
terminates is not exercised within the applicable period, all rights to purchase
shares of Common Stock pursuant to such options shall cease and terminate.
5.5.8 Leaves. For purposes of this Section 5.5, with respect to
Incentive Stock Options, employment shall be deemed to continue while the
Optionee is on military leave, sick leave or other bona fide leave of absence
(as determined by the Board) in accordance with the policies of the Company.
5.6 Exercise.
5.6.1 Procedure. Subject to the provisions of Section 5.3 above,
each option may be exercised in whole or in part; provided, however, that no
fewer than 50 shares (or the remaining shares then purchasable under the option,
if less than 50 shares) may be purchased upon any exercise of any option granted
hereunder and that only whole shares will be issued pursuant to the exercise of
any option (the number of 50 shares shall not be changed by any transaction or
action described in Section 6 unless the Board determines that such a change is
appropriate). Options shall be exercised by delivery to the Secretary of the
Company or his or her designated agent of notice of the number of shares with
respect to which the option is exercised, together with payment in full of the
exercise price.
5.6.2 Payment. Payment of the option exercise price shall be made
in full at the time the notice of exercise of the option is delivered to the
Secretary of the Company or his or her designated agent and shall be in cash or
bank certified or cashier's check for the shares of Common Stock being
purchased. The Board may determine at the time the option is granted for
Incentive Stock Options, or at any time before exercise for Non-Qualified Stock
Options, that additional forms of payment will be permitted, including without
limitation payment through irrevocable instructions to a stock broker to deliver
the amount of sales proceeds necessary to pay the appropriate exercise price and
withholding tax obligations, all in accordance with applicable governmental
regulations.
5.6.3 Withholding. Prior to the issuance of shares of Common
Stock upon the exercise of an option, the Optionee shall pay to the Company the
amount of any applicable federal, state or local tax withholding obligations.
The Company may withhold any distribution in whole or in part until the Company
is so paid. The Company shall have the right to withhold such amount from any
other amounts due or to become due from the Company, as the case may be, to the
Optionee, including salary (subject to applicable law) or to retain and withhold
a number of shares having a market value not less than the amount of such taxes
required to be withheld by the Company to reimburse it for any such taxes and
cancel (in whole or in part) any such shares so withheld.
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5.6.4 Conditions Precedent to Exercise. The Board may establish
conditions precedent to the exercise of any option, which shall be described in
the relevant Option Agreement.
5.7 Foreign Qualified Grants. Options under this Plan may be granted to
officers and employees of the Company and other persons described in Section 4
who reside in foreign jurisdictions as the Board may determine from time to
time. The Board may adopt such supplements to the Plan as are necessary to
comply with the applicable laws of such foreign jurisdictions and to afford
Optionees favorable treatment under such laws; provided, however, that no award
shall be granted under any such supplement on terms which are more beneficial to
such Optionees than the terms permitted by this Plan.
5.8 Corporate Mergers, Acquisitions, Etc. The Board may also grant
options under this Plan having terms, conditions and provisions that vary from
those specified in this Plan provided that such options are granted in
substitution for, or in connection with the assumption of, existing options
granted, awarded or issued by another corporation and assumed or otherwise
agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of property
or stock, reorganization or liquidation to which the Company is a party.
5.9 Holding Period. Unless otherwise determined by the Board, if a
person subject to Section 16 of the Exchange Act exercises an option within six
months of the date of grant of the option, the shares of Common Stock acquired
upon exercise of the option may not be sold until six months after the date of
grant of the option.
5. 10 Option Agreements. Options granted under this Plan shall be
evidenced by written stock option agreements ("Option Agreements") which shall
contain such terms, conditions, limitations and restrictions as the Board shall
deem advisable and which are consistent with this Plan. All Option Agreements
shall include or incorporate by reference the applicable terms and conditions
contained in this Plan.
6. Adjustments Upon Changes in Capitalization.
6.1 Stock Splits, Capital Stock Adjustments. The aggregate number and
class of shares for which options may be granted under this Plan, the number and
class of shares covered by each outstanding option and the exercise price per
share thereof (but not the total price), and each such option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a stock split, stock
dividend or consolidation of shares or any like capital stock adjustment.
6.2 Effect of Merger, Sale of Assets, Liquidation or Dissolution.
6.2.1 Mergers, Sale of Assets, Other Transactions. In the event
of a merger, consolidation or plan of exchange to which the Company is a party
or a sale of all or
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substantially all of the Company's assets (each, a "Transaction"), the Board of
Directors, in its sole discretion and to the extent possible under the structure
of the Transaction, shall select one of the following alternatives for treating
outstanding options under this Plan:
(a) Outstanding options shall remain in effect in accordance with
their terms;
(b) Outstanding options shall be converted into options to
purchase stock in the corporation that is the surviving or acquiring corporation
in the Transaction. The amount, type of securities subject thereto and exercise
price of the converted options shall be determined by the Board of Directors of
the Company, taking into account the relative values of the companies involved
in the Transaction and the exchange rate, if any, used in determining shares of
the surviving corporation to be issued to holders of shares of the Company.
Unless otherwise determined by the Board of Directors, the converted options
shall be vested only to the extent that the vesting requirements relating to
options granted hereunder have been satisfied; or
(c) The Board of Directors shall provide a 30-day period prior to
the consummation of the Transaction during which outstanding options shall be
exercisable to the extent vested and, if so determined by the Board in its
discretion, to the extent of the next portion of the option, if any, that would
vest and be exercisable after the consummation of the Transaction. Upon the
expiration of such 30-day period, all unexercised options shall immediately
terminate.
6.2.2 Liquidation; Dissolution. In the event of the liquidation
or dissolution of the Company, options shall be treated in accordance with
Section 6.2. 1 (c).
6.3 Fractional Shares. In the event of any adjustment in the number of
shares covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.
6.4 Determination of Board to Be Final. All adjustments under this
Section 6 shall be made by the Board of Directors, and its determination as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive. Unless an Optionee agrees otherwise, any change or adjustment to
an Incentive Stock Option shall be made, if possible, in such a manner so as not
to constitute a "modification," as defined in Section 424(h) of the Code, and so
as not to cause the Optionee's Incentive Stock Option to fail to continue to
qualify as an Incentive Stock Option.
7. Securities Regulations.
7.1 Compliance with Law. Shares of Common Stock shall not be issued with
respect to an option granted under this Plan unless the exercise of such option
and the
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issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, applicable laws of foreign
countries and other jurisdictions and the requirements of any quotation service
or stock exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for the
issuance and sale of any shares hereunder. The inability of the Company to
obtain, from any regulatory body having jurisdiction, the authority deemed by
the Company's counsel to be necessary for the lawful issuance and sale of any
shares hereunder or the unavailability of an exemption from registration for the
issuance and sale of any shares hereunder shall relieve the Company of any
liability with respect of the nonissuance or sale of such shares as to which
such requisite authority shall not have been obtained.
7.2 Investment Purpose. As a condition to the exercise of an option, the
Company may require the Optionee to represent and warrant at the time of any
such exercise that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required
by any relevant provision of the aforementioned laws. The Company may place a
stop-transfer order against any shares of Common Stock on the official stock
books and records of the Company, and a legend may be stamped on stock
certificates to the effect that the shares of Common Stock may not be pledged,
sold or otherwise transferred unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation. The Board may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. THIS PROVISION SHALL NOT
OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK
THEREUNDER.
8. Amendment and Termination.
8.1 Plan. The Board of Directors may at any time suspend, amend or
terminate this Plan, provided that, except as set forth in Section 6, the
approval of the Company's shareholders is necessary within 12 months before or
after the adoption by the Board of Directors of any amendment that will:
(a) increase the number of shares of Common Stock that are to be
reserved for the issuance of options under this Plan;
(b) permit the granting of stock options to a class of persons
other than those presently permitted to receive stock options under this Plan;
or
(c) require shareholder approval under applicable law, including
Section 16(b) of the Exchange Act.
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8.2 Options. Subject to the requirements of Section 422 of the Code with
respect to Incentive Stock Options and to the terms and conditions and within
the limitations of this Plan, the Board may modify or amend outstanding options
granted under this Plan. The modification or amendment of an outstanding option
shall not, without the consent of the Optionee, impair or diminish any of his or
her rights or any of the obligations of the Company under such option. Except as
otherwise provided in this Plan, no outstanding option shall be terminated
without the consent of the Optionee. Unless the Optionee agrees otherwise, any
changes or adjustments made to outstanding Incentive Stock Options granted under
this Plan shall be made in such a manner so as not to constitute a
"modification," as defined in Section 424(h) of the Code, and so as not to cause
any Incentive Stock Option issued hereunder to fail to continue to qualify as an
Incentive Stock Option as defined in Section 422(b) of the Code.
8.3 Automatic Termination. Unless sooner terminated by the Board of
Directors, this Plan shall terminate ten years from the date on which this Plan
is adopted by the Board. No option may be granted after such termination or
during any suspension of this Plan. The amendment or termination of this Plan
shall not, without the consent of the Optionee, alter or impair any rights or
obligations under any option theretofore granted under this Plan.
9. Miscellaneous.
9.1 Time of Granting Options. The date of grant of an option shall, for
all purposes, be the date on which the Company completes the required corporate
action relating to the grant of an option; the execution of an Option Agreement
and the conditions to the exercise of an option shall not defer the date of
grant.
9.2 No Status as Shareholder. Neither the Optionee nor any party to
which the Optionee's rights and privileges under the option may pass shall be,
or have any of the rights or privileges of, a shareholder of the Company with
respect to any of the shares of Common Stock issuable upon the exercise of any
option granted under this Plan unless and until such option has been exercised
and the issuance (as evidenced by the appropriate entry on the books of the
Company or duly authorized transfer agent of the Company) of the stock
certificate evidencing such shares.
9.3 Status as an Employee. Nothing in this Plan or in any option granted
pursuant to this Plan shall confer upon any Optionee any right to continue in
the employ of the Company, or to interfere in any way with the right of the
Company to terminate his or her employment or other relationship with the
Company at any time.
9.4 Reservation of Shares. The Company, during the term of this Plan, at
all times will reserve and keep available such number of shares of Common Stock
as shall be sufficient to satisfy the requirements of this Plan.
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10. Effectiveness of This Plan. This Plan shall become effective upon adoption
by the Board so long as it is approved by the Company's shareholders any time
within 12 months after the adoption of this Plan. No option granted under this
Plan to any officer or director of the Company shall become exercisable,
however, until the Plan is approved by the shareholders, and any options granted
prior to such approval shall be conditioned upon and are subject to such
approval.
Adopted by the Board of Directors as of June 4, 1996 and approved by the
Shareholders as of June 4, 1996.
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EXHIBIT 10.2
TO
SUNHAWK.COM CORPORATION
FORM SB-2
"[*]" = confidential information omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
<PAGE> 2
EXHIBIT 10.2
WARNER BROS. PUBLICATIONS U.S. INC.
15800 N.W. 48th Avenue
Hialeah, Florida 33014
Dated: May 18, 1998
SUNHAWK CORPORATION
318 Terry Avenue North
Seattle, WA 98109
Gentlepersons:
The following, when signed by you and by us, will constitute the agreement
pursuant to which we have granted you a nonexclusive license to distribute
copies of printed editions included in our catalog from time to time (but, in
each instance, only for such periods of time as we ourselves have the right to
distribute such editions) ("EDITIONS") via your internet website (currently
located at "HTTP://WWW.SUNHAWK.COM")(the "WEBSITE"):
1. TERM:
1.1. The Term of this Agreement shall be deemed to have commenced as of
the above date and shall continue in effect to and including December 31, 2007
(subject to possible earlier termination as provided below.)
1.2. Such Term shall be subject to early termination at our election by
notice to you upon the occurrence of any of the following events of default:
1.2.1. The voluntary filing by you of any bankruptcy or insolvency
proceeding, or the filing of bankruptcy or insolvency proceedings against you,
or any other creditors' proceedings seeking control of your stock and/or assets,
which are not dismissed within one hundred twenty (120) days thereafter;
1.2.2. Your failure to account to us and/or to pay us amounts due
hereunder which failure is not cured within ten (10) business days following
your receipt of notice from us demanding the same;
1.2.3. Any other breach of this Agreement not cured by you in the
manner prescribed in Paragraph 11.2, below; or
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Distribution Agreement
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1.2.4. In the event that Marlin Eller and Brent Mills shall no
longer be actively in charge of the day to day operations of your company, it
being understood and agreed that notice of termination pursuant to this
Paragraph 1.2.4 must be given within six (6) months following our receipt of
notice that both Messrs. Eller and Mills are no longer actively in charge of
such day to day operations (provided that the latter notice shall have been
given to us within ten [10] days following the first day upon which neither Mr.
Eller nor Mr. Mills is actively in charge).
2. TERRITORY:
The Territory covered by this Agreement shall be the world, provided,
however, that in any instance in which our print and/or digital/internet rights
with respect to a specific Edition and/or any composition(s) contained therein
are less than worldwide, your rights hereunder shall be limited to those
territories in respect of which we have the right to distribute such Edition
and/or component composition(s).
3. GRANT OF RIGHTS/RESTRICTIONS/PROCEDURES/COSTS OF CONVERSION
AND OPERATION:
3.1. Grant of Rights/Restrictions:
3.1.1. Subject in each instance to (1) possible territorial
limitations as provided in Paragraph 2, above, (2) any and all requirements
and/or restrictions as to time, content, and the manner of distribution
contained in the agreements through which the rights granted to you hereunder
have been or may hereafter be derived, and (3) our prior written consent (which
consent shall not be unreasonably withheld) as to each and every specific
Edition, you shall have the nonexclusive right to advertise, promote and sell or
electronically distribute Editions solely via the Website within the Territory
during the Term (as well as the right after the Term to fulfill orders placed
during the Term but not fulfilled prior to the expiration of the Term.)
3.1.2. In each instance in which we give our written consent
pursuant to Paragraph 3.1.1, above, we shall inform you as to any time, content
and/or manner restrictions applicable to the Edition(s) covered by the consent.
In addition, in any instance in which we lose our rights with respect to a
specific Edition, or our rights with respect to such Edition are further
limited, we shall so notify you.
3.2. Distribution Methods and Procedures:
3.2.1. At your election, you may distribute the Editions on (i) a
"HARD COPY FULFILLMENT" basis (i.e., where consumers order hard copies from you
via the Website, you
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Sunhawk Corporation
Distribution Agreement
May 18, 1998
forward such orders to us, and we fulfill such orders), the procedure for which
is described in Paragraph 5.3, below, or (ii) on an "electronic distribution"
basis (i.e., where consumers download their copies directly from the Website.)
3.2.2. Preparation For Electronic Distribution; Disposition of
Electronic Files; Post-Term Uses:
(A) We will establish a procedure under which we will supply
you with an approved text of and, in the event (and to the extent) that we elect
to prepare the same, an electronic version with information concerning the
coding of, each Edition to be distributed by you hereunder. In addition, we
shall provide editorial/marketing advice to you to assist you to select and
prioritize Editions to be distributed hereunder.
(B) You shall have the right to convert Editions approved by
us into electronic formats suitable for electronic distribution;
(C) The entire cost of such conversion shall be borne by
you, including, but not limited to, translating and electronic coding of each
Edition.
(D) At the end of the Term (whether by expiration or by
early termination), you shall immediately discontinue all distribution
activities with respect to Editions (except for the completion of transactions
commenced prior to such termination), and remove all electronic file copies of
Editions from the Website file server(s).
(E) Within ten (10) days thereafter, you shall deliver to us
electronic copies of all files of Edition(s) so converted by you, together with
an affidavit sworn to by a responsible corporate officer attesting to your
discontinuance of all distribution activities with respect to the Editions and
your removal of all electronic file copies of Editions from the Website file
server(s), it being understood and agreed that you may retain archival copies of
Editions previously distributed by you hereunder. However, in the event that
such termination is pursuant to Paragraph 1.2.4, above, such archival copies
shall be destroyed and we shall be provided with an affidavit sworn to by a
responsible corporate officer attesting to such destruction.
(F) We understand and agree that such electronic files may
incorporate technological elements which are proprietary in nature (whether or
not the same have been covered by patent(s), trademark(s), trade secrets or
other statutory protection(s)), that as between you and us, such technological
elements are and will remain your property (unless, and to the extent that, such
technological elements become public domain), and that (if and to the extent
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Sunhawk Corporation
Distribution Agreement
May 18, 1998
that you notify us thereof at or prior to the time of delivery of the electronic
file copies described above) we shall not utilize such technological elements
thereafter except pursuant to a written agreement between you and us, [*].
3.2.3. Separate Sub-Page:
(A) You shall develop and maintain at all times during the
Term a separate sub-page within the Website entitled MUSIC FROM WARNER BROS.
PUBLICATIONS, (the "SUB-PAGE") which shall be utilized solely for the purposes
of this Agreement.
(B) The Sub-Page shall be designed by you and such design
and any subsequent modifications thereto shall be subject in each instance to
our prior written approval, which may be obtained by you via fax (and shall be
deemed to have been given in any instance in which we do not disapprove via fax
within five (5) business days following our receipt of the material for which
approval is sought).
(C) The Sub-Page shall include such trademarks, service
marks, and artwork as may be specified by us by notice to you, or approved in
writing by us, from time to time, and shall be made available for our and
Warner/Chappell Music, Inc.'s use as a linking page to our and/or their
website(s).
3.2.4. Electronic distribution shall be under such publisher
imprints as we shall specifically designate by notice to you in each instance,
it being understood and agreed that each electronically distributed Edition
shall be formatted to include such trademarks and/or copyright notices as we may
specify from time to time, so that such information is made part of each
electronic distribution.
3.2.5. Each Edition which is made available for electronic
distribution shall be offered only in such specific format(s) as we shall
supply, and, unless we specifically notify you to the contrary, the downloadable
file of each such Edition shall include a playback feature which incorporates a
midi file arrangement based solely upon the musical content of the subject
Edition.
3.3. All costs of operating and maintaining the Website (including the
Sub-Page), and all costs of distribution, advertising, marketing, promotion and
sale of Editions by you shall be borne by you.
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Sunhawk Corporation
Distribution Agreement
May 18, 1998
4. LINKS:
4.1. You will assist us in the establishment of a reasonable number of
site-to-site Internet LINKS FROM other websites to the Website, including, but
not limited to, links from music dealers, various Warner Music Group websites,
and, specifically (and without limiting the generality of the foregoing) from
the websites of Warner/Chappell Music, Inc. ("WCMI") and/or us.
4.2. We and WCMI will provide (and maintain at all times during the Term
of this Agreement) highly visible banner ad and song links from all present
and/or future websites controlled by either or both of us, including, but not
limited to, www.wamerchappell.com, and we shall use best efforts to obtain the
same ads and links on www.warnerbros.com. Such banner ad and song links will be
at least as prominent as the banner and song links provided by WCMI or us to
other distributors of Editions, if any, publicized on any present and/or future
websites controlled by WCMI and/or us.
4.3. You will also provide (and maintain at all times during the Term of
this Agreement) links from your present and/or future website(s) to all websites
referred to in Paragraph 4.2, above.
5. ROYALTIES:
5.1. Electronic Distribution of Editions:
5.1.1. In consideration of the foregoing, you hereby agree to pay
us [*] ([*]) of your "GROSS RECEIPTS" (as defined in Paragraph
5.4.1, below) from the electronic distribution of Editions.
5.1.2. [*]
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Sunhawk Corporation
Distribution Agreement
May 18, 1998
5.2. [*]
[*]
5.3. Hard Copy Fulfillment:
5.3.1. With respect to hard copy fulfillment, orders shall be
received by you and the sale/credit card transaction shall be completed by you.
Such order shall then be transmitted to us for fulfillment and we shall credit
your account with a distribution fee equal to [*] ([*]) of the retail
selling price of each copy sold, paid for and not returned.
5.3.2. It is understood and agreed that in the event that you
forward a hard-copy order to us and we do not then have the item(s) ordered in
stock, you will first authorize the purchase utilizing the prospective buyer's
credit card, and you will settle the sale and complete the credit transaction
after we fulfill the order (and notify you thereof).
5.4. Definitions:
5.4.1. "GROSS RECEIPTS":
(A) "GROSS RECEIPTS" means the gross amount of monies
actually received by you, or credited to your account, in respect of electronic
distribution of Editions, less any taxes, discounts, [*] credit card
transaction fees and/or credits actually paid or borne by you. (In the context
of this Paragraph 5.4.1, "you" shall include any parent, subsidiary or
affiliated entity or any other person, firm or corporation directly or
indirectly controlled by you which receives monies on your behalf by reason of
the electronic distribution of Editions via the Website.) [*]
(B) [*]
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5.4.2. [*]
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6. FUTURE STOCK ISSUANCE/REGISTRATION RIGHTS/DIRECTORSHIP:
6.1. In consideration of the covenants and agreements undertaken by us
hereunder, you agree to issue to us [*] unregistered shares of Common Stock
(the "SHARES"), as adjusted from time to time in the event of any stock split,
stock dividend, or similar recapitalization, upon the closing of a firmly
underwritten public offering of Common Stock, or the private sale (or other
disposition) of [*]% or more of the Common Stock then authorized and
outstanding. You warrant and represent that 20,000,000 shares of Common Stock
are authorized, and that of such shares 3,739,894 are presently issued and
outstanding.
6.2. We acknowledge that the Shares will not be registered under the
Securities Act of 1933, as amended (the "ACT"), or applicable state securities
laws. We further acknowledge that we will be required to bear the economic risks
of our investment in the Shares for an indefinite period of time because we will
be unable to sell, transfer or assign the Shares except in compliance with the
registration provisions of the Act and applicable state securities laws, or with
an opinion of counsel reasonably satisfactory to you that registration under the
Act and applicable state securities laws is not required for lawful disposition
of the Shares. We consent to the placement of a legend on the certificates for
the Shares indicating our investment intent and the restrictions on transfer of
the Shares, and also to the placement of a "stop transfer" order on your stock
transfer books until such time as the Shares may be lawfully resold or
distributed.
6.3. If you receive a written request from us, at any time after the
later of (i) the expiration of any "lock-up" period or (ii) 180 days following
the closing of a firmly underwritten public offering of Common Stock, that you
register all or a part of the Shares for resale to us, then you will, as soon as
practicable, use your best efforts to effect such registration as would permit
or facilitate the sale and distribution of all or such portion of the Shares as
are specified in our request. We agree to furnish you with such information,
including information relating to our plan of distribution of the Shares, as you
may request by written notice to us, and to enter into customary indemnification
covenants with you, in connection with such registration.
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6.3.1. If your Board of Directors determines in good faith that
such registration would be seriously detrimental to you and that it is essential
to defer the filing of such registration statement, then you shall have the
right to defer such filing for a period of not more than 180 days after the
receipt of the request from us, provided that you shall not defer your
obligation in this manner more than twice in any twelve-month period.
6.3.2. You shall not be obligated to effect, or to take any action
to effect, any registration pursuant to para. 6.3 after you have initiated two
such registrations.
6.4. Brent Mills and Marlin Eller will vote (or cause to be voted) their
shares of Common Stock (as well as the shares of Common Stock held by any person
owned or controlled, directly or indirectly, by either or both of Messrs. Mills
and Eller) for the election of an individual to be designated by us as a nominee
to your Board of Directors at each election of directors held while we own
shares representing at least two percent (2%) of the outstanding Common Stock.
It is understood and agreed that we will be entitled to nominate one person to
serve as a member of your Board of Directors at any given time, irrespective of
whether you implement a staggered Board or if, for any other reason, there is an
election of directors during our nominee's tenure in office. By their signatures
below, Messrs. Mills and Eller accept the obligations of the para. 6.3.1 insofar
as the same apply to shares directly or indirectly owned or controlled by either
or both of them.
7. ACCOUNTING AND PAYMENT/AUDIT/SUIT:
7.1. You shall keep true and accurate books of account concerning
transactions under this Agreement, and you shall deliver an accounting statement
(plus the appropriate payment of royalties) to us, within forty-five (45) days
following the end of each calendar quarter. To the extent that we are paid by
you, we shall in turn account to and pay all third parties from or through whom
the rights granted to you hereunder are derived (as well as arrangers and/or
adaptors engaged by us in the preparation of Editions, but excluding such
personnel engaged by you).
7.2. We shall keep true and accurate books of account concerning sales
by us pursuant to hard copy fulfillment orders referred by you to us pursuant to
Paragraph 5.3, and we shall deliver an accounting statement (plus the
appropriate payment of distribution fees) to you, within forty-five (45) days
following the end of each calendar quarter.
7.3. Each party shall have the right, at such party's sole cost and
expense, to examine the other party's books of account concerning transactions
pursuant to this Agreement. Each
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Sunhawk Corporation
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May 18, 1998
statement (and the accounting period to which such statement relates) shall be
open to inspection for three (3) years following the date when such statement is
received by such party. Such inspection shall take place at the examined party's
principal place of business during normal business hours upon at least thirty
(30) days' notice, not more than once during each calendar year (although a
specific inspection may involve more than one visit.)
7.4. Legal action with respect to a specific statement and/or the
accounting period to which such statement relates shall be forever barred if not
commenced in a court of competent jurisdiction within the earlier of (1)
thirty-six (36) months following the receipt of such statement or (2) twelve
(12) months following the examined party's receipt of the audit report for such
accounting period.
7.5. For the purposes of this Paragraph 7, a statement shall be deemed
to have been received when due unless the party to whom such accounting is
rendered gives notice of nonreceipt within sixty (60) days following the due
date thereof (in which event the time limitations prescribed above shall be
deemed to run from the date of actual receipt of such statement.)
8. ARRANGEMENTS/ADAPTATIONS:
8.1. Any arrangement(s) and/or adaptation(s) of compositions included in
Editions created by you or on your behalf shall be created under your
supervision on a "work for hire" basis, at your sole cost and expense. However,
from inception, the same shall belong to us, subject only to your right to use
the same for the purposes of this Agreement.
8.2. In each instance, promptly upon completion thereof, you shall
assign to us all rights in the copyright therein, throughout the world,
inclusive of copyright in the electronic file thereof, together with the right
to register such copyright in our name as the "author" or to assign such right
to such third party or parties as we may choose.
8.3. In any instance in which you fail to deliver the appropriate
assignment to us, we shall have the right to execute the same in your name and
on your behalf as your attorney-in-fact (which appointment is coupled with an
interest and is therefore irrevocable) and to register the same with the U.S.
Copyright Office and any other governmental agencies throughout the world as we
may select.
9. SPECIAL NOTICE:
In addition to the notice requirements set forth in Paragraph 3.2.3 (C),
above, you shall include the
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Sunhawk Corporation
Distribution Agreement
May 18, 1998
following special notice in A PROMINENT TYPEFACE READILY READABLE WITH THE NAKED
EYE on each copy of each electronically distributed Edition:
"NOTICE: Purchasers of this musical file are entitled to use it for
their personal enjoyment and musical fulfillment. However, any
duplication, adaptation, arranging and/or transmission of this
copyrighted music requires the written consent of the copyright owner(s)
and of WARNER BROS. PUBLICATIONS, INC. Unauthorized uses are
infringements of the copyright laws of the United States and other
countries and may subject the user to civil and/or criminal penalties."
10. WARRANTIES AND REPRESENTATIONS:
10.1 Each party warrants and represents to the other that such party has
full right, power and authority to enter into and to perform its obligations
pursuant to this Agreement in accordance with its terms.
10.2. In each instance in which (and to the extent to which) we grant
you the right to electronically distribute an Edition, such grant shall
constitute a warranty and representation on our part that your exercise of the
rights so granted to you in compliance with the terms and conditions set forth
above shall not violate applicable law and shall not infringe upon the rights of
any third party, whether contractual in nature or whether based upon other
rights, including but not limited to those relating to copyright, trademark,
service mark, or rights of privacy and/or publicity.
10.3. Your use on the Website of any material(s) not provided to you by
us shall constitute a warranty and representation on your part that you own or
control sufficient rights therein to permit such use thereof and that such use
shall not violate applicable law and shall not infringe upon the rights of any
third party, whether contractual in nature or whether based upon other rights,
including but not limited to those relating to copyright, trademark, service
mark or rights of privacy and/or publicity.
11. INDEMNITIES; CURE OF BREACHES; WAIVER:
11.1. Indemnity:
11.1.1. Each party will indemnify the other, and hold the other
harmless, against any loss or damage (including court costs and reasonable
attorneys' fees) due to a breach of this agreement by that party which results
in a judgment against the other party or which is settled with the indemnifying
party's prior written consent (not to be unreasonably withheld).
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Sunhawk Corporation
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11.1.2. Each party (the "DEFENDING PARTY") will provide a defense
on behalf of the other party in the event of any claim, demand, or litigation
arising from or related to the breach (or alleged breach) of the Defending
Party's representations and warranties hereunder or otherwise relating to such
party's obligations under this Agreement.
11.1.3. Each party shall at all times maintain in force a policy
of errors-and-omissions insurance, issued by a carrier licensed to do business
in New York, California, Tennessee and Florida, having policy limits of at least
[*] Dollars ([*]) for a single claim and [*] Dollars ([*]) for all claims
thereunder, which policy shall name the other party as an additional insured and
which shall require at least thirty (30) days' advance notice of cancellation to
the other party. Certificates of such coverage shall be provided by each party
to the other party promptly following execution of this Agreement.
11.1.4. Each party shall give the other party prompt notice of any
third party claim, action or proceeding in respect of which indemnity is sought
and the other party shall make a good faith effort to consult with the notifying
party prior to responding to such claim, action or proceeding.
11.1.5. Each party is entitied to be notified of all proceedings
in any action in respect of which such party is the indemnitee, and to
participate in the defense thereof by counsel selected by such party, at such
party's sole cost and expense.
11.2. Cure of Breaches:
11.2.1. Neither party will be deemed in breach unless the other
party gives notice and the notified party fails to cure within 30 days (10
business days, in the case of a payment of money or the rendition of an
accounting statement) after receiving notice; provided, that if the alleged
breach does not involve a payment of money and/or the rendition of an accounting
statement and is of such a nature that it cannot be completely cured within 30
days, the notified party will not be deemed to be in breach if the notified
party commences the curing of the alleged breach within such 30-day period and
proceeds to complete the curing thereof with due diligence within a reasonable
time thereafter.
11.2.2. However, either party shall have the right to seek
injunctive relief to prevent a threatened breach of this agreement by the other
party.
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Sunhawk Corporation
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11.3. Waiver:
The waiver of the applicability of any provision of this Agreement
or of any default hereunder in a specific instance shall not affect the waiving
party's rights thereafter to enforce such provision or to exercise any right or
remedy in the event of any other default, whether or not similar.
12. CONFIDENTIALITY/NONDISCLOSURE:
12.1. In the course of performing this Agreement, one party may disclose
information to the other concerning its inventions, know-how, trade secrets and
proprietary information ("CONFIDENTIAL INFORMATION") as may be necessary to
further the purposes of this Agreement. All such Confidential Information
disclosed hereunder shall remain the sole property of the party disclosing such
information and the other party shall have no interest in or rights with respect
thereto. Each party agrees not to (i) use Confidential Information disclosed by
the other party or (ii) to disclose such Confidential Information to any of its
employees or agents or any third party, except for such persons who have a bona
fide need for such information to effect the purposes of this Agreement, without
the disclosing party's prior written consent. Each party will take all
reasonable precautions to prevent an unauthorized disclosure of such
Confidential Information, including at a minimum exercising the same degree of
care and taking the same precautions that such party exercises and takes with
regard to protection of its own most confidential information.
12.2. Neither party hereto shall disclose the terms and conditions of
this Agreement to any third party (other than such party's attorney's and/or
accountants), and shall take reasonable steps to ensure that its employees,
affiliates, and agents do not disclose the terms and conditions of this
Agreement to any third party, without the prior written consent of the other
party, except to the extent that such disclosure is made to such party's
attorneys and/or accountants or is otherwise compelled in connection with
litigation proceedings.
12.3. The obligations set forth in this Section 12 will survive the Term
of this Agreement.
13. NOTICES/STATEMENTS/CONSENTS:
13.1. Notices shall be sent by certified (return receipt requested),
registered mail, Federal Express or Airborne Express, or any other means by
which delivery may be verified, to you and to us at the addresses set forth
above, or to such other addresses as the parties may designate from time to time
by notice in like manner.
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Sunhawk Corporation
Distribution Agreement
May 18, 1998
13.2. Statements (and payments, if applicable) shall be sent by ordinary
mail to the parties' respective addresses for notice.
13.3. Approval/Consent:
Where the consent or approval of a party is required, it shall not
be unreasonably withheld (unless expressly provided otherwise herein) and shall
he deemed given unless the party whose consent or approval has been requested
delivers notice of nonconsent or disapproval to the other party within 15 days
after receipt of notice requesting such consent or disapproval.
14. LAW AND FORUM:
14.1. This Agreement has been entered into in and is to be interpreted
in accordance with the laws of, the State of Florida. All actions or proceedings
seeking the interpretation and/or enforcement of this Agreement shall be brought
only in the State or Federal Courts located in Miami-Dade County, all parties
hereby submitting themselves to the jurisdiction of such courts for such
purpose.
14.2. Service of Process:
14.2.1. Service of process in any action between the parties may
be made by registered or certified mail addressed to the parties' then-current
addresses for notice as prescribed in Paragraph 13, above.
14.2.2. Service shall become effective thirty (30) days following
the date of receipt by the party served (unless delivery is refused, in which
event service shall become effective thirty [30] days following the date of such
refusal).
15. MISCELLANEOUS:
15.1. This Agreement contains the entire agreement between the parties
concerning the subject matter, and replaces and supersedes any and all prior
agreements, written and/or oral.
15.2. This Agreement may not be modified or amended except by a further
written agreement signed by both parties.
15.3. The parties are independent contractors, and nothing contained
herein shall constitute either party the agent of, or a partner, joint venture
or co-venturer with, the other party.
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Sunhawk Corporation
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May 18, 1998
Neither party shall hold itself out to any third party as authorized to enter
into binding commitments on behalf of the other.
15.4. Personal Nature of Agreement; Assignment:
15.4.1. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties and their respective successors and assigns.
However, this Agreement is personal to the parties, and neither party may assign
this Agreement in whole or part except to a parent or subsidiary corporation of
the assignor or to a purchaser of substantially all of the assignor's stock or
assets which is then actively engaged on a regular basis in the same business as
the assignor.
15.4.2. No such assignment shall relieve the assignor of any
liability hereunder, and no such assignment shall become effective unless the
assignee shall deliver to the other party the assignee's written assumption of
the performance of the assignor's obligations hereunder (and the responsibility
for the assignor's warranties and representations hereunder) for all periods
following the effective date of such assignment.
15.5. The paragraph headings included in this Agreement are included for
the convenience of the parties, and neither add to nor detract from the
provisions of said paragraphs.
Very truly yours,
WARNER BROS. PUBLICATIONS U.S. INC.
By: /s/ FRED S. ANTON
------------------------------------
Fred S. Anton - President
Chief Operating Officer &
Chief Financial Officer
AGREED AND ACCEPTED:
SUNHAWK CORPORATION
By: /s/ MARLIN J. ELLER
------------------------------------
Marlin Eller
Chairman
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Sunhawk Corporation
Distribution Agreement
May 18, 1998
The undersigned hereby accepts the obligations described in para. 4.2 of the
Agreement.
WARNER/CHAPPELL MUSIC, INC.
By: /s/ DONALD E. BIEDERMAN
------------------------------------
Donald E. Biederman
Executive Vice President
Business Affairs
The undersigned hereby accept the obligations described in Paragraph 6.4 of the
within Agreement.
/s/ MARLIN J. ELLER
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MARLIN ELLER
/s/ Brent Mills
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BRENT MILLS
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AMENDMENT TO AGREEMENT
("EPS" FILE CONVERSION)
This is an amendment to the agreement which was made as of May 18, 1998
("Agreement") by and between Warner Bros. Publications U.S. Inc. ("Warner") and
Sunhawk Corporation ("SUNHAWK").
Warner wishes to convert the Edition entitled "Rhapsody in Blue" into the
Solero(TM) format, and may from time to time request that Sunhawk convert other
specific Editions into the Solero format.
Sunhawk wishes to convert "Rhapsody in Blue" into the Solero format and
distribute it in accordance with the terms of the Agreement.
The parties therefore amend the Agreement to effective October 20, 1998 as
follows:
1. From time to time Warner may request that Sunhawk convert a specific Edition
into the Solero format.
2. If Sunhawk agrees to produce the conversion, Warner will provide Sunhawk with
encapsulated postscript (EPS) files for each page of the Edition to be
converted.
3. Upon receipt of the files, Sunhawk shall convert the files into the Solero
format as soon as reasonably possible (or other mutually agreed-upon date).
4. Upon completion of the conversion, Sunhawk shall have the right to distribute
the Edition in accordance with the terms of the Agreement.
5. Warner shall pay Sunhawk [*] per non-playable Solero page (or other mutually
agreed-upon fee).
6. This Section 6 shall apply to the "Rhapsody in Blue" project only.
a. Sunhawk agrees to convert "Rhapsody in Blue" into non-playable Solero
format (approximately 400 pages) at a cost of [*] per page. Upon
completion of the conversion, Sunhawk shall
i. create an index of the converted files in the Solero database
system ("Solero Index)
ii. deliver on a PC CD-ROM (win95, 98 and NT 4.0 compatible) the
converted files, Solero Viewer(TM), and Solero Index(TM) made
from Warner-supplied liner notes and other text which Warner will
provide to Sunhawk in digital form.
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b. Warner shall pay the conversion file for "Rhapsody in Blue" upon
execution of this amendment by both parties. If the conversion fee is
not paid within one (1) month of the execution of this amendment,
Sunhawk shall have the right to deduct the fee from amounts which may be
payable to Warner under the Agreement.
c. Sunhawk shall use commercially reasonable efforts to correct any
material program errors in the CD-ROM which Warner brings to Sunhawk's
attention but shall not be responsible for any costs associated with
replacing CD-ROM copies (for warranty claims or otherwise) distributed
by Warner to end users. The Solero Viewer and Solero files are provided
to end users in accordance with the end user license agreement contained
in the Solero Viewer.
7. Each party shall indemnify the other party in accordance with Section 11 of
the Agreement. Specifically, Sunhawk shall indemnify Warner with respect to
claims arising from materials which it creates and provides for the "Rhapsody in
Blue" or any other conversion project. With respect to the "Rhapsody in Blue"
and any other conversion project, Warner shall indemnify Sunhawk with respect to
claims arising from the manufacture and distribution of the CD-ROM as well as
claims which arise from materials which Warner provides for the CD-ROM,
including the underlying music, EPS files, liner notes and any other materials.
Except as provided in this amendment, and except to the extent any term in the
Agreement is inconsistent with the terms of this amendment, all other terms and
conditions of the Agreement shall remain unmodified and are hereby reaffirmed.
IN WITNESS WHEREOF, this amendment is executed as of the Effective Date set
forth above.
Warner Publications U.S. Inc. Sunhawk Corporation
By: [SIGNATURE ILLEGIBLE] By: /s/ BRENT MILLS
------------------------------ ------------------------------
BRENT MILLS
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AMENDMENT TO AGREEMENT
("ASSOCIATE(S) PROGRAM/HARD COPY FULFILLMENT")
This is an amendment to the Agreement that was made as of May 18, 1998 (the
"Effective Date") by and between Warner Bros. Publications U.S. Inc. ("Warner")
and Sunhawk Corporation ("Sunhawk").
Whereas the parties wish to amend the terms of the Agreement, it is hereby
amended effective as of January 1, 1999 as follows:
1. Sunhawk shall have the right to enter into agreements to permit
individuals and entities, including WB, to obtain copies of Editions by
directly or indirectly linking their websites to Sunhawk's Digital Distribution
System ("Associate(s)"). "Digital Distribution System" shall mean the Sunhawk
web site currently located at store.sunhawk.com.
2. Sunhawk shall have the right to pay Referral Fees to Associate(s)
(including WB) who originate sales from their websites. With respect to the
Editions, Sunhawk shall pay [*] ([*]) based on Associate(s)'s Net Sales. In the
Associate(s) Agreements, "Net Sales" is defined as the amount actually received
by Sunhawk from visitors to the Associate(s)'s site who make purchases of
digital versions of the Editions using the special links to the Digital
Distribution System, excluding amounts collected by us for sales taxes, duties,
shipping, handling and similar charges, amounts due to credit card fraud and
bad debt, credits for returned goods, database processing fees, credit card
validation fees or other charges incurred when processing transactions.
3. The following is hereby added to the end of Section 5.1.1 of the
Agreement:
"For sales made through Associate(s) referrals via the Sunhawk Digital
Distribution System, you shall pay to us an amount equal to [*] ([*])
of your Gross Receipts (as defined in Section 5.4.1, below) from the
electronic distribution of Editions, together with any Referral Fees for
sales of digital versions of the Editions originating from a WB website."
4. Referral Fees shall be payable to Associate(s) on a quarterly basis.
In the case that the Referral Fee does not exceed $400, that quarter's Referral
Fee will be rolled over into the next quarter and added to the subsequent
quarter's Referral Fee and continue to roll over until such time as the
Referral Fee reaches $400 or greater.
5. Sunhawk shall have the right to provide Affiliates with a listing of
the Editions in digital form, including, but not limited to, Title, Artist and
Sunhawk catalog number, from which the Affiliate can link to the Sunhawk
Digital Distribution System.
6. Sunhawk shall be responsible for administering the Associate(s)
program. Before executing an Associate(s) agreement that includes access to
Editions, Sunhawk shall provide WB with the identity of the proposed
Associate(s). Said Associate(s) shall be deemed approved by WB unless Sunhawk
is notified within three (3) days that the Associate(s) is not approved. WB
shall have the right to cancel its approval of any Associate(s) upon thirty (30
days) written notice to Sunhawk.
7. Section 5.3.1 is hereby amended to read: "With respect to hard copy
fulfillment, orders shall be received by you and the sale/credit card
transaction shall be completed by you. Such order shall then be transmitted to
WB who will ship the products ordered to Sunhawk and invoice Sunhawk for the
heard copies at [*] off of list price."
Except as provided in this amendment, and except to the extent any term in the
Agreement is inconsistent with the terms of this amendment, all other terms and
conditions of the Agreement shall remain unmodified and are hereby reaffirmed.
IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date set
forth above.
Warner Bros. Publications U.S. Inc. Sunhawk Corporation
By: /s/ DAVID C. OLSEN By: /s/ MARLIN J. ELLER
--------------------------------- --------------------------
David C. Olsen, Dir., Business Affairs Marlin J. Eller
--------------------------------- --------------------------
Print Name Print Name
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EXHIBIT 10.3
TO
SUNHAWK.COM CORPORATION
FORM SB-2
"[*]" = confidential information omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
<PAGE> 2
EXHIBIT 10.3
SUNHAWK CORPORATION
318 Terry Ave. North, Seattle, WA 98109
DISTRIBUTION AGREEMENT
as of June 12, 1998
EMI Christian Music Publishing
PO Box 5085
Brentwood, TN
37024
tel: (615)371-6838
fax:(615)371-6897
Gentlemen and ladies:
When signed by you ("EMI") and us ("Sunhawk"), the following will constitute
our agreement:
1. EMI hereby grants to Sunhawk the non-exclusive right to sell and
distribute digital editions of EMI's copyrighted musical composition(s) and
third party compositions for which EMI has obtained the rights (the
"Edition(s)"), solely via Sunhawk's Solero(TM) technology/format over the
Internet from Sunhawk's website, currently located at http://www.sunhawk.com;
subject but not limited to the following:
o CONTENT: EMI will supply Sunhawk with compositions chosen by EMI for
distribution via the Sunhawk website. The downloadable file of each
such composition shall include a playback feature which incorporates
a midi file arrangement based solely on the musical content of the
Edition(s).
o FORMAT: Each edition(s) shall be formatted in such a way as to include
any and all appropriate copyright information supplied by EMI, and
Sunhawk shall insure that such copyright information is made part of
each download/sale.
o WEBSITE DISPLAY: Sunhawk shall display the edition(s) on Sunhawk's
web site which may display and use EMI's trademarks, service marks
and any and all appropriate artwork, all as selected by EMI. Links to
the edition(s) will be provided to EMI for use and display on EMI's
web site and/or any other web site of EMI's choosing. A link to EMI's
web site will be provided from the Sunhawk web site.
o FILE USAGE: Both EMI and Sunhawk may keep archival copies of the
Solero files. The usage of Solero files is restricted to the terms of
this contract. Sunhawk is sole distributor of the Solero file. EMI is
permitted to make paper copies for use in their own paper publishing.
EMI cannot distribute Solero files or file derived from a Solero
file without Sunhawk's written consent and similarly, Sunhawk cannot
extract midi components or sell the music without EMI's written
consent. Sunhawk will provide to EMI under separate non-disclosure
and license agreements a copy of the Solero Music Editor [*].
2. The territory applicable to this Agreement shall be the World (the
"Territory").
3. Sunhawk shall pay EMI a fee for music sold according to the following
formula:
Sums equal to [*] ([*]) based on the amount of Sunhawk's Gross Receipts
(hereinafter defined) [*]
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[*]
[*]
[*]
[*]
[*]
[*]
As used herein, the term "Gross Receipts" means the gross amount of monies
actually received by Sunhawk, or credited to Sunhawk's account, in respect
of sales of the Edition(s), less any taxes, discounts, [*] credit card
transaction fees and/or credits. The foregoing sums include all payments to
be made to writer(s) and/or publisher(s) and/or arranger(s) (other than
arranger(s) engaged by Sunhawk) of the Edition(s) for which payments EMI
shall be responsible). EMI shall hold Sunhawk free and harmless from and
against any claim of the writer(s) and/or publisher(s) and/or arranger(s)
of the Edition(s) other than arrangers engaged by Sunhawk.
4. If the conversion or transcription of a composition should for any
reason, be considered an arrangement of that composition, Sunhawk will have the
arrangement made by a person connected with Sunhawk as Sunhawk's
employee-for-hire and Sunhawk shall, in each instance, assign to EMI (or the
third party that owns the compositions) all rights in the copyright in the
arrangement, together with the sole right of registering the copyright as a work
made for hire in EMI's name or the name of EMI's designee.
5. [*]
6. The rights hereunder granted shall continue for a term of five (5) years
commencing on the date hereof. Thereafter, the rights granted shall continue on
a yearly basis until such time as EMI, by written notice, notify Sunhawk that
such rights hereunder are terminated.
7. Sunhawk shall render monthly accountings to EMI within thirty (30) days
following the end of each calendar month, accompanied by appropriate remittances
for all sums shown to be due thereunder. EMI (and/or EMI's designated agent)
shall have the right, at EMI's sole cost and expense, upon thirty (30) days
prior written notice, and not more than once during each calendar year, to audit
at Sunhawk's office during normal business hours Sunhawk's books and records
with respect to the Edition(s). Each accounting statement shall be conclusive
and binding on EMI in all respects and EMI shall be barred from maintaining or
instituting any action or objection to such accounting statement unless EMI
shall give Sunhawk a detailed written objection, stating the basis thereof,
within the earlier of (i) thirty six (36) months following the end of the
accounting period which is subject to dispute, or (ii) twelve (12) months
following EMI's audit of such accounting period.
8. EMI warrants and represents that EMI has the full and unrestricted right
to enter this agreement and to grant all of the rights herein granted to
Sunhawk; and that the exercise of such distribution rights by Sunhawk in
accordance with this agreement will not infringe upon the copyright or violate
the property, contractual or other rights of any third party. EMI further grants
and assigns to Sunhawk the benefit of all warranties and representations made
for EMI's benefit by any third party with respect to the Edition(s). EMI shall
hold Sunhawk free and harmless and shall indemnify Sunhawk against any actual
loss or damages (including court costs and reasonable attorneys' fees) due to a
breach of this agreement which results in a final adverse judgment against
Sunhawk or which is settled with EMI's prior written consent (which shall not be
unreasonably withheld).
9. Sunhawk warrants and represents that Sunhawk has the full and
unrestricted right to enter this agreement and to grant all of the rights herein
granted to EMI.
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10. If a claim, whether oral or written, is presented against Sunhawk
which is inconsistent with any of EMI's warranties, representations or
covenants contained herein, Sunhawk shall thereupon serve notice upon EMI
containing the full details of such claims then known to Sunhawk, and EMI shall
assume the defense thereof (except to the extent that such claim involves
Sunhawk's alleged act of omission).
11. Noting contained herein is intended to constitute a partnership or
joint venture between the parties hereto, it being understood that the
relationship between EMI and Sunhawk shall be that of independent contractors
and Sunhawk shall have no authority to bind EMI in any way to Sunhawk or any
third party.
12. In addition to the copyright notices supplied by E-mail and/or fax
from EMI on a song-by-song basis, Sunhawk shall include EMI's Worship Together
trademark, other trademarks determined by EMI and the following special notice
on the cover page on each Edition(s):
NOTICE: This song may be prepared for congregation use under the terms of your
CCLI license. However, if you are not a CCLI license holder, any duplication,
adaptation, arranging and/or transmission of this copyrighted music file
requires the written consent of the Copyright owner(s) and EMI CHRISTIAN MUSIC
PUBLISHING. Unauthorized uses are an infringement of the Copyright Laws of the
United States and other countries.
13. This agreement shall be binding upon and shall inure to the benefit
of the parties hereto.
14. This is the entire agreement between Sunhawk and EMI and may only be
modified or terminated by an agreement in writing signed by Sunhawk and EMI.
This agreement shall be deemed to have been entered into, and shall be
interpreted in accordance with the laws of the State of Tennessee, and any
legal action concerning this agreement shall be heard in the State or Federal
Courts located in Nashville, Tennessee.
15. This agreement replaces and supersedes our prior Distribution
Agreement dated January 1, 199__. Any and all prior agreements, written and/or
oral, with the exc___ of the nondisclosure Agreement and the License Agreement
(Service Provider) dated January 1, 1998.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed and
of the date and year first written above.
SUNHAWK CORPORATION
/s/ BRENT MILLS
- --------------------------
By: Brent Mills
Its: CEO
AGREED TO AND ACCEPTED:
EMI Christian Music Group
/s/ [Signature Illegible]
- --------------------------
By:
Its: Sr. Vice President
<PAGE> 1
EXHIBIT 10.4
TO
SUNHAWK.COM CORPORATION
FORM SB-2
"[*]" = confidential information omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
<PAGE> 2
EXHIBIT 10.4
MUSIC CONVERSION AGREEMENT
This Agreement is made as of April 1, 1998 (the "Effective Date") by and between
Sunhawk Corporation, a Washington corporation with offices at 223 Taylor Avenue
North, Suite 200, Seattle, WA 98109 USA and International Music Engraving
Company, with its principal place of business at #7 Navy Road, Baguio City,
2600, Philippines ("IMEC").
RECITALS
A. IMEC wishes to convert sheet music into Sunhawk's proprietary Solero(TM)
file format.
B. Sunhawk wishes to retain IMEC to convert sheet music into Sunhawk's
proprietary Solero file format.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein, Sunhawk and IMEC agrees as follows:
Section 1
DEFINITIONS
1.1 Music title. "Music Title" means a specific printed music
composition which may consist of one or more pages.
1.2 Source File. "Source File" (also called "Work Space") means a
single page of music in digital form which has been prepared by Sunhawk by
scanning the Music title and converting it into a format which can be used by
the Solero Editor.
1.3 Source Materials. "Source Materials" means any copies of Music
Titles in original sheet music form, notes, audio recordings, or other source
materials which Sunhawk may provide IMEC concerning the Music Title.
1.4 Specifications. "Specifications" for the Final file shall be as
set forth in Schedule "A" of this Agreement.
1.5 Solero Editor. "Solero Editor means the music editor software
provided to IMEC for use in preparing the Final Files as well as any templates,
editing tools, documentation, instruction files, instruction manuals, and any
other files, programs or other materials provided by Sunhawk for use in
converting the Source Files into Final Files.
1.6 Working Materials. "Working Materials" means the working file
which is prepared by IMEC from the Source File using the Solero Editor in
accordance with the Specifications. "Working Materials" also includes any
materials, inventions, documentation, original works of authorship, programs,
files or other materials which IMEC develops or creates which arises from or is
otherwise related to the Solero Editor, Source files, Source Materials,
Specifications or any other information or materials provided to IMEC under this
Agreement.
- -------------
[*] Confidential Treatment Requested
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1.7 Final File. "Final File" means the file which is prepared by IMEC from
the Source File(s) using the Solero Editor which IMEC believes in good faith to
conform in all respects to the Specifications. A Final File will contain one or
more Pages.
1.8 Page. "Page" means a page of music in a Final File which is considered
by the Solero Editor software as a full page of music.
1.9 Delivery and Payment Schedule. "Delivery Schedule" shall be as set
forth in Schedule "B" to this Agreement which lists the Pages contracted for and
the deadlines for their delivery. "Payment Schedule" shall be as also set forth
in Schedule "B".
SECTION 2
CONVERSION AND DELIVERY OF DELIVERABLES
2.1 Conversion, Progress Reports. IMEC shall, using its best efforts,
convert the Source Files into Final Files in accordance with the Specifications.
IMEC acknowledges that it has reviewed said Specifications and that it agrees to
prepare Final Files in accordance to the quality standards described and
exemplified by the Specifications. ALL CONVERSION WORK WILL BE PERFORMED BY IMEC
OR ITS EMPLOYEES AT IMEC'S OFFICES. IMEC AGREES THAT NO CONVERSION WORK SHALL BE
PERFORMED BY INDEPENDENT CONTRACTORS WITHOUT THE EXPRESS WRITTEN APPROVAL OF
SUNHAWK. Upon Sunhawk's request, IMEC shall report on the status of the
conversion of Source Files and any problems encountered relating to conversion
of the Source Files. In addition, IMEC shall contact Sunhawk's representative
promptly by telephone or email upon discovery of any event or problem that will
materially delay conversion work, and thereafter, if requested, promptly confirm
such report in writing. While Sunhawk agrees to provide reasonable technical
support for the Solero Editor, IMEC acknowledges that it is its responsibility
to become proficient in the use of the Solero Editor. The use of the Solero
Editor software is subject to IMEC's acceptance of the terms and conditions of
the separate "Combined Solero Editor and Viewer License Agreement."
2.2 Staffing. IMEC agrees to maintain a staff of qualified employees large
enough to prepare the Pages on the dates set forth in the Delivery Schedule.
Schedule "C" contains a list of the qualifications which qualified staff
typically have.
2.3 Delivery. IMEC shall deliver Pages within the times specified in the
Delivery Schedule. Failure to deliver Pages on the dates set forth in the
Delivery Schedule shall be deemed a material breach of this Agreement.
2.4 Delivery of Source Materials. Upon request by Sunhawk, IMEC shall
either deliver to Sunhawk, or destroy, all corresponding Source Files and Source
Materials.
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<PAGE> 4
SECTION 3
TESTING AND ACCEPTANCE; EFFECT OF REJECTION
3.1 Testing and Acceptance Procedure. All Final Files shall be thoroughly
reviewed by IMEC and all necessary corrections as a result of such review shall
be made prior to delivery to Sunhawk. Upon receipt of a Deliverable, Sunhawk
will, in its sole discretion either: i) accept the Final File and make the
payment set forth in Schedule "B"; or, ii) provide IMEC with written notice of
the aspects in which the Final File contains errors or does not conform to the
Specifications and request that IMEC correct said Final File.
SECTION 4
OTHER OBLIGATIONS OF IMEC
4.1 Product Quality. IMEC agrees that the Final Files will be of high
quality and will conform in all respects to the Specifications. IMEC agrees to
fix at its own expense any errors which may be discovered in any Final File for
a period of one year after the date of acceptance of the Final File by Sunhawk.
IMEC further agrees to inform Sunhawk promptly of any known errors in the Final
Files.
SECTION 5
PROPRIETARY RIGHTS
5.1 Property Rights. IMEC acknowledges and agrees that the Solero Editor,
Source Files, Source Materials, Working Materials, and Final Files, including
but not limited to all source and object code, audiovisual effects associated
therewith are the property of Sunhawk (collectively "Proprietary Materials").
Title to all property rights including but not limited to copyrights, patents
and trade secrets in all of the Proprietary Materials shall remain with
Sunhawk. Except as expressly provided in this Agreement in order for IMEC to
convert the Source Files into Final Files, no license or other rights in the
Proprietary Materials is granted hereby.
5.2 Assignment of Rights. IMEC agrees to transfer and assign, and hereby
transfers and assigns to Sunhawk its entire right, title and interest, if any,
including without limitation all copyright ownership therein, no matter when
acquired, in the Working Materials and Final Files, and IMEC agrees to
cooperate with Sunhawk in perfecting any such assignment of rights. During and
after this Contract, IMEC will assist Sunhawk in every reasonable way, at
Sunhawk's expense, to establish original ownership of all such Working
Materials and Final Files on the part of Sunhawk and secure, maintain and
defend for Sunhawk's benefit all copyrights, patent rights, mask work rights,
trade secret rights and other proprietary rights in and to the Working
Materials and Final Files. IMEC agrees that it shall obtain no "moral",
license, or other rights in the Final Files, Working Materials or other
Proprietary Materials.
3
<PAGE> 5
SECTION 6
CONFIDENTIALITY
6.1 Confidential Information. The terms of this Agreement, Source
Files, Solero Editor, Source Materials, Working Materials, and Final Files, and
any other source code, computer program listings, techniques, algorithms and
processes and technical and marketing plans or other sensitive business
information, including all materials containing said information, which are
supplied by the Sunhawk to IMEC or developed by IMEC in the course of
conversion is the confidential information ("Confidential Information") of
Sunhawk.
6.2 Restrictions on Use. IMEC agrees that except as authorized in
writing by Sunhawk: (i) IMEC will preserve and protect the confidentiality of
all Confidential Information; (ii) IMEC will not disclose to any third party,
the existence, source, content or substance of the Confidential Information or
make copies of Confidential Information; (iii) IMEC will not deliver
Confidential Information to any third party, or permit the Confidential
Information to be removed from IMEC's premises; (iv) IMEC will not use
Confidential Information in any way other than to develop the Final Files as
provided in this Agreement; (v) IMEC will not disclose, use or copy any third
party information or materials received in confidence by IMEC for purposes of
work performed under this Agreement; and (vi) IMEC shall require that each of
its employees who work on or have access to the materials which are the subject
of this Agreement sign a suitable confidentiality and work-for-hire/assignment
agreement and be advised of the confidentiality and other applicable provisions
of this Agreement.
6.3 Limitations. Information shall not be considered to be
Confidential Information if it (i) is already or otherwise becomes publicly
known through no act of IMEC; or (ii) is authorized in writing by Sunhawk to be
disclosed, copied or used.
6.4 Return of Source Materials. Upon Sunhawk's acceptance of a
Final File for a Music Title, IMEC shall provide Sunhawk with all copies and
originals of the Source File, Source Materials, Working Materials and Final
File for the Music Title. Not later than seven (7) days after the termination
of this Agreement for any reason, or if sooner requested by Sunhawk, IMEC will
return to Sunhawk all originals and copies of the Proprietary Materials and
Confidential Information, as well as any other materials provided to IMEC, or
created by IMEC under this Agreement.
6.5 Third Party Confidential Information. IMEC acknowledges that
its association with Sunhawk is in no way conditioned or based upon its
knowledge or disclosure to Sunhawk of confidential information or trade secrets
of others, and agrees that IMEC will not disclose to Sunhawk or induce Sunhawk
to use any confidential information or trade secrets belonging to any third
party.
4
<PAGE> 6
SECTION 7
WARRANTIES, COVENANTS AND INDEMNIFICATION
7.1 Warranties and Covenants of IMEC. IMEC represents, warrants and
covenants to Sunhawk the following:
(a) IMEC has the full power to enter into this Agreement and perform the
services provided for herein, and that such ability is not limited or restricted
by any agreements or understandings between IMEC and other persons or companies;
(b) Any information or materials developed for, or any advice provided to
Sunhawk, shall not rely or in any way be based upon confidential or proprietary
information or trade secrets obtained or derived by IMEC from sources other than
Sunhawk.
(c) The conversion and other work performed by IMEC under this Agreement
shall be in compliance with the Specifications.
7.2 IMEC's Indemnity. IMEC agrees to indemnify, hold harmless and defend
Sunhawk from all claims, defense costs (including reasonable attorneys' fees),
judgments and other expenses arising out of or on account of the conversion work
which it performs under this Agreement, including without limitation claims of
the breach of any covenant or warranty set forth in Section 7.1 above.
7.3 Conditions to Indemnity. IMEC's obligation to indemnify is
conditioned on Sunhawk's notifying IMEC promptly of any claim as to which
indemnification will be sought and providing IMEC reasonable cooperation in the
defense and settlement thereof.
7.4 Sunhawk's Indemnification. Sunhawk agrees to indemnify, hold harmless
and defend IMEC from all claims, defense costs (including reasonable attorneys'
fees), judgments and other expenses arising out of the breach of the following
Covenants and Warranties:
(a) Sunhawk possesses full power and authority to enter into this
Agreement and to fulfill its obligations hereunder.
(b) The performance of the terms of this Agreement and of Sunhawk's
obligations hereunder shall not breach any separate agreement by which Sunhawk
is bound.
7.5 Conditions to Indemnity. Sunhawk's obligation to indemnify is
conditioned on IMEC's notifying Sunhawk promptly of any claim as to which
indemnification will be sought and providing Sunhawk reasonable cooperation in
the defense and settlement thereof.
5
<PAGE> 7
SECTION 8
CONVERSION FEES
8.1 Payments. Sunhawk shall pay IMEC according to the payment schedule
set forth in Schedule "B" upon Sunhawk's acceptance of each Final File.
"Acceptance" shall mean the decision, made in Sunhawk's sole discretion, that
the Final File conforms to the Specifications. Payment will be based on the
number of Pages accepted by Sunhawk. No conversion fee shall be payable on
Pages which are conversions of title pages. Since a Page may be larger or
smaller than the original printed Music Title page, fees are payable on the
number of Pages accepted, and not on the number of pages in the original
printed Music Title.
8.2 Compliance with Laws. Any and all amounts payable to IMEC hereunder
shall be subject to all laws and regulations now or hereafter in existence
requiring the deduction or withholding of payment for income or other taxes
payable by or assessable against IMEC. Sunhawk shall have the right to make
such deductions and withholdings and the payment thereof to the governmental
agency concerned, and IMEC agrees that it shall make and prosecute any claims
which it may have with respect thereto directly with the governmental agency
having jurisdiction over any such matter.
SECTION 9
TERMINATION
9.1 Termination for Non-Performance or Delay. In the event of a
termination of this Agreement by Sunhawk because of IMEC's material breach of
this Agreement, Sunhawk will have no further obligations or liabilities under
this Agreement. Sunhawk will have the right, in addition to all of its other
rights, to require that IMEC deliver to Sunhawk all of IMEC's work in progress,
including all originals and copies thereof, as well as any other materials
provided to IMEC, or created by IMEC under this Agreement. Payment of any
Delivery Schedule milestones under Schedule "B" which have been met shall be
deemed payment in full for all obligations of Sunhawk under this Agreement,
including full payment for all Working Materials, Final Files and all other
materials and work relating to the portion of this Agreement which has been
completed as of the time of termination.
SECTION 10
GOVERNING LAW; JURISDICTION AND VENUE
Governing Law; Venue. The validity, construction, and performance of this
Agreement shall be governed by the laws of the state of Washington without
respects to conflicts of laws, and all claims and/or lawsuits in connection
with agreement must be brought in Seattle, Washington. IMEC consents to the
personal and exclusive jurisdiction and venue of the state and federal courts
located in Seattle, Washington.
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<PAGE> 8
SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Notices. For purposes of all notices required or permitted to be
given hereunder, the addresses of the parties hereto shall be as indicated
below. All notices shall be in writing and shall be deemed to have been duly
given if sent by facsimile, the receipt of which is confirmed by return
facsimile or email, or sent by first class registered or certified mail or
equivalent, return receipt requested, addressed to the Parties at their
addresses set forth below:
If to IMEC: Mr. Kee Bong Kim
International Music Engraving Company
#7 Navy Road
Baguio City 2600
Philippines
If to Sunhawk: Sunhawk Corporation
223 Taylor Avenue North
Suite 200
Seattle, WA 98109-5017 USA
Attn: General Counsel
11.2 Designated Person to Send and Receive Material. The Parties agree
that all materials exchanged between the parties for formal approval shall be
communicated between single designated persons, or a single alternate designated
person for each Party. Each Party shall have the right to change its Designated
Persons from time to time and to so notify the other.
11.3 Entire Agreement. Except for the Combined Solero Editor and Viewer
Agreement, this Agreement, including the attached Schedules which are
incorporated herein by reference as though fully set out, contains the entire
understanding and agreement of the Parties with respect to the subject matter
contained herein, supersedes all prior oral or written understandings and
agreements relating thereto except as expressly otherwise provided, and may not
be altered, modified or waived in whole or in part, except in writing, signed
by duly authorized representatives of the Parties.
11.4 Force Majeure. Neither Party shall be held responsible for damages
caused by any delay or default due to any contingency beyond its control
preventing or interfering with performance hereunder.
11.5 Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be contrary to any law, the remaining
provisions shall remain in full force and effect as if said provision never
existed.
11.6 Contract Assignment. This Agreement is personal to IMEC. IMEC may not
sell, transfer, sublicense, hypothecate or assign its rights and duties under
this Agreement without the
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<PAGE> 9
written consent of Sunhawk. No rights of IMEC hereunder shall devolve by
operation of law or otherwise upon any receiver, liquidator, trustee, or other
party. This Agreement shall inure to the benefit of Sunhawk, its successors and
assigns.
11.7 Waiver and Amendments. No waiver, amendment, or modification of any
provision of this Agreement shall be effective unless consented to by both
Parties in writing. No failure or delay by either Party in exercising any
rights, power, or remedy under this Agreement shall operate as a waiver of any
such right, power, or remedy.
11.8 Agency. The Parties are separate and independent legal entities.
IMEC is performing services for Sunhawk as an independent contractor. Nothing
contained in this Agreement shall be deemed to constitute either IMEC or
Sunhawk an agent, representative, partner, joint venturer or employee of the
other party for any purpose. Neither Party has the authority to bind the other
or to incur any liability on behalf of the other, nor to direct the daily work
activities of the other. Sunhawk shall however have the right to provide
support in the use of its Editor software, suggestions on procedures for
creating Final Files, and comments and corrections on the Final Files which are
submitted for approval.
11.9 Titles and Headings. The titles and headings of each section are
intended for convenience only and shall not be used in construing or
interpreting the meaning of any particular clause or section.
11.10 Contract Interpretation. Ambiguities, inconsistencies, or conflicts
in this Agreement shall not be strictly construed against the drafter of the
language but will be resolved by applying the most reasonable interpretation
under the circumstances, giving full consideration to the Parties' intentions
at the time this Agreement is entered into.
11.11 No Third Party Rights. This Agreement is not for the benefit of any
third party, and shall not be considered to grant any right or remedy to any
third party whether or not referred to in this Agreement.
11.12 Singular and Plural Terms. Where the context of this Agreement
requires, singular terms shall be considered plural, and plural terms shall be
considered singular.
11.13 Limitation on Liability; Remedies. Except as provided in Section 7
above, and except in the case of the infringement or violations of copyright,
trade secret, trademark or any other intellectual property rights, neither
party shall be liable to the other party for any incidental,
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<PAGE> 10
consequential, special, or punitive damages of any kind or nature, including,
without limitation, the breach of this Agreement or any termination of this
Agreement, whether such liability is asserted on the basis of contract, tort
(including negligence or strict liability), or otherwise, even if either party
has warned or been warned of the possibility of any such loss or damage.
IT WITNESS WHEREOF, this Agreement is executed as of the Effective Date set
forth above.
International Music Engraving Company Sunhawk Corporation
By: KIM KEE BONG By: BRENT MILLS
--------------------------------- ---------------------------------
/s/ Kim Kee Bong /s/ Brent Mills
--------------------------------- ---------------------------------
Mr. Kee Bong Kim Brent Mills
Its: President, IMEC Its: CEO
9
<PAGE> 11
SCHEDULE A
SPECIFICATIONS
1. The Final Files shall conform to the Sunhawk Style Manual and any revisions
or updates which are issued during the term of this Agreement.
2. The Final Files will be of a quality consistent with that prepared and
published by Sunhawk.
3. The Final Files shall conform to the quality of sample files (for both a
visual and audio quality) and printed music provided by Sunhawk, including
the "Good and Bad" files, "Samples" and "Showcase Pages" located at
[*].
4. The Final File shall conform to any style or corrections memos which may
be issued by Sunhawk.
5. For each Final File submitted, IMEC will provide Sunhawk with the name of
the IMEC employee who did the final quality review ("slotted") of the
Final File.
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[*] Confidential Treatment Requested
10
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SCHEDULE B
DELIVERY AND PAYMENT SCHEDULE
Delivery Schedule
[*]
[*]
[*]
[*]
Payment upon Acceptance
[*]
[*]
[*]
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[*] Confidential Treatment Requested
11
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SCHEDULE C
STAFFING QUALIFICATIONS
o Music Degree (B.A.) or advanced music skills
o Extensive experience using music notation software
o Excellent verbal communication skills
o Ability to work both independently and in team work environment
o Good trouble-shooting skills
o Excellent knowledge of music notation
o Excellent ear training
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<PAGE> 14
AMENDED SCHEDULE B
DELIVERY AND PAYMENT SCHEDULE
Delivery Schedule
IMEC shall deliver no less than 500, and no greater than 1500 additional Pages
by January 31, 1999.
During each subsequent month that this Agreement is in effect, IMEC shall
provide no less than 500, and no greater than 1500 additional Pages per month.
Payment upon Acceptance
$15 for Pages delivered under this Amended Schedule B.
Advance
As an advance against pages accepted by Sunhawk, Sunhawk shall pay IMEC $10,000
upon the execution of this Agreement by both parties. Said advance shall be
recoupable against fees due for accepted pages under this Schedule. That is, no
additional fees shall be payable to IMEC until the $10,000 is recouped by
Sunhawk. Any un-recouped advance shall be repaid to Sunhawk in the event this
Agreement is terminated because of a breach by IMEC.
<PAGE> 15
AMENDMENT #1 TO MUSIC CONVERSION AGREEMENT
This is an amendment to the Agreement which was made as of April 1, 1998 (the
"Effective Date") by and between Sunhawk Corporation, a Washington corporation
with offices at 223 Taylor Avenue North, Suite 200, Seattle, WA 98109 USA and
International Music Engraving Company, with its principal place of business at
#7 Navy Road, Baguio City, 2600, Philippines ("IMEC").
Whereas the parties wish to amend the terms of the Agreement, and in of the
premises and mutual covenants and agreements set forth herein, Sunhawk and IMEC
hereby amend the Agreement effective December 17, 1998 as follows.
1. The Agreement is hereby amended to add the attached "Amended Schedule B."
2. A new Section 9.2 is added as follows: "Termination for Convenience.
Sunhawk or IMEC shall have the right to terminate this Agreement at its
convenience (with or without cause) upon Two (2) months written notice."
Except as provided in this amendment, and except to the extent any term in the
Agreement is inconsistent with the terms of this amendment, all other terms and
conditions of the Agreement shall remain unmodified and are hereby reaffirmed.
IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date set
forth above.
International Music Engraving Company Sunhawk Corporation
By: KIM KEE BONG By: BRENT MILLS
------------------------ ------------------------
/s/ KIM KEE BONG /s/ Brent Mills
------------------------ ------------------------
Mr. Kee Bong Kim Brent Mills
Its: Its: CEO
------------------------
1
