UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS Under Section
12(b) or (g) of The Securities Exchange Act of 1934
BROWSESAFE.COM, INC.
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(Name of Small Business Issuer in its charter)
Nevada 35-2090110
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
335 West 9th Street, Suite 100, Indianapolis, Indiana 46202-3003
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(Address of principal executive offices) Zip Code
Issuer's telephone number (317) 633-6656
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, par value $0.001
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BROWSESSAFE.COM, INC.
FORM 10-SB
Table of Contents
PART I................................................................... 1
Description of Business............................................. 1
Description of Property............................................. 12
Directors, Executive Officers and Significant Employees............. 16
Remuneration of Directors and Officers.............................. 19
Security Ownership of Management and Certain Securityholders........ 20
Interest of Management and Others in Certain Transactions........... 22
Description of Securities........................................... 23
PART II.................................................................. 24
Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters................................ 24
Legal Proceedings................................................... 25
Changes in and Disagreements with Accountants....................... 25
Recent Sales of Unregistered Securities............................. 26
Indemnification of Directors and Officers........................... 28
PART F/S: Financial Statements.......................................... 30
PART III................................................................. 45
Index and Description of Exhibits................................... 45
SIGNATURES............................................................... 46
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PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative 2.
ITEM 6. DESCRIPTION OF BUSINESS.
Products and Services.
BrowseSafe is a web content review Company whose web program tool is
called "PlanetGood". PlanetGood is not a filter or blocker. The families,
schools and businesses using PlanetGood will be afforded Internet safety while
still having the freedom to choose the content they determine is appropriate for
themselves and their children. PlanetGood is a browsing device that includes a
world-wide site submission and review process and offers continual updating for
its users.
PlanetGood offers several levels or modes of protection when viewing the
Internet: (1) a mode called "PlanetWow" designed to direct children 10 and under
to educational and fun web sites; (2) a level called "PlanetCool" to direct
teens aged 11 to 16 to sites appropriate for teens; and (3) a level called
"PlanetHome" that allows adults to reach sites consistent with adult interests.
PlanetGood compliments or replaces existing browsers, such as Microsoft
Internet Explorer or Netscape Navigator, with a PlanetGood customized version of
these browsers. PlanetGood installs a client-side program called PlanetGood
Stealth which can be customized by the parent (or teacher, system administrator,
librarian) and it runs transparently on the personal computer. The Stealth
program empowers the parent to allow or disallow non-protected browsers, chat
programs and audio or video utilities and has a selectable parental bypass
feature. PlanetGood can also be installed in networked environments.
Once installed on a personal computer or in a networked environment, the
user is prompted to type in their personalized user name and password and is
directed to the PlanetGood's server-side technology. This technology allows
parents the flexibility to customize the Internet sites available to each member
of the family, depending upon their personal preferences and the ages of their
children. Parents are empowered to choose the web content by selecting browsing
variables for each member of their family. They also benefit from parental
controls such as "site preview" and "site over-ride" so they can further
customize the content and time frames for their children to view individual web
sites.
Each site which is available on PlanetGood is personally reviewed by
BrowseSafe's trained staff. A basic principle which governs BrowseSafe is that
the site review system is the only process that can insure accuracy. An
illustration of this feature is the area of nudity and sexual language. On the
web, these topics are seen in many forms and technology alone cannot decipher
the vast differences that may occur between a pornographic site, a photography
studio site containing nude pictures, a medical sexual anatomy site, a 16th
century art site containing nude paintings, a medical site containing sexually
related
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diagrams, a lingerie and intimate apparel site or sites that simply discuss
mature sexual language in an explicit way without any graphics or pictures
whatsoever. The only reliable way to properly analyze these diverse sites is
through human review. Further, without human review, there is no other accurate
way to segment a site so that parents can allow access to certain areas of a
site but restrict access to other areas of the site that they deem to be
inappropriate.
During the review process, each site is given a topic and, if
applicable, may also be assigned a combination of any of the following
characteristics: Alcohol, Alternative Lifestyles, Art - Nudity, Chat, Extreme
Beach / Intimate Apparel, Firearms and Hunting, Gambling, Games, Illegal Drugs,
Jokes & Humor, Mature Sexual Language, Mature Subject Matter, Medical Anatomy,
Medical Terminology - Sexual, Message Boards, Music, New Age / Eastern
Religions, News, Occult, Ordering on-line, Paranormal, Personal Web Pages,
Pop-Culture, Profanity - Excessive, Profanity - Mild, Reviews & Critiques,
Science-Fiction, Search Engine, Sports, Television & Movies, Tobacco, Video or
Audio, Violence - Mild, Violence - Moderate and Violence - Excessive.
For a web site to be accessible to any PlanetWow or PlanetCool account,
the site must have been reviewed and assigned a topic and, if appropriate,
applicable characteristics. If a PlanetWow or PlanetCool user wants to go to a
site that has not been reviewed, they can immediately submit the site for review
or the parent can preview the site to determine whether to allow access by a
child until the site has been reviewed by the BrowseSafe reviewer. Users of
PlanetHome may opt for the same level of security as either PlanetWow or
PlanetCool. In the alternative, the parent may utilize "Free Roam Browsing" or
choose to bypass the PlanetGood system altogether.
In order to stay ahead of demand, the Company has a review capacity of
9,000 sites per week as of November, 1999, with a goal of 15,000 by the first
quarter of 2000. In order to grow to this capacity, the Company intends to
double the size of its site review team.
In addition, BrowseSafe is developing a fourth product that is currently
a pilot program scheduled for full release in the first quarter of 2000 under
the name "PlanetGood Enterprise". This business productivity tool will be
functionally different than BrowseSafe's home product, however, it can be
customized by each business to give an unlimited number of employees
predetermined safe access to the Internet. PlanetGood Enterprise will have full
reporting capabilities by individual employee and will be easily managed by the
business owner or system administrator.
Employees and Training.
As of November, 1999, BrowseSafe has 9 full-time employees, including
executive officers. It also has 6 part-time employees and 26 outside sales
representatives. The Company does not have any agreements with labor unions, and
experiences a low turnover rate among its employees and independent contractors.
All of the employees are required to complete in-house training programs which
include an orientation, review of standard
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operating procedures manual, seminars in updated and new techniques and
information and regular performance reviews.
The review staff is provided with an initial intensive training program
that consists of an overview of the Company, its policies, products and the
basic technology, including topics and characteristics training. Reviewers must
then complete several rigorous training sessions interacting with BrowseSafe's
proprietary technology and incorporating the human interaction necessary to
provide accuracy in the content review process.
During and after completion of training, each reviewer is monitored by
and in contact with their site review manager. New reviewers are evaluated by
managers and based on their level of competency, may receive more
responsibilities in the review process. The most efficient and competent
reviewers may move on to become site review managers and take on the added tasks
that are required by the site review manager's job description. Site reviewers
are regularly monitored for accuracy and further training is assigned as
warranted.
Competition.
The Company under its business plan, which was finalized in September,
1999, will be competing for a share of the Internet safety browser business
dominated presently by a number of large, full-service organizations. The
principal competitors include Cyber Patrol, Cyber Sitter, Net Nanny and Surf
Watch. Most Internet filters merely provide a list of prohibited web sites and
are weakened by changes in the Internet and by clever users who learn how to
circumvent them. PlanetGood provides a positive list of sites that have been
reviewed for content and are updated on BrowseSafe servers for all users to
freely access. Every web site viewable through "PlanetGood" has been viewed and
characterized for content by the Company's staff review team - sites are not
determined to be "good" or "bad", they are simply reviewed objectively for the
content actually contained on the site.
Business Development.
BrowseSafe, LLC was formed as an Indiana limited liability company in
the first quarter of 1998 in Indianapolis, Indiana, as a result of a growing
demand by families and businesses for a safe Internet browser. On July 28, 1998,
BrowseSafe.com, Inc. was incorporated as a Nevada corporation but conducted no
operations and had no assets until May, 1999.
In contemplation of a share exchange with Motioncast Television
Corporation of America described below, BrowseSafe, LLC and BrowseSafe.com, Inc.
entered into an Asset & Liability Contribution Agreement in May, 1999. The other
parties to the Asset & Liability Contribution Agreement were Minati Financial,
Inc., Torquay Holdings, Ltd.,Vista Financial Corp., El Coyote Capital Corp.,
Jupiter Financial Services, Inc., Kyline Investment Corp., Chariot Group, Ltd.,
Sid-Barney, Inc., Sterling Overseas Investments SA, Albury Capital Corp.,
Eivissa Capital Corp., Hemisphere & Associates, Ltd., Barisal Capital
Corporation and Fergus Capital Corporation (collectively the "Funding Group").
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Pursuant to the Asset & Liability Contribution Agreement, the Funding
Group agreed to contribute certain funds to BrowseSafe.com, Inc. in return for
which BrowseSafe.com, Inc. agreed to issue shares of its common stock to the
Funding Group. In addition, BrowseSafe, LLC agreed to contribute all of its
assets and liabilities, including its intellectual property to BrowseSafe.com,
Inc.
Effective as of June 24, 1999, BrowseSafe.com, Inc. and its
shareholders, BrowseSafe, LLC and the Funding Group, entered into a Share
Exchange Agreement with Motioncast. Motioncast was a Nevada corporation
incorporated on June 8, 1990, whose stock was listed on the OTC Bulletin Board
under the trading symbol MCTV. As of the date of the share exchange, Motioncast
had no operations, had assets consisting of only of cash and had minimal
liabilities. Motioncast was considered a development stage company.
As a result of the share exchange, BrowseSafe.com, Inc. became a
wholly owned subsidiary of Motioncast. Motioncast changed its name to
BrowseSafe.com, Inc. and changed its trading symbol to PGPG. BrowseSafe.com,
Inc. changed its name to BrowseSafe Technology, Inc. As of November, 1999, all
operations are conducted in BrowseSafe Technology, Inc. For financial
statement purposes, BrowseSafe Technology, Inc. is considered the
acquiring Company and the merger is treated as a "reverse acquisition".
Pursuant to this accounting treatment, BrowseSafe Technology, Inc. is deemed
to have issued stock for the acquisition of Motioncast.
Pursuant to the Asset & Liability Contribution Agreement and the Share
Exchange Agreement, the Funding Group was obligated to contribute $300,000 to
BrowseSafe.com, Inc. within ten business days of the closing of the share
exchange. To date, the Funding Group has contributed only approximately
$100,000. In addition, the Funding Group was obligated to cause BrowseSafe.com,
Inc. to receive at least $1,500,000 of proceeds from the sale of common stock no
later than November 30, 1999. It is anticipated that the Funding Group will also
fail to complete this obligation.
In connection with the share exchange, BrowseSafe.com, Inc. was
obligated to issue 36,838 shares of its common stock to the Funding Group. These
shares were to be issued in exchange for the receipt of $82,620 in cash and the
cancellation of $50,000 in promissory notes for funding previously provided to
the Funding Group.
Due to the failure of the Funding Group to provide the full amount of
the funding required under the agreements, BrowseSafe.com has not issued these
shares to the Funding Group. BrowseSafe.com, Inc. has advised all members of the
Funding Group in writing that they are in breach of the Exchange Agreement and
the Asset & Liability Contribution Agreement and has provided them an
opportunity to remedy the breach. BrowseSafe.com, Inc. has not yet received any
written response from the members of the Funding Group. At the present time,
BrowseSafe.com, Inc. has not determined what, if any, action it will take
against the members of the Funding Group as a result of their breach of the
agreements.
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Plan of Operation.
The Company is a development stage company, has yet to generate any
material revenues and is seeking additional capital through an investment
capital company and other sources. The Company and its predecessor have obtained
equity and debt financing of approximately $1,085,000 since its inception. The
Company has invested approximately $30,000 in purchased equipment and has
entered into operating leases for equipment that has a cost of approximately
$120,000. The Company has also invested $600,000 in research and development
(including an estimated $230,000 of costs that were incurred in the development
of software. The Company has entered into a royalty agreement with the vendor
who performed these services). The Company has also invested $205,000 in
marketing and advertising expenses and approximately $475,000 on general
administration and overhead. The Company has access to approximately $85,000 in
cash for operating capital in the form of loans from its executive officers.
At the rate of operations as of November, 1999, the Company will need
additional cash estimated at $750,000 over the next four months and intends to
satisfy this requirement through a Rule 504 offering under Regulation D of the
Securities Act of 1933 to accredited investors. BrowseSafe has recently executed
a nonbinding Bridge Financing Term Sheet under which it intends to issue
$750,000 of convertible debentures.
It is anticipated that this 504 offering will be to a single investor
which is an entity that qualifies as an accredited investor and whose owners
also qualify as accredited investors. As structured in November, 1999, $150,000
of the debentures will be issued by November 27, 1999. It is further anticipated
that at least $75,000 in debentures will be issued every thirty days thereafter.
The debentures provide for a conversion price equal to 75% of the average
closing bid price of the common stock as reported on the OTC Bulletin Board. Due
diligence is underway as of November, 1999, but no formal documentation has been
executed and there can be no assurance that this transaction will close.
Over the next 12 months, the Company plans to conduct a public offering
of up to $10,000,000 under the Securities Act. It will use the proceeds to repay
indebtedness, expand marketing, add to working capital and build additional
infrastructure.
The Company's short and long term capital requirements will depend upon
many factors, including acquisition of adequate funding, the rate of market
acceptance of the Company's products, the level of resources required to expand
the Company's marketing and sales organization and other factors, some of which
may be beyond the Company's control. A slower than expected rate of acceptance
of the Company's products or lower than expected revenues generated from the
sale of the products and other costs associated with upgrading the Company's
equipment would materially adversely affect the Company's liquidity. Other than
the proposed Rule 504 offering, the Company has no other commitments for
financing at this time, and there can be no assurances that any such additional
financing would be available in a timely manner, or, if available, would be on
terms acceptable to the Company.
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Assuming it can obtain the necessary funding, the Company anticipates
incurring additional research and development costs estimated at $375,000 over
the next the 12 months of operations for such items as computer programming and
web design. As of November, 1999, the Company uses outside vendors for a
substantial portion of its computer programming and web design. The Company
expects to bring more of these services in-house where efficiencies and savings
can be expected. Updating and maintaining its web design is critical to attract
users and potential advertisers to the BrowseSafe web site. In addition, one of
the by-products of the BrowseSafe business is the accumulation of an extensive
web site content database. The Company intends to investigate the commercial
value of such data to a variety of businesses.
Equipment expenses over the next 12 months are estimated at $600,000 and
will be largely related to acquiring additional servers and increasing
bandwidth. These expenses are necessary to service the volume of users within
the Company's telecommunications and server infrastructure. These expenses also
encompass wiring, routers, load balancing and back-ups, including costs to
maintain the servers, databases, tables of customer information, phone equipment
and support for web sites.
Over the next 12 months, BrowseSafe expects to add 20 full-time
employees to support technology, sales and service and marketing. The Company
also plans to hire managers in several key areas of the organization. In
addition, 35 to 40 part-time employees will be hired to support the web content
and review process.
Intellectual Property.
BrowseSafe.com, Inc. or its wholly owned subsidiary, BrowseSafe
Technology, Inc., own all of the intellectual property assets utilized in the
business of BrowseSafe. These assets include the copyrights in existing versions
of "PlanetGood" browser software and technical manuals as well as marks
associated with BrowseSafe products and services. Applications for trademark or
service mark registration of the name "BrowseSafe" (in stylized lettering) and
the marks "PLANET GOOD," "PLANETWOW," "PLANETCOOL" AND "PLANETHOME" (all in
typed form) were filed in 1998 by BrowseSafe's predecessor-in-interest,
BrowseSafe, LLC. A registration has been issued on the Principal Register for
"PLANET GOOD" as a trademark for computer software (Reg. No. 2,288,288, dated
October 19, 1999); the four other applications remain pending.
BrowseSafe also uses two composite design marks (logos) in connection
with its products and services, neither of which is presently the subject of a
United States registration or registration application. One of these logos
incorporates the name "BrowseSafe.com" and a depiction of the Earth; the other
features the letters "PG" in a block design and is associated with the
"PlanetGood" software product.
Use of BrowseSafe's software by end-users is subject to the terms and
conditions of a license agreement which accompanies distributed copies of the
software. There are no patents or patent applications relating to BrowseSafe's
products or services.
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Marketing.
BrowseSafe's browser PlanetGood has been in development for more than
two years and as of November, 1999, is being shipped to various markets.
BrowseSafe launched the product in September of 1999 and began selling the
product primarily to customers through Internet service providers and directly
under its private label program.
The marketing plan as adopted by the Company concentrates on public and
private schools, libraries, retail, business and other organizations. The
Company has divided these target markets into primary, secondary and tertiary
groups which allows it to tailor its marketing approach.
The primary markets identified by the Company are:
Internet Service Providers (ISP)
Key ISP's around the country will be solicited by the Company to
implement a three-month marketing plan designed specifically for their market.
The campaign will consist of materials to introduce the ISP's customers to
PlanetGood (e-mail, print ads, direct mail, etc.), materials for their web site
(FAQ's, online demo, downloadable product, etc.) and a local public relations
campaign.
There are estimated by Jupiter Research, an internet research Company,
to be over 6,000 ISP's nationwide, serving over approximately 15,000,000 non-AOL
Internet customers (an estimated $540,000,000 potential market). Many small to
medium sized ISP's are struggling to be profitable while offering a $19.95
unlimited usage plan. BrowseSafe's plan will be to offer through ISP's a
value-added program to their current and future customers for an additional fee
added to customers' monthly bills. This fee will be divided between the ISP and
BrowseSafe. BrowseSafe will provide all of the marketing materials and will
provide the customized ISP's with public relations support to show them how to
promote the BrowseSafe products.
Direct Sales over the Internet
The Company anticipates that this area has great potential as the US
population becomes accustomed to purchasing goods and services on the Internet.
By selling PlanetGood on the Internet, the market expands from a national to an
international audience.
Private Label
The BrowseSafe label program has been designed to be used as a
fundraising tool for churches and community service organizations, a source of
additional revenue for web site owners and an alternative business model for
non-Internet companies. By affiliating with certain nonprofit organizations, the
Company can provide a fund-raising
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mechanism for groups that have loyal followings. By delivering a message about
PlanetGood and BrowseSafe through an organization, BrowseSafe can gain
acceptance with an audience in part due to its association with the
organization. The private label program will also give the Company a presence
over the web by allowing web site owners the ability to resell PlanetGood and
receive a residual monthly income from that sale.
Retail Market
The Company will focus its initial marketing and sales efforts on
general retail, certain markets within computer retail and Christian retail
segments because these markets allow the Company access to customers who fit a
target demographic profile without requiring the Company to buy shelf space or
pay advertising fees.
General Retail
Based upon information contained in American Demographics, a
publication that specializes in charting demographics and charting
trends, there are over 28 million homes that own a computer but do not
have Internet access. One of the primary reasons given for not being
connected to the Internet is the issue of on-line predators. Through
groundwork already laid and a public relations campaign designed for
retailers, BrowseSafe plans to enter into agreements to allow it the
opportunity to position PlanetGood in retail outlets. A visual presence
on the shelves of retailers will expose PlanetGood to a large volume of
potential new customers.
Computer Retail
To enter into the computer retail market BrowseSafe is pursuing a
professional computer sales representation firm with 24 local and
regional representatives to position its product on the shelves of the
independent computer software retailers. This effort encompasses the
major national chains consisting of more than 2,000 computer retailers.
According to Computer Retail Week, a trade publication for the computer
retail industry, the retail software channel accounts for over $40
billion in annual software sales. A presence in this market is expected
to enhance the position of the Company's product nationwide.
Christian Retail
BrowseSafe has identified a key distributor that specializes in
selling products to the Christian retail market. Through this
organization, the Company's products will be sold to Christian stores
allowing strategic product positioning. According to CBA, an
organization representing specialty Christian retail stores, there are
over 9,000 retail outlets in the United States with over $3 billion of
sales annually. This retail segment is a natural market for PlanetGood
as the demographics suggest a strong family orientation.
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The secondary markets are:
Business
This area has great potential since currently many businesses using the
Internet allow employees access to the Internet either directly or through a
network. The business owner or its system administrator will be able to
customize the PlanetGood Enterprise to allow employees only into areas and sites
that are most productive for the Company. Efficiencies can be gained by the
Company since employees will not be able to spend time in non-work related
sites.
Cable Companies
As technology continues to improve, new methods of Internet access are
becoming available. One of these new avenues is the cable modem through which
cable companies can provide Internet access utilizing television cable that has
already been installed into customers' homes. Depending upon the acceptance by
consumers and marketing efforts by cable companies, this niche could grow
significantly over the next year. BrowseSafe plans to offer the same programs to
cable companies as it does to traditional ISP's.
Schools
Schools are an important area of focus because of the concern for safety
by parents and educators and their desire to offer children a positive
educational experience when browsing the Internet. Schools will be approached
with two options: The first will be the opportunity to purchase PlanetGood for
use in the classrooms. The second will be to use the fund raising program to
generate additional revenues for the school. The Company has targeted schools as
a secondary market only because there is generally a generally a time line for
decision-making and budgeting.
According to information provided by the U.S. Department of Education
for the school year 1999-2000, there are estimated over 80,000 public elementary
and secondary schools and over 26,000 private elementary and secondary schools
in the U.S. The Department of Education reports that over 95% of these 106,000
schools have computers, but less than 50% of the schools and 15% of the
computers are connected to the Internet. In the 26,000 private schools in the
U.S., there are over 626,000 computers with less than 9% of those computers
connected to the Internet. A main concern of schools without Internet
connections is exposure to unwanted or inappropriate information and sites.
Libraries
Like schools, libraries are an important area of focus because of the
concern for safety by parents and educators. PlanetGood is a suitable tool for
libraries since it is not a "one size fits all" product. BrowseSafe's
classification of web site content will permit
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the library to select the type of content for its internet access as it selects
for the books it has on its shelves.
Market OEM (Original Equipment Manufacture)
This market segment is made up of computer and parts manufacturers. By
bundling PlanetGood within new computers, users will be able to install
PlanetGood with the initial setup of the computer.
Telecommunications Companies
The telecommunications industry has recently begun to focus on the
Internet as a mean to gain new customers and keep current customers. Depending
upon the acceptance by consumers and marketing effort from the
telecommunications companies, this niche appears to be a growth area over the
next years. BrowseSafe plans to offer the same programs to these companies as it
does to traditional ISP's.
The tertiary markets are:
Advertising Sales
The Company intends to pursue the sale of advertising space on
PlanetWow, PlanetCool and PlanetHome web pages. Advertisers pay a premium for
search words so that their ad is displayed to people looking for their product
or service. BrowseSafe will be able to provide a better alternative because each
of the sites is age specific. This offers the Company the opportunity to achieve
a better target audience for a given advertiser.
e-Commerce
As Internet sales continue to grow, BrowseSafe plans to offer special
products and services to its customer base through direct marketing as well as
through an online store. This area of expansion is still in the planning stages.
Market Research Information
The list of reviewed web sites in combination with the characteristics
that describe their content will be a valuable marketing tool for marketers
around the world. The sales of segments of this list can provide an additional
revenue stream for the Company in the future.
Year 2000 Compliance.
The Year 2000 problem is the inability of some software, hardware and
systems to determine the correct century. For example, software with
date-sensitive functions that are not Year 2000 compliant may not be able to
determine whether "00" means 1900 or 2000, which may result in computer failures
or the failure of the computer to produce accurate
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information. The Company's cash flow could be adversely affected if its computer
systems, those of its clients and third party suppliers are not Year 2000
compliant.
The Company has made an assessment of the Year 2000 readiness of its
internal software and hardware systems. Its assessment plan included:
o contacting third party vendors from whom the Company purchases
or licenses its hardware, software, services and supplies;
o assessing repair, upgrade or replacement requirements and
implementing repair, software patches, upgrade or replacement;
o testing certain internal and third party, hardware, software and
systems; and
o contacting certain customers.
Since most of BrowseSafe's hardware is new, it already meets Year 2000
compliant and leap-year compliant standards. Based on the results of this
assessment, the Company recently upgraded its computer systems and has
determined that its software, hardware and computer systems are Year 2000
compliant. In 1999, the Company spent approximately $4,000 to upgrade its
computer systems. These expenses were related to time spent by employees and
consultants in the evaluation process as well as any needed repair, upgrade or
replacement.
The Company has also verified that their suppliers are Year 2000
compliant. If certain suppliers are not Year 2000 compliant, it could result in:
o a decrease in net revenues;
o an increase in the allocation of resources to address Year 2000
problems; and
o an increase in litigation costs as a result of the failure of
certain customers to pay the Company or suppliers to provide
services on a timely basis.
Furthermore, the purchasing patterns of certain customers may be
affected by Year 2000 issues as companies expend significant resources to
correct their current systems. These expenditures may result in reduced funds
available for the services and products the Company provides its customers which
could materially and adversely harm its business condition and future results of
operations.
The Company is not aware of any Year 2000 compliance problems relating
to its systems that would have a material adverse effect on its business,
results of operations, or financial condition.
Software for Servers.
All servers are using Windows NT 4.01 with Service Pack 4 and the Y2K
Update applied. SQL Server 7.0 and Netscape Proxy Server 3.5 both products are
Y2K compliant. SQL Server 7.0 (English) - Win NT
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BrowseSafe Hosting Facility.
Exodus Communications, Inc., BrowseSafe's server hosting facility, has
advised BrowseSafe that it has put into place a comprehensive Year 2000 Risk
Management initiative that is appropriately funded, staffed and managed. In
addition, Exodus has advised the Company that it has established a Year 2000
Oversight Committee to manage its worldwide operations for the transition into
the next millennium. This team is chartered to manage successful completion of
Year 2000 readiness for Exodus' mission critical business processes, internal
systems, facilities and equipment.
BrowseSafe Internal Operations.
All of the computers at BrowseSafe.com have been tested based on the
NSTL Compliance test and have passed. Along with taking this precaution, the
Company has also taken the appropriate measures in making sure that all systems
will have either Windows 98 (Second Edition or the proper Y2K patches) or
Windows NT (2000 or NT 4.0 with Service Pack 5) operating systems. The Company
has taken the same measures with all other software being used within the
BrowseSafe.com architecture.
BrowseSafe Telecommunications.
T1 From SAVVIS
Testing - SAVVIS has tested all of the hardware, software, data
interfaces and facilities referred to above and has determined that
substantially all of the above are Year 2000 compliant. To the extent that such
testing has revealed instances where Year 2000 compliance is lacking, SAVVIS has
undertaken to identify the problem and has scheduled an implementation plan to
ensure timely Year 2000 compliance.
Phone System from TeleComm Industries.
COMDIAL phone system is in place and is Y2K compliant.
ITEM 7. DESCRIPTION OF PROPERTY
Office Space
Effective September 1, 1998, the Company began leasing 1,255 square feet
of office space in downtown Indianapolis, Indiana, from B. B. Kirkbride. The
principal owner of Kirkbride, J. Marshall Gage, is also a director and vice
president of BrowseSafe. The Company obtained the space at $10 per square foot.
The lease was for one year with renewal and expansion options.
The Company believes that this space will provide adequate office and
working space for the technical and administrative needs of the Company for the
immediate future. Long-range future growth can be accommodated by leasing
additional space nearby.
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Equipment
BrowseSafe leases most of its computer system from two principal
computer leasing companies upon terms which are generally commercially
available. The system includes the following:
Database Servers
Compaq ProLiant 5500 R
Processors = 4 (500 MHz Pentium III XEON)
RAM = 1.2 GIG
HD = 3 (9.1 GIG drives in a RAID Configuration)
Redundant Power Supplies
Windows NT Server
BrowseSafe Proprietary Software
Proxy Servers
Compaq ProLiant 5500 R
Processors = 2 (500 MHz Pentium III XEON) upgradeable to a total
of 4 processors
RAM = 756 MB
HD = 3 (9.1 GIG drives in a RAID Configuration)
Redundant Power Supplies
Windows NT Server
BrowseSafe Proprietary Software
Information Servers
Compaq ProLiant 5500 R
Processors = 2 (500 MHz Pentium III XEON) upgradeable to a total
of 4 processors
RAM = 512 MB of RAM
HD = 3 (9.1 GIG drives in a RAID Configuration)
Redundant Power Supplies
Windows NT Server
BrowseSafe Proprietary Software
Email Servers
Compaq Proliant 1850 R
Processors = 1 (450 MHz Pentium II XEON)
RAM = 256 MB
HD = 3 (4.1 GIG SCSI drives in a RAID Configuration)
Compaq 20/40 GIG DLT Drive
NIC = 10/100 MB
Redundant Power Supplies
Windows NT Server
BrowseSafe Proprietary Software
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Internet Robot or Spider Servers
Compaq Proliant 1850 R
Processors = 1 (450 MHz Pentium II XEON)
RAM = 256 MB
HD = 3 (4.1 GIG SCSI drives in a RAID Configuration)
Compaq 20/40 GIG DLT Drive
NIC = 10/100 MB
Windows NT Server 4.0
BrowseSafe Proprietary Software
Internal Operation Servers
Compaq Proliant 1850 R
Processors = 2 (450 MHz Pentium II XEON)
RAM = 256 MB
HD = 3 (4.1 GIG SCSI drives in a RAID Configuration)
NIC = 10/100 MB
Windows NT Server 4.0
Goldmine Version 4.0 (5 Client License)
Visual Sourcesafe 6.0
BrowseSafe Proprietary Software
BrowseSafe also maintains three separate in-house programming test
environments which emulate the proprietary software that it uses for its
PlanetGood service. This includes both client-side and server-side emulations.
Beyond this, BrowseSafe also owns personal computer equipment, routers and hubs
for its internal operations and infrastructure.
Redundancy.
The system has been designed so that the Company will have enough
hardware to handle double the number of current customers. If loss of a server
occurs, the other servers compensate for the unit that is down until the
disabled server is back online. In addition to having redundant server
architecture, each server has redundant power supplies with the RAID
configuration of hard drives. The Raid configuration allows for multiple drives
to fail in each server without the loss of data or functionality.
Exodus Communications, Inc.
BrowseSafe also rents space for its servers from Exodus Communications,
Inc. This Internet data facility is located on one of the main Internet
backbones and offers scalability, reliability and manageability to run the
Company's web applications. Exodus manages Internet web sites and network
infrastructure from Internet data centers in Santa Clara, Boston, Chicago, Los
Angeles, New York, Washington, D.C. and Seattle. This relationship ensures that
BrowseSafe customers are given access to an Internet network with the monitoring
and security as detailed below:
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The Network
o OC-12c network architecture provides global network connectivity to
businesses worldwide.
o High-bandwidth capacity available in a variety of options ensures speed
and performance for crucial Internet applications.
o The Exodus network can sustain over 3 Gbps of traffic to the Internet so
you can make sure your Web communications keep up with elevated Internet
traffic.
o Transmit data through shortest available paths thanks to an
industry-leading combination of public and private peering
relationships.
o While ISPs commonly oversubscribe their networks by nearly four times
their capacities, the Exodus network is designed for unanticipated
spikes in demand. This means our network is managed to have excess
capacity when needed.
o Exodus uses redundant fiber paths to prevent any single point of failure
in the Exodus backbone.
Services and Monitoring
o 24 x 7 service and monitoring
o Secure private state-of-the-art Internet Data Center facilities o URL
Monitoring checks URL for appropriate response times and pings your Web
server application for status verification.
o Complete access and routes to all peers
o Usage based bandwidth services with reporting of bandwidth usage
o Bandwidth allocation changes made within minutes
o Tape and media management
Security
o Biometric key-lock doors
o Alarm systems
o Video surveillance cameras
o Air vents
o Motion and temperature sensors
o Locked-down floor tiles
o Windows with horizontal privacy blinds
o Dedicated services for power, lighting and fire suppression
o Dedicated, shielded connections to the Exodus network
Exodus is experienced at hosting these prominent companies.
o GeoCities
o Hewlett-Packard
o Lycos
o MCI Worldcom
o Microsoft Hotmail
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o MSNBC
o Oracle
o USA Today
o Yahoo
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The Company's directors and executive officers are as follows:
NAME AGE POSITION
Mark W. Smith 41 President/Chief Executive
Officer/Director
Ted P. O'Brien 33 Vice President of Sales and
Marketing/Director
Gregory P. Urbanski 46 Chief Financial Officer/Director
J. Marshall Gage 62 Vice President/Director
Keith W. Balderson 55 Director
Biographies of directors and executive officers are as follows:
President/CEO/Director
----------------------
Mark W. Smith, President, Chief Executive Officer and Director. Since
1986, Mr. Smith has worked as an independent computer and management
consultant for businesses throughout the Midwest. Since 1996, he served
as Director of Electronic Publishing for Kirkbride Technology, a
subsidiary of B.B. Kirkbride, a publisher of books and electronic media
located in Indianapolis, Indiana. Over the past decade, Mr. Smith has
overseen the development of nearly a dozen sophisticated computer
software programs to the marketplace. His expertise is in development
and oversight of database programs, Mr. Smith is one of the founders of
BrowseSafe. Mr. Smith is a graduate of Anderson University, 1980, with
degrees in Business Management and Marketing.
Vice President/Director
-----------------------
Ted P. O'Brien, Secretary, Vice President of Sales & Marketing and
Director. Since 1990, Mr. O'Brien has held management positions with
publishing and distribution companies including Director of Publishing
at B.B. Kirkbride, Director of Marketing for Riverside Distributors and
Director of Marketing and Publishing Activity at World Publishing. Mr.
O'Brien's prior experience is in the areas of sales management,
diversified marketing and planning, product development, distribution
and order fulfillment. Mr. O'Brien is a co-founder of BrowseSafe and is
responsible for planning, budgeting and implementation of sales and
marketing plans, sales and customer service supervision and strategic
planning. Mr. O'Brien received a Bachelor of Science degree in Marketing
and Business Administration from the University of South Dakota in 1998.
Chief Financial Officer/Director
--------------------------------
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Gregory P. Urbanski, Treasurer, Chief Financial Officer and Director.
Prior to co-founding BrowseSafe, Mr. Urbanski served as the controller
and operations manager with B.B Kirkbride, a publisher of books and
electronic media, for 15 years. His responsibilities with the Company
include day-to-day operations, purchasing, personnel and directing
financial and investor relations for the Company. Mr. Urbanski graduated
in 1975 with a Bachelor of Science Degree in Accounting from Butler
University in Indianapolis.
Vice President/Director
-----------------------
J. Marshall Gage, Vice President and Director. Mr. Gage is the CEO and
principal shareholder of B.B. Kirkbride, a publisher of books and
electronic media located in Indianapolis, Indiana. Mr. Gage has been
affiliated with Kirkbride for more than 35 years, beginning in customer
service and advancing through positions in credit management,
advertising and promotion, sales, treasurer, vice president and
ultimately becoming president of the organization. He has an in-depth
understanding of the publishing business and is well known in the
industry. He has served as a university trustee for Murray State
University, has sat on the boards of directors of several companies and
has served as chairman of numerous nonprofit associations. In 1960, Mr.
Gage graduated from Murray State University with a degree in Business
Administration.
Director
--------
Keith W. Balderson, Director. Mr. Balderson is the President of Next
Millennium Management Ltd. Next Millennium acts as a business consultant
to small and mid-size companies with emerging technology. Mr. Balderson
is also the President of Apogee Mineral, Inc., a public mining Company
that is traded on the Vancouver Stock Exchange and Condor Goldfields,
Inc., a public mining Company that is publicly traded on the Canadian
Dealers Network.
The other key employee is as follows:
Erik A. Hannemann, 27, Director of Information Technology. Mr.
Hannemann's expertise includes network development, implementation, and
administration. In addition to these skills he has also developed and
implemented database tools for business. The following are his areas of
expertise:
Technical Summary
Operating Systems: Database systems: Languages:
Windows 3.1 SQL Server 7.0 Visual Basic
Windows NT Microsoft Access VBScript
Windows 95 File Maker Pro Active Server
Windows 98 Pages
Windows 2000 HTML
DOS COBOL
Linux Borland Delphi
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Tools & utilities: Office Products:
Visual SourceSafe MicroSoft Excel
Visual InterDev MicroSoft Access
Microsoft MicroSoft
Information Server PowerPoint
PhotoShop Microsoft Query
CorelDraw Microsoft Word
GoldMine 4.0 WordPerfect/ Lotus
MicroSoft Proxy 123
Server
Netscape SuiteSpot
MicroSoft IEAK Kit
Netscape CCK
ADDITIONAL
TRAINING
o Created Animated
Movies Using
Flash 4.0
o Configured Cisco
Routers for a LAN
environment.
(Internet Access)
o Extensive
knowledge of
TCP/IP protocol.
o Setup and
Administered
Secure Web Sites
Mr. Hannemann leads a programming team that collectively have expertise in
the following areas:
Technical Summary of BrowseSafe's Programming Team
--------------------------------------------------
Operating Systems: Database systems: Languages:
Windows 95 Visual FoxPro Visual Basic
(3.0, 5.0) (3.0, 4.0, 5.0)
Windows 98 SQL Server 7.0 VBScript
Windows NT Sybase System 11 Active Server
Windows 3.1 Microsoft Access Pages
DOS (7.0) Javascript
UNIX limited FoxPro for DOS Paradox for
Novell 3.11, 4.0 (2.0, 2.5, 2.6) Windows (4.0,
LANtastic FoxPro for Windows 7.0)
(2.6) Paradox for DOS
Paradox (3.0, 4.0, 5.0)
IDMS Perl (Internet
Oracle CGI)
HTML
COBOL
Assembler
Borland C++
JCL
Borland Delphi
Tools & utilities: Office Products:
Visual SourceSafe Excel
(4.0)
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Crystal Reports Access
(3.0, 4.0, 5.0,
6.0)
Multi 3rd Party PowerPoint
Products Microsoft Query
Microsoft Word
Certifications
Microsoft Certified
Professional
Microsoft Certified
Solution Developer
Certified Sybase
Professional DBA
Oracle Certified
Professional DBA
Microsoft Visual Basic
Microsoft Visual FoxPro
Microsoft Access
Microsoft Windows 95
Architecture
Sybase System 11 -
SQL Microsoft SQL Server
At present, there are no committees of the board of directors. There are
no arrangements or understanding between any director and any other person
pursuant to which any person was elected or nominated as a director.
The Company's bylaws provide that the size of the board of directors
shall be between one and five members with the exact number within that range
determined from time to time by resolution of the board of directors. There are
presently five authorized positions as members of the board, none of which are
vacant. The five directors were appointed to the board in connection with the
closing of the share exchange effective as of June 24, 1999, to serve until the
next annual meeting of shareholders. The directors are elected by the
shareholders for one year terms. The Company anticipates expanding its board
when it has identified individuals who are prominent educators or have an
expertise in software development and other areas germane to the Company's
business.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS
For the two fiscal years ending December 31, 1997 and 1998, the Company,
which was then known as Motioncast Television Corporation of America, had no
operations and was considered a development stage company. During that period,
it paid no compensation to executive officers and directors. As of June, 1999,
the Company engaged in a share exchange with BrowseSafe.com, Inc. which resulted
in BrowseSafe.com, Inc becoming a wholly owned subsidiary of Motioncast.
Motioncast changed its name to BrowseSafe.com, Inc. and BrowseSafe.com, Inc.
changed its name to BrowseSafe Technology, Inc. As a
19
<PAGE>
result of the share exchange, the Company became an operating Company engaged in
the business activities described in this registration statement.
From inception to June, 1999, the BrowseSafe business was operated in
BrowseSafe, LLC, an Indiana limited liability company. The following table sets
forth certain information as to the Company's executive officers and directors
for the period ending December 31, 1998 and January 1, 1999 through September
30, 1999. Except as shown on the next table relating to Stock Options, no other
compensation was paid any such officers and directors.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
Name and Options Other
Principal Position Period Salary (Shares) Compensation
- --------------------- ------ ------ -------- ------------
Mark W. Smith 1998 $4,640 -0- -0-
Chief Executive 1/1/99-9/30/99 $49,958 -0- -0-
Officer
Ted P. O'Brien 4/3/98-12/31/98 $3,380 -0- -0-
Vice President 1/1/99-9/30/99 $39,600 -0- -0-
of Sales & Marketing
Gregory P. Urbanski 4/3/98-12/31/98 $1,250 -0- -0-
Chief Financial 1/1/99-9/30/99 $12,970 -0- -0-
Officer
J. Marshall Gage 4/3/98-12/31/98 $400 -0- -0-
Senior Vice 1/1/99-9/30/99 -0- -0- -0-
President
ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The following table sets forth, as of November 16, 1999 the beneficial
ownership of the Company's common stock by (i) all persons known by the Company
to beneficially own more than 5% of the Company's voting securities; (ii) each
executive officer and directors; and (iii) all executive officers and directors
as a group.
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Common Stock (1)
----------------------
% of
Name or Group Number of Shares Voting Securities
- ------------- ---------------- -----------------
Executive Officers
and Directors (2)
Mark W. Smith 4,474,400 27.055%
Ted P. O'Brien 2,237,200 13.528%
Gregory P. Urbanski 2,237,200 13.528%
J. Marshall Gage 2,237,200 13.528%
Officers and Directors 11,186,000 67.6398%
as a group (4 persons)
5% Shareholders (2)
BrowseSafe, LLC 11,186,400 67.6398%
(1) Based upon a total of 16,538,000 shares outstanding as of November 16,
1999. Stock issuable upon exercise of outstanding stock options,
warrants and/or convertible notes is shown on the table below.
(2) All of the shares beneficially owned by the Executive Officers and
Directors are held in the name of BrowseSafe, LLC, an Indiana limited
liability company, which is wholly owned by the Executive Officers and
Directors. Beneficial ownership of the shares is shown based upon the
ownership of BrowseSafe, LLC. Unless otherwise indicated, the business
address for the persons listed in the table is 335 West 9th Street,
Suite 100, Indianapolis, Indiana 46202-3003.
As of November 16, 1999, the Company adopted a stock option plan. The
Company may issue incentive stock options, as defined in the Internal Revenue
Code of 1986, or non-qualified stock options to purchase up to 3,000,000 shares
of common stock under the plan. The Company has issued stock options to purchase
an aggregate of 1,250,000 shares of common stock to its executive officers and
directors. The following table sets forth, as of November 16, 1999, the
beneficial ownership of options, warrants or rights to purchase the Company's
common stock by (i) all persons known by the Company to beneficially own more
than 5% of the Company's voting securities; (ii) each executive officer and
directors; and (iii) all executive officers and directors as a group. Except as
otherwise indicated, all options, warrants or rights are owned directly.
Officers and Directors No. of Options Exercise Price
---------------------- -------------- --------------
Mark Smith 450,000 $0.5625
Ted O'Brien 350,000 $0.5625
Greg Urbanski 350,000 $0.5625
Keith Balderson 100,000 $0.5625
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All options vest at a rate of at least 20% per year over a period of five years
with the first 20% becoming exercisable on the first anniversary of the date
when the options were granted.
All options will lapse on the earliest of the following events:
(i) The tenth anniversary of the date of grant of the option;
(ii) The first anniversary of the optionee's death;
(iii) The first anniversary of the date when the optionee ceases to be
an employee due to total and permanent disability or death;
(iv) Thirty (30) days after the optionee ceases to be an employee for
any reason other than total and permanent disability or death;
(v) On the date determined by the Board of Directors for an
extraordinary corporate transaction such as a reorganization,
consolidation, dissolution, etc.;
(vi) The date the optionee files or has filed against him or her a
petition in bankruptcy; or
(vii) The expiration date specified in the optionee's stock option
agreement.
ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Prior to June, 1999, the Company, which was then known as Motioncast
Television Corporation of America, had no operations, had assets consisting of
only of cash and had minimal liabilities. Motioncast was considered a
development stage company. Its stock was listed on the OTC Bulletin Board as of
October, 1998.
As of January 1, 1999, the Company entered into an employment agreement
for a period of two years with Michael Zapara, the principal shareholder of the
Company. The compensation to be paid under this agreement was 200,000 shares of
Company common stock per year; however, such compensation was not paid.
In addition, as of February 1, 1999, the Company entered into a
Placement Agreement with Alexis Capital, Inc., an affiliate of Mr. Zapara, under
which Alexis was to serve as a placer and consultant in connection with the
merger or sale of Motioncast. The compensation to be paid was 10% of the amount
of the transaction, 5% in cash and 5% in stock. Again, such compensation was not
paid. On November 1, 1998, the Company also entered into a Securities Transfer
Agent & Registrar Agreement with Alexis Stock Transfer, also an affiliate of Mr.
Zapara, under which Alexis served as the transfer agent and registrar for the
Company.
Pursuant to the Share Exchange Agreement dated as of June 24, 1999,
between Motioncast and BrowseSafe.com, Inc., the Employment Agreement with Mr.
Zapara and Placement Agreement with Alexis Capital were terminated in exchange
for the issuance of 100,000 shares of Motioncast stock. Following the share
exchange, the Securities Transfer
22
<PAGE>
Agent & Registrar Agreement remained in effect subject to an amendment which
bound the transfer agent to maintain the fee structure in effect as of the date
of the share exchange through December 31, 2000. The Company pays the customary
and usual fees to the transfer agent associated with its services.
Since September 1, 1998, the Company (and its predecessor) has been
leasing 1,255 square feet of office space in downtown Indianapolis, Indiana from
B.B. Kirkbride. The principal owner of B.B. Kirkbride, J. Marshall Gage, is also
a director and vice president of BrowseSafe. The Company obtained the space at
$10 per square foot. The lease was for one year, with renewal and expansion
options.
In addition, Mark Smith and Greg Urbanski, who are executive officers
and directors of the Company, have made personal loans to the Company of
approximately $60,000 and $50,000, respectively, to fund operating expenses.
These loans are non-interest bearing and are not evidenced by promissory notes.
It is the intention of the Company to repay these loans when the Company has the
financial resources to do so.
ITEM 12. DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 25,000,000 shares of
common stock, par value $.001 per share. As of November 16, 1999, there are
16,538,000 shares outstanding, of which 14,538,000 are restricted. The Company
has also issued stock options to its executive officers and directors to
purchase an aggregate of 1,250,000 shares, which options have not vested as of
November 16, 1999. Pursuant to a Banking Consulting Agreement with Business
Investor Services, Inc. dated as of November 18, 1999, the Company is obligated
to issue as a retainer fee of 100,000 common shares and warrants to purchase an
additional 50,000 shares as compensation for strategic business and financial
planning.
Each holder of common stock outstanding is entitled to one vote per
share on all matters submitted to a vote of the shareholders, including the
election of directors. Shareholders do not have cumulative voting rights. In the
event of dissolution or liquidation or winding up the Company's business,
whether voluntary or involuntary, the holders of the common stock are entitled
to share ratably in all assets remaining after payment of liabilities.
Each share of common stock has an equal right to receive dividends when
and if the board of directors decides to declare a dividend. The Company has
never paid cash dividends and does not anticipate paying cash dividends in the
foreseeable future. The holders of the common stock are not entitled to
preemptive rights.
There are no conversion rights or redemption or sinking fund provisions
with respect to the common stock. All of the outstanding shares of common stock
are fully paid and non-assessable.
23
<PAGE>
PART II.
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's common stock has been publicly traded in the
over-the-counter market and quoted on the NASDAQ electronic OTC Bulletin Board
since August, 1999 under the trading symbol "PGPG". Prior to that, the Company's
stock has traded since October, 1998 in the over-the-counter market and quoted
on the OTC Bulletin Board under the symbol MCTV. The OTC Bulletin Board is an
electronic quotation service that displays real-time quotes, last sale prices
and volume information in certain domestic and foreign issuers whose securities
are traded in the over-the-counter market.
No dividends on the Company's common stock have been declared or paid
since the Company's inception. The Company intends to retain earnings to finance
the growth and development of its business and does not anticipate paying cash
dividends on its common stock in the foreseeable future. As of September 30,
1999 there were approximately 37 holders of record of the Company's common
stock.
The following states the range of high and low bid prices for each
quarter from the time the shares of the Company was quoted on the OTC Bulletin
Board on October 26, 1998:
No information is available to trading prices prior to that time.
Calendar Quarter Ending High Low
- ----------------------- ---- ---
December 31, 1998 $1.3750 $0.5625
March 31, 1999 $0.1250 $0.0625 (1) (2)
June 30, 1999 $5.6250 $2.7500 (3)
September 30, 1999 $2.2500 $0.9375
(1) On March 10, 1999, the Company effected a 25 to 1 reverse split
decreasing the issued and outstanding shares of common stock to 400,000.
The trading prices have not been adjusted to reflect the effect of the
reverse split.
(2) On March 27, 1999, the Company issued an additional 500,000 shares of
common stock at $0.10 per share pursuant to a Rule 504 offering.
(3) On April 5, 1999, the Company issued an additional 1,000,000 shares at
$0.10 per share pursuant to a second Rule 504 offering.
24
<PAGE>
The High/Low bid prices for each quarter of the last fiscal year were obtained
from NASDAQ Trading and Market Services. The quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.
Pursuant to NASD Eligibility Rule 6530 (the "Rule") issued on January 4,
1999, issuers who do not make current filings pursuant to Sections 13 and 15(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") are ineligible for
listing on the NASDAQ Over-the-Counter Bulletin Board ("OTCBB"). Pursuant to the
Rule, issuers who are not current with such filings are subject to having the
quotation of their securities removed from the OTCBB pursuant to a phase in
schedule depending on each issuer's trading symbol as reported on January 4,
1999 and thereafter may quote its common stock on the National Quotation Bureau
"Pink Sheets." The Company is subject to having the quotation of its securities
removed from the OTCBB on January 20, 2000, until the Company becomes compliant
with the Rule. One month prior to having the quotation of their securities
removed from the OTCBB, non complying issuers will have their trading symbol
appended with an "E".
As of November, 1999, the Company has not complied with the Rule, and in
the past, has not made filings pursuant to Sections 13 and 15(d) of the Exchange
Act. The Company has filed this registration statement on Form 10SB to become a
reporting Company and therefore comply with the Rule. However, the Company will
remain subject to having quotation of its securities removed from the OTCBB on
January 20, 2000 and trading of its securities thereafter on the Pink Sheets,
until such time as the Securities and Exchange Commission (the "Commission") has
reviewed the Company's Form 10SB and has stated that it has no further comments.
Should the Commission fail to clear all comments prior to January 20, 2000,
quotation of the Company's securities will be removed from the OTCBB and
thereafter traded on the Pink Sheets until such time as the Registration
Statement is cleared by the Commission. Once the Company has complied with the
Rule, it will once again become eligible for quotation on the OTCBB and will
seek to be reinstated on the OTCBB or other appropriate exchange.
ITEM 2. LEGAL PROCEEDINGS
As of the date of this filing, there are no material legal proceedings pending.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
In September, 1998, the Company, which was then known as Medical
Accounting & Computers, engaged Barry L. Friedman, P.C., 1582 Tulita Drive, Las
Vegas, Nevada 89123, to audit the balance sheets of the Company as of August 31,
1998, December 31, 1997, and December 31, 1996, and the related statements of
operations, stockholders' equity and cash flows for the period January 1, 1998
to August 31, 1998, and the two years ending December 31, 1997 and December 31,
1996. The Company's stock began trading in October, 1998, and is quoted on the
OTC Bulletin Board. The Company at that time had no operations, had assets
consisting of cash and only minimal liabilities and was considered a development
stage company.
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<PAGE>
Barry L. Friedman's report on the financial statements did provide for a
going concern opinion since the Company did not at that time have a current
source of revenue and was seeking additional capital through a merger with an
existing operating company. It did not otherwise contain an adverse opinion or
disclaimer of opinion, nor was it modified as to uncertainty, audit scope, or
accounting principles. There were no disagreements with Barry L. Friedman on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.
In June, 1999, the Company which was then known as Motioncast
Television Corporation of America engaged in a share exchange with
BrowseSafe.com, Inc. As a result of the share exchange, BrowseSafe.com, Inc.
became a wholly-owned subsidiary of Motioncast. Motioncast changed its name
to BrowseSafe.com, Inc. and BrowseSafe.com, Inc. changed its name to
BrowseSafe Technology, Inc.
In connection with the share exchange, the Company on August 12, 1999,
engaged Katz Sapper & Miller, LLP, 11711 North Meridian Street, Suite 8800,
Indianapolis, Indiana 46240-0857, to audit the Company's predecessor,
BrowseSafe, LLC's financial statements for fiscal year ending December 31, 1998,
in accordance with generally accepted accounting principles.
Katz Sapper & Miller's report on the financial statements did provide
for a going concern opinion since the Company is still a development stage
company, has yet to generate any material revenues and is seeking additional
capital through an investment capital Company and other sources. It did not
otherwise contain an adverse opinion or disclaimer of opinion, nor was it
modified as to uncertainty, audit scope, or accounting principles. There were no
disagreements with Katz Sapper & Miller on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three years, the Company has sold the following
securities without registering them under the Securities Act of 1933 (the
"Securities Act"):
On March 10, 1999, the Company (then known as Motioncast Television
Corporation of America) issued 100,000 shares of the Company's common stock
(after a 25 to 1 reverse stock split) to Michael Zapara, the Company's then
president and director, in a transaction which was exempt from registration
under Section 4(2) of the Securities Act in exchange for a release of all claims
for salary due the previous two years. The issued shares were restricted and the
total valuation was recorded by the Company at $5,000.
In March, 1999 Motioncast conducted an offering of 500,000 shares of
common stock at $0.10 per share under Rule 504 of Regulation D raising $50,000.
In April, 1999, the Company conducted a second Rule 504 offering of 1,000,000
shares at $0.10 per share, raising $100,000.
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<PAGE>
Effective as of June 24, 1999, BrowseSafe.com, Inc. and its
shareholders, BrowseSafe, LLC, Torquay Holdings, Ltd., Vista Financial Corp., El
Coyote Capital Corp., Jupiter Financial Services, Inc., Kyline Investment Corp.,
Chariot Group, Ltd., Sid-Barney, Inc., Sterling Overseas Investments SA, Albury
Capital Corp., Eivissa Capital Corp., Hemisphere & Associates, Ltd., Barisal
Capital Corporation and Fergus Capital Corporation (these entities, excluding
BrowseSafe, LLC are referred to as the "Funding Group") entered into a Share
Exchange Agreement with Motioncast in a transaction which was exempt from
registration under Section 4(2) of the Securities Act.
Prior to the share exchange, the Company (which was still known as
Motioncast) had 2,000,000 shares of common stock outstanding (100,000 of which
were restricted). Following the share exchange, the total issued and outstanding
shares of common stock were increased by an additional 13,938,000 shares, all of
which are restricted. BrowseSafe, LLC became the majority shareholder of the
Company (whose name was changed to BrowseSafe.com, Inc.) with 11,200,000 shares.
An additional 2,738,000 shares were issued to the Funding Group. In addition,
the Share Exchange Agreement provided that the Company was obligated to issue an
additional 36,838 shares of common stock to the Funding Group in exchange for
the receipt of $82,620 in cash and the cancellation of $50,000 in promissory
notes for funding previously provided by the Funding Group.
The 36,838 shares have not been issued for the following reasons: In
contemplation of the share exchange, BrowseSafe, LLC and the Funding Group had
also entered into an Asset & Liability Contribution Agreement. This agreement,
along with the Share Exchange Agreement, provided that the Funding Group would
contribute $300,000 to BrowseSafe.com, Inc. within ten business days of the
closing on the share exchange. The Funding Group contributed only approximately
$100,000. In addition, the Funding Group was obligated to cause BrowseSafe.com,
Inc. to receive at least $1,500,000 of proceeds from the sale of common stock no
later than November 30, 1999. It is anticipated that the Funding Group will also
fail to complete this obligation.
Due to the failure of the Funding Group to provide the full amount of
the funding required under the agreements, BrowseSafe has not issued the 36,838
shares to the Funding Group. BrowseSafe has advised all members of the Funding
Group in writing that they are in breach of the Exchange Agreement and the Asset
& Liability Contribution Agreement and has provided them an opportunity to
remedy the breach. BrowseSafe has not received any written response from the
members of the Funding Group. At the present time, BrowseSafe has not determined
what, if any, action it will take against the members of the Funding Group as a
result of their breach of the agreements.
In addition, pursuant to the Share Exchange Agreement, the Employment
Agreement with Michael Zapara, the former president and director of Motioncast,
and Placement Agreement with an affiliate of Mr. Zapara were terminated in
exchange for the issuance of 100,000 shares of common stock which shares are
restricted securities.
27
<PAGE>
On September 19, 1998, BrowseSafe, LLC, BrowseSafe.com, Inc. and
Winthrop Associates executed a Management Consulting Agreement. Certain disputes
arose between the parties to this agreement which were resolved in a Mutual
Release and Settlement Agreement dated October 11, 1999. Pursuant to the terms
of the Settlement Agreement, BrowseSafe.com, Inc. agreed to pay the owner of
Winthrop Associates the sum of $200,000 within 120 days of the execution of the
Settlement Agreement. In order to secure the payment of this amount,
BrowseSafe.com, Inc. issued 500,000 shares of its common stock which was placed
into escrow. If the sum of $200,000 is not paid to the owner of Winthrop
Associates within 120 days of the execution of the Settlement Agreement, the
escrow agent will distribute the 500,000 shares to the owner of Winthrop
Associates. The delivery of the 500,000 shares would be in lieu of payment of
the $200,000. The shares, if delivered, will be restricted securities subject to
certain piggy-back registration rights granted in connection with the Settlement
Agreement.
The Company has also agreed to issue to vendors approximately 11,000
restricted shares of common stock in settlement of approximately $33,000 owed to
three vendors.
To assist the Company in strategic business and financial planning, on
November 18, 1999, BrowseSafe entered into an Investment Banking Consulting
Agreement with Business Investor Services, Inc. For its services, Business
Investors Services, Inc. will receive a retainer fee of 100,000 common shares,
warrants to purchase an additional 50,000 shares, a due diligence fee of $15,000
as well as other remuneration. When the Company becomes a reporting Company
under Sections 13 and 15(d) of the Securities Exchange Act of 1934, it is
required to file with the SEC a Form S-8 to register the shares (including those
issued under the warrant) pursuant to applicable provisions of the Securities
Act available for securities offered to employees, consultants and advisors.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's bylaws provide that it shall indemnify its officers and
directors, and its former officers and directors, against all expenses
(including attorney's fees), claims, judgments, liabilities, and amounts paid in
settlement arising out of his or her services on behalf of the Company subject
to the qualifications contained in Nevada law as it now exists, except that no
such persons shall be indemnified against, or be reimbursed for, any expense
incurred in connection with any claim or liability arising out of his or her own
negligence or willful misconduct. Nevada law provides the Company cannot
indemnify its officers, directors, employees and agents when it asserts a direct
claim against them and a court of competent jurisdiction finds that they are
liable to the Company except as allowed by a court of competent jurisdiction.
Nevada law generally provides that a corporation shall have such power
to indemnify officers, directors, employees and agents to the extent they acted
in good faith in a manner they 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 the conduct was unlawful.
Nevada law also generally provides in the event an
28
<PAGE>
officer, director, employee or agent shall be judged liable, enter into a
settlement, or any other resolution of the claim, except when a claim is brought
by the Company, such indemnification shall apply if approved by the court in
which the action was brought, or by a majority vote of the board of directors
(excluding any directors who were party to such action), or by independent legal
counsel in a written opinion, or by a majority vote of stockholders. Nevada law
also generally provides that in the event an officer, director, employee or
agent is successful on the merits or otherwise in defense of any action, suit or
proceeding, the Company shall indemnify him or her against expenses including
attorneys' fees.
As of November, 1999 the Company does not have, but reserves the right
to purchase and maintain, directors and officers insurance insuring its
directors and officers against any liability arising out of their status as
such, regardless of whether the Company has the power to indemnify such persons
against such liability under applicable law.
Insofar as indemnification for liabilities arising under the Securities
Exchange Act of 1934 may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions or otherwise, the
Company 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.
Nevada Revised Statute Section 78.037 states that a Nevada corporation's
articles of incorporation may include provisions to the effect that directors of
the Company shall not be personally liable to the Company or its shareholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law, or (ii) for the payment of distributions under
Nevada Revised Statute Section 78.300. The Company's articles of incorporation
include provisions of the type permitted by Nevada Revised Statute Section
78.037.
29
<PAGE>
INDEX TO FINANCIAL STATEMENTS
BROWSESAFE.COM
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1999 AND 1998
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Unaudited Interim Financial Statements
<PAGE>
BROWSESAFE.COM
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 27,787
Prepaid expenses 1,654
-----------
Total Current Assets 29,441
OFFICE AND COMPUTER EQUIPMENT, net of accumulated depreciation
of $516 27,647
-----------
TOTAL ASSETS $ 57,088
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Bank line of credit $ 200,000
Accounts payable 314,564
Notes payable 108,000
Other liabilities-Note 6 200,000
-----------
Total Current Liabilities 822,564
CONTINGENCIES-Notes 3 and 4 --
-----------
Total Liabilities 822,564
-----------
STOCKHOLDERS' DEFICIT-Note 2
Common stock, 25,000,000 shares authorized and 16,538,000
and 11,200,000 shares issued and outstanding at
September 30, 1999 and 1998, respectively 16,438
Additional paid-in capital 570,765
Deficit accumulated during development stage (1,352,679)
-----------
Total Stockholders' Equity (765,476)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 57,088
===========
Unaudited Interim Financial Statements
<PAGE>
BROWSESAFE.COM
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended September 30, 1999,
Period from February 10, 1998 (Date of Inception) to September 30, 1998 and
Period from February 10, 1998 (Date of Inception) to September 30, 1999
<TABLE>
<CAPTION>
Nine From From
Months Inception Inception
Ended to to
September 30, September 30, September 30,
1999 1998 1999
<S> <C> <C> <C>
REVENUES $ 479 $ -- $ 479
------------ ------------ ------------
GENERAL AND ADMINISTRATIVE
Product development and internet expenses 38,895 87,927 257,226
Marketing and advertising 23,168 102,625 247,889
Legal and professional 47,171 46,397 70,485
Payroll expenses 234,231 64,339 344,983
Hardware lease expense 80,861 82,320
Other expenses 77,123 36,956 138,964
Contract termination 200,000 -- 200,000
------------ ------------ ------------
Total General and Administrative 701,449 338,244 1,341,867
------------ ------------ ------------
Net Operating Income (Loss) (700,970) (338,244) (1,341,388)
INTEREST EXPENSE 9,429 700 11,291
------------ ------------ ------------
Net Loss before Provision for Income Taxes (710,399) (338,944) (1,352,679)
PROVISION FOR INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (710,399) $ (338,944) $ (1,352,679)
============ ============ ============
NET LOSS PER COMMON SHARE-Note 7 $ (0.0535) $ (0.0303) $ (0.1129)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 13,289,097 11,200,000 11,980,094
============ ============ ============
</TABLE>
Unaudited Interim Financial Statements
<PAGE>
BROWSESAFE.COM
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 1999,
Period from February 10, 1998 (Date of Inception) to September 30, 1998 and
Period from February 10, 1998 (Date of Inception) to September 30, 1999
<TABLE>
<CAPTION>
Nine From From
Months Inception Inception
Ended to to
September 30, September 30, September 30,
1999 1998 1999
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (710,399) $ (338,944) $(1,352,679)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
(Increase) decrease in certain current
assets:
Depreciation 516
Inventories 6,889
Prepaid expenses (194) (250) (1,654)
Increase (decrease) in certain current
liabilities:
Accounts payable (52,054) 153,421 314,564
Contract termination payable 200,000 -- 200,000
----------- ----------- -----------
Net Cash (Used) by Operating
Activities (555,758) (185,773) (839,253)
----------- ----------- -----------
INVESTING ACTIVITIES
Cash purchases of property and equipment (6,510) (3,465) (28,163)
----------- ----------- -----------
Net Cash (Used) by Investing
Activities (6,510) (3,465) (28,163)
----------- ----------- -----------
FINANCING ACTIVITIES
Proceeds of long-term debt 98,500 108,000
Proceeds of line of credit borrowings 93,934 200,000
Contributed capital 397,203 190,000 587,203
----------- ----------- -----------
Net Cash Provided by Financing
Activities 589,637 190,000 895,203
----------- ----------- -----------
NET INCREASE IN CASH 27,369 762 27,787
CASH
Beginning of Period 418 -- --
----------- ----------- -----------
End of Period $ 27,787 $ 762 $ 27,787
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 10,495 $ 796 $ 11,291
</TABLE>
Unaudited Interim Financial Statements
<PAGE>
BROWSESAFE.COM
(A Development Stage Company)
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by the Company without audit and therefore do not include all
information and disclosures necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. These unaudited financial statements
contain, in the opinion of management, all adjustments (consisting of normal
accruals and other recurring adjustments) necessary for a fair presentation
of the consolidated financial position, results of operations, and cash
flows for the periods presented. The operating results for the period ended
September 30, 1999, are not necessarily indicative of the operating results
to be expected for the full fiscal year.
NOTE 2 - REORGANIZATION AND MERGER
The accompanying unaudited financial statements include the activity of
BrowseSafe.com, Inc. (formerly Motioncast Television Corporation of America)
and its wholly-owned subsidiary, BrowseSafe Technology, Inc. (formerly
BrowseSafe.com, Inc.).
In July 1998, BrowseSafe.com, Inc. was incorporated as a Nevada corporation.
In May 1999, BrowseSafe LLC and BrowseSafe.com, Inc. entered into an Asset
and Liability Contribution Agreement. Pursuant to that agreement,
BrowseSafe LLC exchanged all of its assets and liabilities for 80%
(11,200,000 shares) of the outstanding common stock of BrowseSafe.com, Inc.
Prior to this transaction, BrowseSafe.com, Inc. had not commenced operations
and had no assets or liabilities.
In June 1999, BrowseSafe.com, Inc. and its shareholders entered into a Share
Exchange Agreement with Motioncast Television Corporation of America
(Motioncast). Pursuant to this agreement, all outstanding shares of
BrowseSafe.com, Inc. were exchanged for shares of Motioncast. Motioncast
was a publicly traded entity in the development stage that had minimal
assets and liabilities. BrowseSafe.com, Inc. survived this merger as a
wholly-owned subsidiary of Motioncast. Immediately following this
transaction, BrowseSafe.com, Inc. changed its name to BrowseSafe Technology,
Inc. and Motioncast changed its name to BrowseSafe.com, Inc. All ongoing
operations are conducted in BrowseSafe Technology, Inc.
For financial statement purposes, BrowseSafe Technology, Inc. is considered
as the acquiring company, and the merger was treated as a "reverse
acquisition". Pursuant to this accounting treatment, BrowseSafe Technology,
Inc. is deemed to have issued stock for the acquisition of Motioncast.
NOTE 3 - ROYALTY AGREEMENT
The Company's product was developed with a third party. The Company has
purchased the software and technology from the third party. The purchase
agreement requires the Company to remit 2.5% of gross revenues received from
internet service providers (ISP's). Royalty payments continue for a two-year
period commencing when the Company has 15,000 active ISP customers.
<PAGE>
NOTE 4 - OTHER
The Company is in the development stage and has yet to generate any material
revenues. The Company has experienced an operating loss since its inception
and has a shareholders' deficit. The Company is seeking additional funds to
properly market and introduce its product, PlanetGood. The Company is
attempting to obtain financing through an investment capital company and
other sources.
NOTE 5 - NET LOSS PER SHARE
Basic per share amounts are computed, generally, by dividing net loss by the
weighted-average number of common shares outstanding.
The net loss per share calculation is based on the number of shares issued
and outstanding pursuant to the recapitalization.
NOTE 6 - SUBSEQUENT EVENT
On October 11, 1999, the Company agreed to pay a former consultant $200,000
to terminate their contract. The payment is secured by 500,000 shares of the
Company's common stock. If the $200,000 payment is not remitted within 120
days, the stock shall be delivered to the consultant in lieu of the $200,000
payment.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
BROWSESAFE LLC
(A Development Stage Company)
CONTENTS
Page
Independent Auditors' Report
Balance Sheet
Statement of Operations
Statement of Members' Equity (Deficit)
Statement of Cash Flows
Notes to Financial Statements
<PAGE>
Independent Auditors' Report
Board of Directors and Members
BrowseSafe LLC (A Development Stage Company)
We have audited the accompanying balance sheet of BrowseSafe LLC (a development
stage company) as of December 31, 1998, and the related statements of
operations, members' equity (deficit) and cash flows for the period from
February 10, 1998 (date of inception) to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BrowseSafe LLC at December 31,
1998, and the results of its operations and its cash flows for the period from
February 10, 1998 (date of inception) to December 31, 1998 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company is in the development stage and has incurred
losses and has negative working capital that raises substantial doubt about the
ability to continue as a going concern. Management's plans in regards to these
matters are also described in Note 6. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/S/KATZ, SAPPER & MILLER, LLP
Certified Public Accountants
Indianapolis, Indiana
October 8, 1999
<PAGE>
BROWSESAFE LLC
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
CURRENT ASSETS
Cash $ 418
Inventories-finished goods 6,889
Prepaid expenses 1,460
---------
Total Current Assets 8,767
OFFICE AND COMPUTER EQUIPMENT, at cost, less accumulated
depreciation of $516 21,137
---------
TOTAL ASSETS $ 29,904
=========
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES
Bank line of credit-Note 2 $ 106,066
Accounts payable 296,523
Payable to related party-Note 3 70,095
Note payable-Note 3 9,500
---------
Total Current Liabilities 482,184
CONTINGENCIES-Notes 5, 6 and 8
MEMBERS' DEFICIT, including deficit accumulated during
the development stage of $642,280 (452,280)
---------
TOTAL LIABILITIES AND MEMBERS' DEFICIT $ 29,904
=========
See Accompanying Notes to Financial Statements.
<PAGE>
BROWSESAFE LLC
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from February 10, 1998 (Date of Inception) to December 31, 1998
REVENUE $ --
---------
MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES
Product development and internet expenses 218,331
Marketing and advertising 224,721
Payroll expenses 110,752
Legal and professional 23,314
Other expenses 63,301
---------
Total Marketing, General and Administrative Expenses 640,419
---------
INTEREST EXPENSE (1,861)
---------
NET LOSS $(642,280)
=========
NET LOSS PER COMMON SHARE-Note 7 $ (0.0573)
=========
See Accompanying Notes to Financial Statements.
<PAGE>
BROWSESAFE LLC
(A Development Stage Company)
STATEMENT OF MEMBERS' EQUITY (DEFICIT)
Period from February 10, 1998 (Date of Inception) to December 31, 1998
Voting Nonvoting
Members Members Total
Capital contributions $ 35,000 $ 155,000 $ 190,000
Net loss for period (581,263) (61,017) (642,280)
--------- --------- ---------
MEMBERS' EQUITY (DEFICIT), END OF PERIOD $(546,263) $ 93,983 $(452,280)
========= ========= =========
See Accompanying Notes to Financial Statements.
<PAGE>
BROWSESAFE LLC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from February 10, 1998 (Date of Inception) to December 31, 1998
OPERATING ACTIVITIES
Net loss $(642,280)
Adjustments to reconcile net loss to net cash (used) by
operating activities:
Depreciation 516
(Increase) in certain current assets:
Inventories (6,889)
Prepaid expenses (1,460)
Increase in certain current liabilities:
Accounts payable 296,523
Due to related party 70,095
---------
Net Cash (Used) by Operating Activities (283,495)
---------
INVESTING ACTIVITIES
Cash purchases of property and equipment (21,653)
---------
Net Cash (Used) by Investing Activities (21,653)
---------
FINANCING ACTIVITIES
Proceeds from note payable 9,500
Net proceeds under line of credit 106,066
Contributed members' capital 190,000
---------
Net Cash Provided by Financing Activities 305,566
---------
NET INCREASE IN CASH 418
CASH
Beginning of Period --
---------
End of Period $ 418
=========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 795
See Accompanying Notes to Financial Statements.
<PAGE>
BROWSESAFE LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General: BrowseSafe LLC (the Company) was formed on February 10, 1998 for
the purposes of developing and distributing computer software that will
allow families to use the Internet safely while giving parents the freedom
to choose what their children can and cannot access.
Estimates: Management uses estimates and assumptions in preparing these
financial statements in conformity with generally accepted accounting
principles. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities
and the reported revenues and expenses. Actual results could vary from the
estimates that were used.
Inventories are valued at the lower of cost or market as determined by the
first-in, first-out (FIFO) method.
Office and Computer Equipment are recorded at cost and are being depreciated
over the estimated useful lives of the assets using accelerated methods.
Long-lived assets, including the Company's property and equipment, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability
is measured by comparison of the carrying amount to future net undiscounted
cash flows expected to be generated by the related asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount exceeds the fair market value of the
assets. To date, no adjustments to the carrying amount of long-lived assets
have been required.
Cash: The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has never
experienced any losses in such accounts.
Marketing and Advertising Costs are expensed as incurred and totaled
$224,721 in 1998.
Income Taxes: No provision for income taxes is required because the
allocated shares of the Company's income or loss for the period are included
in the income tax returns of the members.
Start-Up Costs are expensed as incurred.
Product Development Costs incurred by the Company to develop, enhance,
manage, monitor and operate the Company's web sites are expensed as
incurred.
Member Classes: The Company has two classes of members. Voting members are
allocated income and losses based on ownership percentage. Nonvoting members
are allocated income and loss at the rate of 1% for each $20,000 invested
until three years following the year in which the members' initial capital
contribution of $155,000 is cumulatively repaid. In the event the Company is
sold in its entirety, allocation of the sales gain to the nonvoting members
is limited to five times their initial capital contribution.
<PAGE>
NOTE 2 - DEBT AND CREDIT ARRANGEMENTS
The Company has a secured line of credit for short-term bank borrowings of
up to $200,000. Interest is payable monthly at the Bank's prime lending
rate. The line of credit is subject to renewal in November 1999 and is
guaranteed by the members. At December 31, 1998, $95,000 of the line of
credit was unused.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company has a demand note payable to a company controlled by one of its
members.
The Company also leases office space from the above-mentioned related
entity. Rent expense paid to the entity was $11,030 in 1998.
The Company also receives certain general and administrative services from
the related entity. Total charges for these services were $50,000 for 1998.
At December 31, 1998, the Company owed this entity $70,095 (for these
services and unpaid rents), which is included in accounts payable.
NOTE 4 - REORGANIZATION AND MERGER
In July 1998, BrowseSafe.com, Inc. was incorporated as a Nevada corporation.
In May 1999, BrowseSafe LLC and BrowseSafe.com, Inc. entered into an Asset
and Liability Contribution Agreement. Pursuant to that agreement,
BrowseSafe LLC exchanged all of its assets and liabilities for 80%
(11,200,000 shares) of the outstanding common stock of BrowseSafe.com, Inc.
Prior to this transaction, BrowseSafe.com, Inc. had not commenced operations
and had no assets or liabilities.
In June 1999, BrowseSafe.com, Inc. and its shareholder entered into a Share
Exchange Agreement with Motioncast Television Corporation of America
(Motioncast). Pursuant to this agreement, all outstanding common shares of
BrowseSafe.com, Inc. were exchanged for common shares of Motioncast.
Motioncast was a publicly traded entity in the development stage whose only
asset was cash and had minimal liabilities. BrowseSafe.com, Inc. survived
this merger as a wholly-owned subsidiary of Motioncast. Immediately
following this transaction, BrowseSafe.com, Inc. changed its name to
BrowseSafe Technology, Inc. and Motioncast changed its name to
BrowseSafe.com, Inc. All ongoing operations are conducted in BrowseSafe
Technology, Inc.
For financial statement purposes, BrowseSafe Technology, Inc. is considered
as the acquiring company, and the merger was treated as a "reverse
acquisition". Pursuant to this accounting treatment, BrowseSafe Technology,
Inc. is deemed to have issued stock for the acquisition of Motioncast.
NOTE 5 - ROYALTY AGREEMENT
The Company's product was developed with a third party. The Company has
purchased the software and technology from the third party. The purchase
agreement requires the Company to remit 2.5% of gross revenues received from
internet service providers (ISP's). Royalty payments continue for a two-year
period commencing when the Company has 15,000 active ISP customers.
NOTE 6 - GOING CONCERN UNCERTAINTY
The Company is in the development stage and has yet to generate any material
revenues. The Company has experienced an operating loss since its inception
and has a members' deficit. The Company is seeking additional funds to
properly market and introduce its product, PlanetGood. The Company is
attempting to obtain financing through an investment capital company and
other sources. The ability of the Company to continue as a going concern is
dependent on obtaining the additional capital. The financial statements do
not include adjustments that might be necessary if the Company is unable to
continue as a going concern.
<PAGE>
NOTE 7 - NET LOSS PER SHARE
Basic per share amounts are computed, generally, by dividing net loss by the
weighted-average number of common shares outstanding.
The net loss per share calculation is based on the number of shares issued
and outstanding pursuant to the Asset and Liability Contribution Agreement
in which BrowseSafe LLC received 11,200,000 shares of BrowseSafe.com, Inc.
common stock.
NOTE 8 - SUBSEQUENT EVENT
On October 11, 1999, the Company agreed to pay a former consultant $200,000
to terminate their contract. The payment is secured by 500,000 shares of
BrowseSafe.com, Inc.'s common stock. If the $200,000 payment is not remitted
within 120 days, the stock shall be delivered to the consultant in lieu of
the $200,000 payment.
<PAGE>
Part III
INDEX TO EXHIBITS AND DESCRIPTION
The following exhibits are filed with this Report:
2.1 Articles of Incorporation of Orange County Bancorp, dated June 8, 1990
2.2 Bylaws of Medical Accounting & Computers (formerly Orange County
Bancorp), dated June 8, 1990
2.3 Certificate of Amendment of the Articles of Incorporation of Orange
County Bancorp reflecting the Name change to Medical Accounting &
Computers, dated December 30, 1992
2.4 Certificate of Amendment of the Articles of Incorporation of Medical
Accounting & Computers reflecting the Name Change to Motioncast
Television Corporation of America and a 5 for 1 forward stock split,
dated October 22, 1998
2.5 Certificate of Amendment of the Articles of Incorporation of Motioncast
Television Corporation of America reflecting a 25 to 1 reverse stock
split, dated February 26, 1999
2.6 Articles of Incorporation of BrowseSafe.com, Inc., dated July 28, 1999
2.7 Bylaws of BrowseSafe.com, Inc., dated July 28, 1999
2.8 Secretary of State Corporate Charter for BrowseSafe.com, Inc., dated
July 28, 1999
2.9 Certificate of Amendment of the Articles of Incorporation of
BrowseSafe.com, Inc. reflecting the Name Change to, BrowseSafe
Technology, Inc., dated July 28, 1999
2.10 Certificate of Amendment of the Articles of Incorporation of Motioncast
Television Corporation of America reflecting the Name Change to
BrowseSafe.com, Inc., dated July 28, 1999
2.11 BrowseSafe LLC Articles of Organization, dated March 26, 1998
2.12 BrowseSafe LLC Articles of Correction, dated June 22, 1998
2.13 BrowseSafe LLC Operating Agreement, effective as of March 26, 1998
3.1 Share Exchange Agreement by and among Motioncast Television corporation
of America, BrowseSafe.com, Inc. and all of the shareholders of
BrowseSafe, dated 1999
6.1 Securities Transfer Agent & Registrar Agreement by and between Alexis
Stock Transfer and Motioncast Television Corporation of America, dated
November 1, 1998
6.2 Note between Peoples Bank & Trust Company and BrowseSafe, LLC, dated
November 9, 1998
6.3 Asset and Liability Contribution Agreement by and among BrowseSafe, LLC,
BrowseSafe.com, Inc., Minati Financial, Inc., Torquay Holdings, Ltd.,
Vista Financial Corp., El Coyote Capital Corp., Jupiter Financial
Services, Inc., Kyline Investment Corp., Chariot Group, Ltd.,
Sid-Barney, Inc., Sterling Overseas Investments SA, Albury Capital
Corp., Eivissa Capital Corp., Hemisphere & Associates, Ltd., and
Magellan Holdings, Ltd.
6.4 Agreement by and between BrowseSafe, LLC, BrowseSafe.com, Inc., Barisal
Capital Corporation and Fergus Capital Corporation, dated June 9, 1999
6.5 Amendment to the Agreement between Motioncast Television Corporation of
America and Alexis Stock Transfer, dated July 12, 1999
6.6 Mutual Release and Settlement Agreement between Jerry E. Blythe,
Winthrop Associates, BrowseSafe, LLC, BrowseSafe.com, Inc. and
BrowseSafe Technology, Inc., dated October 11, 1999
6.7 Browsesafe.com, Inc. Stock Option Plan dated November 17, 1999.
6.8 Confidential Investment Banking Consulting Agreement for BrowseSafe.com,
Inc.
10.1 Consent letter from Barry L. Friedman, P.C., dated November 17, 1999
<PAGE>
SIGNATURES:
/s/ BrowseSafe.com, Inc.
------------------------------------
Registrant
November 24, 1999 By: /s/ MARK W. SMITH
---------------------------------
Mark W. Smith
Chief Executive Officer
Exhibit 2.1
Filed in the Office of the Filing Fee: $155.00
Secretary of State Receipt #C53876
of the State of Nevada Chase Index Incorporated
Jul 08 1990 13100 Magnolia #
No. 5179-90 G-200
Corona, CA 91719
ARTICLES OF INCORPORATION
OF
ORANGE COUNTY BANCORP
The undersigned proposes to form a corporation under the laws of the State of
Nevada, relating to private corporations, and to that end hereby adopts articles
of incorporation as follows:
ARTICLE ONE
NAME
----
The name of the corporation is ORANGE COUNTY BANCORP.
ARTICLE TWO
LOCATION
--------
The principal office of this corporation is to be at 5059 S. McCARRAN BLVD.,
SUITE 800, RENO, NEVADA 89502.
ARTICLE THREE
PURPOSES
--------
This corporation is authorized to carry on any lawful business or enterprise.
ARTICLE FOUR
CAPITAL STOCK
-------------
The amount of the total authorized capital stock of this corporation is $25,000
as 25 MILLION SHARES at $.001 PAR VALUE. Such shares are non-assessable.
ARTICLE FIVE
DIRECTORS
---------
The members of the governing board of this corporation shall be styled
directors. The name and address of the member of the first board of directors is
KRISTINE RIGBY, 100 S. CANYON CREST DRIVE., ANAHEIM, CA. 92808.
Directors shall have no personal liability to the corporation or its
stockholders for damages for breach of fiduciary duty as a director. This
provision does not eliminate or limit the liability of a director for acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law or the payment of
Page l of 3
<PAGE>
dividends in violation of NRS 78.300.
ARTICLE SIX
INCORPORATORS
-------------
The name and address of the incorporator is H. N. TERMOHLEN, c/o CHASE INDEX
INC., 5059 S. MC CARRAN BLVD., SUITE #800, RENO, NEVADA 89502.
ARTICLE SEVEN
PERIOD OF EXISTENCE
-------------------
The period of existence of this corporation shall be perpetual.
ARTICLE EIGHT
AMENDMENT OF ARTICLES OF INCORPORATION
--------------------------------------
The articles of incorporation of the corporation may be amended from time to
time by a majority vote of all, shareholders voting by written ballot in person
or by proxy held at any general or special meeting of shareholders upon lawful
notice.
ARTICLE NINE
STATUTORY RESIDENT AGENT
------------------------
The corporation does hereby name, constitute and appoint as its statutory
resident agent within the State of Nevada for receipt of process or any other
lawful purpose, H. K. TERMOHLEN, c/o CHASE INDEX INCORPORATED, 5059 S. MC CARRAN
BOULEVARD, SUITE #800, RENO, NEVADA 89502. The resident agent's telephone number
is (702) 324-2377. This appointment of resident agent shall be continuous unless
otherwise changed by the Board of Directors of the corporation acting pursuant
to the laws of the State of Nevada.
ARTICLE TEN
VOTING OF SHARES
----------------
In any election participated in by the shareholders, each shareholder shall have
one vote for each share of stock he owns either in person or by proxy as
provided by law. Cumulative voting shall not prevail in any election by the
shareholders of this corporation.
IN WITNESS WHEREOF the undersigned, H. K. TERHOBLEN for the purpose of forming
a corporation under the laws of the State of Nevada, does make, file and record
these articles, and
Page 2 of 3
<PAGE>
certifies that the facts herein stated are true; and I have accordingly hereunto
set my hand this day.
INCORPORATOR:
/s/ HERMAN K. TERMOHLEN
---------------------------
HERMAN K. TERMOHLEN
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
Personally appeared HERMAN K. TERMOHLEN before me, a notary public, and executed
time above instrument.
/s/ Helen J. Termonlen
---------------------------
SIGNATURE OF NOTARY
[SEAL]
Notary stamp or seal
Date 5/24/90
-------------
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT OF RESIDENT AGENT
--------------------------------
H. K. TERMOHLEN, c/o CHASE INDEX, INC., hereby certifies that on May 23, 1990,
we accepted appointment as Resident Agent for ORANGE COUNTY BANCORP, in
accordance with Sec. 78.090. NRS 1957.
Furthermore, that the principal office in this state is located at 5059 S.
McCarran BLVD., RENO, NEVADA 89502.
In Witness Whereof, I have hereunto set my hand this MAY 23, 1990.
/s/ H. K. TERMOHLEN
---------------------------
H. K. TERMOHLEN
[RECEIVED STAMP]
[MAY 29,1999]
Page 3 of 3
Exhibit 2.2
BYLAWS
OF
MEDICAL ACCOUNTING & COMPUTERS
(formerly Orange County Bancorp)
(the "Corporation").
Article I.
Office
The Board of Directors shall designate and the Corporation shall maintain a
principal office. The location of the principal office may be changed by the
Board of Directors. The Corporation also may have offices in such other places
as the Board may from time to time designate. The location of the initial
principal office of the Corporation shall be designated by resolution.
Article II
Shareholders Meetings
1. Annual Meetings
The annual meeting of the shareholders of the Corporation shall be held at
such place within or without the State of Nevada as shall be set forth in
compliance with these Bylaws. The meeting shall be held on the 31st of December
of each year. If such day is a legal holiday, the meeting shall be on the next
business day. This meeting shall be for the election of Directors and for the
transaction of such other business as may properly come before it.
2. Special Meetings
Special meetings of shareholders, other than those regulated by statute, may
be called by the President upon written request of the holders of 50% or more of
the outstanding shares entitled to vote at such special meeting. Written notice
of such meeting stating the place, the date and hour of the meeting, the purpose
or purposes for which it is called, and the name of the person by whom or at
whose direction the meeting is called shall be given.
3. Notice of Shareholders Meetings
The Secretary shall give written notice stating the place, day, and hour of
the meeting, and in the case of a special meeting, the purpose or purposes for
which the meeting is called, which shall be delivered not less than ten or more
than fifty days before the date of the meeting, either personally or by mall to
each shareholder of record entitled to vote at such meeting. If mailed,
1
<PAGE>
such notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears on the books of
the Corporation, with postage thereon prepaid. Attendance at the meeting shall
constitute a waiver of notice thereof
4. Place of Meeting
The Board of Directors may designate any place, either within or without the
State of Nevada, as the place of meeting for any annual meeting or for any
special meeting called by the Board of Directors. A waiver of notice signed by
all shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Nevada, as the place for the holding of such
meeting. If no designation is made, or if a special meeting is otherwise called,
the place of meeting shall be the principal office of the Corporation.
5. Record Date
The Board of Directors may fix a date not less than ten nor more than sixty
days prior to any meeting as the record date for the purpose of determining
shareholders entitled to notice of and to vote at such meetings of the
shareholders. The transfer books may be closed by the Board of Directors for a
stated period not to exceed fifty days for the purpose of determining
shareholders entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other purpose.
6. Quorum
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At a meeting resumed after any such
adjournment at which a quorum shall be present or represented, any business may
be transacted, which might have been transacted at the meeting as originally
noticed.
7. Voting
A holder of an outstanding share, entitled to vote at a meeting, may vote at
such meeting in person or by proxy. Except as may otherwise be provided in the
currently filed Articles of' incorporation, every shareholder shall be entitled
to one vote for each share standing in his name on the record of shareholders.
Except as herein or in the currently filed Articles of Incorporation otherwise
provided, all corporate action shall be determined by a majority of the vote's
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
8. Proxies
At all meetings of shareholders, a shareholder may vote in person or by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed
2
<PAGE>
with the Secretary of the Corporation before or at the time of the meeting. No
proxy shall be valid after six months from the date of its execution.
9. Informal Action by Shareholders
Any action required to be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by a majority of the shareholders entitled to vote with
respect to the subject matter thereof
Article III.
Board Of Directors
1. General Powers
The business and affairs of the Corporation shall be managed by its Board of
Directors. The Board of Directors may adopt such rules and regulations for he
conduct of their meetings and the management of the Corporation as they
appropriate under the circumstances. The Board shall have authority to authorize
changes in the Corporation's capital structure.
2. Number, Tenure and Qualification
The number of Directors of the Corporation shall be a number between one and
five, as the Directors may by resolution determine from time to time. Each of
the Directors shall hold office until the next annual meeting of shareholders
and until his successor shall have been elected and qualified.
3. Regular Meetings
A regular meeting of the Board of Directors shall be held without other
notice than by this Bylaw, immediately after and, at the same place as the
annual meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than this resolution.
4. Special Meetings
Special meetings of the Board of Directors may be called by order of the
Chairman of the Board or the President. The Secretary shall give notice of the
time, place and purpose or purposes of each special meeting by mailing the same
at least two days before the meeting or by telephone, telegraphing or
telecopying the same at least one day before the meeting to each Director.
Meeting of the Board of Directors may be held by telephone conference call.
5. Quorum
A majority of the members of the Board of Directors shall constitute a quorum
for the transaction of business, but less than a quorum may adjourn any meeting
from time to time until a
3
<PAGE>
quorum shall be present, whereupon the meeting may be held, as adjourned,
without further notice. At any meeting at which every Director shall be present,
even though without any formal notice, any business may be transacted.
6. Manner of Acting
At all meetings of the Board of Directors, each Director shall have one vote.
The act of a majority of Directors present at a meeting shall be the act of the
fill Board of Directors, provided that a quorum is present.
7. Vacancies
A vacancy in the Board of Directors shall be deemed to exist in the case of
death, resignation, or removal of any Director, or if the authorized number of
Directors is increased, or if the shareholders fail, at any meeting of the
shareholders, at which any Director is to be elected, to elect the full
authorized number of Director to be elected at that meeting.
8. Removals
Directors may be removed, at any time, by a vote of the shareholders holding
a majority of the shares outstanding and entitled to vote. Such vacancy shall be
filled by the Directors then in office, though less than a quorum, to hold
office until the next annual meeting or until his successor is duly elected and
qualified, except that any directorship to be filled by election by the
shareholders at the meeting at which the Director is removed. No reduction of
the authorized number of Directors shall have the effect of removing any
Director prior to the expiration of his term of office.
9. Resignation
A Director may resign at any time by delivering written notification thereof
to the President or Secretary of the Corporation. A resignation shall become
effective upon its acceptance by the Board of Directors; provided, however, that
if the Board of Directors has not acted thereon within ten days from the date of
its delivery, the resignation shall be deemed accepted.
10. Presumption of Assent
A Director of the Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action(s) taken unless his dissent shall be placed in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
11. Compensation
4
<PAGE>
By resolution of the Board of Directors, the Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors or a
stated salary as Director. No such payment shall preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
12. Emergency Power
When, due to a national disaster or death, a majority of the Directors are
incapacitated or otherwise unable to attend the meetings and function as
Directors, the remaining members of the Board of Directors shall have all the
powers necessary to function as a complete Board, and for the purpose of doing
business and filling vacancies shall constitute a quorum, until such time as all
Directors can attend or vacancies can be filled pursuant to these Bylaws.
13. Chairman
The Board of Directors may elect from its own number a Chairman of the Board,
who shall preside at all meetings of the Board of Directors, and shall perform
such other duties as may be prescribed from time to time by the Board of
Directors. The Chairman may by appointment fill any vacancies on the Board of
Directors.
Article IV.
Officers
1. Number
The Officers of the Corporation shall be a President, one or more Vice
Presidents, and a Secretary Treasurer, each of whom shall be elected by a
majority of the Board of Directors. Such other Officers and assistant Officers
as may be deemed necessary may be elected or appointed by the Board of
Directors. In its discretion, the Board of Directors may leave unfilled for any
such period as it may determine any office except those of President and
Secretary. Any two or more offices may be held by the same person. Officers may
or may not be Directors or shareholders of the Corporation.
2. Election and Term of Office
The Officers of the Corporation to be elected by the Board of Directors shall
be elected annually by the Board of Directors at the first meeting of the Board
of Directors held after each annual meeting of the shareholders. If the election
of Officers shall not be held at such meeting, such election shall be held as
soon thereafter as convenient. Each Officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
5
<PAGE>
3. Resignations
Any Officer may resign at any time by delivering a written resignation either
to the President or to the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
4. Removal
Any Officer or agent may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of an Officer or agent shall not of itself
create contract rights. Any such removal shall require a majority vote of the
Board of Directors, exclusive of the Officer in question if he is also a
Director.
5. Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, or if a new office shall be created, may be
filled by the Board of Directors for the un-expired portion of the term.
6. President
The President shall be the chief executive and administrative Officer of the
Corporation. He shall preside at all meetings of the stockholders and, in the
absence of the Chairman of the Board, at meetings of the Board of Directors. He
shall exercise such duties as customarily pertain to the office of President and
shall have general and active supervision over the property, business, and
affairs of the Corporation and over its several Officers, agents, or employees
other than those appointed by the Board of Directors. He may sign, execute and
deliver in the name of the Corporation powers of attorney, contracts, bonds and
other obligations, and shall perform such other duties as may be prescribed from
time to time by the Board of Directors or by the Bylaws.
7. Vice President
The Vice President shall have such powers and perform such duties as may be
assigned to him by the Board of Directors or the President. In the absence or
disability of the President, the Vice President designated by the Board or the
President shall perform the duties and exercise the powers of the President. A
Vice President may sign and execute contracts and other obligations pertaining
to the regular course of his duties.
8. Secretary
The Secretary shall keep the minutes of all meetings of the stockholders and
of the Board of Directors and, to the extent ordered by the Board of Directors
or the President, the minutes of meetings of all committees. He shall cause
notice to be given of meetings of stockholders, of the
6
<PAGE>
Board of Directors, and of any committee appointed by the Board. He shall have
custody of the corporate seal and general charge of the records, documents and
papers of the Corporation not pertaining to the performance of the duties vested
in other Officers, which shall at all reasonable times be open to the
examination of any Directors. He may sign or execute contracts with the
President or a Vice President thereunto authorized in the name of the
Corporation and affix the seal of the Corporation thereto. He shall perform such
other duties as may be prescribed from time to time by the Board of Directors or
by the Bylaws.
9. Treasurer
The Treasurer shall have general custody of the collection and disbursement
of finds of the Corporation. He shall endorse on behalf of the Corporation for
collection checks, notes and other obligations, and shall deposit the same to
the credit accounts to any Director of the Corporation upon application at the
office of the Corporation during business hours; and, whenever required by the
Board of Directors or the President, shall render a statement of his accounts.
He shall perform such other duties as may be prescribed from time to time by the
Board of Directors or by the Bylaws.
10. Other Officers
Other Officers shall perform such duties and shall have such powers as may be
assigned to them by the Board of Directors.
11. Salaries
The salaries or other compensation of the Officers of the Corporation shall
be fixed from time to time by the Board of Directors, except that the Board of
Directors may delegate to any person or group of persons the power to fix the
salaries or other compensation of any subordinate Officers or agents. No Officer
shall be prevented from receiving any such salary or compensation by reason of
the fact that he is also a Director of the Corporation.
12. Surety Bonds
In case the Board of Directors shall so require, any Officer or agent of the
Corporation shall execute to the Corporation a bond in such sums and with such
surety or sureties as the Board of Directors may direct, conditioned upon the
faithful performance of his duties to the Corporation, including responsibility
for negligence and for the accounting for all property, moneys or securities of
the Corporation, which may come into his hands.
7
<PAGE>
Article V.
Contracts, Loans, Checks And Deposits
1. Contracts
The Board of Directors may authorize any Officer or Officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Corporation and such authority may be general or
confined to specific instances.
2. Loans
No loan or advance shall be contracted on behalf of the Corporation, no
negotiable paper or other evidence of its obligation under any loan or advance
shall be issued in its name, and no property of the Corporation shall be
mortgaged, pledged, hypothecated or transferred as security for the payment of
any loan, advance, indebtedness or liability of the Corporation unless and
except as authorized by the Board of Directors. Any such authorization may be
general or confined to specific instances.
3. Deposits
All finds of the Corporation not otherwise employed shall be deposited from
time to time to the credit of the Corporation in such banks, trust companies or
other depositories as the Board of Directors may select, or as may be selected
by an Officer or agent of the Corporation authorized to do so by the Board of
Directors.
4. Checks and Drafts
All notes, drafts, acceptances, checks, endorsements and evidence of
indebtedness of the Corporation shall be signed by such Officer or Officers or
such agent or agents of the Corporation and in such manner as the Board of
Directors from time to time may determine. Endorsements for deposits to the
credit of the Corporation in any of its duly authorized depositories shall be
made in such manner as the Board of Directors may from time to time determine.
5. Bonds and Debentures
Every bond or debenture issued by the Corporation shall be in the form of an
appropriate legal writing, which shall be signed by the President or Vice
President and by the Treasurer or by the Secretary, and sealed with the seal of
the Corporation. The seal may be facsimile, engraved or printed. Where such bond
or debenture is authenticated with the manual signature of an authorized Officer
of the Corporation or other trustee designated by the indenture of trust or
other agreement under which such security is issued, the signature of any of the
Corporation's Officers named thereon may be facsimile. In case any Officer who
signed, or whose facsimile signature has been used on any such bond or
debenture, shall cease to be an Officer of the Corporation for any reason before
the same has been delivered by the Corporation, such bond or
8
<PAGE>
debenture may nevertheless be adopted by the Corporation and issued and
delivered as though the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such Officer.
Article VI
Capital Stock
1. Certificate of Share
The shares of the Corporation shall be represented by certificates prepared
by the Board of Directors and signed by the President. The signatures of such
Officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or one of its employees. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled except that in case of a lost, destroyed or mutilated certificate, a
new one may be issued therefor upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
2. Transfer of Shares
Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the Corporation, and on surrender for
cancellation of the certificate for such shares. The Corporation authorizes the
transfer of shares by the transfer agent without the attachment of a medallion
guarantee. Such transfers will be guaranteed by the Corporation. The person in
whose name shares stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
3. Transfer Agent and Registrar
The Board of Directors of shall have the power to appoint one or more
transfer agents and registrars for the transfer and registration of certificates
of stock of any class, and may require that stock certificates shall be
countersigned and registered by one or more of such transfer agents and
registrars.
4. Lost or Destroyed Certificates
The Corporation may issue a new certificate to replace any certificate
theretofore issued by it alleged to have been lost or destroyed. The Board of
Directors may require the owner of such a certificate or his legal
representative to give the Corporation a bond in such sum and with such sureties
as the Board of Directors may direct to indemnify the Corporation as transfer
agents and
9
<PAGE>
registrars, if any, against claims that may be made on account of the issuance
of such new certificates. A new certificate may be issued without requiring any
bond.
5. Consideration for Shares
The capital stock of the Corporation shall be issued for such consideration
as shall be fixed from time to time by the Board of Directors. In the absence of
fraud, the determination of the Board of Directors as to the value of any
property or services received in full or partial payment of shares shall be
conclusive.
6. Registered Shareholders
The Corporation shall be entitled to treat the holder of record of any share
or shares of stock as the holder thereof, in fact, and shall not be bound to
recognize any equitable or other claim to or on behalf of this Corporation to
any and all of the rights and powers incident to the ownership of such stock at
any such meeting, and shall have power and authority to execute and deliver
proxies and consents on behalf of this Corporation in connection with the
exercise by this Corporation of the rights and powers incident to the ownership
of such stock. The Board of Directors, from time to time, may confer like powers
upon any other person or persons.
Article VII.
Indemnification
No Officer or Director shall be personally liable for any obligations of the
Corporation or for any duties or obligations arising out of any acts or conduct
of said Officer or Director performed for or on behalf of the Corporation. The
Corporation shall and does hereby indemnify and hold harmless each person and
his heirs and administrators who shall serve at any time hereafter as a Director
or Officer of the Corporation from and against any and all claims, judgments and
liabilities to which such persons shall become subject by reason of his having
heretofore or hereafter been a Director or Officer of the Corporation, or by
reason of any action alleged to have heretofore or hereafter taken or omitted to
have been taken by him as such Director or Officer, and shall reimburse each
such person for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability, including power to defend such
persons from all suits or claims as provided for under the provisions of the
Nevada Revised Statutes; provided, however, that no such persons shall be
indemnified against, or be reimbursed for, any expense incurred in connection
with any claim or liability arising out of his own negligence or willful
misconduct. The rights accruing to any person under the foregoing provisions of
this section shall not exclude any other right to which he may lawfully be
entitled, nor shall anything herein contained restrict the right of the
Corporation to indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The Corporation, its Directors,
Officers, employees and agents shall be fully protected in taking any action or
making any payment, or in refusing so to do in reliance upon the advice of
counsel.
10
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Article VIII.
Notice
Whenever any notice is required to be given to any shareholder or Director
of the Corporation under the provisions of the Articles of Incorporation, or
under the provisions of the Nevada Statutes, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
Attendance at any meeting shall constitute a waiver of notice of such meetings,
except where attendance is for the express purpose of objecting to the holding
of that meeting.
Article IX.
Amendments
These Bylaws may be altered, amended, repealed, or new Bylaws adopted by a
majority of the entire Board of Directors at any regular or special meeting. Any
Bylaw adopted by the Board may be repealed or changed by the action of the
shareholders.
Article X.
Fiscal Year
The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.
Article XI.
Dividends
The Board of Directors may at any regular or special meeting, as they deem
advisable, declare dividends payable out of the surplus of the Corporation.
Article XII.
Corporate Seal
The seal of the Corporation shall be in the form of a circle and shall bear
the name of the Corporation and the year of incorporation per sample affixed
hereto.
Date: June 8, 1990
/s/ Maria Conterars
- --------------------------
Maria Conterars, Secretary
11
Exhibit 2.3
Filed in the office of the
Secretary of State
of the State of Nevada
Dec 30, 1992
No. 5179-90
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
H.K. TERMOHLEN and
--------------------------- --------------------------
Name of Incorporator Name of Incorporator
certify that:
1. They constitute at least two-thirds of the original incorporators of
ORANGE COUNTY BANCORP
- ---------------------
Name of Corporation
a Nevada corporation.
2. The original articles were filed in the Office of the Secretary of State on
JULY 8, 1990, and a certified copy of the articles were filed in the Office of
the County Clerk on , 19 .
------------- --
3. As of the date of this certificate, no part of the capital of the corporation
has been paid.
4. They hereby adopt the following amendment to the articles of incorporation of
this corporation: Article ONE (1) is amended to read as follows:
---------
MEDICAL ACCOUNTING & COMPUTERS
/s/ H.K. Termohlen
------------------------
Signature
------------------------
Signature
State of California
----------
County of Riverside
---------
On Dec. 29, 1992, personally appeared before me, a Notary Public, H.K.
Termohlen, who acknowledged that they executed the above instrument.
/s/ Janice E. Marshall
------------------------
Signature of Notary
(Notary Seal or Stamp)
Exhibit 2.4
Filed in the office of the
Secretary of State
of the State of Nevada
October 22, 1998
No. C5179-90
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
MEDICAL ACCOUNTING & COMPUTERS
The undersigned, being the President and the Secretary of Medical
Accounting & Computers, a Nevada Corporation. hereby certify that by
majority vote of the Board of Directors at a meeting held on 22nd
October 1998, it was voted and adopted a resolution to amend the
original Articles of Incorporation as follows:
The undersigned further certify that ARTICLES ONE and FOUR of the
original Articles of Incorporation filed on the 8th day of June 1990
herein is amended to read as follows:
ARTICLE ONE, NAME is amended to read:
The name of the Corporation shall be:
"Motioncast Television Corporation of America".
ARTICLE FOUR, CAPITAL STOCK is amended to read:
The Corporation declare a 5 for 1 forward stock split to be effective
October 25, 1998.
The undersigned hereby certify that they have on this 22nd October 1998
executed this Certificate Amending that original Articles of
Incorporation heretofore filed with the Secretary of State of Nevada.
/s/ M. Zapara
---------------------------
M. Zapara, President
/s/ Vivienne Furlong
---------------------------
Vivienne Furlong, Secretary
Exhibit 2.5
Filed #C5179-90;
Feb 26, 1999
In the office of
Dean Heller Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
MOTIONCAST TELEVISION CORPORATION OF AMERICA
The undersigned, being the President and the Secretary of Motioncast
Television Corporation of America, a Nevada Corporation, hereby certify
that by majority vote of the Board of Directors at a meeting held on
February 25, 1999, it was voted and adopted a resolution to amend the
original Articles of Incorporation as follows:
The undersigned further certify that ARTICLE FOUR of the original
Articles of Incorporation filed on the 8th day of June 1990 herein is
amended to read as follows:
ARTICLE FOUR, CAPITAL STOCK is amended to read:
The Corporation declare a 25 to 1 reverse stock split to be effective
March 10, 1999.
The undersigned hereby certify that they have on this day February 26,
1999 executed this Certificate Amending that original Articles of
Incorporation heretofore filed with the Secretary of State of Nevada.
/s/ M. Zapara
---------------------------
M. Zapara, President
/s/ Vivienne Furlong
---------------------------
Vivienne Furlong, Secretary
Exhibit 2.6
Filed
in the office of the
Secretary of State of the
State of Nevada
July 28, 1998
No. C17766-98
Dean Heller Secretary of State
ARTICLES OF INCORPORATION
OF
BROWSESAFE.COM, INC.
ARTICLE I
The name of the corporation is BrowseSafe.com, Inc. (the "Corporation").
ARTICLE II
The purposes for which the Corporation is organized and its powers are to engage
in all lawful business, and to have, enjoy, and exercise all of the rights,
powers, and privileges conferred upon corporations incorporated pursuant to
Nevada law, whether now or hereafter in effect, and whether or not herein
specifically mentioned.
ARTICLE III
The amount of total authorized capital stock which the Corporation shall have
authority to issue is 50,000,000 shares of common stock, each with $0.001 par
value, and 1,000,000 shares of preferred stock, each with $0.01 per value. To
the fullest extent permitted by the laws of the State of Nevada (currently set
forth in NRS 78.195), as the same now exists or may hereafter be amended or
supplemented, the Board of Directors may fix and determine the designations,
rights, preferences or other variations of each class or series within each
class of capital stock of the Corporation.
ARTICLE IV
The business and affairs of the Corporation shall be managed by a Board of
Directors which shall exercise all the powers of the Corporation except as
otherwise provided in the Bylaws, these Articles of Incorporation or by the laws
of the State of Nevada. The number of members of the Board of Directors shall be
set in accordance with the Company's Bylaws; however, the Initial Board of
Directors shall consist of one member. The name and address of the person who
shall serve as the director until the first annual meeting of stockholders and
until his successor is duly elected and qualified is as follows:
Name Address
---- -------
Mark W. Smith 3353 West 9th Street, Suite 100
Indianapolis, Indiana 46202
ARTICLE V
The name and address of the Incorporator of the Corporation is Craig A. Stoner,
455 Sherman Street, Suite 300, Denver, Colorado 60203.
<PAGE>
ARTICLE VI
To the fullest extent permitted by the laws of the State of Nevada (currently
set forth in NRS 78.037), as the same now exists or may hereafter be amended or
supplemented, no director or officer of the Corporation shall be liable to the
Corporation or to its stockholders for damages for breach of fiduciary duty as a
director or officer.
ARTICLE VII
The Corporation shall indemnify, to the fullest extent permitted by applicable
law in effect from time to time, any person against all liability and expense
(including attorneys' fees) incurred by reason of the fact that he is or was a
director or officer of the Corporation, he is or was serving at the request of
the Corporation as a director, officer, employee, or agent of, or in any similar
managerial or fiduciary position of, another corporation, partnership, joint
venture, trust or other enterprise. The Corporation shall also indemnify any
person who is serving or has served the Corporation as director, officer,
employee, or agent of the Corporation to the extent and in the manner provided
In any bylaw, resolution of the shareholders or directors, contract, or
otherwise, so long as such provision is legally permissible.
ARTICLE VIII
The owners of shares of stock of the Corporation shall not have a preemptive
right to acquire unissued shares, treasury shares or securities convertible into
such shares.
ARTICLE IX
Only the shares of capital stock of the Corporation designated at issuance as
having voting rights shall be entitled to vote at meeting of stockholders of the
Corporation, and only stockholders of record of shares having voting rights
shell be entitled to notice of and to vote at meetings of stockholders of the
Corporation.
ARTICLE X
The initial resident agent of the Corporation shall be the Corporation Trust
Company of Nevada, whose street address is 1 East 1st Street, Reno, Nevada
89501.
ARTICLE XI
The provisions of NRS 78.378 to 78.3793 inclusive, shall not apply to the
Corporation.
2
<PAGE>
ARTICLE XII
One-third of the votes entitled to be cast on any matter by each shareholder
voting group entitled to vote on a matter shall constitute a quorum of that
voting group for action on that matter by shareholders.
ARTICLE XIII
The holder of a bond, debenture or other obligation of the Corporation may have
any of the rights of a stockholder in the Corporation to the extent determined
appropriate by the Board of Directors at the time of Issuance of such bond,
debenture or other obligation.
IN WITNESS WHEREOF, the undersigned incorporator has executed these Articles of
Incorporation this 22nd day of July, 1998.
By /s/ Craig A. Stoner
-------------------------
Craig A. Stoner
Incorporator
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
Personally appeared before me this 22nd day of July, 1998, Craig A. Stoner, who,
being first duly sworn, declared that he executed the foregoing Articles of
Incorporation arid that the statements therein are true and correct to the best
of his knowledge and belief.
My commission expires: Witness my hand and official seal.
8-17-99 /s/ Shelley C. Strawn
- ------------- -------------------------
Notary Public
455 Sherman Street, Suite 300
Denver, Colorado 80203
3
<PAGE>
Filed
in the office of the
Secretary of State of the
State of Nevada
July 28, 1998
No. C17766-98
Dean Heller Secretary of State
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
The Undersigned, Corporation Trust Company of Nevada, with address at One East
First Street, Town of Reno, County of Washoe, State Nevada, hereby accepts the
appointment as Resident Agent of Browsesafe.com, Inc. in accordance with NRS
78.090.
In Witness Whereof, I have hereunto set my hand this 27th day of July, 1998
CT CORPORATION SYSTEM
/s/ Marcia J. Sunahara
----------------------------
Signature
Marcia J. Sunahara
----------------------------
Print Name
Special Assistant Secretary
----------------------------
Title
4
Exhibit 2.7
BROWSESAFE.COM, INC.
BYLAWS
- --------------------------
Adopted as of July 28, 1998
<PAGE>
BROWSESAFE.COM, INC.
BYLAWS
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
Offices
1.1 Registered Office...............................................1
1.2 Principal Office................................................1
ARTICLE II
Stockholders
2.1 Annual Meeting..................................................1
2.2 Special Meetings................................................1
2.3 Place of Meeting................................................2
2.4 Notice of Meeting...............................................2
2.5 Adjournment.....................................................2
2.6 Organization....................................................2
2.7 Closing of Transfer Books or Fixing of Record Date..............3
2.8 Quorum..........................................................3
2.9 Proxies.........................................................3
2.10 Voting of Shares................................................3
2.11 Action Taken Without a Meeting..................................4
2.12 Meetings by Telephone...........................................4
-i-
<PAGE>
Section Page
- ------- ----
ARTICLE III
Directors
3.1 Board of Directors; Number; Qualifications; Election............4
3.2 Powers of the Board of Directors: Generally.....................4
3.3 Committees of the Board of Directors............................5
3.4 Resignation.....................................................5
3.5 Removal.........................................................5
3.6 Vacancies.......................................................5
3.7 Regular Meetings................................................5
3.8 Special Meetings................................................6
3.9 Notice..........................................................6
3.10 Quorum..........................................................6
3.11 Manner of Acting................................................6
3.12 Compensation....................................................6
3.13 Action Taken Without a Meeting..................................6
3.14 Meetings by Telephone...........................................7
ARTICLE IV
Officers and Agents
4.1 Officers of the Corporation.....................................7
4.2 Election and Term of Office.....................................7
4.3 Removal.........................................................7
4.4 Vacancies.......................................................7
4.5 President.......................................................8
4.6 Vice Presidents.................................................8
4.7 Secretary.......................................................8
4.8 Treasurer.......................................................9
4.9 Salaries........................................................9
4.10 Bonds...........................................................9
-ii-
<PAGE>
Section Page
- ------- ----
ARTICLE V
Stock
5.1 Certificates...................................................10
5.2 Record.........................................................11
5.3 Consideration for Shares.......................................11
5.4 Cancellation of Certificates...................................11
5.5 Lost Certificates..............................................11
5.6 Transfer of Shares.............................................11
5.7 Transfer Agents, Registrars, and Paying Agents.................12
ARTICLE VI
Indemnification of Officers and Directors
6.1 Indemnification; Advancement of Expenses.......................12
6.2 Insurance and Other Financial Arrangements Against
Liability of Directors, Officers, Employees, and
Agents.........................................................12
ARTICLE VII
Acquisition of Controlling Interest
7.1 Acquisition of Controlling Interest............................13
ARTICLE III
Execution of Instruments; Loans, Checks and Endorsements;
Deposits; Proxies
8.1 Execution of Instruments.......................................13
8.2 Loans..........................................................13
8.3 Checks and Endorsements........................................13
8.4 Deposits.......................................................13
8.5 Proxies........................................................14
8.6 Contracts......................................................14
-iii-
<PAGE>
Section Page
- ------- ----
ARTICLE IX
Miscellaneous
9.1 Waivers of Notice..............................................14
9.2 Corporate Seal.................................................14
9.3 Fiscal Year....................................................14
9.4 Amendment of Bylaws............................................15
9.5 Uniformity of Interpretation and Severability..................15
9.6 Emergency Bylaws...............................................15
Secretary's Certification..............................................16
-iv-
<PAGE>
BYLAWS
OF
BROWSESAFE.COM, INC.
ARTICLE I
Offices
1.1 Registered Office. The registered office of the Corporation required
by the General Corporation Law of Nevada, Nevada Revised Statutes, 1957 ("NRS"),
Chapter 78, to be maintained in Nevada may be, but need not be, identical with
the principal office if in Nevada, and the address of the registered office may
be changed from time to time by the Board of Directors.
1.2 Principal Office. The Corporation may have such other office or
offices either within or outside of the State of Nevada as the business of the
Corporation may require from time to time if so designated by the Board of
Directors.
ARTICLE II
Stockholders
2.1 Annual Meeting. Unless otherwise designated by the Board of
Directors, the annual meeting shall be held on the date and at the time and
place fixed by the Board of Directors; provided, however, that the first annual
meeting shall be held on a date that is within 18 months after the date on which
the Corporation first has stockholders, and each successive annual meeting shall
be held on a date that is within 18 months after the preceding annual meeting.
2.2 Special Meetings. Special meetings of stockholders of the
Corporation, for any purpose, may be called by the Chairman of the Board, the
president, any vice president, any two members of the Board of Directors, or the
holders of at least 10% of all of the shares entitled to vote at such meeting.
Any holder or holders of not less than 10% of all the outstanding shares of the
Corporation who desire to call a special meeting pursuant to this Section 2 of
Article II shall notify the president that a special meeting of the stockholders
shall be called. Within 30 days after notice to the president, the president
shall set the date, time, and location of a stockholders' meeting. The date set
by the president shall be not less than 30 nor more than 120 days after the date
of notice to the president. If the president fails to set the date, time, and
location of special meeting within
1
<PAGE>
the 30-day time period described above, the stockholder or stockholders calling
the meeting shall set the date, time, and location of the special meeting. At a
special meeting no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting.
2.3 Place of Meeting. The Board of Directors may designate any place,
either within or outside the State of Nevada, as the place for any annual
meeting or special meeting called by the Board of Directors. If no designation
is made, or if a meeting shall be called otherwise than by the Board, the place
of meeting shall be the Company's principal offices, whether within or outside
the State of Nevada.
2.4 Notice of Meeting. Written notice signed by an officer designated by
the Board of Directors, stating the place, day, and hour of the meeting and the
purpose for which the meeting is called, shall be delivered personally or mailed
postage prepaid to each stockholder of record entitled to vote at the meeting
not less than 10 nor more than 60 days before the meeting. If mailed, such
notice shall be directed to the stockholder at his address as it appears upon
the records of the Corporation, and notice shall be deemed to have been given
upon the mailing of any such notice, and the time of the notice shall begin to
run from the date upon which the notice is deposited in the mail for
transmission to the stockholder. Personal delivery of any such notice to any
officer of a corporation or association, or to any member of a partnership,
constitutes delivery of the notice to the corporation, association or
partnership. Any stockholder may waive notice of any meeting by a writing signed
by him, or his duly authorized attorney, either before or after the meeting.
2.5 Adjournment. When a meeting is for any reason adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
2.6 Organization. The president or any vice president shall call
meetings of stockholders to order and act as chairman of such meetings. In the
absence of said officers, any stockholder entitled to vote at that meeting, or
any proxy of any such stockholder, may call the meeting to order and a chairman
shall be elected by a majority of the stockholders entitled to vote at that
meeting. In the absence of the secretary or any assistant secretary of the
Corporation, any person appointed by the chairman shall act as secretary of such
meeting. An appropriate number of inspectors for any meeting of stockholders may
be appointed by the chairman of such meeting. Inspectors so appointed will open
and close the polls, will receive and take charge of proxies and ballots, and
will decide all questions as to the qualifications of voters, validity of
proxies and ballots, and the number of votes properly cast.
2
<PAGE>
2.7 Closing of Transfer Books or Fixing of Record Date. The directors
may prescribe a period not exceeding 60 days before any meeting of the
stockholders during which no transfer of stock on the books of the Corporation
may be made, or may fix a day not more than 60 days before the holding of any
such meeting as the day as of which stockholders entitled to notice of and to
vote at such meetings must be determined. Only stockholders of record on that
day are entitled to notice or to vote at such meeting.
2.8 Quorum. Unless otherwise provided by the Articles of Incorporation,
one-third of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If fewer than one-third of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
without further notice for a period not to exceed 60 days at any one
adjournment. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of stockholders so that less than a quorum remains.
If a quorum is present, the affirmative vote of a majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the stockholders, unless the vote of a greater number or voting by
classes is required by law or the Articles of Incorporation.
2.9 Proxies. At all meetings of stockholders, a stockholder may vote by
proxy, as prescribed by law. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
6 months from the date of its creation, unless it is coupled with an interest,
or unless the stockholder specifies in it the length of time for which it is to
continue in force, which may not exceed 7 years from the date of its creation.
2.10 Voting of Shares. Each outstanding share, regardless of class,
shall be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
stockholders, except as may be otherwise provided in the Articles of
Incorporation or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the provisions of the Articles of Incorporation. If the Articles of
Incorporation or any such resolution provide for more or less than one vote per
share for any class or series of shares on any matter, every reference in the
Articles of Incorporation, these Bylaws and the General Corporation Law of
Nevada to a majority or other proportion or number of shares shall be deemed to
refer to a majority or other proportion of the voting power of all of the shares
or those classes or series of shares, as may be required by the Articles of
Incorporation, or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the
3
<PAGE>
Articles of Incorporation, or the General Corporation Law of Nevada. Cumulative
voting shall not be allowed. Unless the General Corporation Law of Nevada, the
Articles of Incorporation, or these Bylaws provide for different proportions, an
act of stockholders who hold at least a majority of the voting power and are
present at a meeting at which a quorum is present is the act of the
stockholders.
2.11 Action Taken Without a Meeting. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting if a
written consent thereto is signed by stockholders holding at least a majority of
the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consents is required. In no instance where action is authorized by written
consent need a meeting of stockholders be called or notice given. The written
consent must be filed with the minutes of the proceedings of the stockholders.
2.12 Meetings by Telephone. Unless other restricted by the Articles of
Incorporation or these Bylaws, stockholders may participate in a meeting of
stockholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Section constitutes presence
in person at the meeting.
ARTICLE III
Directors
3.1 Board of Directors; Number; Qualifications; Election. The
Corporation shall be managed by a Board of Directors, all of whom must be
natural persons at least 18 years of age. Directors need not be residents of the
State of Nevada or stockholders of the Corporation. The number of directors of
the Corporation shall be not less than one nor more than twelve. Subject to such
limitations, the number of directors may be increased or decreased by resolution
of the Board of Directors, but no decrease shall have the effect of shortening
the term of any incumbent director. Subject to the provisions of Article III of
the Corporation's Articles of Incorporation, each director shall hold office
until the next annual meeting of shareholders or until his successor has been
elected and qualified.
3.2 Powers of the Board of Directors: Generally. Subject only to such
limitations as may be provided by the General Corporation Law of Nevada or the
Articles of Incorporation, the Board of Directors shall have full control over
the affairs of the Corporation.
4
<PAGE>
3.3 Committees of the Board of Directors. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board, designate one
or more committees, each committee to consist of one or more directors, which,
to the extent provided in the resolution or resolutions or in these Bylaws,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may have power to
authorize the seal of the Corporation to be affixed to all papers on which the
Corporation desires to place on a seal. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless the Articles of Incorporation or these Bylaws
provide otherwise, the Board of Directors may appoint natural persons who are
not directors to serve on committees.
3.4 Resignation. Any director of the Corporation may resign at any time
by giving written notice of his resignation to the Board of Directors, the
president, any vice president, or the secretary of the Corporation. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. When
one or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office.
3.5 Removal. Except as otherwise provided in the Articles of
Incorporation, any director may be removed, either with or without cause, at any
time by the vote of the stockholders representing not less than two-thirds of
the voting power of the issued and outstanding stock entitled to voting power.
3.6 Vacancies. All vacancies, including those caused by an increase in
the number of directors, may be filled by a majority of the remaining directors,
though less than a quorum, unless it is otherwise provided in the Articles of
Incorporation. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. A director elected to fill a
vacancy caused by an increase in the number of directors shall hold office until
the next annual meeting of stockholders and until his successor has been elected
and has qualified.
3.7 Regular Meetings. A regular meeting of the Board of Directors shall
be held without other notice than this Bylaw immediately after and at the same
place as the annual meeting of stockholders. The Board of Directors may provide
by resolution the time and place, either within or outside the State of Nevada,
for the holding of additional regular meetings without other notice than such
resolution.
5
<PAGE>
3.8 Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the president or a one-third of the directors
then in office. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or outside Nevada, as the
place for holding any special meeting of the Board of Directors called by them.
3.9 Notice. Notice of any special meeting shall be given at least two
days previously thereto by written notice delivered personally or mailed to each
director at his business address. Any director may waive notice of any meeting.
A director's presence at a meeting shall constitute a waiver of notice of such
meeting if the director's oral consent is entered on the minutes or by taking
part in the deliberations at such meeting without objecting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.10 Quorum. A majority of the number of directors elected and qualified
at the time of the meeting shall constitute a quorum for the transaction of
business at any such meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
3.11 Manner of Acting. If a quorum is present, the affirmative vote of a
majority of the directors present at the meeting and entitled to vote on that
particular matter shall be the act of the Board, unless the vote of a greater
number is required by law or the Articles of Incorporation.
3.12 Compensation. By resolution of the Board of Directors, any director
may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for attendance at such meeting; or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
3.13 Action Taken Without a Meeting. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if, before or after the action, a written consent
thereto is signed by all the members of the Board or of the committee. The
written consent must be filed with the minutes of the proceedings of the Board
or committee.
6
<PAGE>
3.14 Meetings by Telephone. Unless other restricted by the Articles of
Incorporation or these Bylaws, members of the Board of Directors or of any
committee designated by the Board, may participate in a meeting of the Board or
committee by means of a telephone conference or similar method of communication
by which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section constitutes presence in
person at the meeting.
ARTICLE IV
Officers and Agents
4.1 Officers of the Corporation. The Corporation shall have a president,
a secretary, and a treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may appoint one or more vice presidents and
such other officers, assistant officers, committees, and agents, including a
chairman of the board, assistant secretaries, and assistant treasurers, as they
may consider necessary, who shall be chosen in such manner and hold their
offices for such terms and have such authority and duties as from time to time
may be determined by the Board of Directors. One person may hold any two or more
offices. The officers of the Corporation shall be natural persons 18 years of
age or older. In all cases where the duties of any officer, agent, or employee
are not prescribed by the Bylaws or by the Board of Directors, such officer,
agent, or employee shall follow the orders and instructions of (a) the
president, and if a chairman of the board has been elected, then (b) the
chairman of the board.
4.2 Election and Term of Office. The officers of the Corporation shall
be elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting of the stockholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until the first
of the following occurs: until his successor shall have been duly elected and
shall have qualified; or until his death; or until he shall resign; or until he
shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer or agent may be removed by the Board of
Directors or by the executive committee, if any, whenever in its judgment the
best interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
4.4 Vacancies. A vacancy in any office, however occurring, may be filled
by the Board of Directors for the unexpired portion of the term.
7
<PAGE>
4.5 President. The president shall, subject to the direction and
supervision of the Board of Directors, be the chief executive officer of the
Corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents, and employees. He
shall, unless otherwise directed by the Board of Directors, attend in person or
by substitute appointed by him, or shall execute, on behalf of the Corporation,
written instruments appointing a proxy or proxies to represent the Corporation,
at all meetings of the stockholders of any other corporation in which the
Corporation shall hold any stock. He may, on behalf of the Corporation, in
person or by substitute or by proxy, execute written waivers of notice and
consents with respect to any such meetings. At all such meetings and otherwise,
the president, in person or by substitute or proxy as aforesaid, may vote the
stock so held by the Corporation and may execute written consents and other
instruments with respect to such stock and may exercise any and all rights and
powers incident to the ownership of said stock, subject however to the
instructions, if any, of the Board of Directors. The president shall have
custody of the treasurer's bond, if any. If a chairman of the board has been
elected, the chairman of the board shall have, subject to the direction and
modification of the Board of Directors, all the same responsibilities, rights,
and obligations as described in these Bylaws for the president.
4.6 Vice Presidents. The vice presidents, if any, shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the Board of Directors. In the absence of the president, the
vice president designated by the Board of Directors or (if there be no such
designation) the vice president designated in writing by the president shall
have the powers and perform the duties of the president. If no such designation
shall be made, all vice presidents may exercise such powers and perform such
duties.
4.7 Secretary. The secretary shall perform the following: (a) keep the
minutes of the proceedings of the stockholders, executive committee, and the
Board of Directors' (b) see that all notices are duly given in accordance with
the provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and affix the seal to all
documents when authorized by the Board of Directors' (d) keep, at the
Corporation's registered office or principal place of business within or outside
Nevada, a record containing the names and addresses of all stockholders and the
number and class of shares held by each, unless such a record shall be kept at
the office of the Corporation's transfer agent or registrar; (e) sign with the
president or a vice president, certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation, unless the Corporation has a transfer agent; and (g) in general,
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by the president or by the Board of
Directors. Assistant secretaries, if any, shall have the same duties and powers,
subject to supervision by the secretary.
8
<PAGE>
4.8 Treasurer. The treasurer shall be the principal financial officer of
the Corporation and shall have the care and custody of all funds, securities,
evidences of indebtedness, and other personal property of the Corporation, and
shall deposit the same in accordance with the instructions of the Board of
Directors. He shall receive and give receipts and acquittances for monies paid
in or on account of the Corporation, and shall pay out of the funds on hand all
bills, payrolls, and other just debts of the Corporation of whatever nature upon
maturity. He shall perform all other duties incident to the office of the
treasurer and, upon request of the Board, shall make such reports to it as may
be required at any time. He shall, if required by the Board, give the
Corporation a bond in such sums and with such sureties as shall be satisfactory
to the Board, conditioned upon the faithful performance of his duties and for
the restoration to the Corporation of all books, papers, vouchers, money, and
other property of whatever kind in his possession or under his control belonging
to the Corporation. He shall have such other powers and perform such other
duties as may be from time to time prescribed by the Board of Directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account, prepare
and file all local, state, and federal tax returns, prescribe and maintain an
adequate system of internal audit, and prepare and furnish to the president and
the Board of Directors statements of account showing the financial position of
the Corporation and the results of its operations.
4.9 Salaries. Officers of the Corporation shall be entitled to such
salaries, emoluments, compensation, or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
4.10 Bonds. If the Board of Directors by resolution shall so require,
any officer or agent of the Corporation shall give bond to the Corporation in
such amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of that officer's or agent's duties
and offices.
9
<PAGE>
ARTICLE V
Stock
5.1 Certificates. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the Corporation by its
president or a vice president and by the treasurer or an assistant treasurer or
by the secretary or an assistant secretary, and shall be sealed with the seal of
the Corporation, or with a facsimile thereof. Whenever any certificate is
countersigned or otherwise authenticated by a transfer agent or transfer clerk,
and by a registrar, then a facsimile of the signatures of the officers or
agents, the transfer agent or transfer clerk or the registrar of the Corporation
may be printed or lithographed upon the certificate in lieu of the actual
signatures. If the Corporation uses facsimile signatures of its officers and
agents on its stock certificates, it cannot act as the registrar of its own
stock, but its transfer agent and registrar may be identical if the institution
acting in those dual capacities countersigns or otherwise authenticates any
stock certificates in both capacities. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is delivered by the
Corporation, the certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed the certificates, or whose facsimile signature has been used thereon, had
not ceased to be an officer of the Corporation. If the Corporation is authorized
to issue shares of more than one class or more than one series of any class,
each certificate shall set forth upon the face or back of the certificate or
shall state that the Corporation will furnish to any stockholder upon request
and without charge a full statement of the designations, preferences,
limitations, and relative rights of the shares of each class authorized to be
issued and, if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series, so far as the same have been fixed and
determined, and the authority of the Board of Directors to fix and determine the
relative rights and preferences of subsequent series.
Each certificate representing shares shall state the following upon the
face thereof: the name of the state of the Corporation's organization; the name
of the person to whom issued; the number and class of shares and the designation
of the series, if any, which such certificate represents; the par value of each
share represented by such certificate or a statement that the shares are without
par value. Certificates of stock shall be in such form consistent with law as
shall be prescribed by the Board of Directors. No certificate shall be issued
until the shares represented thereby are fully paid.
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<PAGE>
5.2 Record. A record shall be kept of the name of each person or other
entity holding the stock represented by each certificate for shares of the
Corporation issued, the number of shares represented by each such certificate,
the date thereof and, in the case of cancellation, the date of cancellation. The
person or other entity in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof, and thus a holder of record of
such shares of stock, for all purposes as regards the Corporation.
5.3 Consideration for Shares. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof) as
shall be fixed from time to time by the Board of Directors. That part of the
surplus of the Corporation which is transferred to stated capital upon the
issuance of shares as a share dividend shall be deemed the consideration for the
issuance of such dividend shares. Such consideration may consist, in whole or in
part, of money, promissory notes, other property, tangible or intangible, or in
labor or services actually performed for the Corporation, contracts for services
to be performed or other securities of the Corporation.
5.4 Cancellation of Certificates. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and canceled, except as herein provided with respect
to lost, stolen, or destroyed certificates.
5.5 Lost Certificates. In case of the alleged loss, destruction, or
mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond, in such form and amount and with such surety as it
may determine, before issuing a new certificate.
5.6 Transfer of Shares. Upon surrender to the Corporation or to a
transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the Corporation which shall be kept at its
principal office or by its registrar duly appointed.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and accordingly shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof except as may be required by the laws of Nevada.
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<PAGE>
5.7 Transfer Agents, Registrars, and Paying Agents. The Board may at its
discretion appoint one or more transfer agents, registrars, and agents for
making payment upon any class of stock, bond, debenture, or other security of
the Corporation. Such agents and registrars may be located either within or
outside Nevada. They shall have such rights and duties and shall be entitled to
such compensation as may be agreed.
ARTICLE VI
Indemnification of Officers and Directors
6.1 Indemnification; Advancement of Expenses. To the fullest extent
permitted by the laws of the State of Nevada (currently set forth in NRS
78.751), as the same now exists or may hereafter be amended or supplemented, the
Corporation shall indemnify its directors and officers, including payment of
expenses as they are incurred and in advance of the final disposition of any
action, suit, or proceeding. Employees, agents, and other persons may be
similarly indemnified by the Corporation, including advancement of expenses, in
such case or cases and to the extent set forth in a resolution or resolutions
adopted by the Board of Directors. No amendment of this Section shall have any
effect on indemnification or advancement of expenses relating to any event
arising prior to the date of such amendment.
6.2 Insurance and Other Financial Arrangements Against Liability of
Directors, Officers, Employees, and Agents. To the fullest extent permitted by
the laws of the State of Nevada (currently set forth in NRS 78.752), as the same
now exists or may hereafter be amended or supplemented, the Corporation may
purchase and maintain insurance and make other financial arrangements 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, for any liability asserted against such
person and liability and expense incurred by such person in its capacity as a
director, officer, employee, or agent, or arising out of such person's status as
such, whether or not the Corporation has the authority to indemnify such person
against such liability and expenses.
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<PAGE>
ARTICLE VII
Acquisition of Controlling Interest
7.1 Acquisition of Controlling Interest. The provisions of the General
Corporation Law of Nevada pertaining to the acquisition of a controlling
interest (currently set forth NRS 78. 378 to 78.3793, inclusive), as the same
now exists or may hereafter be amended or supplemented, shall not apply to the
Corporation.
ARTICLE VIII
Execution of Instruments; Loans, Checks and Endorsements;
Deposits; Proxies
8.1 Execution of Instruments. The president or any vice president shall
have the power to execute and deliver on behalf of and in the name of the
Corporation any instrument requiring the signature of an officer of the
Corporation, except as otherwise provided in these Bylaws or where the execution
and delivery thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation. Unless authorized to do so by
these Bylaws or by the Board of Directors, no officer, agent, or employee shall
have any power or authority to bind the Corporation in any way, to pledge its
credit, or to render it liable pecuniarily for any purpose or in any amount.
8.2 Loans. The Corporation may lend money to, guarantee the obligations
of, and otherwise assist directors, officers, and employees of the Corporation,
or directors of another corporation of which the Corporation owns a majority of
the voting stock, only upon compliance with the requirements of the General
Corporation Law of Nevada.
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
8.3 Checks and Endorsements. All checks, drafts, or other orders for the
payment of money, obligations, notes, or other evidences of indebtedness, bills
of lading, warehouse receipts, trade acceptances, and other such instruments
shall be signed or endorsed by such officers or agents of the Corporation as
shall from time to time be determined by resolution of the Board of Directors,
which resolution may provide for the use of facsimile signatures.
8.4 Deposits. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the Corporation's credit in such banks or
other depositories as shall from time to time be determined by resolution of the
Board of Directors, which
13
<PAGE>
resolution may specify the officers or agents of the Corporation who shall have
the power, and the manner in which such power shall be exercised, to make such
deposits and to endorse, assign, and deliver for collection and deposit checks,
drafts, and other orders for the payment of money payable to the Corporation or
its order.
8.5 Proxies. Unless otherwise provided by resolution adopted by the
Board of Directors, the president or any vice president may from time to time
appoint one or more agents or attorneys-in-fact of the Corporation, in the name
and on behalf of the Corporation, to cast the votes which the Corporation may be
entitled to cast as the holder of stock or other securities in any other
corporation, association, or other entity any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporation, association, or other entity or to consent
in writing, in the name of the Corporation as such holder, to any action by such
other corporation, association, or other entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf of
the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
8.6 Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
ARTICLE IX
Miscellaneous
9.1 Waivers of Notice. Whenever notice is required by the General
Corporation Law of Nevada, by the Articles of Incorporation, or by these Bylaws,
a waiver thereof in writing signed by the director, stockholder, or other person
entitled to said notice, whether before, at, or after the time stated therein,
or his appearance at such meeting in person or (in the case of a stockholders'
meeting) by proxy, shall be equivalent to such notice.
9.2 Corporate Seal. The Board of Directors may adopt a seal circular in
form and bearing the name of the Corporation, the state of its incorporation,
and the word "Seal" which, when adopted, shall constitute the seal of the
Corporation. The seal may be used by causing it or a facsimile of it to be
impressed, affixed, manually reproduced, or rubber stamped with indelible ink.
9.3 Fiscal Year. The Board of Directors may, by resolution, adopt a
fiscal year for the Corporation.
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<PAGE>
9.4 Amendment of Bylaws. The provisions of these Bylaws may at any time,
and from time to time, be amended, supplemented or repealed by the Board of
Directors.
9.5 Uniformity of Interpretation and Severability. These Bylaws shall be
so interpreted and construed as to conform to the Articles of Incorporation and
the laws of the State of Nevada or of any other state in which conformity may
become necessary by reason of the qualification of the Corporation to do
business in such state, and where conflict between these Bylaws, the Articles of
Incorporation or the laws of such a state has arisen or shall arise, these
Bylaws shall be considered to be modified to the extent, but only to the extent,
conformity shall require. If any provision hereof or the application thereof
shall be deemed to be invalid by reason of the foregoing sentence, such
invalidity shall not affect the validity of the remainder of these Bylaws
without the invalid provision or the application thereof, and the provisions of
these Bylaws are declared to be severable.
9.6 Emergency Bylaws. Subject to repeal or change by action of the
stockholders, the Board of Directors may adopt emergency bylaws in accordance
with and pursuant to the provisions of the laws of the State of Nevada.
15
<PAGE>
SECRETARY'S CERTIFICATION
The undersigned Secretary of BrowseSafe.com, Inc. (the "Corporation")
hereby certifies that the foregoing Bylaws are the Bylaws of the Corporation
adopted by the Board of Directors as of the 28th day of July, 1998.
By /s/ Mark W. Smith
-----------------------
Mark W. Smith
Secretary
16
Exhibit 2.8
SECRETARY OF STATE
STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that BROWSESAFE.COM INC. did on July 28, 1998 file in this office
the original Articles of incorporation; that said Article. are now on file and
of record in the office of the Secretary of State of the State of Nevada, and
further, that said Articles contain all the provisions required by the law of
said State of Nevada.
IN WITNESS WHEREOF. I have hereunto
set my hand and affixed the Great Seal
of State, at my office, in Carson
City, Nevada, on July 28, 1998.
/s/ Dean Heller
Secretary of State
By: /s/ Denise A. Bates
Certification Clerk
Exhibit 2.9
Filed
in the office of the
Secretary of State of the
State of Nevada
Jul 28 1999
No. C17766-98
Dean Heller
Secretary of State
Dean Heller STATE OF NEVADA Telephone 702.687.5203
Secretary of State OFFICE OF THE SECRETARY OF STATE Fax 702.687.3471
101 N. CARSON ST., STE. 3 Web site
CARSON CITY. NEVADA 8970 14786 http://sos.state.nv.us
Filing Fee:
Certificate of Amendment to Articles of Incorporation
For Profit Nevada Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
- Remit in Duplicate -
1. Name of corporation: BrowseSafe.com, Inc.
-------------------------------------------------------
- ------------------------------------------------------------------------------
2. The articles have been amended as follows (provide article numbers, if
available): ARTICLE ONE
----------------------------------------------------------------
The name of the corporation is BrowseSafe Technology, Inc.
- ------------------------------------------------------------------------------
(the "Corporation")
- ------------------------------------------------------------------------------
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor the amendment is: 100%*
4. Signatures:
/s/Mark W. Smith /s/ Mark Smith
- ------------------------------ ------------------------------
President or Vice President Secretary or Asst. Secretary
(acknowledgement required) (acknowledgement not required)
State of: Indiana
County of: Marion
This instrument was acknowledged before me
on July 26, 1999, by
Mark W. Smith (Name of Person)
as President
as designated to sign this certificate
of Browsesafe.com, Inc.
(name on behalf of whom instrument was executed)
/s/ Erika Young
- ------------------------------
Notary Public Signature
My commission expires: Sept. 15, 2006
* If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and remit the proper
fees may cause this filing to be rejected.
Exhibit 2.10
Filed
in the office of the
Secretary of State of the
State of Nevada
Jul 28 1999
No. C5179-90
Dean Heller
Secretary of State
Dean Heller STATE OF NEVADA Telephone 702.687.5203
Secretary of State OFFICE OF THE SECRETARY OF STATE Fax 702.687.3471
101 N. CARSON ST., STE. 3 Web site
CARSON CITY. NEVADA 8970 14786 http://sos.state.nv.us
Filing Fee:
Certificate of Amendment to Articles of Incorporation
For Profit Nevada Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
- Remit in Duplicate -
1. Name of corporation: Motioncast Television Corporation of America
-------------------------------------------------------
- ------------------------------------------------------------------------------
2. The articles have been amended as follows (provide article numbers, if
available): ARTICLE ONE
----------------------------------------------------------------
NAME
- ------------------------------------------------------------------------------
The name of the corporation is BrowseSafe.com, Inc.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor the amendment is: 94%. *
4. Signatures:
/s/ Mark W. Smith /s/ Ted P. O'Brien
- ------------------------------ ------------------------------
President or Vice President Secretary or Asst. Secretary
(acknowledgement required) (acknowledgement not required)
State of: Indiana
County of: Marion
This instrument was acknowledged before me on
July 26, 1999, by
Mark W. Smith (Name of Person)
as President
as designated to sign this certificate
of Motioncast Television Corp.
(name on behalf of whom instrument was executed)
/s/ Erika Young
- ------------------------------
Notary Public Signature
My Commission expires: Sept. 15, 2006
* If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and remit the proper
fees may cause this filing to be rejected
Exhibit 2.11
ARTICLES OF ORGANIZATION
- ------------------------------------------------------------------------------
Indiana Secretary of State Thursday, March 26, 1998
Division of Corporations/Limited Liability Co.
302 West Washington Street
Indpls., In. 46204
APPROVED AND FILED APR 3, 1998
1.) The name of this company will be BrowseSafe, L.L.C.
2.) The address of this company will be 335 West 9th Street, Suite 100,
Indianapolis, Indiana 46202. The name of the registered agent of the
company is Mark W. Smith.
3.) The duration of BrowseSafe, L.L.C. will be perpetual until
dissolution in accordance with Indiana Law.
4.) The Operating Agreement and these Articles provide that the initial
Manager of the company will be Kirkbride Bible Company, Inc.
The Operating Agreement for BrowseSafe, L.L.C. will be on file at the company's
address referenced above. Please file these Articles pursuant to IC 23-18-2-4. A
$90.00 filing fee is enclosed pursuant to IC 23-18-12-3.
Sincerely,
Jerry L. Craig
Exhibit 2.12
ARTICLES OF CORRECTION
- ------------------------------------------------------------------------------
Indiana Secretary of State Monday, June 22, 1998
Division of Corporation/
Limited Liability Company
302 West Washington Street
Indpls., In. 46204
APPROVED AND FILED JUNE 24, 1998
Dear Sirs:
On or about March 26, 1998, ARTICLES OF ORGANIZATION were filed with the
Indiana Secretary of State regarding the formation of a Limited Liability
Company by the name of BrowseSafe, LLC. Attached is a copy of those Articles of
Organization.
This document is provided to change an incorrect statement that was
contained in those Articles of Organization. Those Articles of Organization
incorrectly stated that the initial manager of the company was Kirkbride Bible
Company, and the corrected statement is that the initial manager, pursuant to
the Operating Agreement, is Mark W. Smith.
Please make this correction or attach this document to the Articles of
Organization to state the correct manager of BrowseSafe, LLC.
The company has included the $30.00 filing fee for these Articles of
Correction. An additional amount is included for the fee required for returning
a certified copy of these documents to BrowseSafe, at 335 West 9th Street, Ste.
100, Indianapolis, Indiana 46202. Thank you.
Sincerely,
/s/ Jerry L. Craig
Jerry L. Craig
Exhibit 2.13
OPERATING AGREEMENT OF
BrowseSafe
LIMITED LIABILITY COMPANY
AN INDIANA LIMITED LIABUJTY COMPANY
EFFECTIVE AS OF
MARCH 26, 1998
<PAGE>
Definitions
1.01. Definitions. The following terms used in this Operating Agreement
shall have the following meanings (unless otherwise expressly provided herein):
a. "Articles of Organization" shall mean the Articles of Organization of
BrowseSafe, L.L.C. as filed with the Secretary of State of Indiana as the same
may be amended from time to time.
b. "Capital Account" as of any given date shall mean the Capital
Contribution to the Company by a Member as adjusted up to the date in question
pursuant to Article VIII.
c. "Capital Contribution" shall mean any contribution to the capital of
the Company in cash or property by a Member whenever made. "Initial Capital
Contribution" shall mean the initial contribution to the capital of the Company
pursuant to this Operating Agreement.
d. "Capital Interest" shall mean the proportion that a Member's positive
Capital Account bears to the aggregate positive Capital Accounts of all Members
whose Capital Accounts have positive balances as may be adjusted from time to
time.
e. Company shall refer to BrowseSafe Limited Liability Company.
f. "Deficit Capital Account" shall mean with respect to any Member, the
deficit balance, it' any, in such Member's Capital Account as of the end of the
taxable year, after giving effect to the following adjustments:
i. Credit to such Capital Account any amount which such Member is
obligated to restore under Treas Reg. Sec. 1.704-1(B)(2)(ii)(c), as well
as any addition thereto pursuant to the next to last sentence of Treas.
Reg. Sec. 1 .704-2(g)(1) and (i)(5), after taking into account
thereunder any changes during such year in partnership minimum gain (as
determined in accordance with Treas. Reg. Sec. 1.704-2(d)) and in the
minimum gain attributable to any partner nonrecourse debt (as determined
under Treas. Reg. Sec. 1.704-2(i)(3); and
ii. Debit to such Capital Account the items described in Treas.
Reg. Sec. 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
iii. This definition of Deficit Capital Account is intended to
comply with the provision of Treas. Reg. Sec. 1.704-1(b)(2)(ii)(d) and
1.704-2, and will be interpreted consistently with those provisions.
2
<PAGE>
g. "Distribution Cash" means all cash revenues, and funds received by
the Company from Company operations, less the sum of the following to the extent
paid or set aside by the Company:
i. All principal and interest payments on indebtedness of the
Company and all other sums paid to lenders;
ii. All cash expenditures incurred incident to the normal
operation of the Company's business;
iii. Such Reserves as the Managers deem reasonably necessary to
the proper operation of the Company's business.
h. "Economic Interest" shall mean a Member's or Economic Interest
Owner's share of one of more of the Company's Net Profits, Net Losses, and
distributions of the Company's assets pursuant to this Operating Agreement and
the Indiana Act, but shall not include any right to participate in the
management or affairs of the Company, including the right to vote on, consent
to, or otherwise participate in any decision of the Members or Managers.
i. "Economic Interest Owner" shall mean the owner of an Economic
Interest who is not a Member.
j. "Entity" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
cooperative or association, or any foreign trust, or foreign business
organization.
k. "Fiscal Year" shall mean the Company's fiscal year, which shall be
the calendar year.
l. "IRC" shall mean the Internal Revenue Code of 1986 or corresponding
provisions of subsequent superseding federal revenue laws.
m. "Gifting Member" shall mean any member or Economic Interest Owner who
gifts, bequeaths, or otherwise transfers for no consideration (by operation of
law or otherwise, except for bankruptcy) all or any part of its Membership
Interest or Economic Interest.
n. "Majority Interest" shall mean one or more Interests of Members which
taken together exceed 50 per cent of the aggregate of all Capital Interests.
3
<PAGE>
o. "Manager" shall mean one or more managers. Specifically, "Manager"
shall mean Mark W. Smith, or any other persons that succeed him in that
capacity. References to the Manager in the singular or as him, her, it, itself,
or other like references shall also, when the context so requires, be deemed to
include the plural or the masculine or feminine reference, as the case may be.
p. "Member" shall mean each of the parties who executes a counterpart of
this Operating Agreement as a Member and each of the parties who may hereafter
become Members, To the extent a Manager has purchased Membership Interests in
the Company, he will have all the rights of a Member with respect to such
Membership Interests, and the term `Member" as used in this Operating Agreement
shall include a Manager to the extent he has purchased such Membership Interests
in the Company. If a Person is a Member immediately before the purchase or other
acquisition by such Person of an Economic Interest, that Person shall have all
the rights of a Member with respect to the purchased or otherwise acquired
Membership Interest or Economic Interest, as the case may be. "Voting Member"
shall mean only those four individuals listed specifically in Section 9.01, by
name, and they may be designated as Initial Members.
q. "Membership Interest" shall mean a Member's entire interest in the
Company including the Member's Economic Interest and the right to participate in
the management of the business and affairs of the Company, including the right
to vote on, consent to, or otherwise participate in any decision or action of or
by the Members granted pursuant to this Operating Agreement and the Indiana Act.
r. "Net Profits" and "Net Losses" shall mean the income, gain, loss,
deductions, and credits of the Company in the aggregate or separately stated, as
appropriate, determined in accordance with generally accepted accounting
principles employed under the ___________ method of accounting at the close of
each fiscal year on the Company's information tax return filed for federal
income tax purposes.
s. "Operating Agreement" shall mean this Operating Agreement as
originally executed and as amended from time to time.
t. "Persons" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors, and assigns of the
"Person" when the context so permits.
u. "Reserves" shall mean, for any fiscal period, funds set aside or
amounts allocated during such period to reserves that shall be maintained in
amounts deemed sufficient by the Managers for working capital and to pay taxes,
insurance, debt service, or other costs or expenses incident to the ownership or
operation of the Company's business.
v. "Selling Member" shall mean any Member or Economic Interest Owner
which sells, assigns, or otherwise transfers for consideration all or any
portion of its Membership Interest or Economic Interest.
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w. "Indiana Act" shall mean the Indiana Limited Liability Company Act,
I.C. 23-18-1-1, et seq.
x. "Transferring Member" shall collectively mean a Selling Member and a
Gifting Member.
y. "Treasury Regulations" shall include proposed, temporary, and final
regulations promulgated under the IRC in effect as of the dare of filing the
Articles of Organization and the corresponding sections of any regulations
subsequently issued that amend or supersede those regulations.
ARTICLE II
Formation of Company
2.01 Formation. On March 26, 1998, Jerry Craig organized an Indiana
Limited Liability Company by executing and delivering articles of organization
to the Indiana Secretary of State in accordance with and pursuant to the Indiana
Act.
2.02 Name. The name of the Company is BrowseSafe Limited Liability
Company.
2.03 Principal Place of Business. The principal place of business of the
Company within the State of Indiana shall be Indianapolis. The Company may
locate its places of business and registered office at any other place or places
as the Manager may from time to time deem advisable.
2.04 Registered Office and Registration Agent. The Company's initial
registered office shall be at the office of its registered agent at 335 W. 9th
Street, Suite 100, Indianapolis, Indiana 46202, and the name of its initial
registered agent at such address shall be Mark W. Smith. The registered office
and registered agent may be changed from time to time by filing the address of
the new registered office and/or the name of the new registered agent with the
Indiana Secretary of State pursuant to the Indiana Act.
2.05 Term. The term of the Company shall be perpetual from the date of
filing of Articles of Organization with the Secretary of State of the State of
Indiana, unless the Company is earlier dissolved in accordance with either the
provisions of this Operating Agreement or the Indiana Act.
ARTICLE III
Business of Company
3.01 Permitted Businesses. The business of the Company shall be:
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a. To accomplish any lawful business whatsoever, or which shall at any
time appear conducive to or expedient for the protection of benefit of the
Company and its assets.
b. To exercise all other powers necessary to or reasonably connected
with the Company's business that may be legally exercised by limited liability
companies under the Indiana Act.
c. To engage in all activities necessary, customary, convenient, or
incident to any of the foregoing.
ARTICLE IV
Names and Addresses of Members
The names and business addresses of the initial Members are as follows:
Name Address
- ---- -------
Mark W. Smith 335 W. 9th Street, Ste. 100, Indianapolis, Indiana 46202
J. Marshall Gage 335 W, 9th Street, Ste. 100, Indianapolis, Indiana 46202
Gregory Urbanski 335 W. 9th Street, Ste. 100, Indianapolis, Indiana 46202
Ted O'Brien 335 W. 9th Street, Ste. 100, Indianapolis, Indiana 46202
ARTICLE V
Rights and Duties of Managers
5.01 Management. The business and affairs of the Company shall be
managed by its Managers. The Managers shall direct, manage, and control the
business of the Company to the best of their ability. Except for situations in
which the approval of the Members is expressly required by this Operating
Agreement or by nonwaivable provisions of applicable law, the Managers shall
have full and complete authority, power, and discretion to manage and control
the business, affairs, and properties of the Company, to make all decisions
regarding those matters and to perform any and all other acts or activities
customary or incident to the management of the Company's business. At any time
when there is more than one Manager, any one Manager may take any action
permitted to be taken by the Managers, unless the approval of more than one of
the Managers is expressly required pursuant to this Operating Agreement or the
Act.
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5.02 Number, Tenure, and Qualifications. The Company shall initially
have one Manager. The number of Managers of the Company shall be fixed from time
to time by the majority vote of Voting Members, but in no instance shall there
be less than one Manager. Each Manager shall hold office until the next annual
meeting of Members or until a successor shall have been elected and qualified.
Managers shall be elected by the majority vote of Voting Members. Managers need
not be residents of the State of Indiana or Members of the Company;
5.03 Certain Powers of Manager. Without limiting the generality of
section 5.01 above, the Managers shall have power and authority, on behalf of
the Company;
a. To acquire property from any Person as the Managers may determine.
The fact that a Manager or a Member is directly or indirectly affiliated or
connected with any such person shall not prohibit the Managers from dealing with
that Person;
b. To borrow money for the Company from banks, or other lending
institutions, the Managers, Members, or affiliates of the Managers or Members on
such terms as agreed by a majority vote of Voting Members, and in connection
therewith, to hypothecate, encumber, and grant security interests in the assets
of the Company to secure repayment of the borrowed sums. No debt shall be
contracted or liability incurred by or on behalf of the Company except by the
Managers, as agreed to by a majority vote of the Voting Members, or by agents or
employees of the Company expressly authorized to contract such debt or incur
such liability by such affirmative vote;
c. To purchase liability and other insurance to protect the Company's
property and business;
d. To hold and own any Company real and/or personal properties in the
name of the company;
e. To invest any Company funds temporarily (by way of example but not
limitation) in time deposits, short-term governmental obligations, commercial
paper, or other investments;
f. Upon the majority vote of the Voting Members, to sell or otherwise
dispose of all or substantially all of the assets of the Company as part of a
single transaction or plan so long as the disposition is not in violation of or
a cause of a default under any other agreement to which the Company may be
bound, provided, however, that the affirmative vote of the Members shall not be
required with respect to any sale of disposition of the Company's assets in the
ordinary course of the Company's business;
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g. To execute on behalf of the Company all instruments and documents,
including checks; drafts; notes and other negotiable instruments; mortgages, or
deeds of trust; security agreements; financing statements; documents providing
for the acquisition, mortgage or disposition of the Company's property;
assignments; bills of sale; leases; partnership agreements; and any other
instruments or documents necessary, in the opinion of the Managers, to the
business of the Company, save that at least two Voting Members signatures are
required on any checks or drafts over $10,000.00, drawn from any BrowseSafe
account;
h. To employ accountants, legal counsel, managing agents, or other
experts to perform services for the Company and to compensate them from Company
funds;
i. To enter into any and all other agreements on behalf of the Company,
with any other Person for any purpose, in such forms as the Managers may
approve; and
j. To do and perform all other acts as may be necessary or appropriate
to the conduct of the Company's business.
k. Unless authorized to do so by this Operating Agreement or by a
Manager or Managers of the Company, no attorney-in-fact, employee, or other
agent of the Company shall have any power or authority to bind the Company in
any way, to pledge its credit or to render it liable pecuniarily for any
purpose. No Member shall have any power or authority to bind the Company unless
the Member has been authorized by the Managers to act as an agent of the Company
in accordance wit the previous sentence.
5.04 Liability for Certain Acs. The Managers shall perform their
Managerial duties in good faith, in a manner they reasonably believe to be in
the best interests of the Company, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances. A Manager who
so performs the duties of Manager shall not have any liability by reason of
being or having been a Manager of the Company. A Manager does not, in any way,
guarantee the return of the Members' or Economic Interest Owner's Capital
Contributions or a profit for the Members or Economic Interest Owners from the
operations of the Company. A Manager shall not be liable to the Company or to
any member for any loss or damage sustained by the Company or any Member, or
Economic Interest Owner, unless the loss or damage shall have been the result of
fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by the
Manager.
5.05 Managers Have No Exclusive Duty to Company. The Managers shall not
be required to manage the Company as their sole and exclusive function and they
may have other business interests and may engage in other activities in addition
to those relating to the Company. Neither the Company nor any member shall have
any right, by virtue of this Operating Agreement, to share or participate in
such other investments or activities of the Managers or to the income of
proceeds derived therefrom. The Managers shall incur no liability to the Company
or to any of the Members as a result of engaging in any other business or
venture.
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5.06 Bank Accounts. The Managers may from time to time open bank
accounts in the name of the Company, and at least two Voting Members will be
required to be signatories on any checks or drafts exceeding $10,000.00, drawn
thereon.
5.07 Indemnity of the Managers, Employees, and Other Agents. To the
maximum extent permitted under the Indiana Act, the Company shall indemnify the
Managers and make advances for expenses. The Company shall indemnify its
employees and other agents who are not Managers to the fullest extent permitted
by law, provided that the indemnification in any given situation is approved by
a majority of Voting Members,
5.08 Resignation. Any Manager of the Company may resign at any time by
giving written notice to the Members of the Company. The resignation of any
Manager shall take effect upon receipt of that notice or at such later time as
shall be specified in the notice; and, unless otherwise specified in the notice,
the acceptance of the resignation shall not be necessary to make it effective.
The resignation of a Manager who is also a Member shall not affect the Manager's
rights as a Member and shall not constitute a withdrawal of a Member.
5.09 Removal. At any meeting called expressly for that purpose, all or
any lesser number of Managers may be removed at any time, with or without cause,
by the majority vote of Voting Members. The removal of a Manager who is also a
Member shall not affect the Manager's rights as a Member and shall not
constitute a withdrawal of a Member.
5.10 Vacancies. Any vacancy occurring for any reason in the number of
Managers of the Company may be filled by the affirmative vote of a majority of
the remaining Managers then in office, provided that if there are no remaining
Managers, the vacancy(ies) shall be filled by the majority vote of Voting
Members.
a. Any Manager's position to be filled by reason of any increase in the
number of Managers shall be filled by the affirmative vote of a majority of the
Managers then in office or by an election at an annual meeting or at a special
meeting of Members called for that purpose or by the Members' unanimous written
consent.
b. A Manager elected to fill a vacancy shall be elected for the
unexpired term of the Manager's predecessor in office and shall hold office
until the expiration of that term and until the Manager's successor shall be
elected and shall quality or until the Manager's earlier death, resignation, or
removal.
c. A Manager chosen to fill a position resulting from an increase in the
number of Managers shall hold office until the next annual meeting of Members
and until a successor shall be elected and shall qualify, or until the Manager's
earlier death, resignation, or removal.
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5.11 Salaries. The salaries and other compensation of the Managers shall
be fixed from time to time by an affirmative vote of the Voting Members, shall
not exceed 15% of the previous year's annual income (or estimated income in the
first year of the Company's existence) and no Manager shall be prevented from
receiving that salary because the Manager is also a Member of the Company.
ARTICLE VI
Rights and Obligations of Members
6.01 Limitation of Liability. Each Member's liability shall be limited
as set forth in this Operating Agreement, the Indiana Act, and other applicable
law.
6.02 Company Debt Liability. A Member will not be personally liable for
any debts or losses of the Company beyond the Member's respective Capital
Contributions and any obligation of the Member under section 8.01 or 8.02 below
to make Capital Contributions, except as provided in section 6.07 below or as
otherwise required by law.
6.03 List of Members. Upon written request of any Member, the Manager
shall provide a list showing the names, addresses, and Membership Interests and
Economic Interests of all Members.
6.04 Approval of Sale of All Assets. The Members shall have the right,
by a two thirds vote of Voting Members, to approve the sale, exchange, or other
disposition of all or substantially all, of the Company's assets (other than in
the ordinary course of the Company's business) which is to occur as part of a
single transaction or plan.
6.05 Company Books. In accordance with section 9.09 below, the Managers
shall maintain and preserve, during the term of the Company, and for five (5)
years thereafter, all accounts, books, and other relevant Company Documents.
Upon reasonable request, each Member and Economic Interest Owner shall have the
right, during ordinary business hours, to inspect and copy those Company
documents at the requesting Member's and Economic Interest Owner's expense.
6.06 Priority and Return of Capital. Except as may be expressly provided
in Article IX, no Member or Economic Interest Owner shall have priority over any
other Member or Economic Interest Owner, either for the return of Capital
Contributions or for Net Profits, Net Losses, or distributions; provided that
this section shall not apply to loans (as distinguished from Capital
Contributions) which a Member has made to the Company.
6.07 Liability of a Member to the Company. A Member who rightfully
receives the return in whole or in part of its contribution (as defined in
section IC. 23-18-1 of the Indiana Act) is nevertheless liable to the Company
only to the extent now or hereafter provided by the Indiana Act.
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a. A Member who receives a distribution made by the Company which is
either in violation of this Operating Agreement, or made when the Company's
liabilities exceed its assets (after giving effect to the distribution) is
liable to the Company for a period of six years after the distribution for the
amount of the distribution.
6.08 Salaries. The salaries and other compensation of the Members shall
be fixed from time to time by an affirmative vote of the Voting Members, and
shall not exceed 20% of the previous year's annual income (or estimated income
in the first year of the Company's existence).
ARTICLE VII
Meetings of Members
7.01 Annual Meeting. The annual meeting of the members shall be held on
the third Tuesday In April or at such other time as shall be determined by
resolution of the Members, commencing with the year 1998, for the purpose of the
transaction of such business as may come before the meeting.
7.02 Special Meetings. Special meetings of the Members, for any purpose
or purposes, unless otherwise prescribed by statute, may be called by a Manager
or by any Voting Member.
7.03 Place of Meetings. The members may designate any place, either
within or outside the State of Indiana, as the place of meeting for any meeting
of Members. If no designation it' made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Company in the State of Indiana.
7.04 Notice of Meetings. Except as provided in section 7.05 below,
written notice stating the place, day, and hour of the meeting and the purpose
or purposes for which the meeting is called shall be delivered no fewer than 10
nor more than 50 days before the date of the meeting, either personally or by
mail, by or at the direction of the Managers or person calling the meeting, to
each Member entitled to vote at the meeting. If mailed, the notice shall be
deemed to be delivered two calendar days after being deposited in the United
States mail, addressed to the Member at the Member's address as it appears on
the books of the Company, with postage thereon prepaid.
7.05 Meeting of All Members. If all of the Members shall meet at any
time and place, either within or outside of the State of Indiana, and consent to
the holding of a meeting at that time and place, the meeting shall be valid
without call or notice, and at the meeting lawful action may be taken.
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7.06 Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment of the
meeting, or Members entitled to receive payment of any distribution, or to make
a determination of Members for any other purpose, the date on which notice of
the meeting is mailed or the date on which the resolution declaring the
distribution is adopted, as the case may be, shall be the record date for the
determination of Members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this section, the
determination shall apply to any adjournment of the meeting.
7.07 Quorum. Three Fourths (75%) of Voting Members represented in person
or by proxy, shall constitute a quorum at any meeting of Members. In the absence
of a quorum at any meeting of Members, a majority of the Voting Members so
represented may adjourn the meeting from time to time for a period not to exceed
60 days without further notice. However, if the adjournment is for more than 60
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 Member of
record entitled to vote at the meeting. At an adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed.
7.09 Proxies. At all meetings of members a Voting Member may vote in
person or by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. The proxy shall be filed with the Managers of the Company
before or at the time of the meeting. No proxy shall be valid after 11 months
from the date of its execution, unless otherwise provided in the proxy.
7.10 Action by Members Without a Meeting. Action required or permitted
to be taken at a meeting of Members may be taken without a meeting if the action
is evidenced by one or more written consents describing the action taken, signed
by each Member entitled to vote, and delivered to the Managers of the Company
for inclusion in the minutes or for filing with the Company records. Action
taken under this section is effective when all Members entitled to vote have
signed the consent, unless the consent specifies a different effective date. The
record date for determining Members entitled to take action without meeting
shall be the date the first Member signs a written consent.
7.11 Waiver of Notice. When any notice is required to be given to any
member, a waiver of the notice in writing signed by the person entitled to the
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of the notice.
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ARTICLE VIII
Contributions to the Company
and Capital Accounts
8.01 Members' Capital Contributions. Each Member shall contribute such
amount as is set forth in appended Exhibit A as its share of the Initial Capital
Contribution. Exhibit A may be amended from time to time as new Members pay
their Initial Capital Contributions, and said amended Exhibit A's will be
attached to the prior Exhibit A, and signed by all Voting members, to be
effective.
8.02 Additional Contributions. Each Voting Member shall be required to
make such additional Capital Contributions as shall be determined by the Consent
of all Voting Members to be necessary to meet the expenses of the Company.
Upon learning of any such determination, the Manager shall give written notice
to each Member of the amount of required additional contribution, and each
Member shall deliver to the Company its pro rata share thereof (in proportion to
the respective Interest of the Member on the date such notice is given) no later
than 30 days following the date such notice is given None of the terms,
covenants, obligations or rights contained in this section 8.02 is or shall be
deemed to be for the benefit of any person or entity other than the Members and
the Company, and no such third person shall under any circumstances have any
right to compel any actions or payments by the Manager and/or the Members.
8.03 Capital Accounts. A separate Capital Account will be maintained for
each Member.
a. Each Member's Capital Account will be increased by:
i. The amount of money contributed by the Member to the Company;
ii. The fair market value of property contributed by the Member
to the Company (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject
to under IRC Section 752);
iii. Allocations to the member of Net Profits and Net losses; and
iv. Allocations to the Member of income described in IRC Sec.
705(a)(1)(B).
b. Each member's Capital Account will be decreased by:
i. The amount of money distributed to the Member by the Company;
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ii. The fair market value of property distributed to the Member
by the Company (net of liabilities secured by such distributed
property that such Member is considered to assume or take subject
to under IRC Sec. 752;
iii. Allocations to the Member of expenditures described in IRC
705(a)(2)(B); and
iv. Allocations to the account of the member of Company loss and
deduction as set forth in the relevant Treasury Regulations,
taking into account adjustments to reflect book value.
c. In the event of a permitted sale or exchange of a Membership Interest
or an Economic Interest in the Company, the Capital Account of the transferor
shall become the Capital Account of the transferee to the extent it relates to
the transferred Membership Interest or Economic Interest in accordance with
Treas. Reg. I .704-1(b)(2)(iv).
d. The manner in which Capital Accounts are to be maintained pursuant to
this section 8.03 is intended to comply with the requirements of IRC Sec. 704(b)
and the Treasury Regulations promulgated thereunder. If in the opinion of the
Company's accountants the manner in which Capital Accounts are to be maintained
pursuant to the preceding provisions of this section 8.03 should be modified to
comply with IRC Sec. 704(b) and the Treasury Regulations thereunder, then
notwithstanding anything to the contrary contained in the preceding provisions
of this section 8.03, the method in which Capital Accounts are maintained shall
be so modified; provided, however, that any change in the manner of maintaining
Capital Accounts shall not materially alter the economic agreement between or
among the Members.
e. Upon liquidation of the Company (or any Member's Membership Interest
or Economic Interest Owner's Economic Interest), liquidating distributions will
be made in accordance with the positive Capital Account balances of the Members
and Economic Interest Owners, as determined after taking into account all
Capital Account adjustments for the Company's taxable year during which the
liquidation occurs. Liquidations proceeds will be paid within 60 days of the end
of the taxable year (or, if later, within 120 days after the date of the
liquidation). The Company may offset damages for breach of this Operating
Agreement by a Member or Economic Interest Owner whose interest is liquidated
(either upon the withdrawal of the Member or the liquidation of the Company)
against the amount otherwise distributable to the Member.
f. Except as otherwise required in the Indiana Act (and subject to
sections 8.01 and 8.02 above), no Member or Economic Interest Owner shall have
any liability to restore all or any portion of a deficit balance in the Member's
or Economic Interest Owner's Capital Account.
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8.04 Withdrawal or Reduction of Member' Contributions to Capital. A
Member shall not receive out of the Company's property any part of its Capital
Contribution until all liabilities of the Company, except liabilities to Members
on account of their Capital Contributions, have been paid or there remains
property of the Company sufficient to pay them.
a. A Member, irrespective of the nature of its Capital Contribution, has
only the right to demand and receive cash in return for its Capital
Contribution.
ARTICLE IX
Allocations, Income Tax, Distributions,
Elections, and Reports
9.01 Allocations of Profits and Losses from Operations. The Net Profits
and Net Losses of the Company for each fiscal year will be allocated as follows,
and distributed on an annual basis, within two weeks after April 15th:
Member Allocation
------ ----------
Mark W. Smith 30%
J. Marshall Gage 15%
Gregory Urbanski 15%
Ted O'Brien 15%
The Investors (individually, allocated at 1% for
every $20,000 invested), as identified in
Exhibit A, attached hereto, and as amended from
time to time, pursuant to Section 8.01: 25% (cumulative)
If less than $500,000 is contributed by the Investors collectively, then the
remaining percentage of ownership (and Profits or Losses) shall be split
proportionately between the four Initial Members, according to the Allocation
shown, or if more than $500,000 is contributed by the Investors, then the
Allocation shown to the Initial Members shall be reduced proportionately along
the same ratios shown in the Allocation above:
Until the Net Profits allocated to the Investors have been paid for three
consecutive years after the year in which all of their Initial Capital
Contributions were cumulatively paid back, subject to the buyout limitation
described below, at which point the Allocations will change from thence forward
to:
Member Allocation
------ ----------
Mark W. Smith 40%
J. Marshall Gage 20%
Gregory Urbanski 20%
Ted O'Brien 20%
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a. Buyout Limitation: In the event that the Company is sold in its
entirety, the amount paid to each of the Investors as their individual
allocation of the buy-out profits, shall not exceed Five (5) times their
individual Initial Capital Contributions but this clause shall not be
interpreted to require the return of any previous profit distributions that
might have exceeded Five (5) times the initial Investment amount.
9.02 Special Allocations to Capital Accounts. No allocations of loss,
deduction, and/or expenditures described in IRC 705(a)(2)(B) shall be charged to
the Capital Accounts of any Member if such allocation would cause such Member to
have a Deficit Capital Account. The amount of the loss, deduction, and/or IRC
705(a)(2)(B) expenditure which would have caused a Member to have a Deficit
Capital Account shall instead be charged to the Capital Account of any Members
which would not have a Deficit Capital Account as a result of the allocation, in
proportion to their respective Capital Contributions, or, if no such Members
exist, then to the Members in accordance with their interests in Company profits
pursuant to section 9.01 above.
a. Notwithstanding any other provision of this section 9.02, if there is
a net decrease in the Company's minimum gain as defined in Treas. Reg.
1.704-2(d) during a taxable year of the Company, the Capital Accounts of each
Member shall be allocated items of income (including gross income) and gain for
such year (and if necessary for subsequent years) equal to that Member's share
of the net decrease in Company minimum gain. This section 9.02(d) is intended to
comply with the minimum gain chargeback requirement of Treas. Reg. 1.704-2 and
shall be interpreted consistently therewith. If in any taxable year that the
Company has a net decrease in the Company's minimum gain, if the minimum gain
chargeback requirement would cause a distortion in the economic arrangement
among the Members and it is not expected that the Company will have sufficient
other Income to correct that distortion, the Managers may in their discretion
(and shall, if requested to do so by a member) seek to have the IRS waive the
minimum gain chargeback requirement in accordance with Treas. Reg.
1.704-2(f)(4).
b. Items of Company loss, deduction, and expenditures described in IRC
705(a)(2)(B) which are attributable to any nonrecourse debt of the Company and
are characterized as partner (Member) nonrecourse deductions under Treas. Reg.
1.704-2 (i) shall be allocated to the Members' Capital Accounts in accordance
with said Treas. Reg. 1.704-2(i).
c. Beginning in the first taxable year in which there are allocations of
"nonrecourse deductions" (as described in Treas. Reg. 1.704-2(b) those
deductions shall be allocated to the Members in accordance with, and as a part
of, the allocations of Company profit or loss for that period.
d. In accordance with IRC Sec. 704(c)(1)(A) and Treas. Reg.
1.704-1(b)(2)(i), (iv), if a Member contributes property with a fair market
value that differs from its adjusted basis at the time of contribution, income,
gain, loss, and deductions for the property shall, solely for federal income tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of the property to the Company and its fair market
value at the time of contribution.
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e. Pursuant to IRC Sec. 704(c)(1)(B), if any contributed property is
distributed by the Company other than to the contributing Member within five
years of being contributed, then, except as provided in IRC Sec. 704(c)(2), the
contributing Member shall be treated as recognizing gain or loss from the sale
of the property in an amount equal to the gain or loss that would have been
allocated to the Member under IRC Sec. 704(c)(1)(A) if the property had been
sold at its fair market value at the time of the distribution.
f. In the case of any distribution by the Company to a Member or
Economic Interest Owner, the Member & Economic Interest Owner shall be treated
as recognizing gain in an amount equal to the lesser of:
i. The excess (if any) of the fair market value of the property
(other than money) received in the distribution over the adjusted
basis of the Member's Membership Interest or Economic Interest
Owner's Economic Interest in the Company immediately before the
distribution reduced (but not below zero) by the amount of money
received in the distribution; or
ii. The Net Precontribution Gain (as defined in IRC Sec. 737(b)
of the Member or Economic Interest Owner. The Net Precontribution
Gain means the net gain (if any) which would have been recognized
by the distributee Member or Economic Interest Owner under IRC
Sec. 704(c)(1)(B) of all property which had been contributed to
the Company within five years of the distribution, and is held by
the Company immediately before the distribution, had been
distributed by the Company to another Member, or Economic
Interest Owner. If any portion of the property distributed
consists of property which had been contributed by the
distributee Member or Economic Interest Owner to the Company,
then the property shall not be taken into account under this
section 9.02(f) and shall not be taken into account in
determining the amount of the Net Precontribution Gain.
If the property distributed consists of an interest in an entity,
the preceding sentence shall not apply to the extent that the
value of the interest is attributable to the property contributed
to the entity after such interest had been contributed to the
Company.
g. In connection with a Capital Contribution of money of other property
(other than a de minimis amount) by a new or existing member or Economic
Interest Owner as consideration for an Economic Interest Or Membership Interest,
or in connection with the liquidation of the Company or a distribution of money
or other property (other than a de minimis amount) by the Company to a retiring
Member or Economic Interest Owner as consideration for an Economic Interest or
Membership Interest, the Capital Accounts of the Members shall be
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adjusted to reflect a revaluation of Company property (including intangible
assets) in accordance with Treas. Reg. 1.704-1(b)(2)(iv)(f). If under Treas.
Reg. 1.704-1(b)(2)(iv)(f), Company property that has been revalued is properly
reflected in the Capital Accounts and on the books of the Company at a book
value that differs from the adjusted tax basis of the property, then
depreciation, depletion, amortization and gain or loss with respect to such
property shall be shared among the Members in a manner that takes account of the
variation between the adjusted tax basis of such property and its book value, in
the same manner as variations between the adjusted tax basis and fair market
value of property contributed to the Company taken into account in determining
the Member's shares of tax items under IRC Sec. 704(c)
h. All recapture of income tax deductions resulting from sale or
disposition of Company property shall be allocated to the Member or Members to
whom the deduction that gave rise to the recapture was allocated hereunder to
the extent that the Member is allocated any gain from the sale of other
disposition of the property.
i. Any credit or charge to the Capital Accounts or the Members pursuant
to sections 9.02(a),(b), and/or (c), shall be taken into account in computing
subsequent allocations of profits and losses pursuant to section 9.01 above, so
that the net amount of any items charged or credited to Capital Accounts
pursuant to sections 9.01 and 9.02 shall to the extent possible, be equal to the
net amount that would have been allocated to the Capital Account of each Member
pursuant to the provisions of this Article IX if the special allocations
required by sections 9.02(a)(b), and/or (c), had not occurred.
9.03 Distributions. Except as provided in section 8.03(d) above, all
distributions of cash or other property shall be made to the Members pursuant to
the Allocation then applicable under section 9.01 herein.
Except as provided in section 9.04, all distributions of Distributable
Cash and property shall be made at such time as determined by the Manager. All
amounts withheld pursuant to the IRC or any provisions of state or local tax law
for any payment or distribution to the Members from the Company shall be treated
as amounts distributed to the relevant Member or Members pursuant to this
section 9.03.
9.04 Limitation Upon Distributions. No distribution shall be declared
and paid unless, after distribution is made, the assets of the Company are in
excess of all liabilities of the Company, except liabilities to Members on
account of their contributions.
9.05 Accounting Principles. The profits and losses of the Company shall
be determined in accordance with accounting principles applied on a consistent
basis using the ___ method of accounting. It is intended that the Company will
elect those accounting methods that provide the Company with the greatest tax
benefits.
9.06 Interest on and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to return of its Capital
Contribution, except as otherwise specifically provided for in this Operating
Agreement.
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9.07 Loans to Company. Nothing in this Operating Agreement shall prevent
any Member from making secured or unsecured loans to the Company by agreement
with the Company.
9.08 Accounting Period. The Company's accounting period shall be the
calendar year.
9.09 Records, Audits, and Reports. At the expense of the Company, the
Manager shall maintain records and accounts of all operations and expenditures
of the Company. At a minimum the Company shall keep at its principal place of
business the following records:
a. A current list of the full name and last known business, residence,
or mailing address of each Member, Economic Interest Owner, and Manager, both
past and present;
b. A copy of the Articles of Organization of the Company and all
amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;
c. Copies of the Company's federal, state, and local income tax returns
and reports, if any, for the four most recent years;
d. Copies of the Company's currently effective written Operating
Agreement, copies of any writings permitted or required with respect to a
Member's obligation to contribute cash, property, or services, and copies of any
financial statements of the Company for the three most recent years;
e. Minutes of every annual meeting, special meeting, and court-ordered
meeting;
f. Any written consents obtained from Members for actions taken by
Members without a meeting.
9.10 Returns and Other Elections. The Manager shall cause the
preparation and timely filing of all tax returns required to be filed by the
Company pursuant to the IRC and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business. Copies of
those returns, or pertinent information from the returns, shall be furnished to
the Members within a reasonable time after the end of the Company's fiscal year.
a. All elections permitted to be made by the Company under federal or
state laws shall be made by the Manager after consultation with all of the
Members.
ARTICLE X
Transferability
10.01 General. Except as otherwise specifically provided in this
Operating Agreement, neither a Member nor an Economic Interest Owner shall have
the right to:
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a. Sell, assign, transfer, exchange or otherwise transfer for
consideration, (collectively, "sell") all or any part of its Membership Interest
or Economic Interest;
b. Gift, bequeath or otherwise transfer for no consideration (whether or
not by operation of law, except in the case of bankruptcy) all or part of its
Membership Interest or Economic Interest.
10.02 Right of First Refusal. If a Selling Member desires to sell all or
any portion of its Membership Interest or Economic Interest in the Company to a
third-party purchaser, the Selling Member shall obtain from such third-party
purchaser a bona fide written offer to purchase the interest, stating the terms
and conditions upon which the purchase is to be made and the consideration
offered therefor. The Selling Member shall give written notification to the
remaining Members, by certified mail or personal delivery, of its intention to
so transfer the interest, furnishing to the remaining Members a copy of the
aforesaid written offer to purchase the interest.
a. The remaining Members, and each of them shall, on a basis pro rata to
their Capital Interest or on a basis pro rats to the Capital Interests of those
remaining Members exercising their right of first refusal, have the right to
exercise a right of first refusal to purchase all (but not less than all) of the
interest proposed to be sold by the Selling Member upon the same terms and
conditions as stated in the aforesaid written offer to purchase by giving
written notification to the Selling Member, by certified mail or personal
delivery, of their intention to do so within (10) days after receiving written
notice from the Selling Member. The failure of all the remaining members (or any
one or more of them) to so notify the Selling Member of their desire to exercise
this right of first refusal within said ten-(10) day period shall result in the
termination of the right of the first refusal and the Selling Member shall be
entitled to consummate the sale of its interest in the Company, or such portion
of its interest, if any, with respect to which the right of first refusal has
not been exercised, to the third-party purchaser.
b. If the remaining Members (or any one or more of the remaining
members) give written notice to the Selling Member of their desire to exercise
this right of first refusal and to purchase all the Selling Member's interest in
the Company that the Selling Member desires to sell upon the same terms and
conditions as are stated in the aforesaid written offer to purchase, the
remaining Members shall have the right to designate the time, date, and place of
closing, provided that the date of closing shall be within ten (10) days after
receipt of written notification from the Selling Member of the third-party offer
to purchase.
c. In the event of either the purchase of the Selling Member's interest
in the Company by a third-party purchaser or the gift of an interest in the
Company (including an Economic Interest), and as a condition to recognizing one
or more of the effectiveness and binding nature of any such sale or gift and
(subject to section 10.03 below) substitution of a new Member as against the
Company or otherwise the remaining Members may require the Selling Member or
Gifting Member and the proposed purchaser, donee or successor-in-interest, as
the case may be, to execute, acknowledge, and deliver to the remaining Members
such
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instruments of transfer, assignment, and assumption and such other certificates,
representations, and documents, and to perform all the other acts that the
remaining Members may deem necessary or desirable to:
i. Constitute such purchaser, as a Member, donee or
successor-in-interest as such;
ii. Confirm that the person desiring to acquire an interest or
interests in the Company, or to be admitted a Member, has
accepted, assumed, and agreed to be subject and bound by all of
the terms, obligations and conditions of the Operating Agreement,
as the same may have been further amended (whether such Person is
to be admitted as a new Member or will merely be an Economic
Interest Owner);
iii. Preserve the Company after the completion of such sale,
transfer, assignment, or substitution under the laws of each
jurisdiction in which the Company is qualified, organized, or
does business;
iv. Maintain the status of the Company as a partnership for
federal tax purposes; and
v. Assure compliance with any applicable state and federal laws
including securities laws and regulations.
d. Any sale or gift of a Membership Interest or Economic Interest or
admission of a Member in compliance with this Article X shall be deemed
effective as of the last day of the calendar month in which the remaining
Members' consent thereto was given, or, if no such consent was required pursuant
to section 10.02(e) below, then on such date that the donee or successor
interest complies with.
The Selling Member agrees, upon request of the remaining Members, to
execute such certificates or other documents and perform such other acts as may
be reasonably requested by the remaining Members from time to time in connection
with such sale, transfer, assignment, or substitution. The Selling Member hereby
indemnifies the Company and the remaining Members against any and all loss,
damages, or expense (including, without limitation, tax liabilities or loss of
tax benefits) arising directly or indirectly from any transfer or purported
transfer in violation of this Article X.
e. Subject to section 10.03(c) below, a Transferring Member may gift all
or any portion of its Membership Interest and Economic Interest (without regard
to section 10.02(a) and (b) above) provided that the donee or to the
successor-in-interest (collectively, "donee") complies with section 10.02(c) and
further provided that the donee is either the Gifting Member's spouse, former
spouse or lineal descendant (including adopted children). In the event of the
gift of all or any portion of a Gifting Member's Membership Interest or Economic
Interest to one or more
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donees who are under 25 years of age, one or more trusts shall be established to
hold the gifted interest(s) for the benefit of such donee(s) until all of the
donee(s) reach the age of at least 25 years.
10.03 Transferee Not Member in Absence of Unanimous Consent.
Notwithstanding anything contained in this Operating Agreement to the contrary
(including, without limitation, sections 10.02 above, if all of the remaining
members do not approve by unanimous written consent of the proposed sale or gift
of the Transferring Member's Membership Interest or Economic Interest to a
transferee & donee which is not a Member immediately before the sale or gift,
the proposed transferee or donee shall have no right to participate in the
management of the business and affairs of the Company or to become a Member, The
transferee or donee shall be merely an Economic Interest Owner. No transfer of a
Member's interest in the Company (including any transfer of the Economic
Interest or any other transfer that has not been approved by unanimous written
consent of the Members) shall be effective unless and until written notice
(including the name and addresses of the proposed transferee or donee and the
date of such transfer) has been provided to the Company and the nontransferring
Member(s).
a. Upon and contemporaneously with any sale or gift of a Transferring
Member's Economic Interest in the Company which does not at the same time
transfer the balance of the rights associated with the Economic Interest
transferred by the Transferring Member (including, without limitation, the
rights of the Transferring Member to participate in the management of the
business and affairs of the Company), the Company shall purchase from the
Transferring Member and the Transferring Member shall sell to the Company for a
purchase price of $100, all remaining rights and interests retained by the
Transferring Member that immediately before the sale or gift were associated
with the transferred Economic Interest.
b. The restrictions on transfer contained in this section 10.03 are
intended to comply (and shall be interpreted consistently) with the restrictions
on transfer set forth in the Indiana Act.
ARTICLE XI
Additional Members
11.01 Admission to Membership. From the date of the formation of the
Company, any Person or Entity acceptable to the Members by their unanimous vote
may become a Member in this Company either by the issuance by the Company of
Membership Interests for such consideration as the Members by their unanimous
votes shall determine, or as a transferee of a Member's Membership Interest or
any portion thereof, subject to the terms and conditions of this Operating
Agreement.
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11.02 Financial Adjustments. No new Members shall be entitled to any
retroactive allocation of losses, income, or expense deductions incurred by the
Company. The Managers may, as their option, at the time a Member is admitted,
close the Company books (as though the Company's tax year had ended) or make pro
rata allocations of loss, income, and expense deductions to a new member for
that portion of the Company's tax year in which a member was admitted In
accordance with the provisions of IRC Sec. 706(d) and the Treasury Regulations
promulgated thereunder.
ARTICLE XII
Dissolution and Termination
12.01 Dissolution.
a. The Company shall be dissolved upon the occurrence of any of three
events:
i. By the unanimous written agreement of all Members; or
ii. Upon the death, retirement, resignation, expulsion,
bankruptcy, or dissolution of a Member or occurrence of any other
event which terminates the continued membership of a Member in
the Company (a `Withdrawal Event"), unless the business of the
Company is continued by the consent of all the remaining Members
within 90 days after the Withdrawal Event and there are at least
two remaining members. Each of the Members hereby agrees that
within 60 days after the occurrence of a Withdrawal Event other
than the bankruptcy of BrowseSafe (and provided that there are
then at least two remaining Members of the Company), they will
promptly consent, in writing, to continue the business of the
Company.
Each of the Members further agrees promptly to consent, in
writing, to continue the business of the Company upon a sale or
gift either of a Member's entire Economic Interest to which all
of the remaining members do not consent within 45 days after the
occurrence of such a sale or gift or upon a sale or gift of a
Transferring Member's entire Membership Interest. The consents
shall be mailed or hand delivered to the principal place of
business of the Company set forth In section 2.03 above (or to
such other address designated by the Manager) no later than 80
days after each Withdrawal Event or transfer by a Member of its
entire Economic Interest or Membership Interest. The sole remedy
for breach of a Member's obligation to consent to continue the
business of the Company under this section shall be money damages
(and not specific performance).
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b. Notwithstanding anything to the contrary in this Operating Agreement,
if three fourths (75%) of the Voting Members vote to dissolve the Company at a
meeting of the Company pursuant to Article VII, then all of the members shall
agree in writing to dissolve the Company as soon as possible (but in any event
not more than 10 days) thereafter.
c. As soon as possible following the occurrence of any of the events
specified in this section 12.01 effecting the dissolution of the Company, the
appropriate representative of the Company shall execute a statement of intent to
dissolve In such form as shall be prescribed by the Indiana Secretary of State
and file same with the Indiana Secretary of State's office.
d. If a Member who is an individual dies or a court of competent
jurisdiction adjudges him to be incompetent to manage the Member's person or
property, the Members executor, administrator, guardian, conservator, or other
legal representative may exercise all of the Member's rights for the purpose of
settling the Member's estate or administering his property.
e. Except as expressly permitted in this Operating Agreement, a Member
shall not voluntarily resign and take any other voluntary action that directly
causes a Withdrawal Event. Unless otherwise approved by the Voting Members, a
Member who resigns (a "Resigning Member") or whose Membership Interest is
otherwise terminated by virtue of a Withdrawal Event, regardless of whether the
Withdrawal Event was the result of a voluntary act by the Member, shall not be
entitled to receive any distributions to which the Member would have been
entitled had the Member remained a Member. Except as otherwise expressly
provided in this Operating Agreement, a Resigning Member shall become an
Economic Interest Owner. Damages for breach of this section 12.0 1(e) shall be
monetary damages only (and not specific performance), and the damages may be
offset against distributions by the Company to which the Resigning Member would
otherwise be entitled.
12.02 Effect of Filing of Dissolving Statement. Upon the filing with the
Indiana Secretary of State of a statement of intent to dissolve, the Company
shall cease to carry on its business, except insofar as may be necessary for the
winding up of its business, but its separate existence shall continue until a
certificate of dissolution has been issued by the Secretary of State or until a
decree dissolving the Company has been entered by a court of competent
jurisdiction.
12.03 Winding Up, Liquidation, and Distribution of Assets. Upon
dissolution, an accounting shall be made by the Company's independent
accountants of the accounts of the Company and the Company's assets,
liabilities, and operations, from the date of the last previous accounting until
the date of the dissolution. The Managers shall immediately proceed to wind up
the affairs of the Company. If the Company is dissolved and its affairs are to
be would up, the Managers shall:
a. Sell or otherwise liquidate all of the Company's assets as promptly
as practicable (except to the extent the Manager(s) may determine to distribute
any assets to the Members in kind);
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b. Allocate any profit or loss resulting from such sales to the Members'
and Economic Interest Owners' Capital Accountants in accordance with Article IX
above;
c. Discharge all liabilities of the Company, including liabilities to
Members and Economic Interest Owners who are creditors, to the extent otherwise
permitted by law, other than liabilities to Members and Economic Interest owners
for distributions, and establish such Reserves as may be reasonably necessary to
provide for contingencies or liabilities of the Company (for purposes of
determining the Capital Accounts of the Members and Economic Interest Owners,
the amounts of such Reserves shall be deemed to be an expense of the Company);
d. Distribute the remaining assets in the following order;
i. If any assets of the Company are to be distributed in kind,
the net fair marker value of those assets as of the date of
dissolution shall be determined by independent appraisal or by
agreement of the Members. Those assets shall be deemed to have
been sold as of the date of dissolution for their fair market
value, and the Capital Accounts of the Members and Economic
Interest Owners shall be adjusted pursuant to the provisions of
Article IX and section 8.03 of the Operating Agreement to reflect
such deemed sale.
ii. The positive balance (if any) of each Member's and Economic
Interest Owner's Capital Account (as determined after taking into
account all Capital Account adjustments for the Company's taxable
year during which the liquidation occurs) shall be distributed to
the Members, either in cash or in kind, as determined by the
Managers, with any assets distributed in kind being valued for
this purpose at their fair market value as determined pursuant to
section 12.03(b)(i). Any such distributions to the Members in
respect of their Capital Accounts shall be made in accordance
with the time requirements set forth in Treas. Reg.
l.704-1(b)(2)(ii(b)(2).
e. Notwithstanding anything to the contrary in this Operating Agreement,
upon a liquidation within the meaning of Treas. Reg. 1.704-1 (b)(2)(ii)(g), if
any Member has a Deficit Capital Account (after giving effect to all
contributions, distributions, allocations, and other Capital Account adjustments
for all taxable years, including the year during which such liquidation occurs),
the Member shall have no obligation to make any Capital Contribution, and the
negative balance of the Member's Capital Account shall not be considered a debt
owed by the Member to the Company or to any other Person for any purpose
whatsoever.
f. Upon completion of the winding up, liquidation, and distribution of
assets, the Company shall be deemed terminated.
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g. The Managers shall comply with any applicable requirements of
applicable law pertaining to the winding up of the affairs of the Company and
the final distribution of its assets.
12.04 Articles of Dissolution. When all debts, liabilities, and
obligations have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
the Members, articles of dissolution shall be executed in duplicate and verified
by the person signing the articles, which articles shall set forth the
information required by the Indiana Act. Duplicate originals of the articles of
dissolution shall be delivered to the Indiana Secretary of State.
12.05 Certificate of Dissolution. Upon the issuance of the certificate
of dissolution, the existence of the Company shall cease, except for the purpose
of suits, other proceedings, and appropriate action as provided in the Indiana
Act. The Manager shall have authority to distribute any Company property
discovered after dissolution, convey real estate, and take such other action as
may be necessary on behalf of and in the name of the Company.
12.06 Return of Contribution Nonrecourse to Other Members. Except as
provided by law or as expressly provided in this Operating Agreement, upon
dissolution, each Member shall look solely to the assets of the Company for the
return of its Capital Contributions. If the Company property remaining after the
payment or discharge of the debts and liabilities of the Company is insufficient
to return the cash contribution of one or more Members, the Members shall have
no recourse against any other Member.
ARTICLE XIII
Miscellaneous Provisions
13.01 Notices. Any notice, demand, or communications required or
permitted to be given by any provision of this Operating Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
personally to the party or so an executive officer of the party to whom the same
is directed or, if sent by registered or certified mail, postage and charges
prepaid, addressed to the Member's and/or Company's address, as appropriate,
which is set forth in this Operating Agreement. Except as otherwise provided in
this Operating Agreement, any such notice shall be deemed to be given three
business days after the date on which the same was deposited in a regularly
maintained receptacle for the deposit of United States mail, addressed and sent
as aforesaid.
13.02 Books of Accounts and Records. Proper and complete records and
books of account shall be kept or shall be caused to be kept by the Managers in
which shall be entered fully and accurately all transactions and other matters
relating so the Company's business in the detail and completeness customary and
usual for businesses of the type engaged in by the Company. The books and
records shall be maintained as provided in section 9.09 above. The books and
records shall at all times be maintained at the principal executive office of
the Company and
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shall be open to the reasonable inspection and examination of the Members,
Economic Interest Owners, or their duly authorized representatives during
reasonable business hours.
13.03 Application of Indiana Law. This Operating Agreement, and the
application of Interpretation hereof, shall be governed exclusively by its terms
and by the laws of the State of Indiana, and specifically the Indiana Act.
13.04 Waiver of Action for Participation. Each Member and Economic
Interest Owner irrevocably waives during the term of the Company any right that
it may have to maintain any action for partition with respect to the property of
the Company.
13.05 Amendments. This Operating Agreement may not be amended except by
the unanimous written agreement of all of the Voting Members.
13.06 Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holding, designations,
powers of attorney, and other instruments necessary to comply with any laws,
rules, or regulations.
13.07 Construction. Whenever the singular number is used in this
Operating Agreement and when required by the context, the same shall include the
plural and vice versa, and the masculine gender shall include the feminine and
neuter genders and vice versa.
13.08 Headings. The headings in this Operating Agreement are for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent, or intent of this Operating Agreement or any of its
provisions.
13.09 Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, that would have
originally constituted a violation, from having the effect of an original
violation.
13.10 Right's and Remedies Cumulative. The rights and remedies provided
by this Operating Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive the right to use any or all
other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance, or otherwise.
13.11 Severability. If any provision of this Operating Agreement or its
application to any person or circumstance shall be invalid, illegal, or
unenforceable to any extent, the remainder of this Operating Agreement and its
applications shall not be affected and shall be enforceable to the fullest
extent permitted by law.
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13.12 Heirs, Successors, and Assigns. Each and all of the covenants,
terms, provisions, and agreements contained in this Operating Agreement shall be
binding upon and inure to the benefit of the parties hereto and, to the extent
permitted by this Operating Agreement, their respective heirs, legal
representatives, successors, and assigns.
13.13 Creditors. None of the provisions of thin Operating Agreement
shall be for the benefit of or enforceable by any creditors of the Company.
13.14 Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
13.15 Rule Against Perpetuities. The parties to this Operating Agreement
intend that the Rule against Perpetuities (and any similar rule of law) not
apply to any provisions of this Operating Agreement. However, notwithstanding
anything to the contrary in this Operating Agreement, If any provision in this
Operating Agreement would be invalid or unenforceable because of the Rule
against Perpetuities or any similar rule of law but for this section 13.15, the
parties to this Operating Agreement hereby agree that any future interest which
is created pursuant to said provision shall cease if it is not vested within 21
years after the death of the survivor of the group composed of Mark Smith,
Marshall Gage, Greg Urbanski, and Ted 0'Brien (all who are currently Members)
and their issue who are living on the date of this Operating Agreement and their
issue, if any, who are living on the effective date of this Operating Agreement.
13.16 Investment Representations. The parties to this Operating
Agreement agree as follows with respect to investment representation.
a. The undersigned Members and Economic Interest Owners, if any,
understand:
i. That the Membership Interests and Economic Interest evidenced
by this Operating Agreement have not been registered under the
Securities Act of 1933, 15 U.S.C. 15b et. seq., the Indiana
Securities Act or any other state securities laws (the
"Securities Acts") because the Company is issuing these
Membership Interests and Economic Interests in reliance upon the
exemptions from the registrations requirements of the Securities
Acts providing for issuance of securities not involving a public
offering;
ii. That the Company has relied upon the fact that the Membership
Interests and Economic Interests are to be held by each Member
for investment; and
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iii. That exemption from registration under the Securities Acts
would not be available if the Membership Interests and Economic
Interests were acquired by a Member with a view to distribution.
b. Accordingly, each Member and Economic Interest Owner hereby confirms
to the Company that the Member and Economic Interest Owner is acquiring the
Membership Interests and Economic Interests for the Member's and Economic
Interest Owner's own account, for investment and not a view to the resale or
distribution.
i. Each Member and Economic Interest Owner agrees not to
transfer, sell, or offer for sale any portion of the Membership
Interests or Economic Interests unless there is an effective
registration or other qualification relating thereto under the
Securities Act of 1933 and under any applicable state securities
laws or unless the holder of Membership Interests or Economic
Interests delivers to the Company an opinion of counsel,
satisfactory to the Company, that the registration or other
qualification under the Securities Act of 1933 and applicable
state securities laws is not required in connection with the
transfer, offer, or sale.
ii. Each Member and Economic Interest Owner understands that the
Company is under no obligation to register the Membership
Interests or Economic Interests or to assist the Member or
Economic Interest Owner in complying with any exemption from
registration under the Acts if the Member or Economic Interest
Owner should at a later date wish to dispose of the Membership
Interest or Economic Interest.
iii. Furthermore, each Member realizes that the Membership
Interests and Economic Interests are unlikely to qualify for
disposition under Rule 144, 17 C.F.R. 230.144 (1992), of the
Securities and Exchange Commission unless the Member is not an
"affiliate" of the Company and the Membership Interest or
Economic Interest has been beneficially owned and fully paid for
by the Member or Economic Interest Owner for at least three
years.
c. Before acquiring the Membership Interests and Economic Interests,
each Member and Economic Interest Owner has investigated the Company and its
business and has had made available to each Member and Economic Owner all
information necessary for the Member or Economic Owner to make an informed
decision to acquire the Membership Interest or Economic Interest. Each Member
and Economic Interest Owner considers itself to be a person possessing
experience and sophistication as an investor adequate for the evaluation of the
merits and risks of the Member's or Economic Interest Owner's investment in the
Membership Interest or Economic Interest.
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CERTIFICATE
The undersigned hereby agree, acknowledge, and certify that the
foregoing Operating Agreement, consisting of 30 pages, including the Attached
Exhibit A, constitutes the Operating Agreement of BrowseSafe Limited Liability
Company adopted by the Voting Members of the Company:
INITIAL MEMBERS: DATE:
---------------- -----
/s/ Mark Smith 3/26/98
- --------------------------- ---------------
/s/ J. Marshall Gage 3/26/98
- --------------------------- ---------------
/s/ Ted O'Brien 3/26/98
- --------------------------- ---------------
/s/Gregory Urbanski 3/26/98
- --------------------------- ---------------
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EXHIBIT A
Members Initial Capital Contribution
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Initial Member
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Initial Member
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Initial Member
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Initial Member
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Investor Member
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Investor Member
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Investor Member
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Investor Member
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Investor Member
We, the Voting Members, as of _________ day of _____________, 19_____, attest
that the above Investors are Members of BrowseSafe LLC, pursuant to the terms of
this Operating Agreement, and according to their Initial Contribution shown
above, and are entitled to the rights provided under the Operating Agreement.
X X
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X X
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Exhibit 3.1
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT (the "Agreement"), dated as of this _____ day of
_______________, 1999, by and among MOTIONCAST TELEVISION CORPORATION OF
AMERICA, a Nevada corporation ("MOTIONCAST"), BROWSESAFE.COM, INC., a Nevada
corporation ("BROWSESAFE"), and all of the shareholders of BROWSESAFE.
W I T N E S S E T H :
WHEREAS, MOTIONCAST desires to acquire BROWSESAFE as a wholly-owned subsidiary;
and
WHEREAS, the BROWSESAFE shareholders have agreed to exchange all of their
BROWSESAFE shares solely for restricted shares of MOTIONCAST common stock; and
WHEREAS, the Boards of Directors of MOTIONCAST and BROWSESAFE have approved and
adopted this Agreement as a "plan of reorganization" within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
provisions and conditions contained herein, and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties hereto agree that MOTIONCAST shall acquire all of the issued and
outstanding capital stock of BROWSESAFE in exchange solely for its voting stock
(the "Exchange") upon and subject to the following terms and conditions:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings, unless the context shall otherwise require:
(a) MOTIONCAST Common Stock shall mean the Common Stock, $.001 par
value, of MOTIONCAST, as more fully described in the Articles of
Incorporation of MOTIONCAST.
(b) BROWSESAFE Common Stock shall mean the Common Stock, $.001 par
value, of BROWSESAFE, as more fully described in the Articles of
Incorporation of BROWSESAFE.
(c) Closing shall mean the consummation of the Exchange in accordance
with the provisions hereof to be held on or before June 24, 1999
unless changed by the mutual agreement of the parties hereto.
(d) Exceptions Schedule shall mean the schedule attached hereto as
Exhibit A in the case of MOTIONCAST and Exhibit B in the case of
BROWSESAFE.
<PAGE>
ARTICLE II
EXCHANGE OF SECURITIES
On the Closing Date, all of the outstanding shares of BROWSESAFE Common Stock
shall be exchanged for 13,938,000 shares of MOTIONCAST Common Stock.
The MOTIONCAST Common Stock certificates shall bear the usual restrictive legend
pertaining to Rule 144 of the General Rules and Regulations promulgated under
the Securities Act of 1933. MOTIONCAST and the BROWSESAFE shareholders shall
execute the appropriate investment letters containing representations that the
BROWSESAFE Common Stock and the MOTIONCAST Common Stock they are acquiring,
respectively, are being acquired for investment purposes only and not with a
view to resale, distribution or liquidation. At the Closing, all transactions
shall be deemed to have been simultaneous and none shall become effective until
all have been completed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The following representations and warranties are hereby made by MOTIONCAST to
BROWSESAFE and by BROWSESAFE to MOTIONCAST.
3.01 Organization; Authorization. It is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation and has full power and authority to carry on its business
as it now is being conducted and to own the properties and assets it now
owns. It is duly qualified to do business or is in the process of
qualifying to do business as a foreign corporation and is in good
standing in every jurisdiction in which the conduct of its business or
ownership of its properties requires such qualification; and it has full
power and authority to enter into this Agreement and to carry out the
transaction contemplated herein.
3.02 No Defaults. Except as set forth in the Exceptions Schedule, it is not
in default under any material contract, lease, agreement or other
undertaking to which it is a party or by which it is bound. The
execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, or compliance with the terms and
conditions hereof will not conflict with, result in a breach of the
unwaived terms and conditions of, nor constitute a default under its
articles of incorporation or bylaws or any contract, agreement,
commitment or other undertaking to which it is a party or by which it is
bound.
3.03 Governmental Consents. Except for the requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws, no
consent or approval of, or filing or registration with, any governmental
or regulatory authority is required in connection with the performance
of the terms of this Agreement.
3.04 Title to Assets. It has good and marketable title to all of its
properties and assets, both real and personal, free and clear of all
security interests, liens, claims, equities of others and
Share Exchange Agreement - Page 2
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restrictions on the right to transfer, except as disclosed in the
Exceptions Schedule, none of which exceptions impairs in any material
respect the normal conduct of its business.
3.05 Tax Returns and Payments. Except as disclosed in the Exceptions
Schedule, all of its tax returns and reports required by law to be filed
have been duly filed, and all taxes, assessments, fees and other
governmental charges (other than those presently payable without
interest or penalty or those which are being contested in good faith by
appropriate proceedings diligently conducted and which are disclosed in
the Exceptions Schedule) upon it or upon any of its properties, assets,
interest or income which are due or are to become due have been paid or
adequately reserved against. None of its federal income tax returns is
currently under examination by the Internal Revenue Service.
3.06 No Litigation. Except as disclosed in the Exceptions Schedule:
(a) there is no action, proceeding, claim or investigation pending
or, to the best of the party's knowledge, threatened against it
or to which any of its assets or properties are subject before
any court or any governmental department, commission, board,
bureau, agency or instrumentality, business or goodwill and,
after investigation, it knows of no basis or grounds for any such
action, proceeding, claim or investigation; and
(b) there is no outstanding order, writ, injunction or decree of any
court, governmental department, commission, board, bureau, agency
or instrumentality, or any arbitration award against it.
3.07 No Adverse Changes. Since the execution of the letter of intent, it has
not engaged in any material transaction not in the ordinary course of
business, made or declared any dividends or distributions of its
capital, surplus or profits, or redeemed or issued any shares of its
Common Stock or other securities, except as noted in the Exceptions
Schedule. Other than as set forth in the Exceptions Schedule, there have
been no changes in its assets, properties, liabilities or financial
condition from those shown in the audited financial statements for its
last fiscal year or in its condition, other than changes which have not
materially affected, singly or in the aggregate, its business assets,
properties or financial condition. Other than as set forth in the
Exceptions Schedule, it has not borrowed any amounts or incurred any
liabilities other than pursuant to contracts entered into in the
ordinary course of business; discharged any lien or encumbrance or
satisfied any liabilities other than current liabilities incurred in the
ordinary course of business; mortgaged, pledged or subjected to lien or
charge or any other encumbrance any of its assets or properties except
as may be required in the ordinary course of business; sold, assigned or
transferred any of its assets except in the ordinary course of business;
waived any rights of substantial value; or loaned money to any of its
directors, officers or shareholders.
3.08 No Adverse Claims. Except as set forth in the Exceptions Schedule, none
of its officers or employees has any claim against it except for
salaries or other ordinary expenses, and it is
Share Exchange Agreement - Page 3
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not obligated to any of such persons in any way or for any amount except
for salaries, wages or ordinary expenses.
3.09 Books and Records Complete. Except as set forth in the Exceptions
Schedule, its books and records are substantially accurate and complete
and there are no material matters for which proper entry has not been
made in such books and records.
3.10 Insurance. It is adequately insured, except as disclosed in the
Exceptions Schedule, with respect to risks usually insured against by
companies owning properties similar to those owned by it. All policies
are presently in force and paid in full and will continue to be so
without interruption until the Closing Date.
3.11 No Brokerage Fees. No agent, broker, investment banker, person or firm
acting on behalf of it to the best of its knowledge, is or will be
entitled to any broker's or finder's fee or any other commission or fee,
directly or indirectly, in connection with any of the transactions
contemplated hereby.
3.12 Subsidiaries. It does not own stock or securities evidencing an
ownership interest in any corporation, business trust, firm or business
which may be considered a subsidiary, except as set forth on the
Exceptions Schedule.
3.13 Contracts. Other than as set forth in the Exceptions Schedule, it is not
a party to any material (1) labor agreements, (2) contracts of
employment, (3) contracts for the purchase, sale or lease (as lessor or
lessee) of real estate or personal property, (4) contracts for services
to be rendered to it, (5) employee insurance, hospital or medical
expense programs, or (6) pension or profit-sharing plans, retirement
plans, bonus or incentive agreements or plans, or stock purchase or
stock option plans, formal or informal.
3.14 Financial Statements. Its financial statements fairly represent its
financial condition and have been prepared in accordance with generally
accepted accounting principles. Neither MOTIONCAST nor BROWSESAFE will
have any liabilities other than as set forth on the financial statements
or on the Exceptions Schedule or, in the case of BROWSESAFE, as might be
incurred in the ordinary course of business.
3.15 Property and Equipment. The property and equipment as shown on the most
recent balance sheet are in good operating condition and in a state of
good maintenance and repair, ordinary wear and tear excepted.
3.16 Representations True. No representation or warranty contained herein,
nor any statement or certificate furnished hereunder or in connection
herewith, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading. There is no
fact known to it that materially and adversely affects its business,
prospects, or financial condition or any of its subsidiaries, that has
not been set forth in this Agreement or in the schedules, exhibits,
Share Exchange Agreement - Page 4
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certificates, or statements in writing furnished in connection with the
transactions contemplated by this Agreement. Each has disclosed to the
other all contingent liabilities and all claims affecting its business
past and pending.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MOTIONCAST
4.01 Capital Stock. MOTIONCAST represents and warrants that its authorized
capital stock consists of 25,000,000 shares of Common Stock, $.001 par
value, of which 2,000,000 shares are issued and outstanding. All of the
issued and outstanding shares of MOTIONCAST Common Stock are validly
issued, fully paid and nonassessable. MOTIONCAST has full right and
authority to issue to the BROWSESAFE shareholders, upon the terms and
conditions set forth in this Agreement, the shares specified by this
Agreement and, subject to the receipt of the consideration therefor
pursuant to the terms and conditions hereof, the shares will be duly and
validly issued as fully paid and nonassessable shares of MOTIONCAST
Common Stock. All of its currently issued and outstanding shares of
Common Stock have been issued pursuant to a duly registered public
offering or in accordance with an applicable exemption from state and
federal securities laws.
4.02 Information Furnished. MOTIONCAST represents and warrants that it has
furnished to BROWSESAFE and to the BROWSESAFE shareholders copies of all
documents used in connection with the offer and sale of its Common
Stock, used in connection with fulfilling the requirements of Rule
15c2-11 of the Securities Exchange Act of 1934, or released to the
public. Such documents do not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
contained therein not misleading. Such documents contain all of the
material and relevant information concerning the business and financial
condition of MOTIONCAST as of their respective dates.
4.03 Warrants and Convertible Securities. Except as described in Sections
4.06, 8.07 and 8.08, there are no outstanding options, warrants or other
rights to subscribe for, purchase, or receive shares of MOTIONCAST
Common Stock or any other securities convertible into MOTIONCAST Common
Stock.
4.04 Assets and Liabilities. Except as described in Sections 8.07, 8.08 and
in the Exceptions Schedule, MOTIONCAST represents and warrants that it
has no assets or liabilities except for at least $135,000 in cash.
4.05 No Contingent Liabilities. MOTIONCAST represents and warrants that it
is not subject to any contingent liabilities.
4.06 Contracts. Other than as set forth in the Exceptions Schedule,
MOTIONCAST is not a party to any contract, lease, agreement or other
undertaking. The agreement engaging Alexis Stock Transfer as
MOTIONCAST'S transfer agent shall be amended at Closing. The
Share Exchange Agreement - Page 5
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consulting agreement with Alexis Capital, Inc. and the consulting
agreement with Michael Zapara shall be terminated in exchange for
100,000 shares of MOTIONCAST stock at Closing. MOTIONCAST shall have no
further liability to Alexis Capital, Inc. or Michael Zapara upon
termination of these consulting agreements.
4.07 Active Business. Since August 31, 1998 MOTIONCAST has not engaged in the
active conduct of any operating business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BROWSESAFE AND BROWSESAFE SHAREHOLDERS
5.01 Capital Stock. The authorized capital stock of BROWSESAFE consists of
50,000,000 shares of $.001 par value Common Stock, of which 13,938,000
shares will be issued and outstanding as of the Closing Date, and
1,000,000 shares of Preferred Stock, $.01 par value, none of which are
issued or outstanding. The outstanding shares of BROWSESAFE Common Stock
are validly issued, fully paid and nonassessable. As of the Closing
Date, there will be no outstanding options, warrants or other rights to
subscribe for, purchase, or receive shares of BROWSESAFE Common Stock or
any other securities convertible into BROWSESAFE Common Stock except as
set forth on the Exceptions Schedule or in Sections 8.07 and 8.08.
5.02 Ownership of BROWSESAFE Common Stock. To the best of their knowledge,
the BROWSESAFE shareholders have good title to, and own beneficially,
free and clear of all liens, encumbrances and restrictions on transfer,
and have full right and authority to exchange, upon the terms and
conditions set forth in this Agreement, all of the outstanding shares of
BROWSESAFE Common Stock.
ARTICLE VI
INDEMNIFICATION
6.01 Indemnity Agreement of MOTIONCAST. MOTIONCAST covenants and agrees to
indemnify and save and hold harmless BROWSESAFE and the BROWSESAFE
shareholders from and against any damage, expense, liability, loss or
deficiency (including, without limitation, reasonable attorneys' fees
and other costs and expenses incident to any suit, action or proceeding)
arising out of or resulting from, and to pay BROWSESAFE or any
BROWSESAFE shareholder on demand the full amount of any and all sums
which BROWSESAFE or any BROWSESAFE shareholder may pay or become
obligated to pay on account of: (1) any inaccuracy in any representation
or breach of any warranty or covenant made by MOTIONCAST hereunder or in
any schedule delivered pursuant hereto; or (2) any failure by MOTIONCAST
duly to perform or observe any term, provision, covenant or agreement
hereunder to be performed or observed by MOTIONCAST. BROWSESAFE or any
BROWSESAFE shareholder shall give prompt notice in writing of
Share Exchange Agreement - Page 6
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any claim to which this Section 6.01 applies and afford MOTIONCAST
reasonable opportunity to pay, settle or contest such claim at its
expense.
6.02 Indemnity Agreement of BROWSESAFE. BROWSESAFE covenants and agrees to
indemnify and save and hold harmless MOTIONCAST from and against any
damage, expense, liability, loss or deficiency (including, without
limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action or proceeding) arising out of or resulting
from, and to pay MOTIONCAST on demand the full amount of any and all
sums which MOTIONCAST may pay or become obligated to pay on account of:
(1) any inaccuracy in any representation or breach of any warranty or
covenant made by BROWSESAFE; or (2) any failure by BROWSESAFE duly to
perform or observe any term, provision, covenant or agreement hereunder
to be performed or observed by BROWSESAFE. MOTIONCAST shall give
BROWSESAFE prompt notice in writing of any claim to which this Section
6.02 applies and afford BROWSESAFE reasonable opportunity to pay, settle
or contest such claim at its expense.
6.03 Remedies. In addition to any other remedies available at law or in
equity, in the event there is: 1) any material inaccuracy in any
representation or material breach of any warranty or covenant made by
MOTIONCAST hereunder or in any schedule delivered pursuant hereto; or
2) any material failure by MOTIONCAST duly to perform or observe any
term, provision, covenant or agreement hereunder to be performed or
observed by MOTIONCAST under the terms of this Agreement, the
BROWSESAFE Shareholders shall, at their option, be entitled to: 1)
receive additional shares of MOTIONCAST stock (thereby further diluting
the MOTIONCAST Shareholders presently holding the 2,000,000 issued and
outstanding shares) to place the BROWSESAFE Shareholders in the same
economic position as they would have been in had the breach not
occurred or 2) rescission of the share exchange transaction. The
BROWSESAFE Shareholders shall be entitled to retain a security interest
in all of BROWSESAFE's assets in order to secure their rights under
this section.
ARTICLE VII
COVENANTS
7.01 Examination of Documents. Prior to the Closing, all original documents
and other information relating to its affairs will be made available,
and copies of any such documents will be furnished, upon request, to the
other party and its counsel. Included among the documents to be made
available are all articles of incorporation and amendments, bylaws and
amendments, minutes of all incorporators, directors and shareholders
meetings or consent minutes with respect to actions taken by
incorporators, directors or shareholders, all financial statements and
all material contracts, leases and agreements to which it is a party or
an intended beneficiary.
Share Exchange Agreement - Page 7
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7.02 Preservation of Business; Access to Documents. From and after the date
of this Agreement and until the Closing Date, MOTIONCAST and BROWSESAFE
covenant and agree with each other that each corporation shall:
(a) use its best efforts to preserve its business organization,
goodwill and business relationships intact and to retain the
services of its officers and key employees;
(b) provided the same does not violate any statute, order, decree,
rule, regulation or contract, give each other and its authorized
agents full access, during normal business hours, upon reasonable
notice, to all of its assets, properties, books, records,
agreements and commitments and furnish such representatives
during such period with all such information concerning its
affairs as the other may reasonably request; provided, however,
that each party and its authorized agents shall hold in
confidence all documents and information thus acquired or learned
concerning the parties and, if the transactions contemplated by
this Agreement are not consummated, all such documents shall
immediately thereafter be returned to the appropriate parties;
(c) take all necessary corporate and any other action, and use its
best effort to obtain all consents, approvals and agreements
required to carry out the transactions contemplated in this
Agreement and to satisfy, or cause to be satisfied, the
conditions specified herein; and
(d) maintain in full force and effect insurance policies providing
coverages and amount of coverage as now provided.
7.03 Business in Ordinary Course. MOTIONCAST, BROWSESAFE and the BROWSESAFE
shareholders further covenant and agree with each other that each of the
representations and warranties made by it as set forth in Articles III,
IV, and V will be true and correct on the Closing Date. From the date of
this Agreement until the Closing Date, neither MOTIONCAST or BROWSESAFE
shall do any of the following except with the prior written consent of
the other party:
(a) effect any general salary increase except in line with its past
practices;
(b) enter into any written employment agreement;
(c) increase the base compensation or other benefits of any employee
by more than ten percent;
(d) make any contribution to any trust or plan for the benefit of
employees not required by the present terms thereof or in
accordance with past practices;
(e) make any change in any employee benefit plan which would
materially increase the cost thereof or adopt any new employee
benefit plan;
Share Exchange Agreement - Page 8
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(f) issue to commit to issue any capital stock or other ownership
interests;
(g) grant or commit to grant any options, warrants or other rights to
subscribe for or purchase or otherwise acquire any shares of its
capital stock or other ownership interest or issue or commit to
issue any securities convertible into or exchangeable for shares
of its Common Stock or other ownership interests;
(h) declare, set aside or pay any dividend or distribution with
respect to its Common Stock or other ownership interests;
(i) directly or indirectly redeem, purchase or otherwise acquire or
commit to acquire any of its Common Stock or other ownership
interest or directly or indirectly terminate or reduce or commit
to terminate or reduce any bank line of credit or the
availability of any funds under any loan or financing agreement;
(j) effect a split or reclassification of any capital stock or
recapitalization;
(k) change its articles of incorporation, bylaws or other governing
instruments;
(l) borrow or agree to borrow any funds except pursuant to existing
bank lines of credit or other existing loan agreements or
financing arrangements; or
(m) waive or commit to waive any right of substantial value.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE EXCHANGE
The obligations of the parties under this Agreement are subject to the
satisfaction of the following express conditions precedent at or before the
Closing:
8.01 Approvals. This Agreement and the transaction contemplated hereby shall
have received the requisite approvals and authorizations of the Board of
Directors and shareholders of MOTIONCAST and of BROWSESAFE.
8.02 Opinions of Counsel. Each corporation shall have caused its counsel to
prepare and deliver to the other an opinion, dated as of the Closing
Date, in form and substance satisfactory to the other, to the effect
that:
(a) It has been duly incorporated and is a validly existing
corporation in good standing under the laws of its state of
incorporation with full corporate power and authority to own and
operate its properties and to carry on its business as presently
being conducted.
Share Exchange Agreement - Page 9
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(b) It is duly qualified and licensed to transact business in each
state or other jurisdiction in which it transacts business and by
each governmental authority by which it is required to be
licensed, except for jurisdictions in which failure to qualify
would not materially and adversely affect its business,
operations or financial condition.
(c) Its capitalization is as set forth herein.
(d) Neither the execution and delivery by it of this Agreement nor
compliance with the terms of this Agreement will conflict with or
result in a material breach of any of the terms, conditions or
provisions of, or constitute a material default under, its
articles of incorporation or bylaws or any material note,
indenture, mortgage, deed of trust or other material agreement or
instrument actually known to such counsel to which it is a party
or by which it or any of its property is bound.
(e) This Agreement has been duly authorized and executed by it, and
all corporate action by it required to authorize the Exchange has
been taken.
(f) Such counsel knows of no material litigation, proceeding or
governmental investigation pending or threatened against or
relating to its properties or business, except as disclosed in
writing.
(g) Such counsel knows of no corporate liabilities other than in the
case of BROWSESAFE except as might be incurred in the ordinary
course of business.
(h) Such counsel knows of no outstanding order, writ, injunction or
decree of any court, governmental department, commission, board,
bureau, agency or instrumentality, or any arbitration award
against corporation.
(i) Such counsel knows of no contract, leases, agreements or other
undertakings of the corporation other than in the case of
BROWSESAFE except as might be incurred in the ordinary course of
business.
8.03 Financial Information. MOTIONCAST shall have delivered to BROWSESAFE
audited financial statements covering the last fiscal year and unaudited
interim financial statements covering the period through the most
recently completed fiscal quarter. BROWSESAFE shall have delivered to
MOTIONCAST, such audited and unaudited financial statements as may be
required for the contemplated preparation and filing of an updated Rule
15c2-11 statement reflecting the consummation of the Exchange. The
audited financial statements shall have been prepared by independent
public accountants within the meaning of the Securities Act of 1933 and
the published rules and regulations thereunder. The financial statements
and supporting schedules of the corporation examined by such independent
public accountants at all dates and for all periods referred to in their
opinions shall have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. Each corporation
shall disclose to the other in the Other Information Schedule (1) any
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changes in the capital stock or other securities of the corporation, or
any payment or declaration of any dividend or other distribution in
respect thereof or exchange therefor, or any change in the debt of the
corporation; (2) any decreases in net current assets or net assets; (3)
any decreases in the cash balance; and (4) any increases in the total
liabilities since the date of the unaudited interim financial
statements.
8.04 Certificate of President and Secretary. BROWSESAFE and MOTIONCAST shall
have furnished to the other a certificate of the president or
vice-president and the secretary of the respective company, dated as of
the Closing Date, to the effect that the representations and warranties
of the respective company in this Agreement are true and correct at and
as of the Closing, that no error, misstatement or omission has been
discovered or is known with respect to such representations and
warranties, and that the respective company has complied with all the
agreements and has satisfied all the covenants on its part to be
performed at or prior to the Closing.
8.05 No Adverse Change in MOTIONCAST or BROWSESAFE. Between the date of
execution of this Agreement and the Closing Date, MOTIONCAST and
BROWSESAFE
(a) except in the ordinary course of its business, shall not have
incurred any liabilities or obligations (direct or contingent) or
disposed of any of its assets, or entered into any material
transaction or suffered or experienced any materially adverse
change in its operations or condition, financial or otherwise;
(b) shall not have increased its issued and outstanding shares of
Common Stock or any other securities; and
(c) shall not have experienced any changes in key management
positions.
8.06 Proceedings Complete. All proceedings of MOTIONCAST and BROWSESAFE in
connection with the authorization, execution and delivery of this
Agreement and the transactions contemplated hereby shall be satisfactory
in form and substance to the other and its counsel, and each corporation
or its counsel shall have received copies of all documents it reasonably
shall request in connection with the transactions contemplated hereby
and of all corporate proceedings of the other in connection therewith.
8.07 Purchase of MOTIONCAST Common Stock. Within 10 business days of Closing,
shareholders of BROWSESAFE other than Browsesafe, LLC, shall purchase
83,162 shares of MOTIONCAST Common Stock for a total of $300,000.
Notwithstanding anything in this Agreement to the contrary, Browsesafe,
LLC shall have no liability for the failure of the other shareholders of
BROWSESAFE to contribute the $300,000 described above or to contribute
any other amounts provided for in this Agreement.
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8.08 MOTIONCAST Assets and Liabilities. At the Closing, MOTIONCAST shall have
no assets or liabilities except for:
$135,000 in cash in the Dieterich & Associates Trust Account;
$ 50,000 in promissory notes for sums already advanced to
BROWSESAFE (to be cancelled for shares at $3.60/share);
$ 27,380 in sums already advanced for shares acquisition in
BROWSESAFE;
$ 82,620 in cash to be wired in at Closing, to be cancelled by
shares at $3.60/share in newly-issued common stock;
$300,000 in subscriptions (see 8.07 above).
Cancellation of the indebtedness of $50,000 and consideration for the
$82,620 to be delivered at Closing will amount to a total of 36,838
newly-issued shares of restricted common stock.
8.09 Delivery of MOTIONCAST Books and Records. At the Closing, MOTIONCAST
shall deliver to BROWSESAFE copies of any books and records of
MOTIONCAST, as BROWSESAFE may reasonably request.
8.10 Satisfactory Completion of MOTIONCAST Due Diligence. At the Closing,
MOTIONCAST shall have been satisfied with its due diligence review of
BROWSESAFE.
8.11 Satisfactory Completion of BROWSESAFE Due Diligence. At the Closing,
BROWSESAFE shall have been satisfied with its due diligence review of
MOTIONCAST.
8.12 Satisfactory Review of UCC and Judgment Searches. Prior to the Closing,
BROWSESAFE shall have received and reviewed the UCC and Judgment
searches ordered by it and the results of such searches shall be
satisfactory to BROWSESAFE.
8.13 Satisfactory Review of Agreements between MOTIONCAST and Alexis Stock
Transfer, Alexis Capital, Inc. and Michael Zapara. Prior to the Closing,
BROWSESAFE shall have received and reviewed the Agreements between
MOTIONCAST and Alexis Stock Transfer, Alexis Capital, inc. and Michael
Zapara. The results of the review shall be satisfactory to BROWSESAFE.
8.14 Cash Receipts. At the Closing, the shareholders of BROWSESAFE other than
Browsesafe, LLC shall wire-transfer $82,620 to MOTIONCAST'S bank account
at Peoples Bank & Trust Company, Indianapolis, Indiana, Account No.
97133043. At the Closing, MOTIONCAST shall cause Dieterich & Associates
to wire transfer $135,000 to MOTIONCAST'S bank account at Peoples Bank &
Trust Company, Indianapolis, Indiana, Account No. 97133043.
Share Exchange Agreement - Page 12
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ARTICLE IX
TERMINATION, FURTHER ASSURANCES AND MISCELLANEOUS
9.01 Termination and Postponement. This Agreement and the Exchange
contemplated hereby may be terminated, and the transactions provided for
herein abandoned, at any time prior to but not after the Closing, as
follows:
(a) by mutual consent of the MOTIONCAST Board of Directors, the
BROWSESAFE shareholders and the BROWSESAFE Board of Directors;
(b) by the MOTIONCAST Board of Directors, the BROWSESAFE shareholders
or the BROWSESAFE Board of Directors if any of the conditions set
forth in Article VIII shall not have been met by the Closing
Date; or
(c) by the MOTIONCAST Board of Directors, the BROWSESAFE
shareholders or the BROWSESAFE Board of Directors if the
Exchange has not been effected by June 24, 1999, which date
shall be extended unless otherwise requested by the
MOTIONCAST Board of Directors, the BROWSESAFE shareholders and
the BROWSESAFE Board of Directors. In the event of the
termination and abandonment of this Agreement and the Exchange
contemplated hereby, this Agreement shall become void and of
no effect, without any liability on the part of any party or
its directors, officers or shareholders.
9.02 Waiver. Prior to the Closing Date, any condition specified in Article
VIII hereinabove and any other term or provision of the Agreement, the
waiver of which will not, in the reasonable opinion of the MOTIONCAST
Board of Directors or the BROWSESAFE shareholders, have a materially
adverse effect on the shareholders of MOTIONCAST or the BROWSESAFE
shareholders, respectively, may be waived by such parties if it or they
are entitled to the benefits thereof. Any such permitted waiver shall be
evidenced by a certificate executed on behalf of the electing party by
its authorized agent.
9.03 Appointment of Directors. At the Closing, all of MOTIONCAST's present
officers and all of the directors except for Keith Balderson shall
resign, and Mark W. Smith, J. Marshall Gage, Gregory Urbanski nd Ted
O'Brien shall be appointed to MOTIONCAST's Board of Directors.
9.04 Survival. All agreements, representations and warranties made hereunder
or in connection with the transactions contemplated hereby shall survive
the Closing and remain effective in accordance with the terms hereof
regardless of any investigation at any time made by or on behalf of
MOTIONCAST or BROWSESAFE.
9.05 Expenses. MOTIONCAST and BROWSESAFE shall each bear their respective
costs and expenses incurred prior to Closing, including legal,
accounting and other expenses, in
Share Exchange Agreement - Page 13
<PAGE>
connection with the proposed reorganization. The preparation of this
document shall be an expense of MOTIONCAST.
9.06 Assignment. This Agreement may not be assigned nor any of the
performances hereunder delegated by operation of law or otherwise by any
party hereto, and any purported assignment or delegation shall be void.
9.07 Headings. The article and section headings of this Agreement are
inserted for convenience of reference only and do not constitute a part
of this Agreement.
9.08 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors,
legal representatives, assigns and transferors.
9.09 Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof. There are no
representations, warranties, conditions or other obligations except as
herein specifically provided. Any waiver, amendment or modification
hereof must be in writing. A waiver in one instance shall not be deemed
to be a continuing waiver or waiver in any other instance.
9.10 Change of Fiscal Year. After Closing, MOTIONCAST shall change its fiscal
year end to such year end as may be approved by the new MOTIONCAST Board
of Directors.
9.11 Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Nevada.
9.12 Notices. All notices, requests, instructions or other documents
("Notices") to be given hereunder shall be deemed given if in writing,
sent by certified mail addressed as follows:
Share Exchange Agreement - Page 14
<PAGE>
To MOTIONCAST:
Michael Zapara, President
Motioncast Television Corporation
of America
11300 West Olympic
Suite 800
Los Angeles, CA 90064
To BROWSESAFE: with a copy to:
Mark W. Smith, President Fay M. Matsukage, Esq.
BrowseSafe.com, Inc. Dill Dill Carr Stonbraker &
335 West 9th Street, Suite 100 Hutchings, P.C.
Indianapolis, Indiana 46202 455 Sherman Street, Suite 300
Denver, Colorado 80203
Robert J. Milford, Esq.
Lowe Gray Steele & Darko, LLP
Bank One Tower
111 Monument Circle, Suite 4600
Indianapolis, Indiana 46204-5146
To the BROWSESAFE shareholders: with a copy to:
Mark W. Smith, President Fay M. Matsukage, Esq.
BrowseSafe.com, Inc. Dill Dill Carr Stonbraker &
335 West 9th Street, Suite 100 Hutchings, P.C.
Indianapolis, Indiana 46202 455 Sherman Street, Suite 300
Denver, Colorado 80203
Robert J. Milford, Esq.
Lowe Gray Steele & Darko, LLP
Bank One Tower
111 Monument Circle, Suite 4600
Indianapolis, Indiana 46204-5146
All notices shall be deemed delivered two days after mailing, if mailed
in accordance herewith. Any party may change its/his address for initial
Notices by giving notice of such change in accordance herewith.
9.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the ame instrument. This
Agreement may be deemed executed upon receipt of a facsimile copy
bearing signatures of the parties, provided that a complete document
bearing original signatures is assembled within five business days of
such execution.
Share Exchange Agreement - Page 15
<PAGE>
9.14 Name Change. The signatories to this Agreement approve of an amendment
to the Articles of Incorporation changing the name of MOTIONCAST to
"Browsesafe.com, Inc." The filing of the Amended Articles shall be done
at the time directed by the new MOTIONCAST Board of Directors.
9.15 Effective Date. The Effective date of the Closing shall be June 24,
1999.
Share Exchange Agreement - Page 16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
- ------------------------------------ ----------------------------------
MOTIONCAST BROWSESAFE
Motioncast Television Corporation of BrowseSafe.com, Inc.
America
By: By: /s/ Mark W. Smith
--------------------------------- -------------------------------
Michael Zapara, President Mark W. Smith, President
Share Exchange Agreement - Page 17
<PAGE>
- ------------------------------------ ----------------------------------
BROWSESAFE Shareholders
Browsesafe, LLC Albury Capital Corp.
By: /s/ Mark W. Smith By: /s/ illegible
--------------------------------- -------------------------------
Minati Financial, Inc. Eivissa Capital Corp.
By: /s/ Moneca Yardley By: /s/ J. Howe
--------------------------------- -------------------------------
Torquay Holdings, Ltd. Hemisphere & Associates, Ltd.
By: /s/ illegible By: /s/ illegible
--------------------------------- -------------------------------
Vista Financial Corp.
Barisal Capital Corporation
By: /s/ illegible
--------------------------------- By: /s/ Trudy Rogers
-------------------------------
Chariot Group, Ltd.
El Coyote Capital Corp.
By: /s/ Carol Clark By: /s/ illegible
--------------------------------- -------------------------------
Jupiter Financial Services, Inc. HomePride Entertainment Inc.
By: /s/ illegible By: /s/ illegible
--------------------------------- -------------------------------
Kyline Investment Corp. Sterling Overseas Investments SA
By: /s/ Darlene Vaughn By: /s/ illegible
--------------------------------- -------------------------------
Fergus Capital Corporation
By: /s/ illegible
-------------------------------
Share Exchange Agreement - Page 18
<PAGE>
EXHIBIT A
MOTIONCAST EXCEPTIONS
SECTION 3.02 None
SECTION 3.04 None
SECTION 3.05 None
SECTION 3.06 None
SECTION 3.07 None
SECTION 3.08 None
SECTION 3.09 None
SECTION 3.10 None
SECTION 3.12 None
SECTION 3.13 1. Agreement with Alexis Stock Transfer as
MOTIONCAST'S transfer agent
2. Consulting Agreement with Alexis Capital, Inc.
3. Consulting Agreement with Michael Zapara.
Section 3.14 None
Section 3.15 None
Section 4.04 $3,000.00 liability to Dill & Dill
$9,800.00 liability to Hemisphere
Section 5.01 See Section 3.13 above.
MOTIONCAST
By: /s/ Michael Zapara
------------------
Michael Zapara
Share Exchange Agreement - Page 19
<PAGE>
EXHIBIT "B"
BROWSESAFE EXCEPTIONS
SECTION 3.02 None
SECTION 3.04 Browsesafe LLC contributed all of its assets to
Browsesafe.com, Inc. pursuant to the terms of an Asset
and Liability Contribution Agreement dated May ___,
1999. All required filings have not been made with the
Patent and Trademark Office.
SECTION 3.05 None
SECTION 3.06 A letter was received from Blythe & Ost dated June 15,
1999 regarding Winthrop Associates. A copy of the
letter and related information has been sent to
Christopher Dieterich.
SECTION 3.07 Browsesafe has never had an audited statement.
Browsesafe executed the Asset and Liability
Contribution Agreement described above and completed
the transaction described therein. See Section 3.06
above.
SECTION 3.08 None
SECTION 3.09 None
SECTION 3.10 None
SECTION 3.12 None
SECTION 3.13 Contracts:
----------
Contracts of employment
1. Dan Lehman - programmer
Contracts for the purchase, sale or lease (as lessor
or lessee) of real estate or personal property
1. Freedom Capital - server lease
2. Skytel Pager - pager services
Contracts for services to be rendered to it
1. Exodus - service and backbone hosting
2. Premium - contract programming
3. Card Services - credit card service
Share Exchange Agreement - Page 20
<PAGE>
Employee insurance, hospital or medical expense
programs
1. MetLife - employee disability
2. Brokers National - group dental and eyecare
Stock Purchase/Option Agreements
1. Browsesafe has agreed to issue 62,000 shares
of Motioncast stock to some of its initial investors
in exchange for the investors giving up any rights
they may have under the Investor's Rights Agreement
dated June 29, 1998.
Section 3.14 See Section 8.08 of the Agreement for a description of
certain liabilities. See Section 3.06 above.
Section 5.01 See Section 3.13 above.
BROWSESAFE
By: /s/ Mark W. Smith
------------------
Share Exchange Agreement - Page 21
Exhibit 6.1
SECURITIES TRANSFER AGENT & REGISTRAR AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of November 1998, by
and between ALEXIS STOCK TRANSFER, a corporation with offices at P. 0. Box 1405,
Rancho Mirage, California 92270 (hereinafter "Transfer Agent"), and MOTIONCAST
TELEVISION CORPORATION OF AMERICA, a Nevada corporation who's address is 675
Fairview Drive, #246, Carson City, NV 89701 (hereinafter "Company").
RECITALS
WHEREAS, Company desires to retain an independent Transfer Agent and
Registrar to maintain its stock transfer records; and
WHEREAS, Transfer Agent agrees to act as Transfer Agent and Registrar for
Company on the terms set forth in this Agreement
NOW, THEREFORE, in consideration of the mutual benefit to be derived
herefrom, the parties hereto agree as follows:
1. Appointment. The Company hereby appoints Transfer Agent as the
Transfer Agent and Registrar for the Company's common stock securities
commencing on 1st November 1998.
2. The Company's Representations. The Company represents as follows:
a. The Company is a corporation duly and validly organized
under the laws of the State of Nevada in good standing and
with all power and authority necessary to enter into this
Agreement.
b. This Agreement has been properly authorized by the
Company's Board of Directors and a copy of the resolution
authorizing the appointment of Transfer Agent accompanies
this Agreement.
c. A description of the capitalization of the Company
including the number of shares authorized, the number of
shares currently outstanding and par value of the Company's
securities is attached hereto as Exhibit "A". The Company
represents that Exhibit "A" presents a true and accurate
picture of the Company's capitalization as of the date of
this Agreement.
d. The Company represents that each outstanding share of the
Company is validly authorized and issued, fully paid, and
non-assessable, and is not issued, owned or held in
violation of any preemptive right of the shareholders. The
Company further represents that the shares have been issued
in compliance with the laws, ivies, and regulations of the
Securities
1
<PAGE>
and Exchange Commission and applicable State blue sky
regulators for those jurisdictions in which the Company's
securities have been sold.
e. The Company represents that the information provided to
Transfer Agent concerning the classification of the
Company's outstanding securities as restricted securities,
control Securities, and free trading securities, is an
accurate description of such securities and may be relied
on by Transfer Agent for purposes of the initial record
setup.
3. The Company's Agreements. The Company agrees to provide Transfer Agent with
the following information.
a. A List of Shareholders. The Company agrees to furnish a
complete and up-to-date list of shareholders, certified by
secretary of the Company, setting forth the names of each
shareholder, certificate numbers, dates of issue, number of
shares, current addresses, Social Security or Federal Tax
Identification Numbers, and other data as may be required
by the Transfer Agent.
b. List of Stop Transfer Orders. The Company agrees to furnish
to the Transfer Agent, a list of stop transfer orders in
effect against previously issued certificates, showing the
reason such stop transfer orders were placed, and
describing any certificates issued in replacement for those
reported lost, stolen, or destroyed.
c. List of Restricted Stock. The Company agrees to furnish to
Transfer Agent, a list, certified by the Secretary of the
Company, of restricted certificates containing certificate
numbers, the names of the holders, the beneficial ownership
dates, and where stock was acquired by gift or pledge, the
date of the gift or pledge.
d. Original Issuance Instructions. The Company agrees to
provide original issuance instructions, a certified copy of
the Directors' Resolution authorizing the issuance, and an
opinion of counsel regarding the legality of the issuance,
for each original issuance of the Company's securities. If
the original issuance of the shares is pursuant to a
registration statement under the Securities Act of 1933,
the Company shall also provide a copy of the registration
statement notice of declaration of effectiveness, and at
last one copy of the definitive prospectus or offering
circular used in the offering.
e. Stock Certificates. The Company agrees to furnish to
transfer agent an adequate supply of stock certificates to
maintain the Company's transfers on a current basis and on
Transfer Agent's request, to finish such additional
certificates as Transfer Agent deems necessary considering
the volume of transfers, historical consumption and pending
Company plans.
2
<PAGE>
f. Corporate Information. The Company agrees to furnish to
Transfer Agent a copy, certified by the Company's
Secretary, of the Company's Articles of Incorporation and
Bylaws including any and all amendments certified as
complete and accurate by the Company's secretary or other
appropriate officer.
g. Updated Information. The Company shall furnish to the
Transfer Agent on an ongoing basis, any changes or
amendments to the Articles of Incorporation, Bylaws or
personnel holding positions as officers, directors or key
employees. At least annually, the Company shall furnish
Transfer Agent with a "Corporate Profile" on a form which
may be supplied by Transfer Agent, which form shall include
current corporate information on the Company as of the date
it is prepared. The Company further agrees to furnish and
inform Transfer Agent of any lawsuits flied, served or
judgements entered, pending and outstanding within thirty
(30) days of it, the Company, being served.
h. Shareholder and Regulatory Communications. The Company
shall also furnish to the Transfer Agent copies of all
Securities and Exchange Commission filings, copies of all
shareholder mailings any and all information concerning
changes in filing status with the Securities and Exchange
Commission, any state regulatory authority and the National
Association of Securities Dealers, Inc.
i. Certificate of Good Standing or Equivalent. In original
form currently issued, within thirty (30) days of the
Company status with the state in which the Company is duly
and validly organized under.
j. Corporation Resolutions. The Company shall provide
corporate resolutions stating: 1. The authorization and
appointment of Transfer Agent 2. For bond of indemnity
k. Agreement to Indemnify Transfer Agent. The Company shall
furnish to Transfer Agent the completed and executed
"Agreement to Indemnify Transfer Agent".
4. Transfer Agent's Representations. The Transfer Agent represents as follows:
a. Corporate Standing. Transfer Agent is a corporation duly
and validly organized under the laws of the State of
Nevada, in good standing sod with all power and authority
necessary to enter into this Agreement Transfer Agent is
registering with the United States Securities and Exchange
Commission pursuant to the requirements of the Securities
Exchange Act of 1934, as amended.
3
<PAGE>
b. Qualifications. Transfer Agent is fully qualified to
process restricted stock transactions and will only process
such transactions with the prior approval of the Company
and/or its counsel. If the Company has no counsel, and/or
the transfer involves unusual issues under Rule 144, as
adopted under the Securities Act of 1933, as amended, or
Transfer Agent believes a legal opinion is needed, Transfer
Agent may seek an opinion from its corporate counsel. All
legal fees incurred by Transfer Agent for legal opinion(s)
or services will be paid by the Company.
5. Transfer Agent's Agreements. Transfer Agent agrees as follows:
a. Transfer of Securities. So long as the Company is current
on its account with Transfer Agent Transfer Agent agrees to
process and record transfers of the Company's securities
which are submitted in proper form and with proper
documentation.
b. Maintenance of Shareholder Records. Transfer Agent agrees
to maintain a stock ledger and a shareholder register,
together with a correspondence tile containing transfer and
other corporate correspondence concerning the Company's
transfer business.
c. Access to Records. Transfer Agent agrees to maintain
confidentiality of the Company's transfer records and to
provide authorized Company persons with access to the
Company's transfer records upon receiving twenty-four (24)
hour notice and during normal business hours. The Company's
Board of Directors shall designate person(s) authorized to
obtain access to the transfer records in writing and no
access to persons not properly authorized will be allowed.
Transfer Agent may, however, provide access to transfer
records when required by the Securities and Exchange
Commission pursuant to their regulatory authority and
pursuant to subpoenas or other court orders.
d. Delivery of Certificates. Transfer Agent agrees to deliver
stock certificates to persons entitled thereto via first
class mall unless such certificates are in negotiable form
in which case they will be delivered via registered letter
or other special delivery method. Additional charges for
special delivery other than first class mail shall be paid
promptly by the Company or the recipient.
6. Term/Termination. This Agreement shall be for two years and continue from
year to year thereafter unless terminated by either party by the giving of
written notice of such termination to the other party at least 30 days prior to
the effective date of such termination. In addition, Transfer Agent shall have
the right to terminate this Agreement upon 72 hours advance notice to the
Company in the event of a disagreement concerning the lawfulness of any
transfer, other action requested by the Company or for other causes determined
by the sole discretion of
4
<PAGE>
the Transfer Agent. The Transfer Agent shall also have the right to terminate
this Agreement for non-payment of fees due Transfer Agent and to thereupon
exercise its remedies in accordance with this Agreement. In the event of
termination, Transfer Agent agrees to deliver the Company's Transfer Agent and
Registrar records to the Company upon full payment of all balances then due,
including all termination fees. Pending delivery of records to the Company,
storage fees will be assessed by Transfer Agent commencing 30 days after the
effective date of termination and continuing thereafter.
7. Indemnification.
a. Indemnity of Transfer Agent. The Company agrees that
Transfer Agent will not be held responsible for any errors
or omissions in the stockholder and other transfer records
which may have occurred prior to the appointment of the
Transfer Agent or occur as a result of information provided
from the Company to the Transfer Agent at the time the
Transfer Agent is appointed, and the Company agrees to hold
the Transfer Agent harmless and indemnity it for any loss
or expense which it may incur as a result of such omissions
or errors.
Company agrees to indemnify and defend Transfer Agent from
any and all lawsuits arising from its relationship,
responsibilities and instructions with the Company
including but not limited to liabilities, losses, damages.
costs, charges, counsel fees, and other expenses of every
kind, nature and character, which Transfer Agent may incur
as a result of acting as the Company's Transfer Agent and
Registrar.
b. Indemnification of Company. Transfer Agent hereby agrees to
indemnify the Company from any liability it may suffer as a
result of Transfer Agent's negligence or willful misconduct
in performing the functions of Transfer Agent and Registrar
for the Company.
8. Fees Payable by the Company.
a. The Company shall pay to Transfer Agent such fees for
Transfer Agent's Services as are reflected in the then
current fee schedule of the Transfer Agent. The Company
acknowledges that certain of the fees payable to Transfer
Agent are determined on a quotation basis at the time the
Company appoints Transfer Agent and any quotation provided
to the Company for such fees shall be deemed to be the
amount included on the Company's then current fee schedule.
In addition to the fees due to Transfer Agent, the Company
shall reimburse Transfer Agent for such out-of-pocket
expenses including long distance telephone, non-routine
postage and handling charges, next day delivery charges,
copy charges, travel, legal and such other expenditures
incurred on behalf of the Company. The Fee Schedule may be
changed form time to time by the Transfer Agent upon thirty
(30) days written notice to the Company.
5
<PAGE>
b. Payment Due Date. The Company hereby agrees to the
following payment terms on each item invoiced by Transfer
Agent. All billed fees, charges and costs are due in full
ten (10) days following the date of invoice. Each account
becomes past due if not paid within thirty (30) days from
the date of invoice and each past due account will be
assessed a finance charge of 1 1/2% per month on all past
due amounts. No records will be released to the Company by
the Transfer Agent in the event of termination until all
amounts previously invoiced have been paid in frill.
9. Remedies. In the event of a breach of this Agreement by the Company, Transfer
Agent shall have the following remedies:
a. Transfer Agent may terminate this Agreement upon any
material default by the Company, including nonpayment of
amounts invoiced, and upon termination may hold the
Company's records pending payment in full of any balances
clue to Transfer Agent including termination charges.
b. In the event that the Company's account becomes past due,
Transfer Agent may convert the Company to inactive status
and assess a charge for deactivation of the Company's
status, and may assess each transaction submitted for
processing with a special handling fee in accordance with
the Company's then current fee schedule.
c. In the event the Company is unable to process transfers of
to Company's securities due to the unavailability of an
adequate supply of stock certificates, the Transfer Agent
may assess the Company with a special handling fee for each
transaction which is rejected due to lack of stock
certificates.
d. The Transfer Agent may also exercise any other remedies
available at law or in equity in the event of a breach of
this Agreement by the Company.
10. Miscellaneous Provisions.
a. Successors in Interest. This Agreement shall be binding
upon and inured to the benefit of the successors in
interest to of the parties hereto.
b. Headings. The headings herein are for convenience of
reference only and shall in no way effect the
interpretation of this Agreement, or any part hereof.
c. Attorney's Fees: Venue. In the event that this Agreement or
any provision hereof is referred to an attorney for
enforcement, the prevailing party shall be entitled to
reasonable attorney's fees and costs incurred. In the event
that suit be brought to enforce any of the provisions, the
parties agree that
6
<PAGE>
the laws of the State of California shall be applied to all
issues of fact and law raised therein, and venue shall be
in Riverside County, California.
d. Counterpart Signatures. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original and all of which when taken together shall
constitute one and the same instrument.
e. Merger. This Agreement contains the complete and final
Agreement of the parties hereto and is intended as an
exclusive statement of their intent, incorporates and
supersedes all prior and contemporaneous negotiations and
agreements, and it may not be supplemented or modified by
evidence either oral or written, of any such matters or by
course of dealing, but only upon the written agreement of
all parties hereto.
IN WITNESS WHEREOF, the parties hereby agree to and have executed this
Agreement as of the day and year first above written.
THE COMPANY
/s/
--------------------------------------------
MOTIONCAST TELEVISION CORPORATION OF AMERICA
Its President, M. Zapara
THE COMPANY
/s/
--------------------------------------------
MOTIONCAST TELEVISION CORPORATION OF AMERICA
Its Secretary, Vivienne Furlong
TRANSFER AGENT
/s/ Gina Zapara
--------------------------------------------
ALEXIS STOCK TRANSFER
Its authorized signatory
7
Exhibit 6.2
peoples bank VARIABLE RATE
& Trust Company COMMERCIAL
130 E. Market Street REVOLVING OR
Indianapolis, IN 46204 DRAW NOTE
(317) 237-8000
"LENDER"
Borrower: Browsesafe, L.L.C.
335 W. 9th Street, Ste 100
Indianapolis, IN 46202
Tel: (317) 633-6656
ID #: ###-##-####
Officer Interest Principal Funding/ Maturity Customer Loan
Initials Rate Amount/ Agreement Date Number Number
Credit Line Date
CRF Variable $200,000.00 11/09/98 11/09/99 691585
PROMISE TO PAY: For value received, Borrower promises to pay to the order of
Lender indicated above the principal amount of Two Hundred Thousand and no/100
Dollars ($200,000.00), or if less, the aggregate unpaid principal amount of all
loans or advances made by the Lender to the Borrower, plus interest on the
unpaid principal balance and those other charges permitted by applicable law and
authorized pursuant to this Note, all without relief for valuation and
appraisement laws, all at the rate and in the manner described below, until all
amounts owing under this Note are paid in full. All amounts received by Lender
shall be applied first to late payment charges, then to expenses, then to
accrued unpaid interest, and then to unpaid principal or in an other manner as
determined by Lender, in Lender's sole discretion, as permitted by law.
REVOLVING OR DRAW FEATURE: X The Note possesses a revolving feature. Upon
satisfaction of the conditions set forth in this Note, Borrower shall be
entitled to borrow up to the full principal amount of the Note and to repay and
reborrow from time to time during the term of this Note. ___ This Note possesses
a draw feature. Upon satisfaction of the conditions set forth in this Note,
Borrower shall be entitled to make one or more draws under this Note. Any
repayment may not be reborrowed. The aggregate amount of such draw shall not
exceed the full principal amount of this Note. Information with regard to any
loans or advances under this Note shall be recorded and maintained by Lender in
its internal records and such records shall be conclusive as to the information
set forth therein absent manifest error. The Lender's failure to record the date
and amount of any loan or advance shall not limit or otherwise affect the
obligations of the Borrower under this Note to repay the principal amount of the
loans or advances together with all interest accruing thereon. Lender shall not
be obligated to provide Borrower with a copy of the record on a periodic basis.
Borrower shall be entitled to inspect or obtain a copy of the record during
Lender's business hours.
CONDITIONS FOR ADVANCES: If there is no default under this Note, Borrower shall
be entitled to borrow monies under this Note (subject to the limitation
described above) under the following conditions:
INTEREST RATE: This Note has a variable rate feature. The interest rate on this
Note may change from time to time if the Index Rate identified below changes.
Interest shall be computed on the basis of 360 days and the actual number of
days per year. Interest on this Note shall be calculated and payable at a
variable rate equal to (0.000%) per annum over the Index Rate. The initial Index
Rate is currently (8.000%) percent per annum. The initial interest rate on this
Note shall be (8.000%) per annum. Any change in the interest rate resulting from
a change in the Index Rate will be effective on: The date the Index Rate
changes.
The minimum interest rate on this Note shall be (___n/a%) per annum. The maximum
interest rate on this Note shall not exceed (____n/a%) per annum, or if less, or
if a maximum rate is not indicated, the maximum interest rate Lender is
permitted to charge by law.
INDEX RATE: The Index Rate for this Note shall be: Lender's Base or Reference
Rate, which Lender may increase or decrease at any time in Lender's discretion,
is publicly available, and which may not necessarily reflect the rate Lender
charges to its other customers which may be lower. If the Index Rate is
redefined or becomes unavailable, then Lender may select another index which is
substantially similar.
DEFAULT RATE: In the event of any default under this Note, the Lender may, in
its discretion, increase the interest rate on this Note to 4% above the Index
Rate or the maximum interest rate Lender is permitted to charge by law,
whichever is less.
PAYMENT SCHEDULE: Borrower shall pay the principal and interest according to the
following schedule:
Interest only payments beginning February 9, 1999 and continuing at quarterly
time intervals thereafter. A final payment of the unpaid principal balance plus
accrued interest is due and payable on November 9, 1999.
All payments will be made to Lender at any address so designated by Lender and
in lawful currency of the United States of America.
RENEWAL: If checked, ___ this Note is a renewal of Loan Number_______________.
SECURITY: To secure the payment and performance of obligations incurred under
this Note, Borrower grants Lender a security interest in all of Borrower's
rights, title, and interest, in all monies, instruments, savings, checking and
other deposit accounts of Borrower's (excluding IRA, Keogh and trust accounts
and deposits subject to tax penalties if so assigned) that are now or in the
future in Lender's custody or control. X If checked, the obligations under this
Note are also secured by a lien on and/or security interest in the property
described in the security instruments executed in connection with this Note as
well as any other property designated as security for the Note now or in the
future.
PREPAYMENT: This Note may be prepaid in part or in full on or before its
maturity date. All prepayments will be credited as determined by Lender and as
permitted by law. If this Note is prepaid in full, there will be X No minimum
finance charge or prepayment penalty. ____ A minimum finance charge of
$________. _____ A prepayment penalty of :_____
LATE PAYMENT CHARGE: If a payment is more than 10 days late, Borrower will be
charged a late payment charge of: ____% of the unpaid late payment; X $100.00 or
5% of the unpaid late payment; whichever is ___ greater X less.
BORROWER ACKNOWLEDGES THAT BORROWER HAS READ, UNDERSTANDS AND AGREES TO THE
TERMS AND CONDITIONS OF THIS NOTE, INCLUDING THE PROVISIONS ON THE REVERSE SIDE.
BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS NOTE.
DATE: NOVEMBER 9, 1998
BORROWER: BROWSESAFE, L.L.C. BORROWER: BROWSESAFE, L.L.C.
BY: /S/ MARK W. SMITH BY: /S/ GREGORY P. URBANSKI
---------------------------- --------------------------
MARK W. SMITH, PRESIDENT GREGORY P. URBANSKI
CHIEF FINANCIAL OFFICER
<PAGE>
TERMS AND CONDITIONS
1. DEFAULT: Borrower will be in default under this Note in the event that
Borrower, any guarantor or any other third party pledging collateral to
secure this Note:
a) fails to make any payment on this Note or any other indebtedness to
Lender when due;
b) fails to perform any obligation or breaches any warranty or covenant to
Lender contained in this Note, any security instrument, or any other
present or future written agreement regarding this or any other
indebtedness of Borrower to Lender;
c) provides or causes any false or misleading signature or representation
to be provided to the Lender;
d) sells, conveys or transfers rights in any collateral securing this Note
without the written approval of Lender, destroys, loses or damages such
collateral in any material respect, or subjects such collateral to
seizure or confiscation;
e) has a garnishment, judgment, tax levy, attachment or lien entered or
served against Borrower, any guarantor, or any third party pledging
collateral to secure this Note or any of their property;
f) dies, becomes legally incompetent, is dissolved or terminated, ceases to
operate its business, becomes insolvent, makes an assignment for the
benefit of creditors, fails to pay debts as they become due, or becomes
the subject of any bankruptcy, insolvency or debtor rehabilitation
proceeding; or
g) causes Lender to deem itself insecure due to a significant decline in
the value of any real or personal property securing payment of this
Note, or Lender in good faith, believes the prospect of payment or
performance is impaired.
2. RIGHTS OF LENDER ON DEFAULT: If there is a default under this Note, Lender
will be entitled to exercise one of the following remedies without notice or
demand (except as required by law):
a) to declare the principal amount plus accrued interest under this Note
and all other present and future obligations of Borrower immediately due
and payable in full;
b) to collect the outstanding obligations of Borrower with or without
resorting to the judicial process;
c) to cease making advances under this Note or any other agreement between
Borrower and Lender;
d) to take possession of any collateral in any manner permitted by law;
e) to require Borrower to deliver and make available to Lender any
collateral at a place reasonably convenient to Borrower and Lender;
f) to sell, lease or otherwise dispose of any collateral and collect any
deficiency balance with or without resorting to legal process;
g) to set-off Borrower's obligations against any amounts due to Borrower
including, but not limited to monies, instruments and deposit accounts
maintained with Lender; and
h) to exercise all other rights available to Lender under any other written
agreement or applicable law.
Upon default in any covenant or agreement providing for the payment of taxes,
the maintenance of insurance, or otherwise relating to the collateral securing
Borrower's obligations to Lender, Lender may, in its sole discretion, advance
such sums and costs and take such other steps as Lender may deem necessary or
advisable to protect any collateral. All sums so advanced or paid by Lender
shall be payable by Borrower to Lender, and shall be part of Borrower's
obligations to Lender. Lender's rights are cumulative and may be exercised
together, separately, and in any order. Lender's remedies under this paragraph
are in addition to these available at common law, including, but not limited to,
the right of set-off.
3. DEMAND FEATURE: ___ If checked, this Note contains a demand feature.
Lender's right to demand payment at any time, and from time to time, shall
be in Lender's sole and absolute discretion, whether or not any default has
occurred.
4. FINANCIAL INFORMATION: Borrower will at all times keep proper books of
record and account in which full, true and correct entries shall be made in
accordance with generally accepted accounting principles and will deliver to
Lender, within ninety (90) days after the end of each fiscal year of
Borrower, a copy of the annual financial statements of Borrower relating to
such fiscal year, such statements to include (1) the balance sheet of
Borrower as at the end of such fiscal year and (2) the related income
statement, statement of retained earnings and statement of changes in the
financial position of Borrower for such fiscal year, prepared by such
certified public accounts as may be reasonably satisfactory to Lender.
Borrower also agrees to deliver to Lender within fifteen (15) days after
filing same, a copy of Borrower's income tax returns and also, from time to
time, such other financial information with respect to Borrower as Lender
may request. Borrower shall permit Lender's representatives to inspect
Borrower's properties and its books and records, and to make copies or
abstracts thereof.
5. MODIFICATION AND WAIVER: The modification or waiver of any of Borrower's
obligations or Lender's rights under this Note must be contained in writing
by Lender. Lender may perform any of Borrower's obligations or delay or fail
to exercise any of the rights without causing a waiver of those obligations
or rights. A waiver on one occasion will not constitute a waiver on any
other occasion. Borrower's obligations under this Note shall not be affected
if Lender amends, compromises, exchanges, fails to exercise, impairs or
releases any of the obligations belonging to any co-borrower or guarantor of
any of its rights against any co-borrower, guarantor or collateral.
6. SEVERABILITY: If any provision of this Note is invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
7. ASSIGNMENT: Borrower will not be entitled to assign any of its rights,
remedies, or obligations described in this Note without the prior written
consent of Lender which may be withheld by Lender in its sole discretion.
Lender will be entitled to assign some or all of its rights and remedies
described in this Note without notice to or the prior consent of Borrower in
any manner.
8. NOTICE: Any notice or other communication to be provided to Borrower or
Lender under this Note shall be in writing and sent to the parties at the
addresses described in this Note or such other address as the parties may
designate in writing from time to time.
9. APPLICABLE LAW: This Note shall be governed by the laws of the State of
Indiana. Unless applicable law provides otherwise, Borrower consents to the
jurisdiction and venue of any court selected by Lender in its discretion
located in such state in the event of any legal proceeding under this Note.
10. COLLECTION COSTS: To the extent permitted by law, Borrower agrees to pay
collection costs, expenses and reasonable attorneys fees and costs, incurred
by Lender in collecting any amount due or enforcing any right or remedy
under this Note whether or not suit is brought, including but not limited
to, expenses, fees, and costs incurred for collection, enforcement,
realization or collateral, construction, interpretation, and appearance in
collection, bankruptcy, insolvency, reorganization, post-judgment and
appellate proceedings.
11. CHECK PROCESSING FEE: If a check, draft, order, or like instrument for
payment is dishonored or returned to Lender for any reason, Lender will
assess a check processing fee of $22.00 plus an amount equal to the actual
charge by the depository institution returning or dishonoring the
instrument.
12. MISCELLANEOUS: This Note and the obligations incurred by Borrower are
commercial obligations to finance income-producing business or activity, and
not for personal, family or household purposes. Borrower and Lender agree
that time is of the essence. Borrower and any person who endorses this Note
waives presentment, demand for payment, notice of dishonor and protest and
further waives any right (if any) to require Lender to proceed against
anyone else before proceeding against Borrower or said person. All
references to Borrower in this Note shall include all of the parties signing
this Note, and this Note shall be binding upon the heirs, successors and
assigns of Borrower and Lender. If there is more than one Borrower, their
obligations under this Note shall be joint and several. This Note represents
the complete and integrated understanding between Borrower and Lender
regarding the terms hereof.
13. JURY TRIAL WAIVER: LENDER AND BORROWER HEREBY WAIVE ANY RIGHT TO A TRIAL BY
JURY IN A CIVIL ACTION ARISING OUT OF, OR BASED UPON, THIS NOTE OR THE
COLLATERAL SECURING THIS NOTE.
14. ADDITIONAL TERMS: LOAN PURPOSE IS WORKING CAPITAL TO SUPPORT INTRODUCTION OF
NEW SOFTWARE PRODUCTS, PENDING RECEIPT OF PAYMENTS FROM MIDDLEGATE
FINANCIAL. SECURED BY SECURITY AGREEMENT DATED 11/09/98 COVERING ALL
BUSINESS ASSETS LIMITED GUARANTY OF $50,000.00 FOR MARK W. SMITH AND LIMITED
GUARANTY OF $40,000.00 EACH FOR GREGORY P. URBANSKI, TED P. O'BRIEN AND J.
MARSHALL GAGE BILLING.
Exhibit 6.3
ASSET AND LIABILITY CONTRIBUTION AGREEMENT
------------------------------------------
This AGREEMENT, made and entered into this 19th day of May, 1999, by and
between Browsesafe, LLC, an Indiana Limited Liability Corporation
("Browsesafe"), Browsesafe.com, Inc. ("Company"), Minati Financial, Inc.,
Torquay Holdings, Ltd., Vista Financial Corp., El Coyote Capital Corp., Jupiter
Financial Services, Inc., Kyline Investment Corp., Chariot Group, Ltd.,
Sid-Barney, Inc., Sterling Overseas Investments SA, Albury Capital Corp.,
Eivissa Capital Corp., Hemisphere & Associates, Ltd., Magellan Holdings, Ltd.
(collectively "Funding Group").
W I T N E S S E T H:
WHEREAS, Company was incorporated in the State of Nevada on July 28,
1998;
WHEREAS, prior to the execution of this Agreement, Company has not
issued any stock;
WHEREAS, prior to the execution of this Agreement, Company has not
conducted any operations, received any assets or incurred any debt;
WHEREAS, since incorporation, Mark W. Smith has acted as President,
Secretary, Treasurer and Sole Director of Company;
WHEREAS, the parties desire to contribute certain assets and liabilities
to Company; and
WHEREAS, Company desires to accept said assets and assume said
liabilities.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
<PAGE>
1. Upon receipt of the consideration described herein, Company shall issue
shares of its common stock to the following entities/individuals:
Entities/Individual No. of Shares
------------------- -------------
Browsesafe 11,200,000
Minati Financial, Inc. 273,800
Torquay Holdings, Ltd. 100,000
Vista Financial Corp. 50,000
El Coyote Capital Corp. 50,000
Jupiter Financial Services, Inc. 25,000
Kyline Investment Corp. 10,000
Chariot Group, ltd. 50,000
Sid-Barney, Inc. 50,000
Sterling Overseas Investments SA 355,000
Albury Capital Corp. 355,000
Eivissa Capital Corp. 355,000
Hemisphere & Associates, Ltd. 354,467
Magellan Holdings, Ltd. 709,733
----------
13,938,000
==========
2. In consideration of the receipt of the shares described herein,
Browsesafe hereby contributes to Company all of its assets and liabilities.
These assets shall include, but not be limited to, all of its equipment,
inventory, supplies, goodwill, intellectual property, trademarks and copyright
protected software. An audited balance sheet of Browsesafe is attached as
Exhibit "A". Company hereby assumes all of Company's assets and liabilities.
3. In consideration of the receipt of the shares described herein, the
Funding Group hereby contributes to Company the sum of $27,380 USD, and agrees
to make or cause to be made the additional contributions described in Sections
4, 7 and 8.
4. It is all of the parties intent that Company be merged into Motioncast
Television Corp. of America ("PubCo") as soon as possible. Company shall use its
best efforts to negotiate a merger agreement with PubCo upon terms acceptable to
Company and its shareholders. Upon
2
<PAGE>
completion of a merger, Browsesafe shall receive 11,200,000 shares of PubCo and
the Funding Group shall receive 2,738,000 shares of PubCo. The total number of
PubCo shares outstanding (including the shares issued to Browsesafe and Funding
Group) shall be approximately 15,938,000. Upon the closing of the merger of
Company into PubCo, Funding Group shall contribute an additional $150,000 USD to
PubCo. In addition, Funding Group shall cause PubCo to have unencumbered cash in
the amount of $100,000 USD on the date of closing of the merger. On the date of
closing of the merger, Funding Group shall cause PubCo to have no other assets
and no liabilities.
5. Upon the closing of the merger, a five-person Board of Directors shall
be established for PubCo. The Funding Group shall have the right to appoint one
director and Browsesafe shall have the right to appoint the remaining four
directors. Mark W. Smith shall be appointed as President of PubCo.
6. It is the intent of all the parties that the transaction described
herein be completed pursuant to Internal Revenue Code Section 351.
7. Funding Group shall contribute $300,000 USD to PubCo on or before June
10, 1999.
8. It is all of the parties intent to pursue $5,000,000 of additional
funding for PubCo. The pursuit of this funding shall commence in June, 1999.
This funding will be obtained by selling up to 1,000,000 additional shares of
PubCo stock at a price of $5.00 per share. The sale shall be done either through
a private placement or registered offering. In the alternative, Funding Group
may purchase some or all of the 1,000,000 additional shares at a price of $5.00
per share. The Funding Group shall cause PubCo to receive at least $1,500,000
USD of proceeds from the sale of stock not later than November 30, 1999.
3
<PAGE>
9. If Funding Group does not contribute the funds described above on a
timely basis or does not cause the additional funds to be contributed as
described above on a timely basis, the Funding Group shall forfeit their
2,738,000 shares of Company (if the merger has not been completed) or PubCo (if
the merger has not been completed). Upon thirty (30) days prior notice to
Funding Group, Company or PubCo shall cancel all of such shares.
10. Upon execution of this Agreement, Browsesafe and Funding Group shall
also execute the Consent in Lieu of a Special Meeting attached as Exhibit "B".
This Consent confirms that Mark W. Smith is the sole director, President and
Secretary of the Company and that he has the authority to negotiate and execute
a Merger Agreement with PubCo on behalf of the Company.
11. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all appropriate and necessary action on the part of each party. The provisions
of this Agreement constitute valid and binding obligations of each party
enforceable in accordance with the terms and conditions hereof.
12. This Agreement and the Exhibits attached hereto represent the entire
Agreement hereof superseding all prior agreements, understandings, discussions,
negotiations and commitments of any kind. This Agreement may not be amended or
supplemented, nor may any of the rights hereunder be waived, except in writing
signed by each of the parties hereto.
13. In the event that any provision or any part of any provision of this
Agreement is held to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall not affect the legality, validity or
enforceability of any other provision or part hereof.
14. This Agreement will be binding, inure to the benefit of, and be
enforceable by all of the parties hereto as well as their respective executors,
personal representatives, administrators, successors and assigns.
4
<PAGE>
15. This Agreement shall be governed by and construed by and in accordance
with the laws of the State of Indiana.
16. If any legal action is brought for the enforcement of this Agreement,
or because of an alleged dispute, breach or default in connection with any of
the provisions of this Agreement, the successful or prevailing party shall be
entitled to recover from the other party all costs and expenses of suit,
including reasonable attorney's fees and investigatory and litigation and court
costs, in addition to any other relief to which the successful party may be
entitled.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the date and year first above written.
BROWSESAFE, LLC
By: /s/ Mark W. Smith
-------------------------------
BROWSESAFE.COM, INC.
By: /s/ Mark W. Smith
-------------------------------
"Company"
MINATI FINANCIAL, INC.
By: /s/ illegible
-------------------------------
5
<PAGE>
TORQUAY HOLDINGS, LTD.
By: /s/ illegible
-------------------------------
VISTA FINANCIAL CORP.
By: /s/ illegible
-------------------------------
EL COYOTE CAPITAL CORP.
By: /s/ illegible
-------------------------------
JUPITER FINANCIAL SERVICES, INC.
By: /s/ illegible
-------------------------------
6
<PAGE>
KYLINE INVESTMENT CORP.
By: /s/ Darlene Vaughan
-------------------------------
CHARIOT GROUP, LTD.
By:
-------------------------------
HOME PRIDE ENTERTAINMENT, INC.
By: /s/ illegible
-------------------------------
STERLING OVERSEAS INVESTMENTS SA
By: /s/ illegible
-------------------------------
7
<PAGE>
ALBURY CAPITAL CORP.
By: /s/ illegible
-------------------------------
EIVISSA CAPITAL CORP.
By: /s/ J Howe
-------------------------------
HEMISPHERE & ASSOCIATES, LTD.
By: /s/ illegible
-------------------------------
MAGELLAN HOLDINGS, LTD.
By:
-------------------------------
"Funding Group"
8
<PAGE>
2,738,000
273,800 to: Minati Financial Inc.
#1-44 Hyphe Gardens
Maxwell Christ church
Barbados
Ann: Moneys Yardley
100,000 to: Torquay Holdings Ltd.
PMB #2
Caribbean Place
Providenciales
Turk & Caicos
WI
Attn: John Zammit
50,000 to: Vista Financial Corp.
#2 Canevale New Road
Christ Church
Barbados
Attn: Anthony Leacock
50,000 to: El coyote Capital Corp.
101 Worthy Down
Maxwell Hill
Christ Church
Barbados
Attn: Carol Clark
25,000 to: Jupiter Financial Services Inc.
1001 Harriett House
Spy Street
Bridgetown Barbados
Attn: Brian Griffith
10,000 to: Kyline Investment Corp.
2500 - 1055 Dunamuir Street
Vancouver, B.C.
Attn: Darlene Vaughan
50,000 to: Chariot Group Ltd.
3216 Kirkwood Highway #244
Wilmington, Delaware 19808
Attn: Steve Levine
50,000 to: Home Pride Entertainment Inc.
101 Avalon
Green Hill
St. Michael
Barbados
Attn: Raphael Reid
355,000 to: Sterling Oversees Investments SA
P0 Box 793
Dartford, Kent
England
DA2 7ZY
Attn: Chris Bonvini
355,000 to: Albury Capital Corp
222 Lower Westbury Rd
St. Michael
Barbados
Attn: Carl Griffith
355,000 to: Eivissa Capital Corp.
Passage Gardens
Passage Road
Bridgetown
Barbados
Attn: Frederick Howe
354,467 to: Hemisphere & Associates Ltd.
2002 Worthy Down
Graeme Hall
Christ Church
Barbados
Attn: Andrew Mutiny
709,733 to: Magellan Holdings Ltd.
Care of Elco Bank
61 Grosvenor P0 Box 7521
Nassau, Bahamas
Attn: Izik Colley
<PAGE>
Exhibit A
BrowseSafe, LLC
Balance Sheet
May 18, 1999
ASSETS
Current Assets
Regular Checking Account $ 1,865.84
Savings Account 295.14
Petty Cash 100.00
Regular Receivables 57.00
Start-Up Costs 165,373.39
Start-Up Costs Accum Amort <5,512.45>
Start-Up Costs Organization 23,172.80
Start-Up Costs-Organ Amort <772.43>
Prepaid Expenses 1,459.79
------------
Total Current Assets 186,039.08
Property and Equipment
Furniture & Fixtures 21,690.19
Accum Depre - Furn & Rix <515.55>
Co Name & Logo Design 108,620.00
Accum Depre - Co Name & Logo <3,620.67>
Proof of Prin - Kirkbride 9,400.00
Amort-Proof of Prin Kirkbride <313.33>
PlanetGood Programs 300,000.00
PlanetGood Programs Contra <300,000.00>
-------------
Total Property and Equipment 135,260.64
Other Assets
Total Other Assets 0.00
Total Assets $ 321,299.72
=============
<PAGE>
BrowseSafe, LLC
Balance Sheet
May 18, 1999
LIABILITIES AND CAPITAL
Current Liabilities
Notes Payables - B B Kirkbride $ 44,500.00
Notes Payable - Peoples Bank 194,000.00
Accounts Payable - MicroArts 111,636.85
Accounts Payable - Text 100 28,525.45
Accounts Payable - Kirkbride 63,221.02
General Payable Acct 73,332.99
-------------
Total Current Liabilities 515,216.31
Long-Term Liabilities
Total Long-Term Liabilities 0.00
-------------
Total Liabilities $ 515,216.31
Capital
Other Investors 155,000.00
Retained Earnings <285,808.89>
Equity-Mark W. Smith 14,000.00
Equity-Ted P. O'Brien 7,000.00
Equity-Gregory P. Urbanski 7,000.00
Equity-J. Marshall Gage 7,000.00
Additional Paid in Capital 50,000.00
Net Income <148,107.70>
--------------
Total Capital <193,916.59>
Total Liabilities & Capital $ 321,299.72
=============
<PAGE>
Exhibit B
ACTION BY UNANIMOUS CONSENT IN WRITING
IN LIEU OF A SPECIAL MEETING
BY THE SOLE DIRECTOR
OF
BROWSESAFE.COM, INC.
DATED AS OF MAY 18,1999
The undersigned, being the Sole Director of BrowseSafe.com, Inc. a
Nevada corporation (the "Corporation'), by unanimous consent in writing
pursuant to the authority contained in the corporate law of the State of
Nevada and without the formality of convening a meeting, does hereby consent
to the following actions of the Corporation, to be effective as of May 18,
1999:
WHEREAS, it was contemplated in the Action by Unanimous Consent in
Writing in Lieu of an Organizational Meeting dated July 28, 1998 that
the Corporation would acquire Browsesafe, LLC, an Indiana limited
liability corporation ("Browsesafe"); and
WHEREAS, this Corporation authorized a private offering of up to
3,550,000 shares of Common Stock by means of a written consent to
action dated July 28, 1998; and
WHEREAS, the acquisition of Browsesafe has not occurred; and
WHEREAS, the private offering of shares did not occur; and
WHEREAS, this Corporation authorized the appointment of American
Securities Transfer & Trust, Inc. as transfer agent and registrar in a
Consent in Writing dated July 28, 1998; and
WHEREAS, such appointment did not occur; and
WHEREAS, this Corporation authorized the opening of a bank account at
Colorado Business Bank in Denver, Colorado; and
WHEREAS, such bank account was never opened; and
WHEREAS, the Corporation still desires to acquire Browsesafe;
Consent to Action in Lieu of Special Meeting
the sole Director of BrowseSafe.com, Inc.
dated May 18, 1999
Page 1
<PAGE>
NOW, THEREFORE, be it:
RESOLVED, that the Corporation hereby rescinds the previous
resolutions concerning a private offering of up to 3,550,000 shares of
Common Stock, the appointment of American Securities Transfer & Trust,
Inc., and the opening of a bank account at Colorado Business Bank in
Denver, Colorado; and it is further
RESOLVED, that the Corporation issue 11,200,000 shares of Common Stock
to Browsesafe in exchange for its assets and liabilities pursuant to
the terms of an Asset and Liability Contribution Agreement, a copy of
which is attached hereto as Exhibit A; and it is further
RESOLVED, that the form, terms, and provisions of the Asset and
Liability Contribution Agreement are hereby approved; and it is
further
RESOLVED, that Mark W. Smith, as the sole officer of the Corporation
is hereby authorized and directed to execute the Asset and Liability
Contribution Agreement in the name and on behalf of the Corporation;
and it is further
RESOLVED, upon receipt of the assets and liabilities of Browsesafe,
the shares of Common Stock shall be fully paid and nonassessable
shares of Common Stock, and that the officer of the Corporation is
hereby authorized to issue and deliver certificates representing such
names and denominations as may be designated by such officer of the
Corporation and to deliver such certificates as may be directed by any
such officer; and it is further
RESOLVED, that as none of the shares will be registered under the
Securities Act of 1933, as amended (the "act"), that any and all
certificates representing the shares shall bear a conspicuous legend
regarding the restricted nature of the securities and Rule 144, which
shall be substantially as follows:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act"). The
shares may not be offered for sale, sold, or otherwise
transferred except pursuant to an effective registration
statement under the Act, the availability of which is to be
established to the satisfaction of the Company."
RESOLVED FURTHER, that the Corporation offer and sell, pursuant to
Sections 3(b) and 4(2) of the Securities Act of 1933, as amended, and
Rule 504 of Regulation D promulgated thereunder, up to 2,738,000
shares of the Corporation's Common
Consent to Action in Lieu of Special Meeting by
the sole Director of BrowseSafe.com, Inc.
dated May 15, 1999
Page 2
<PAGE>
Stock (the "Shares") at a price of $0.01 per share, or an aggregate of
$27,380, to the persons set forth on Schedule A attached hereto and
made a part hereof; and it is further
RESOLVED, that as none of the shares will be registered under the
Securities Act of 1933, as amended (the "Act"), that any and all
certificates representing the shares shall bear a conspicuous legend
regarding the restricted nature of the securities and Rule 144, which
shall be substantially as follows:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act"). The
shares may not be offered for sale, sold, or otherwise
transferred except pursuant to an effective registration
statement under the Act, the availability of which is to be
established to the satisfaction of the Company."
RESOLVED FURTHER, that when such Shares are so issued and sold, the
Shares of Common Stock shall be fully paid and nonassessable shares of
Common Stock, and that the President of the Corporation is hereby
authorized to issue and deliver certificates representing such shares
and to make an original issue of the certificates for such shares in
such names and denominations as may be designated by the President of
the Corporation and to deliver such certificates as may be directed by
such officer; and it is further
RESOLVED, that it is desirable and in the best interests of the
Corporation that its Shares be qualified or registered for sale in
various states; that the President of this Corporation is hereby
authorized to determine the states in which appropriate action shall
be taken to qualify or register for sale all or such part of the
Shares of the Corporation as said officer may deem advisable; that
said officer is hereby authorized to perform on behalf of the
Corporation any and all such acts as he may deem necessary or
advisable in order to comply with the applicable laws of any such
states, and in connection therewith to execute and file all requisite
papers and documents, including, but not limited to, applications,
reports, surety bonds, irrevocable consents and appointments of
attorneys for service of process; and the execution by such officer of
any such paper or document or the doing by him of any action in
connection with the foregoing mailers shall conclusively establish his
authority therefor from this Corporation and the approval and
ratification by this Corporation of the papers and documents so
executed and the action so taken; and it is further
RESOLVED, that the appropriate officers of the Corporation arc hereby
authorized and directed to take such further steps and incur such
expenditures as may be reasonably necessary in order to complete the
proposed private offering, including,
Consent to Action in Lieu of Special Meeting by
the sole Director of BrowseSafe.com, Inc.
dated May 18,1999
Page 3
<PAGE>
but without limiting the generality of the foregoing, expenditures for
legal fees, accounting fees, printing costs, and travel expenses
necessary and incident to the completion of the private offering; and
it is further
RESOLVED, that the officers of the Corporation, or any one or more of
them, be and they hereby are authorized and empowered on behalf of the
Corporation, to incur such costs and expenses, to do all acts,
transactions and things, and to execute and deliver any and all
agreements, documents, certificates and other papers which they deem
necessary or appropriate in connection with the foregoing resolutions;
and it is further RESOLVED, that as the Asset and Liability
Contribution Agreement contemplates a merger or other business
combination with a public company, Mark W. Smith, as the sole officer
of the Corporation, is hereby authorized and directed to negotiate the
terms of a merger or other business combination with the public
company such that the former members of Browsesafe shall receive
11,200,000 shares of common stock of the public company and the
persons listed on Schedule A hereto shall receive 2,738,000 shares of
common stock, with the public company having a total of 15,938,000
shares issued and outstanding after taking into account such
issuances; and it is further
RESOLVED, that the actions taken by Mark W. Smith in opening a bank
account for the Corporation at People Savings and Loan in
Indianapolis, Indiana, are hereby ratified and approved; and ft is
further
RESOLVED, that this Consent in Writing shall be effective on the date
set forth in the heading hereof.
/s/ Mark W. Smith
-----------------------
Mark W. Smith
BEING THE SOLE DIRECTOR
Consent to Action in Lieu of Special Meeting
the sole Director of BrowseSafe.com, Inc.
dated May 15. 1999
Page 4
Exhibit 6.4
AGREEMENT
---------
This Agreement made and entered into this 9th day of June, 1999 by
and between Browsesafe, LLC, an Indiana Limited Liability Corporation
("Browsesafe"), Browsesafe.com, Inc. ("Company"), Barisal Capital Corporation
("Barisal") and Fergus Capital Corporation ("Fergus").
WITNESSETH:
WHEREAS, Browsesafe, Company and other investors ("Funding Group")
executed an Asset & Liability Contribution Agreement on or about May 19th, 1999
("Contribution Agreement"), a copy of which is attached hereto as Exhibit "A";
WHEREAS, Magellan Holdings, Ltd. contributed certain funds to Company
pursuant to the terms of the Contribution Agreement in exchange for 709,733
shares of Company's common stock;
WHEREAS, Magellen Holdings, Ltd. has elected to have all of their
shares of Company redeemed;
WHEREAS, Company has agreed to redeem said shares;
WHEREAS, Barisal desires to become a shareholder of Company pursuant
to the terms of the Contribution Agreement; and
WHEREAS, Fergus desires to become a shareholder of Company pursuant to
the terms of the Contribution Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Upon execution of this Agreement, Company shall issue shares of its
common stock to the following entities:
Entity Number of Shares
------ ----------------
Barisal 354,733
Fergus 355,000
2. In consideration of the receipt of shares described above, Barisal
and Fergus shall become a member of the Funding Group and shall observe, perform
and fulfill all of the terms and conditions to be observed, performed and
fulfilled by a member of the Funding Group pursuant to the terms of the
Contribution Agreement. Barisal and Fergus shall also receive all rights and
privileges granted to a member of the Funding Group pursuant to the terms of the
Contribution Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the date and year first above written.
BROWSESAFE, LLC
By: /s/ Mark W. Smith
---------------------------
BROWSESAFE.COM, INC.
By: /s/ Mark W. Smith
---------------------------
<PAGE>
BARISAL CAPITAL CORPORATION
By: /s/ Trudy Rogers
---------------------------
FERGUS CAPITAL CORPORATION
By: /s/ illegible
---------------------------
Exhibit 6.5
July 12, 1999
Officers and Directors
Motioncast Television Corporation of America
Dear Officers and Directors:
This letter is our clarification and confirmation to you regarding your right of
termination of the "Securities Transfer Agent & Registrar Agreement" between
Alexis Stock Transfer and yourselves, Motioncast Television Corporation of
America, entered into on November 1, 1998.
Please be advised that you the issuer have the right to terminate this agreement
at any time upon your providing us written termination notice, properly
delivered thirty (30) days prior to such termination taking effect and full
payment of any and all monies owed and due.
The fees charged to you pursuant to our Fee Schedule dated January 1, 1999 will
not increase more than 15% prior to January 1, 2001. Any revision made to the
Fee Schedule or any of its charges to Motioncast will be given in writing at
least thirty (30) days prior to the effective date of such changes.
We thank you for your business.
So signed and agreed to this 12th day of July 1999
By /s/ Gina A. Zapara
--------------------------
Gina A. Zapara, President
Alexis Stock Transfer
Exhibit 6.6
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
This Mutual Release and Settlement Agreement (hereinafter referred to as
"Agreement") is entered into this 11th day of October, 1999 between Jerry E.
Blythe and Winthrop Associates (hereinafter collectively referred to as
"Claimants"), BrowseSafe, LLC, BrowseSafe.com, Inc. and BrowseSafe Technology,
Inc. (hereinafter collectively referred to as "BrowseSafe") and Lowe Gray Steele
& Darko, LLP (hereinafter referred to as "Escrow Agent").
RECITALS:
WHEREAS, on or about September 19, 1998, Winthrop Associates,
BrowseSafe, LLC and BrowseSafe.com, Inc. executed a Management Consulting
Agreement (referred to as "Consulting Agreement");
WHEREAS, Claimants and BrowseSafe both allege that the other party has
breached the Consulting Agreement;
WHEREAS, each party has denied the allegations; and
WHEREAS, each party is desirous of resolving all claims, damages and
actions relating to or arising from the Consulting Agreement.
NOW THEREFORE, in consideration of the premises and the undertakings of
the parties hereto, the parties hereby agree as follows:
1. Incorporation of Recitals. The Recitals set forth above are
incorporated into and form a part of this Agreement.
2. Payment to Claimants.
(a) BrowseSafe.com, Inc. shall pay to Escrow Agent f/b/o Jerry
E. Blythe, the sum of Two Hundred Thousand Dollars
($200,000) within One Hundred Twenty (120) days of the
execution of this Agreement.
(b) At the time of execution of this Agreement,
BrowseSafe.com, Inc. shall issue Five Hundred Thousand
(500,000) shares of common stock of BrowseSafe.com, Inc.
(the "Shares") to Jerry E. Blythe and shall deliver the
certificate representing the Shares to Escrow Agent as
security for the payment of the Two Hundred Thousand
Dollars ($200,000). On the One Hundred and Twenty First
(121st) day following execution of this Agreement, Escrow
Agent shall pay the sum of Two Hundred Thousand Dollars
($200,000) to Jerry E. Blythe if such funds were
previously paid to Escrow Agent by BrowseSafe.com, Inc. If
Escrow Agent has not previously received the sum of Two
Hundred Thousand Dollars ($200,000) from BrowseSafe.com,
Inc., on the One Hundred and Twenty First (121st) day
following execution of this Agreement, Escrow Agent
<PAGE>
shall deliver the certificate representing the Shares to
Jerry E. Blythe. If Escrow Agent has previously received
the sum of Two Hundred Thousand Dollars ($200,000) from
BrowseSafe, com, Inc. and has paid such funds to Jerry E.
Blythe, on the One Hundred and Twenty First (121st) day
following execution of this Agreement, Escrow Agent shall
deliver the certificate representing the Shares to
BrowseSafe.com, Inc. Upon receipt of the certificate
representing the Shares, BrowseSafe.com, Inc. shall cancel
the Shares. The issuance and delivery of the Shares to
Jerry E. Blythe shall be in lieu of payment of the unpaid
portion of the sum of Two Hundred Thousand Dollars
($200,000).
(c) The Shares shall be unrestricted shares if a registration
has been completed. If a registration has not been
completed, any of the Shares subject to any restrictions
shall contain the piggyback registration rights more fully
described in Section 5. BrowseSafe and Claimants shall
timely provide the other party with any information
reasonably requested in connection with the registration
or transfer of the Shares hereunder or pursuant to Section
4 or any other provision of this Agreement.
3. Mutual Release of Claims. Claimants and BrowseSafe do hereby release,
acquit and forever discharge one another, their respective agents, servants,
predecessors, successors, assigns, subsidiaries, affiliates, parents, officer
and directors, from any and all claims, actions, causes of action, suits,
damages, demands debts, sums of money, accounts, covenants, contracts,
controversies, agreements, promises, rights, liabilities, costs and judgments
whatsoever, known or unknown, which either Claimants or BrowseSafe ever had, now
have or hereafter may have against the other, from the beginning of the world to
the date of this Agreement, which are in any way related to the Consulting
Agreement or any other services Claimants may have performed for BrowseSafe.
4. Restrictions on Transferability of Securities in Compliance with the
Act. If restricted, the Shares cannot be publicly resold by the holder hereof
without registration under the Securities Act and compliance with the prospectus
delivery requirements thereof, or the availability of an exemption therefrom.
Each certificate representing the Shares, except a new certificate issued for
securities registered under the Securities Act, shall be stamped or otherwise
imprinted with the legend set forth below (in addition to any legend required
under applicable state securities laws) unless in the opinion of counsel
selected by the holder of such certificate and reasonably acceptable to
BrowseSafe, the securities represented thereby need no longer be subject to
restrictions on resale under the Securities Act, or if the securities are
transferred in accordance with Rule 144 promulgated by the Securities and
Exchange Commission under the Securities Act.
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. THE OFFERING OF THESE SHARES HAVE NOT BEEN REVIEWED OR APPROVED BY
ANY STATE'S SECURITIES ADMINISTRATOR. THESE SHARES MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED
2
<PAGE>
UNLESS REGISTERED OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS THE CORPORATION RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO
COUNSEL FOR THE CORPORATION STATING THAT REGISTRATION, QUALIFICATION OR OTHER
SUCH ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS.
5. Registration. If restricted, the Shares shall have the following
Registration Rights:
(a) Registration Rights. Whenever BrowseSafe proposes to register
any of its securities under the Securities Act and the registration form
to be used may be used for the registration of the Shares (a "Piggyback
Registration"), BrowseSafe shall give prompt written notice to Claimants
of its intention to effect such a registration and shall include in such
registration the Shares.
(b) Expenses. All of the expenses of registration of the Shares in
connection with such Piggyback Registration shall be paid by BrowseSafe.
(c) Registration Procedures. Whenever any of Claimants Shares are
to be registered as provided herein, BrowseSafe shall use its best
efforts to effect the registration and the sale of such Underlying
Securities in accordance with the intended method of disposition thereof
and pursuant thereto BrowseSafe shall as expeditiously as possible:
(i) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Shares and use
its best efforts to cause such registration statement to become
effective;
(ii) notify Claimants of the effectiveness of each
registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period of not less than 90 days and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(iii) furnish to Claimants such number of copies of such
registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as Claimants may
reasonably request in order to facilitate the disposition of the Shares;
(iv) use its best efforts to register or qualify the
Shares under such other securities or blue sky laws as reasonably
requested by Claimants and do any and all other acts and things which
may be reasonably necessary to enable Claimants to consummate the
disposition of the Shares.
3
<PAGE>
(v) notify Claimants at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
of the happening of any event as a result of which the prospectus
included in such registration statement contains an untrue statement of
a material fact or omits any fact necessary to make the statements
therein not misleading, and upon such event and at the request of
Claimants, BrowseSafe shall prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of the
Shares, such prospectus shall not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading;
(vi) cause all such Shares to be listed on each securities
exchange on which similar securities issued by BrowseSafe.com, Inc. are
then listed;
(vii) provide a transfer agent and registrar for all such
Shares not later than the effective date of such registration statement;
(viii) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions in order to expedite the disposition of such Shares;
6. Good Faith Settlement. This Agreement is made in good faith by the
parties in acceptance of a good faith settlement by them of all claims arising
from the issues herein above described.
7. No Admission of Liability. It is understood and agreed that the terms
and conditions of this Agreement are not an admission of liability on the part
of the parties and their liability is hereby expressly denied. It is further
understood that this Agreement is to have a broad construction in order to
effect the full and final release of the matters herein set forth.
8. Understanding of the Parties. The parties hereby represent that they
have read and understand each of the terms and provisions of this Agreement and
are executing it voluntarily and following the opportunity for independent legal
advice and that the respective signers have the authority and capacity to bind
themselves and/or their principals as the case may be.
9. Invalidity; Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be, only as to such
jurisdiction, ineffective to the extent of such prohibition or unenforceability,
but all remaining provisions shall remain valid. If any waivers, as set forth
herein, are determined to be contrary to any applicable law or public policy,
such waivers shall be effective only to the extent permitted by law.
10. Entire Agreement. Following full execution, this Agreement shall
reflect the entire agreement between the parties and those statement, promises
or inducements made by or on behalf of either party that are not contained
herein shall not be binding.
4
<PAGE>
11. Governing Law. This Agreement shall be governed by the laws of the
State of Indiana.
12. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties respective successors and assigns.
13. Effective Date. This Agreement shall be effective as of and after
the date of execution of this Agreement.
14. Miscellaneous. Nothing herein contained shall be deemed to obligate
the Escrow Agent to transfer the Shares hereunder, unless the same shall have
been first received by the Escrow Agent pursuant to the provisions of this
Agreement. In performing any of its duties hereunder, the Escrow Agent shall not
incur liability to anyone for any damages, losses or expenses except for willful
default or negligence and it shall accordingly not incur any such liability with
respect to any action taken or omitted in reliance upon any instrument not only
as to its due execution and validity and effectiveness of its provisions but
also as to the truth and accuracy of any information contained therein which the
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by a proper person or persons and to conform with the provisions of
this Agreement.
5
<PAGE>
"CLAIMANTS" BROWSESAFE"
WINTHROP ASSOCIATES BROWSESAFE, LLC.
By: /s/ Jerry E. Blythe By: /s/ Mark Smith
------------------------ ----------------------
/s/ Jerry E. Blythe
- ---------------------------
Jerry E. Blythe BROWSESAFE.COM, INC.
"ESCROW AGENT" By: /s/ Mark Smith
----------------------
LOWE GRAY STEELE & DARKO, LLP
BROWSESAFE TECHNOLOGY, INC.
By: /s/ Robert J. Milford
------------------------
Robert J. Milford, Partner
By: /s/ Mark Smith
----------------------
6
Exhibit 6.7
BROWSESAFE.COM, INC.
STOCK OPTION PLAN
1. PURPOSE. The Plan is intended to provide to officers, directors, key
Employees and Consultants of the Corporation an opportunity to acquire a
proprietary interest in the Corporation, to encourage such key individuals to
remain in the employ of or to contract with the Corporation, and to attract and
retain new Employees, Consultants, and directors with outstanding
qualifications. Pursuant to the Plan, the Corporation may grant to officers,
directors, Consultants and key Employees of the Corporation options to purchase
shares of Common Stock upon such terms and conditions as provided herein.
2. DEFINITIONS.
(a) "Affiliate" means any corporation (other than the Corporation) in
an unbroken chain of corporations that includes the Corporation if each of such
corporations, other than the last corporation in the chain, owns at least 50% of
the total voting power of one of the other corporations.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" means the voting common stock of the Corporation.
(e) "Consultant" means any person who, or any employee of any firm
which, is engaged by the Corporation or any Affiliate to render consulting
services and is compensated for such consulting services, and any non-employee
director of the Corporation whether compensated for such services or not.
(f) "Corporation" means BrowseSafe.com, Inc., a Nevada corporation.
(g) "Effective Date" means November _____, 1999.
(h) "Employee" means any individual who is employed, within the
meaning of Section 3401 of the Code and the regulations thereunder, by the
Corporation or by any Affiliate. For purposes of the Plan and only for purposes
of the Plan, and in regard to Nonstatutory Stock Options but not for Incentive
Stock Options, a Consultant or director of the Corporation or any Affiliate will
be deemed to be an Employee, and service as a Consultant or director with the
Corporation or any Affiliate will be deemed to be employment, but no Incentive
Stock Option will be granted to a Consultant or director who is not an employee
of the Corporation or any Affiliate within the meaning of Section 3401 of the
Code and the regulations thereunder. In the case of a non-employee director or
Consultant, the provisions governing when a termination of employment has
occurred for purposes of the Plan will be set forth in the written Stock Option
Agreement between the Optionee and the Corporation, or, if not so set forth, the
Board will have the discretion to determine when a termination of "employment"
has occurred for purposes of the Plan.
<PAGE>
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Exercise Price" means the price per Share at which an Option may
be exercised, as determined by the Board and as specified in the Optionee's
stock option agreement.
(k) "Fair Market Value" means the value of each Share as determined by
the Board. (l) "Incentive Stock Option" means an Option of the type described in
Section 422(b) of the Code.
(m) "Joint Escrow Instructions" means joint escrow instructions
entered into between an Optionee and the Corporation in such form as may be
approved by the Board from time to time.
(n) "Nonemployee Director" shall mean a member of the Board who:
(i) is not currently an officer or Employee of the Corporation or
a parent or Subsidiary of the Corporation;
(ii) has not received compensation for serving as a Consultant or
in any other non-director capacity or had an interest in any transaction with
the Corporation or a parent or Subsidiary of the Corporation that would exceed
the $60,000 threshold for which disclosure would be required under Item 404(a)
of Regulation S-K, or
(iii) has not been engaged through another party in a business
relationship with the Corporation which would be disclosable under Item 404(b)
of Regulation S-K. If the Board determines that compliance with Section 162(m)
of the Code is desirable, then the term "Nonemployee Director" shall also be
interpreted to satisfy the definition of "outside director" under Section 162(m)
and applicable regulations issued pursuant thereto.
(o) "Nonstatutory Stock Option" means an Option of the type not
described in Sections 422(b) or 423(b) of the Code.
(p) "Option" means an option to purchase Common Stock granted pursuant
to the Plan.
(q) "Optionee" means any person who holds an Option pursuant to the
Plan.
(r) "Outside Directors" shall mean a member of the Board who qualifies
as an "outside director" pursuant to Internal Revenue Code Section 162(m) and
the Regulations promulgated thereunder.
(s) "Plan" means the BrowseSafe.com, Inc. Stock Option Plan, as
amended from time to time.
2
<PAGE>
(t) "Purchase Price" means at any particular time the Exercise Price
times the number of Shares for which an Option is being exercised.
(u) "Share" means one share of authorized Common Stock.
3. ADMINISTRATION.
(a) The Board. The Plan shall be administered by the Board. The Board
shall meet such other requirements as may be established from time to time by
the Securities and Exchange Commission for plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act.
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board will have the authority, in its discretion and on behalf of the
Corporation:
(i) to grant Options;
(ii) to determine the Exercise Price per Share of Options to be
granted;
(iii) to determine the Employees to whom, and the time or times
at which, Options will be granted and the number of Shares for which an Option
will be exercisable;
(iv) to interpret the Plan;
(v) to prescribe, amend, and rescind rules and regulations
relating to the Plan;
(vi) to determine the terms and provisions of each Option granted
and, with the consent of the holder thereof, modify or amend each Option;
(vii) to accelerate or defer, with the consent of the Optionee,
the exercise date of any Option;
(viii) to authorize any person to execute on behalf of the
Corporation any instrument required to effectuate the grant of an Option
previously granted by the Board;
(ix) with the consent of the Optionee, to reprice, cancel, and
regrant, or otherwise adjust the Exercise Price of an Option previously granted
by the Board; and
(x) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) Board's Determination of Fair Market Value. The Board will have
the authority to determine, upon review of relevant information, the Fair Market
Value of the
3
<PAGE>
Common Stock, subject to the provisions of the Plan. The Board will make good
faith efforts to value the Common Stock.
(d) Board's Interpretation of the Plan. The interpretation and
construction by the Board of any provision of the Plan or of any Option granted
hereunder will be final and binding on all parties claiming an interest in an
Option granted under the Plan. No member of the Board will be liable for any
action or determination made in good faith with respect to the Plan or any
Option.
(e) Board Procedures. The Board shall designate one of its members as
chairman. The Board may hold meetings at such times and places as it shall
determine. The acts of a majority of the Board's members present at meetings at
which a quorum exists, or acts reduced to or approved in writing by all of the
Board's members, shall be valid acts of the Board.
4. PARTICIPATION.
(a) Eligibility. The Optionees will be such persons as the Board may
select from among the Employees, provided that Consultants or Nonemployee
Directors are not eligible to receive Incentive Stock Options.
(b) Ten Percent Shareholders. Any Employee who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Corporation or any Affiliate will not be eligible to receive an Incentive Stock
Option unless:
(i) the Exercise Price of the Shares subject to such Option when
granted is at least 110% of the Fair Market Value of such Shares, and
(ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant.
(c) Stock Ownership. For purposes of Section 4(b), in determining
stock ownership, an Employee will be considered as owning the stock owned,
directly or indirectly, by or for his or her brothers and sisters, spouse,
ancestors, and lineal descendants. Stock owned, directly or indirectly, by or
for a corporation, partnership, estate, or trust will be considered as being
owned proportionately by or for its shareholders, partners, or beneficiaries,
respectively. Stock with respect to which such Employee holds an Option will be
counted in the determination of stock ownership for purposes of the above
Section 4(b).
(d) Outstanding Stock. For purposes of Section 4(b), the term
"outstanding stock" will include all stock actually issued and outstanding
immediately after the grant of the Option to the Optionee but will not include
any share for which an Option is exercisable by any person.
(e) Maximum Number of Options to One Person. No single Optionee shall
be entitled to receive more than 500,000 Options in any year pursuant to this
Plan.
4
<PAGE>
5. SHARES.
(a) Shares Subject to This Plan. The aggregate number of Shares which
may be issued upon exercise of Options under the Plan will not exceed 3,000,000
shares of Common Stock, subject to adjustment pursuant to Section 9; provided,
however, that in no event shall the number of shares of Common Stock underlying
Options granted pursuant to the Plan exceed twenty-five percent (25%) of the
number of outstanding shares of Common Stock at the end of the immediately
preceding fiscal quarter.
(b) Options Not to Exceed Shares Available. The number of Shares for
which an Option is exercisable at any time will not exceed the number of Shares
remaining available for issuance under the Plan. If any Option expires or is
terminated, the number of Shares for which such Option was exercisable may be
made exercisable pursuant to other Options under the Plan. The limitations
established by this Section 5(b) will be subject to adjustment in the manner
provided in Section 9 upon the occurrence of an event specified therein.
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements. Options will be evidenced by written
stock option agreements between the Optionee and the Corporation in such form as
the Board will from time to time determine. No Option or purported Option will
be a valid and binding obligation of the Corporation unless so evidenced in
writing.
(b) Number of Shares. Each stock option agreement will state the
number of Shares for which the Option is exercisable and will provide for the
adjustment thereof in accordance with Section 9. Each stock option agreement
will also specify whether the option is a Nonstatutory Stock Option or an
Incentive Stock Option.
(c) Vesting. An Optionee may not exercise his or her Option for any
Shares until the Option, in regard to such Shares, has vested. Each stock option
agreement will include a vesting schedule which will show when the Option
becomes exercisable, provided each Option will vest at a rate of at least 20%
per year over a period of five years with the first 20% becoming exercisable on
the first anniversary of the date when the Options were granted. The vesting
schedule will not impose upon the Corporation or any Affiliate any obligation to
retain the Optionee in its employ or under contract for any period or otherwise
change the employment-at-will status of an Optionee who is an Employee.
(d) Lapse of Options. Each stock option agreement will state the time
or times when the Option covered thereby lapses and becomes unexercisable in
part or in full. An Option will lapse on the earliest of the following events
(unless otherwise determined by the Board and reflected in an option agreement):
(i) The tenth anniversary of the date of grant of the
Option;
(ii) The first anniversary of the Optionee's death;
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<PAGE>
(iii) The first anniversary of the date when the Optionee
ceases to be an Employee due to Total and Permanent Disability (within the
meaning of Section 22(e)(3) of the Code);
(iv) On the date provided in Section 6(h)(i), unless with
respect to a Nonstatutory Stock Option, the Board otherwise extends such period
before the applicable expiration date;
(v) On the date provided in Section 9 for a transaction
described in such section;
(vi) The date the Optionee files or has filed against him
or her a petition in bankruptcy; or
(vii) The expiration date specified in the Optionee's
stock option agreement.
(e) Exercise Price. Each stock option agreement will state the
Exercise Price for the Shares for which the Option is exercisable. Subject to
Section 4(b), the Exercise Price of an Incentive Stock Option and a Nonstatutory
Stock Option will, when granted, be not less than 100% and 50% of the Fair
Market Value of the Shares for which the Option is exercisable, respectively,
and not less than the par value of the Shares.
(f) Medium and Time of Payment. The Purchase Price will be payable in
full in cash upon the exercise of an Option but the Board may allow the Optionee
to pay the Purchase Price:
(i) by surrendering Shares, in good form for transfer, owned by
the Optionee for more than 12 months and which have a Fair Market Value on the
date of exercise equal to the Purchase Price; or
(ii) in any combination of such consideration or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable law as long as the sum of the consideration so paid
equals the Purchase Price.
The Board or a stock option agreement may prescribe requirements with respect to
the exercise of Options, including the submission by the Optionee of such forms
and documents as the Board may require and the delivery by the Optionee of cash
sufficient to satisfy applicable withholding requirements. The Board may vary
the exercise requirements and procedures from time to time to facilitate, for
example, the broker-assisted exercise of Options.
(g) Nontransferability of Options. During the lifetime of the
Optionee, the Option will be exercisable only by the Optionee or the Optionee's
conservator or legal representative and will not be assignable or transferable
except pursuant to a qualified domestic relations order as defined by the Code.
In the event of the Optionee's death, the Option will not be transferable by the
Optionee other than by will or the laws of descent and distribution.
(h) Termination of Employment Other than by Death or Disability.
6
<PAGE>
(i) If an Optionee ceases to be an Employee for any reason other
than his or her death or disability, the Optionee will have the right, subject
to the provisions of this Section 6(h), to exercise any Option held by the
Optionee for 30 days after his or her termination of employment, but not beyond
the otherwise applicable term of the Option and only to the extent that on such
date of termination of employment the Optionee's right to exercise such Option
had vested.
(ii) For purposes of this Section 6(h), the employment
relationship will be treated as continuing intact while the Optionee is an
active employee of the Corporation or any Affiliate, or is on military leave,
sick leave, or other bona fide leave of absence to be determined in the sole
discretion of the Board. The preceding sentence notwithstanding, in the case of
an Incentive Stock Option, employment will be deemed to terminate on the date
that the Optionee ceases active employment with the Corporation or any
Affiliate, unless the Optionee's reemployment rights are guaranteed by statute
or contract.
(i) Death of Optionee. If an Optionee dies while an Employee, or after
ceasing to be an Employee but during the period while he or she could have
exercised an Option under Section 6(h), any Option granted to the Optionee may
be exercised, to the extent it had vested at the time of death and subject to
the Plan, at any time within 12 months after the Optionee's death, by the
executors or administrators of his or her estate or by any person or persons who
acquire the Option by will or the laws of descent and distribution, but not
beyond the otherwise applicable term of the Option.
(j) Disability of Optionee. If an Optionee ceases to be an Employee
due to becoming totally and permanently disabled within the meaning of Section
22(e)(3) of the Code, any Option granted to the Optionee may be exercised to the
extent it had vested at the time of cessation and, subject to the Plan, at any
time within 12 months after the Optionee's termination of employment, but not
beyond the otherwise applicable term of the Option.
(k) Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, will have no rights as a shareholder of the Corporation with respect
to any Shares for which his or her Option is exercisable until the date of the
issuance of a stock certificate for such Shares. No adjustment will be made for
dividends, ordinary or extraordinary or whether in currency, securities, or
other property, distributions, or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Section 9.
(l) Modification, Extension, and Renewal of Options. Within the
limitations of the Plan, the Board may modify, extend or renew outstanding
Options or accept the cancellation of outstanding Options for the granting of
new Options in substitution therefor. Notwithstanding the preceding sentence, no
modification of an Option will, without the consent of the Optionee, alter or
impair any rights or obligations under any Option previously granted.
(m) Rule 16b-3. Options granted to persons who are subject to Section
16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3
promulgated thereunder and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to the Plan's transactions.
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(n) Other Provisions. The stock option agreements authorized under the
Plan may contain such other provisions which are not inconsistent with the terms
of the Plan, including, without limitation, restrictions upon the exercise of
the Option, as the Board will deem advisable.
7. $100,000 PER YEAR LIMITATION ON VESTING OF ISOs. To the extent that the
Fair Market Value of Shares (determined for each Share as of the date of grant
of the Option covering such Share) subject to Options granted under the Plan (or
any other plan of the Corporation or any Affiliate), which are designated as
Incentive Stock Options and which become exercisable by an Optionee for the
first time during a single calendar year, exceeds $100,000, the Options (or
portion thereof) covering such Shares will be recharacterized (to the extent of
such excess over $100,000) as a Nonstatutory Stock Option. In determining which
Option(s) will be treated as Nonstatutory Stock Options under the preceding
sentence, the Options will be taken into account in the order granted, with the
result that a later granted Option will be recharacterized as a Nonstatutory
Stock Option prior to such recharacterization of a previously granted Option.
8. TERM OF PLAN. Options may be granted pursuant to the Plan until a date
no more than ten (10) years from the date when the Plan is adopted or the date
when the Plan is approved by the shareholders of the Corporation, whichever is
earlier, and all Options which are outstanding on such date will remain in
effect until they are exercised or expire by their respective terms.
9. RECAPITALIZATION, TAKEOVERS, AND LIQUIDATIONS.
(a) Reorganizations. The number of Shares covered by the Plan, as
provided in Section 5, and the number of Shares for which each Option is
exercisable will be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, a reverse stock split, the
payment of a stock dividend, recapitalization, combination or reclassification
of the Corporation's stock or any other event which results in an increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Corporation, and the Exercise Price will be proportionately
increased in the event the number of Shares subject to such Option are decreased
and will be proportionately decreased in the event the number of Shares subject
to such Option are increased. For the purposes of this Section 9(a), the
conversion of any convertible securities of the Corporation will not be deemed
to have been "effected without receipt of consideration." Adjustments will be
made by the Board, whose determination in that respect will be final, binding
and conclusive. Except as expressly provided in the Plan, no issuance by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, will affect, and no adjustment by reason thereof
will be made with respect to, the number or price of Shares subject to an
Option.
(b) Liquidation. In the event of the dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such action. The Board will notify the Optionee not less than 15 days prior to
the proposed consummation of a pending dissolution or liquidation, and such
Option will be exercisable as to all Shares which are vested prior to expiration
until immediately prior to the consummation of such action.
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(c) Merger. In the event of (i) a proposed merger of the Corporation
with or into another corporation, as a result of which the Corporation is not
the surviving corporation and (ii) the Option is not assumed or an equivalent
option substituted by the successor corporation or a parent or subsidiary of the
successor corporation, then in such case the Option will terminate immediately
prior to the consummation of such transaction. The Board will notify the
Optionee not less than 15 days prior to the proposed consummation of such
transaction, and the Option will be exercisable as to all Shares which are
vested prior to expiration and until immediately prior to the consummation of
such transaction.
(d) Determination by Board. All adjustments described in this Section
9 will be made by the Board, whose determination will be conclusive and binding
on all persons.
(e) Limitation on Rights of Optionee. Except as expressly provided in
this Section 9, no Optionee will have any rights by reason of any payment of any
stock dividend, stock split or reverse stock split or any other increase or
decrease in the number of shares of stock of any class, or by reason of any
reorganization, consolidation, dissolution, liquidation, merger, exchange,
split-up, reverse split-up or spin-off of assets or stock of another
corporation. Any issuance by the Corporation of Shares, Options or securities
convertible into Shares or Options will not affect, and no adjustment by reason
thereof will be made with respect to, the number or Exercise Price of the Shares
for which an Option is exercisable. Notwithstanding the foregoing, if the
Corporation enters into a transaction affecting the Corporation's capital stock
or distributions to the holders of its capital stock for which a revision in the
terms of each Option is not required pursuant to this Section 9, the Board will
have the right, but not the obligation, to revise the terms of each Option in a
manner that the Board, in its sole discretion, deems fair and reasonable given
the transaction involved. If necessary or appropriate in connection with such
transaction, the Board may declare that any Option will terminate as of a date
fixed by the Board and given each Optionee the right to exercise his or her
Option in whole or in part, including exercise as to Shares to which the Option
would not otherwise be exercisable.
(f) No Restriction on Rights of Corporation. The grant of an Option
will not affect or restrict in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations, or changes of its capital
or business structure, or to merge or consolidate, or to dissolve, liquidate,
sell, or transfer all or any part of its business or assets.
10. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance. No Share will be issued upon the exercise of
any Option unless and until the Corporation had determined that:
(i) The Corporation and the Optionee have taken all actions
required to exempt the issuance of the Shares from the registration requirements
under the Securities Act of 1933, as amended (the "Act"), or the Corporation and
the Optionee will determine that the registration requirements of the Act do not
apply to such exercise;
(ii) Any applicable listing requirement of any stock exchange on
which the Common Stock is listed has been satisfied; and
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(iii) Any other applicable provision of state or Federal law has
been satisfied.
(b) Restrictions on Transfer; Representations of Optionee; Legends.
Regardless of whether the offering and sale of Shares has been registered under
the Act or has been registered or qualified under the securities laws of any
state, the Corporation may impose restrictions upon the sale, pledge, or other
transfer of such Shares, including the placement of appropriate legends on stock
certificates, if, in the judgment of the Corporation and its counsel, such
restrictions are necessary or desirable in order to achieve compliance with the
provision of the Act, the securities laws of any state, or any other law. If the
sale of Shares is not registered under the Act and the Corporation will
determine that the registration requirements of the Act apply to such sale, but
an exemption is available which requires an investment representative or other
representative, the Optionee will be required, as a condition to purchasing
Shares by exercise of his or her Option, to represent that such Shares are being
acquired for investment, and not with a view to the sale or distribution
thereof, except in compliance with the Act, and to make such other
representations as are deemed necessary or appropriate by the Corporation and
its counsel. Stock certificates evidencing Shares acquired pursuant to an
unregistered transaction to which the Act applies will bear a restrictive legend
substantially in the following form and such other restrictive legends as are
required or deemed advisable under the Plan or the provisions of any applicable
law:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF,
AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION UNDER THE
ACT AND/OR QUALIFICATION UNDER ANY APPLICABLE STATE SECURITIES
LAWS, OR WITHOUT AN OPINION OF COUNSEL ACCEPTABLE TO THE
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED."
Any determination by the Corporation and its counsel in connection with any of
the matters set forth in this Section 10 will be conclusive and binding on all
persons.
(c) Registration or Qualification of Securities. The Corporation may,
but will not be obligated to, register or qualify the sale of Shares under the
Act or any other applicable law. In connection with any such registration or
qualification, the Corporation will provide each Optionee with such information
required pursuant to all applicable laws and regulations.
10
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(d) Exchange of Certificates. If, in the opinion of the Corporation
and its counsel, any legend placed on a stock certificate representing Shares
issued hereunder is no longer required, the Optionee or the holder of such
certificate will be entitled to exchange such certificate for a certificate
representing the same number of Shares but without such legend.
11. EXERCISE OF UNVESTED OPTIONS. The Board may grant to any Optionee the
right to exercise any Option prior to the complete vesting of such Option.
Without limiting the generality of the foregoing, the Board may provide that if
an Option is exercised prior to having completely vested, the Shares issued upon
such exercise will remain subject to vesting at the same rate as under the
Option so exercised and will be subject to a right, but not an obligation, of
repurchase by the Corporation with respect to all unvested Shares if the
Optionee ceases to be an Employee for any reason. For the purposes of
facilitating the enforcement of any such right of repurchase, at the request of
the Board, the Optionee will enter into Joint Escrow Instructions with the
Corporation and deliver every certificate for his or her unvested Shares with a
stock power executed in blank by the Optionee and by the Optionee's spouse, if
required for transfer.
12. AMENDMENT OF THE PLAN. The Board may, from time to time, terminate,
suspend or discontinue the Plan, in whole or in part, or revise or amend the
Plan in any respect whatsoever, including, but not limited to, the adoption of
any amendment(s) deemed necessary or advisable to qualify the Options under
rules and regulations promulgated by the Securities and Exchange Commission with
respect to Employees who are subject to the provisions of Section 16 of the
Exchange Act or to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option granted thereunder, without approval
of the shareholders of the Corporation, but without the approval of the
Corporation's shareholders, no such revision or amendment will:
(a) Increase the number of Shares subject to the Plan, other than
any increase pursuant to Section 9;
(b) Materially modify the requirements as to eligibility for
participation in the Plan;
(c) Materially increase the benefits accruing to Optionees under the
Plan;
(d) Extend the term of the Plan; or
(e) Amend this Section 12 to defeat its purpose.
No amendment, termination or modification of the Plan will affect any Option
theretofore granted in any material adverse way without the consent of the
Optionee.
13. APPLICATION OF FUNDS. The proceeds received by the Corporation from the
sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes.
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14. APPROVAL OF SHAREHOLDERS. The Plan will be subject to approval by the
affirmative vote of the holders of a majority of all classes of the outstanding
shares present and entitled to vote at the first meeting of shareholders of the
Corporation following the adoption of the Plan or by written consent, and in no
event later than one year following the Effective Date. Prior to such approval,
Options may be granted but will not be exercisable. Any amendment described in
Section 12.(a) to (e) will also be subject to approval by the Corporation's
shareholders.
15. WITHHOLDING OF TAXES. In the event the Corporation or an Affiliate
determines that it is required to withhold federal, state, or local taxes in
connection with the exercise of an Option or the disposition of Shares issued
pursuant to the exercise of an Option, the Optionee or any person succeeding to
the rights of the Optionee, as a condition to such exercise or disposition, may
be required to make arrangements satisfactory to the Corporation or the
Affiliate to enable it to satisfy such withholding requirements. Alternatively
the Corporation may issue or transfer Shares net of the number of Shares
sufficient to satisfy withholding tax requirements. For withholding tax
purposes, the Shares will be valued on the date the withholding obligation is
incurred.
16. RIGHTS AS AN EMPLOYEE. Neither the Plan nor any Option granted pursuant
thereto will be construed to give any person the right to remain in the employ
of the Corporation or any Affiliate, or to affect the right of the Corporation
or any Affiliate to terminate such individual's employment at any time with or
without cause. The grant of an Option will not entitle the Optionee to, or
disqualify the Optionee from, participation in the grant of any other Option
under the Plan or participation in any other benefit plan maintained by the
Corporation or any Affiliate.
17. DISAVOWAL OF REPRESENTATIONS, UNDERTAKING, OR CREATION OF IMPLIED
RIGHTS. In adopting and maintaining the Plan and granting options hereunder,
neither the Corporation nor any Affiliate makes any representations or
undertakings with respect to the initial qualification or treatment of Options
under federal or state tax or securities laws. The Corporation and each
Affiliate expressly disavows the creation of any rights in Employees, Optionees,
or beneficiaries of any obligations on the part of the Corporation, any
Affiliate or the Board, except as expressly provided herein.
18. INSPECTION OF RECORDS. Copies of the Plan, records reflecting each
Optionee's Option(s), and any other documents and records which an Optionee is
entitled by law to inspect will be open to inspection by the Optionee and his or
her duly authorized representative at the office of the Board at any reasonable
business hour.
19. INFORMATION TO OPTIONEES. Each Optionee will be provided with such
information regarding the Corporation as the Board from time to time deems
necessary or appropriate; provided however, that each Optionee will at all times
be provided with such information as is required to be provided from time to
time pursuant to applicable regulatory requirements, including, but not limited
to, any applicable requirements of the Securities and Exchange Commission and
other state securities agencies.
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20. EXECUTION. To record the adoption of the Plan by the Board effective as
of November 17, 1999, the Corporation has caused its authorized officer to
execute the same.
BrowseSafe.com Inc.,
an Nevada corporation
By: /s/ Mark W. Smith
-------------------------------
Mark W. Smith, President
13
Exhibit 6.8
CONFIDENTIAL INVESTMENT BANKING CONSULTING AGREEMENT FOR
BrowseSafe.com, Inc.
This Agreement is made as of Thursday, November 18, 1999 by and between Mr. Mark
W. Smith, President and CEO, BrowseSafe.com, Inc., ("Client"), with its
principal place of business at 335 West 9th Street, Suite 100, Indianapolis, IN
46202-3003 and Ronald Ardt ("ARDT") as President and CEO of Business Investor
Services, Inc., a Texas Corporation, ("BIS") with its principal offices at 15400
Knoll Trail, Suite 200, Dallas, TX 75248.
CONFIDENTIAL DOCUMENT
FOR THE EYES AND USE OF
ONLY THE PARTIES HERETO
Witnesseth
WHEREAS, Client requires expertise in the area of business consulting to
support its further business expansion, development and growth, and
WHEREAS, ARDT through his investment banking experience is in the
business of providing advisory services including business development and risk
planning, as well as merchant banking services; including finding sources of
investment capital;
NOW, THEREFORE, in consideration of the premises above and the mutual
promises and covenants contained herein and subject specifically to the
conditions hereof, and for other good and valuable consideration, receipt of
which is hereby acknowledged by each party, the parties intending to be legally
bound thereby agree that all of the foregoing recitals are true and agree as
follows:
1. Certain Definitions: When used in this Agreement, the following terms shall
have the meanings set forth below:
1.1 Affiliate - any persons or entities controlled by a party.
1.2 Client - the organizations or legal entities who use the services
of ARDT. Unless specifically stated otherwise, the term "Client"
shall also include the clients of the Client.
1.3 Client Affiliates - the organizations or legal entities
affiliated with the Client who uses the services of ARDT through
the Client.
1.4 Contact Person - The person who shall be primarily responsible
for carrying out the duties of the parties hereunder. Client and
ARDT shall each appoint a Contact Person to be responsible for
their respective duties. In the event that one party gives notice
to the other party in writing that, in their reasonable opinion,
the other party's Contact Person is not able to fulfill their
duties and responsibilities hereunder, both parties shall
mutually agree upon a replacement Contact Person within 10 days
of the said notice.
1.5 Extraordinary Expenses - expenditures that are beyond those
expenses that are usual, regular, or customary in the conduct of
in-house activities in fulfillment of the scope of this
agreement.
1.6 Equity - cash, securities or liquid assets, specifically
excluding real property.
1.7 Payment or Payable in kind - distribution of the proceeds of a
transaction in the same type and form as was given as valuable
consideration for the transaction.
2. Contact Persons. The Contact Person for Client is Mr. Mark Smith, President
and CEO. The Contact Person for ARDT is Ronald Ardt.
3. Services to be rendered by ARDT. Client hereby engages ARDT and ARDT accepts
such engagement upon the terms of this Agreement to provide the following
services:
3.1 Advice and Counsel (Interface Consulting). ARDT will participate
with management of the Client, professionals and advisors to
provide advice and counsel in relation to Client's strategic
CONFIDENTIAL INVESTMENT BANKING AGREEMENT: Page 1 of 9
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PGPG ARDT IBCA 111899 (C) 1999 Ronald Ardt
<PAGE>
business and financial plans, and other strategies, including but
not limited to, identification and negotiations with potential
lenders or investors, merger or acquisition candidates, joint
ventures, corporate partners and others involving strategic
financially related transactions, as well as marketing and public
relation matters as requested by Client. ARDT may provide
additional merger and acquisition candidates and strategies so as
to assist Client in its corporate expansion and business
development.
3.2 Client and/or Client Transaction Due Diligence (Research). ARDT
will participate with management of the Client, professionals,
affiliates and advisors to undertake due diligence on all
proposed financial transactions affecting the Client, including
investigation and advice on the financial, valuation and stock
price implications thereof. Client may be introduced to
affiliates of ARDT and others to perform certain due diligence
and valuation functions, however Client shall not be required to
use these referrals, but may source this work to others provided
that the information and services are of equal or better
competency. Notwithstanding the foregoing, the Client shall have
the principal responsibility for gathering the information
required being included in the due diligence materials as
directed by ARDT. Should the information not be forthcoming to
ARDT by the Client within a reasonable time period as established
by ARDT, then the term of this Agreement may be extended or this
Agreement may be cancelled by ARDT without recourse by Client.
Time is of the essence in meeting regulatory deadlines and it is
the responsibility of the Client to comply with all of ARDT's
reasonable requests for documentation.
3.3 Offering Structuring and Document Preparation (Legal Filings).
ARDT will assist in the preparation and coordination of the
filing of appropriate documents necessary to be in compliance
with federal and state law to complete an offering document for
the placement of securities on a "best efforts" basis
("Offering"), including a portion of the legal work associated
with the Offering, but not including specific direct cost for
related state filing fees which shall be billed separately. A
duly licensed Attorney will perform all legal work. Additional
documents may require extra legal work that could be extensive
depending upon the comments and requests of government regulatory
entities. These documents and filings may include a Private
Placement Memorandum, Bridge Loan Agreement or other such
documentation, if any, which may be billed by the hour (at a rate
of $225/hour), with prior written notice to, and approval of,
Client. The Offering will be in the form of capital financing yet
to be determined subject to the due diligence and research
findings and valuation, and also market conditions and marketing
considerations that may affect the structure of such Offering. If
ARDT's duties include the filing of Regulation D documentation
(the "Funding Package" or "Private Placement Memorandum"), it is
estimated that about 30 days are required for such documentation
to be prepared.
3.4 Brokerage Introductions (Selling Group and Investor / Broker
Dealer Relations). Both as a member of the Regional Investment
Bankers Association ("RIBA") and through professional
relationships, ARDT and ARDT's affiliated Broker Dealers,
Capstone Partners, L.C. and Richmark Capital Corp. have developed
an association with additional broker dealers, investment
professionals, and fund managers. In the event the utilization of
such association becomes necessary or desirable ARDT will enable
contact on behalf of Client to facilitate business transactions
with ARDT's associates. In this event, ARDT shall use his "best
efforts" to assist Client in establishing relationships with
securities dealers and to provide the most recent corporate
information to interested securities dealers, as well as other
parties, on a regular and continuous basis. The Client may wish
to have ARDT or an affiliate of ARDT assist in the formation of a
"Selling Group" to act as "Placement Agent" of any Client
Offerings. ARDT understands that this is in keeping with Client's
business objective to establish a nationwide network of
securities dealers who may have an interest in trading Client's
securities and/or providing capital for securities offering
financing.
3.5 Market Awareness. Upon the conclusion of any Offering, and based
upon a separate engagement agreement, ARDT shall assist the
Client or make the desired introductions, in making application,
or for appropriate market awareness by both investors, analysts,
and market makers.
3.6 Market-making Intelligence. ARDT also has close association with
numerous marketing and
CONFIDENTIAL INVESTMENT BANKING AGREEMENT: Page 2 of 9
Initialed by all parties: _______ ______
PGPG ARDT IBCA 111899 (C) 1999 Ronald Ardt
<PAGE>
public relation professionals and will use their best efforts to
enable contact between Client and such professionals to
facilitate business transactions and marketing expertise among
them. By sharing marketing ideas and networking among contacts by
ARDT, the Client can increase its exposure and expertise by
establishing these relationships. ARDT may help the Client create
a more liquid and orderly market in which its stock may trade.
3.7 Additional Duties. Client and ARDT shall mutually agree in
writing about any additional duties that ARDT may provide for the
compensation paid or payable by Client under this Agreement. Such
additional agreement(s) may, although there is no requirement to
do so, be attached hereto and made a part hereof as Exhibits
beginning with Exhibit A.
3.8 Best Efforts. ARDT shall devote such time and effort as may be
reasonably necessary to perform the services described in this
Agreement. ARDT is not responsible for the performance of any
services that may be rendered hereunder without the Client
previously providing the necessary information on a timely basis.
ARDT cannot guarantee results on behalf of Client, but shall
pursue reasonable avenues available through its network of
contacts. At such time as an interest is expressed in Client's
needs, ARDT shall notify Client, advising the source of such
interest and any terms and conditions of such interest. The
acceptance and consummation of any transaction is subject to
acceptance of the terms and conditions by Client. It is
understood that a portion of the compensation to be paid
hereunder is being paid by Client to have ARDT available to
assist with transactions on an "as needed" basis.
4. Legality of Transactions and Services. ARDT hereby represents and warrants
the services contemplated herein, the consideration received and the
services to be rendered are and will be in compliance with all federal and
state laws of the United States. Upon request, ARDT shall provide an
opinion of an attorney licensed to practice law within the United States in
support of this representation.
5. Compensation to ARDT.
5.1 Fees.
A. Due Diligence Reimbursement / Consulting Fee. Upon receipt of
any funding contemplated by the parties to this Agreement that
may flow to Client as a result of the efforts on his behalf by
ARDT or its affiliated parties, and subject to approval of the
client, a Due Diligence amount of $15,000 (Fifteen Thousand
Dollars) shall be reimbursed to "Business Investor Services,
Inc." for the investigative services of Ardt Investment
Management for document gathering and review, comparable
valuation analysis, offering structuring and consulting
efforts, as well as other services. $7,500 shall be due upon
execution of this agreement and $7,500 shall be due within 90
days. Both amounts due shall be paid by Client upon the next
receipt of available funding. Any additional direct
out-of-pocket expenses for additional due diligence requested
by Client shall be reimbursed by Client immediately upon
request.
B. Continued "On-Call" Consulting Fee. In addition, Client agrees
to pay ARDT or one of its affiliates, $2,000 per month for six
months, commencing January 30, 2000 and every 30 days
thereafter, for continuing "on call" consulting services
regarding market support and research dissemination
activities. The consulting retainer shall be paid to "Business
Investor Services, Inc.", either by check or by monthly bank
wire.
C. Retainer fee. Client shall pay to ARDT a retainer fee of
100,000 (One Hundred Thousand) Common Stock Shares (described
in "D" below) commencing with the signing of this Agreement,
in lieu of the normal Investment Banking Retainer fee of
$100,000, and held in escrow by Lowe, Gray, Steele and Darko,
LLP, for ARDT "s benefit, subject to release by Client. The
shares shall be issued as soon as the Client's Form 10-SB
becomes effective and after the filing of the S-8 registration
statement with the Transfer Agent and regulatory authorities,
which filing shall not be unreasonably delayed. Should the
Client become delinquent in keeping all fees current, ARDT may
discontinue work on Client's behalf.
D. Description of Shares. The stock shares granted to ARDT from
Client, is (as of the date of this
CONFIDENTIAL INVESTMENT BANKING AGREEMENT: Page 3 of 9
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PGPG ARDT IBCA 111899 (C) 1999 Ronald Ardt
<PAGE>
agreement) an amount equal to 100,000 (One Hundred Thousand)
Shares of the Company's common stock which transfer shall
qualify as exempt from registration review pursuant to Section
4(2) of the Securities Act of 1933, as amended (under S-8
exemption as "employee/consultant compensation"), (hereinafter
the "Shares"). ARDT's ownership interest in the shares shall
vest immediately upon execution of this document and shall be
paid upon commencement of services. The shares earned by ARDT
shall be issued as directed by Ardt.
E. Warrants. The warrants granted to ARDT from Client are 50,000
(Fifty Thousand) Warrants (of no current value) on the Common
Stock shares of the Client, which shall vest immediately upon
the execution of this agreement, and shall be held in the
escrow stated above in 5.1 (C). The exercise price shall be
fixed at $1.00 (One Dollar per share). ARDT must exercise the
warrants into stock if the price of the common shares trades
above $2/share for any 30-day period. Each warrant shall be
convertible upon exercise into one share of common stock for a
period of Three (3) years from the effective date of this
agreement.
F. Provisions governing the Shares. The following provisions are
applicable to the Shares issued to ARDT pursuant to this
agreement:
1. All shares and warrants shall be granted S-8 registration
rights (as payment for consulting services (i) with none
of the proceeds of any sale of such shares going to or
benefiting Client, and (ii) not as part of, or tied to,
any direct offering) by the Client.
2. Any of the shares and warrants may be sold at anytime
after shares are released from escrow and Client agrees to
deliver to ARDT such exempt unrestricted shares, as
defined or interpreted under Rule 144 of the Securities
Exchange Act of 1933, and are without legend after
exercise of such registration rights mentioned above.
3. Client shall provide at the time of exercise of this
Agreement, paperwork for ARDT to have (as Attached
"Exhibits I, II, and III"):
I. "Stock Certificates" of ownership of all shares
without restrictive legend or statement (provided by
Client along with Corporate Resolution),
II. S-8 "Registration Rights Agreement" to the above
mentioned stock (provided by Client in a form
acceptable by its Transfer Agent) and
III. "[Form of] Warrant Agreement" containing grant of
warrants (provided by Client from its Securities
Attorney.
G. Due Date and Assurance of Payment of Compensation. The
business advisory retainer fee and any other fees resulting
from this relationship shall be due upon the 30th (thirtieth)
day of each month beginning with the month of execution of
this agreement. In no case shall Client prohibit or take
measures to prevent ARDT from collecting fees due or from
having stock registered, transferred or exercised as provided
for in this Agreement; Client shall take measures to expedite
and assure the full cooperation of the Client's transfer Agent
in regard to transferring any shares or warrants issued to
ARDT hereunder.
H. Standard Placement Agent Fees. Should Client desire to have
ARDT assist in creating or managing a Selling Group for the
Client's securities, Client may expect to pay additional fees
for Broker Dealer Services and the raising of capital in
accordance with NASD rules which are limited to approximately
a 10% commission, a 3% non-accountable (legal and accounting)
expense allowance and a 2% due diligence and marketing
allowance, (See section 5.1 A which $15,000 shall be credited
toward this 2%) or any direct out-of-pocket marketing
allowance. It is agreed that the fees under this (IBCA)
agreement are for professional services separate from any fees
charged under any Placement Agent Selling Agreement for the
placement of any offering.
5.2 Optional Form of Payment. ARDT may, at the time for each payment
and at his sole option, elect to receive all or a portion of said
fees in the form of securities, equity, financing instruments or
other consideration from Client to ARDT on terms agreed by Client
in writing.
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5.3 Extraordinary Expenses. Extraordinary expenses of ARDT that are
cumulatively in excess of $2,000 (Two Thousand Dollars) shall be
submitted to Client for written approval prior to expenditure and
shall be paid by Client, within ten (10) business days of receipt
of ARDT's request for payment.
5.4 Finder Fees.
5.4(1)In the event ARDT introduces Client or a Client affiliate to any
third party funding source(s), underwriter(s), merger partner(s)
or joint venture(s) who enters into a, funding, underwriting,
merger, joint venture or similar agreement with Clients or
Clients' client, Client hereby agrees to pay ARDT an advisory
finder's fee according to industry standards, an amount equal to
4% (four percent) of the gross proceeds from such funding or
value derived from such merger or other transaction, payable upon
the consummation of such funding, underwriting, merger, joint
venture or similar agreement with Clients or Clients' client or
underwriting, even though the term of this agreement may have
expired, as pursuant to item number ten (Term of Agreement and
Termination). Any fees collected from the Client under Section
5.1 H in the form of the 10% commission on the same transaction
shall be credited against the 4% in this provision.
5.4(2)ARDT may, at its' sole option, elect to receive all or a portion
of said advisory finder fee as payment in kind, i.e. pro-rata in
the same form and type of securities, equity, or financing
instruments issued to the funding source or underwriter by
Client. In the event the exercise of this option results in
additional expense over and above the expense of the funding
and/or underwriting then the additional expenses shall be borne
by ARDT. In addition the exercise of this option by ARDT shall
not impede or otherwise have a negative effect on any funding or
underwriting.
6. Indemnification. Each party shall hold the other party harmless from and
against, and shall indemnify the other party, for any liability, loss, and
costs, expenses or damages whatsoever, caused by reason of any injury
(whether to body, property, personal or business, character or reputation)
sustained by any person or to any person or property by reason of any act,
neglect, default or omission of it or any of its agents, employees, or
other representatives arising out of or in relation to this agreement.
Nothing herein is intended to nor shall it relieve either party from
liability for its own act, omission or negligence. All remedies provided by
law or in equity shall be cumulative and not in the alternative.
7. Client Representations. Client hereby represents, covenants and warrants to
ARDT as follows:
7.1 Authorization. Clients and its signatories herein have full power
and authority to enter into this Agreement and to carry out the
transactions contemplated hereby.
7.2 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate any provision of the charter or by-laws of
Client, or violate any term or provision of any other agreement
or any statute or law.
7.3 Agreement in Full Force and Effect. All material contracts,
agreements, plans, leases, policies and licenses referenced
herein to which Client is a party are valid and in full force and
effect.
7.4 Consents. No consent of any person, other than the signatories
hereto, is necessary to the consummation of the transactions
contemplated hereby, including, without limitation, consents from
parties to loans, contracts, lease or other agreements and
consents from governmental agencies, whether federal, state, or
local.
7.5 ARDT Reliance. That ARDT has, may and will rely upon the
documents, instruments and written information furnished to ARDT
by the Client's officers, or designated employees.
7.6 Services NOT EXPRESSED OR IMPLIED.
7.6 (1) That ARDT has not agreed with Client, in this agreement
or any other agreement, verbal
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or written, that any associate of ARDT will be a market-maker in
any specific securities or securities that Client or Client's
Client has an interest: and,
7.6 (2) That any payment made herein to ARDT are not, and shall
not be construed as compensation to ARDT for the purposes of
having a referral or associate of ARDT make a market, or to cover
ARDT's out-of-pocket expenses for having a referral of ARDT make
a market, or for the submission by a referral of ARDT of an
application to make a market in any securities; and,
7.6 (3) That no payments made herein to ARDT are for the purpose
of affecting the price of any security or influencing any
market-making functions.
7.6 (4) That no payment made herein to ARDT shall be for making
false or exaggerated representations about the Clients or any of
the Client's clients or products.
7.6 (5) That no payment made herein to ARDT shall be for Research
Reporting coverage or securities purchase recommendations. BIS's
research department may or may not decide to initiate coverage of
Client's stock based on its due diligence, independently from any
form of contractual agreement.
8. ARDT Representations. ARDT hereby represents, covenants and warrants to
Client as follows:
8.1 Authorization. ARDT has full power and authority to enter into
this Agreement and to carry out the transactions contemplated
hereby.
8.2 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate any provision of the charter or by-laws of
Client, or violate any term or provision of any other agreement
or any statute or law.
8.3 Agreement in Full Force and Effect. All contracts, agreements,
plans, leases, policies and licenses referenced herein to which
Client is a party are valid and in full force and effect.
8.4 Consents. No consent of any person, other than the signatories
hereto, is necessary to the consummation of the transactions
contemplated hereby, including, without limitation, consents from
parties to loans, contracts, lease or other agreements and
consents from governmental agencies, whether federal, state, or
local.
8.5 Client Reliance. That Client has and will rely upon the
documents, instruments and written information furnished to
Client by ARDT and BIS's officers, or designated employees.
9.0 Confidentiality. ARDT and Client each agree to provide reasonable security
measures to keep information confidential whose release may be detrimental
to the stability and confidentiality of either ARDT or the Client. ARDT
shall not use any information obtained from Client for any purpose other
than the purposes described in this Agreement or any other Agreement with
Client.
10.0 Miscellaneous Provisions.
10.1 Amendment and Modification. This Agreement may be amended
modified and supplemented only by written agreement of ARDT and
Client.
10.2 Waiver of Compliance. Any failure of ARDT or Client to comply
with any obligation, agreement or condition herein may be
expressly waived in writing, but such waiver of failure to insist
upon strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
10.3 Expenses: Transfer Taxes, Etc. Whether or not the transaction
contemplated by this agreement is be consummated, ARDT agrees
that all fees and expenses incurred by ARDT, in connection with
this Agreement that are not specifically dealt with above shall
be borne by ARDT and Client agrees that all fees and expenses
incurred by Client in connection with this Agreement shall be
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borne by Client, including, without limitation as to ARDT or
Client, all fees of counsel and accountants.
10.4 Other Business Opportunities. Except as expressly provided in
this agreement, each party hereto shall have the right
independently to engage in and receive full benefits from
business activities. In case of business activities which would
be competitive with the other party, notice shall be given prior
to this agreement or, if such activities are proposed. Within 10
days prior to engagement therein. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to
any other activity, venture, or operation of either party.
10.5 Compliance with Regulatory Agencies. Each party agrees that all
actions, direct or indirect, taken by it and it's respective
agents, employees and affiliates in connection with this
agreement and any financing or underwriting hereunder shall
conform to all applicable Federal and State Laws.
10.6 Notices. Any notices to be given hereunder by any party to the
other may be effected by personal delivery in writing or in by
mail, registered or certified, postage prepaid with return
receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing in the introductory paragraph
of this agreement, but any party may change his address by
written notice in accordance with this subsection. Notices
delivered personally shall be deemed communicated as of actual
receipt; mailed notices shall be deemed communicated as of three
days after mailing.
10.7 Assignment. This agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but
neither this Agreement nor any right, interests or obligations
hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties, except by
operation of law.
10.8 Delegation. Neither party shall delegate the performance of its
duties under this agreement without the prior written consent of
the other party.
10.9 Publicity. Neither ARDT nor Client shall make or issue, or cause
to be made or issued, any announcement or written statement
concerning this Agreement or the transaction contemplated hereby
for dissemination to the general public without the prior consent
of the other party. This provision shall not apply, however, to
any announcement or written statement required to be made by law
or the regulations of any federal or state governmental agency,
except that the party concerning the timing and consent of such
announcement before such announcement is made.
10.10 Governing Law. This agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance
with the laws of the State of Texas, without regard to its
conflict of law doctrine. Clients and ARDT agree that if action
is instituted to enforce or interpret any provision of this
agreement then jurisdiction and venue shall be Dallas County,
Texas, or Marion County, Indiana.
10.11 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
10.12 Headings. The heading of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part
hereto or affect in any way the meaning or interpretation of this
Agreement.
10.13 Entire Agreement. This Agreement, including any Exhibits hereto,
and the other documents and certificates delivered pursuant to
the terms hereto, set forth the entire agreement and
understanding of the parties hereto in respect of the subject
matter contained herein, and superseded all prior agreements,
promise, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee
or representative of any party hereto.
10.14 Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed
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or implied is intended or shall be construed to confer upon or
give to any person or corporation other than the parties hereto
and their successors or assigns, any rights or remedies under or
by reason of this Agreement.
10.15 Attorneys' Fees and Costs. If any action is necessary to enforce
and collect upon the terms of this agreement, the prevailing
party shall be entitled to reasonable attorneys' fees and costs,
in addition to any other relief to which that party may be
entitled. This provision shall be construed as applicable to the
entire agreement.
10.16 Survivability. If any part of this agreement is found, or deemed
by a court of competent jurisdiction to be invalid or
unenforceable, that part shall be severable from the remainder of
this agreement.
10.17 Further Assurances. Each of the parties agrees that it shall from
the time to time take such actions and execute such additional
instruments as may be reasonably necessary or convenient to
implement and carry out the intent and purpose of this Agreement.
10.18 Right to Data after Termination. After termination of this
Agreement each party shall be entitled to copies of all
information acquired hereunder as of the date of termination and
not previously furnished to it.
10.19 Relationship of the Parties. Nothing contained in this Agreement
shall be deemed to cause either party the partner of the other,
nor, except as otherwise herein expressly provided, to cause
either party the agent or legal representative of the other, nor
create any fiduciary relationship between them. It is not the
intention of the parties to create nor shall this Agreement be
construed to create any commercial or other partnership. Neither
party shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other party, except
as otherwise expressly provided herein.. The rights, duties,
obligations and liabilities of the parties shall be several not
Joint or collective. Each party shall be responsible only for its
obligations as herein set out and shall be liable only for its
share of the costs and expenses as provided herein. Each party
shall indemnify, defend and hold harmless the other party, its
directors, officers, and employees from and against any and all
losses, claims, damages and liabilities arising out of any act or
any assumption of liability by the indemnify party, or any of its
directors, officers or employees, done or undertaken, or
apparently done or undertaken, on behalf of the other parties.
Each party shall be responsible for the acts of its agents and
affiliates.
11. Arbitration, Dispute Resolution.
11.1 WITH RESPECT TO THE ARBITRATION OF ANY DISPUTE, THE UNDERSIGNED
HEREBY ACKNOWLEDGE THAT:
(i) Arbitration is final and binding on the parties;
(ii) The parties are waiving their right to seek a remedy in
court, including the right to jury trial;
(iii) Pre-arbitration discovery is generally more limited and
different from court proceeding;
(iv) The arbitrator's award is not required to include factual
findings or legal reasoning and any party's right to appeal
or to seek modification of ruling by the arbitrators is
strictly limited;
(v) The panel of arbitrator will typically include a minority of
arbitrators who were or are affiliated with the securities
industry; and
(vi) This arbitration agreement is specifically intended to
include any and all statutory claims that might be asserted
by any party.
11.2 THE PARTIES AGREE THAT:
A. ALL DISPUTES, CONTROVERSIES, OR DIFFERENCES BETWEEN THE CLIENT,
ARDT OR ANY OF THEIR OFFICERS, DIRECTORS, LEGAL REPRESENTATIVES,
ATTORNEYS, ACCOUNTANTS, AGENTS OR EMPLOYEES, OR ANY CUSTOMER OR
OTHER PERSON OR ENTITY, ARISING OUT OF, IN CONNECTION WITH OR AS
A RESULT OF THIS AGREEMENT, SHALL BE RESOLVED THROUGH ARBITRATION
RATHER THAN THROUGH LITIGATION.
B. THE UNDERSIGNED HEREBY AGREES TO SUBMIT THE DISPUTE FOR
RESOLUTION TO EITHER
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THE AMERICAN ARBITRATION ASSOCIATION, IN DALLAS, TEXAS, or
Indianapolis, Indiana, OR THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC., IN A LOCATION IN ACCORDANCE WITH THE REGULATORY
RULES OF THE NASD, WHICHEVER ASSOCIATION MAY ASSERT JURISDICTION
OVER THE DISPUTE, WITHIN FIVE (5) DAYS AFTER RECEIVING A WRITTEN
REQUEST TO DO SO FROM ANY OT THE AFORESAID PARTIES.
C. IF ANY PARTY FAILS TO SUBMIT THE DISPUTE TO ARBITRATION ON
REQUEST, THEN THE REQUESTING PARTY MAY COMMENCE AN ARBITRATION
PROCEEDING.
D. ANY HEARING SCHEDULED AFTER AN ARBITRATION IS INITIATED SHALL
TAKE PLACE IN DALLAS, DALLAS COUNTY, TEXAS or Indianapolis,
Indiana, AND THE FEDERAL ARBITRATION ACT SHALL GOVERN THE
PROCEEDING AND ALL ISSUES RAISED BY THIS AGREEMENT TO ARBITRATE.
E. IF ANY PARTY SHALL INSTITUTE ANY COURT PROCEEDING IN AN EFFORT TO
RESIST ARBITRATION AND BE UNSUCCESSFUL IN RESISTING ARBITRATION
OR SHALL UNSUCCESSFULLY CONTEST THE JURISDICTION OF ANY
ARBITRATION FORUM LOCATED IN DALLAS, DALLAS COUNTY, TEXAS, or
Marion County, Indiana, OVER ANY MATTER WHICH IS THE SUBJECT OF
THIS AGREEMENT, THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER
FROM THE LOSING PARTY ITS LEGAL FEES AND ANY OUT-OF-POCKET
EXPENSES INCURRED IN CONNECTION WITH THE DEFENSE OF SUCH LEGAL
PROCEEDING OR ITS EFFORTS TO ENFORCE ITS RIGHTS TO ARBITRATION AS
PROVIDED FOR HEREIN.
F. EACH PARTY WILL SIGN ANY REQUIRED NASD UNIFORM SUBMISSION
AGREEMENT AT THE TIME ANY DISPUTE IS SUBMITTED FOR ARBITRATION.
OR THE APPLICABLE PAPERWORK FOR THE AMERICAN ARBITRATION
ASSOCIATION, AT THE TIME ANY DISPUTE IS SUBMITTED FOR ARBITRATION
WHICHEVER ONE IS APPLICABLE.
G. THE PARTIES SHALL ACCEPT THE DECISION OF ANY AWARD AS BEING,
FINAL AND CONCLUSIVE AND AGREE TO ABIDE THEREBY.
H. ANY DECISION MAY BE FILED WITH ANY COURT AS A BASIS FOR JUDGEMENT
AND EXECUTION FOR COLLECTION.
12. Term of Agreement and Termination. This agreement shall be effective upon
execution, shall continue for 6 (six) months unless terminated sooner, by
either party, upon giving to the other party 30 (thirty) days written
notice, after which time this agreement is terminated. ARDT shall be
entitled to the finders fees described in this Agreement for funding or
underwriting commitments entered into by Client's client within one year
after the termination of this agreement if said funding or underwriting was
the result of ARDT efforts prior to the termination of this agreement.
13. Authority of signatory(ies). Signatories warrant that they are authorized to
sign on behalf of the Client with full written power and authority to act in
this capacity on behalf of Client. Signatory(ies) also warrant(s) that he
(they) have adopted this Agreement by Corporate Resolution if required to do
so by the Client's By-Laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
Client: BowseSafe.com, Inc.:
By: /s/ Mark Smith
-----------------------------------------------
Mark Smith, President & Chief Executive Officer
Consultant:
By: /S/ Ronald P. Ardt
-----------------------------------------------
Ronald P. Ardt, JD, President and CEO, Business Investor Services, Inc.
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Exhibit 10.1
BARRY L . FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO (702)896-0278
November 17, 1999
Securities Exchange Commission
450 Fifth Street
Washington, DC 20549
Ladies and Gentlemen:
We have read the statements made by BrowseSafe.com, Inc., in their Form 10SB,
Part II, Item 3, which we understand will be filed with the Commission pursuant
to Regulation SB. We agree with the statements in these paragraphs concerning
our firm.
Very truly yours,
BARRY L. FRIEDMAN, P.C.
/s/ BARRY L. FRIEDMAN
