U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM SB-2/A REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
NFOX.COM
---------------------------------------------
(Name of small business issuer in its charter)
Nevada 7372 88-0425098
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
incorporation or Code Number) Number)
organization)
6216 S. Sandhill Rd., Suite C
Las Vegas, NV 89120
(702) 898-0456
(Address and telephone number of principal executive offices)
---------------------
6216 S. Sandhill Rd., Suite C
Las Vegas, NV 89120
(Address of principal place of business or intended principal place of
business)
Karl Kraft, Chief Executive Officer
NFOX.COM
6216 S. Sandhill Rd., Suite C
Las Vegas, NV 89120
(702) 898-0456
(Name, address and telephone number of agent for service)
--------------------
Copies of Communications to:
Donald J. Stoecklein, Esq.
Sperry Young & Stoecklein
1850 E. Flamingo Rd., Suite 111
Las Vegas, NV 89119
(702) 794-2590
<PAGE>
Approximate date of commencement of proposed sale to public:
As soon as practicable after the registration statement becomes effective
--------------------------
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[ ]
<TABLE>
Calculation of Registration Fee
Proposed
Offering Proposed
Price Maximum
Amount to Per Aggregate Amount of
Title of Each Class of be Share Offering Registration
Securities to be Registered Registered (1) Price (1) Fee
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value 2,250,000 $2.00 $4,500,000 $1,251
- ----------------------------------------------------------------------------
TOTAL 2,250,000 N/A $4,500,000 $1,251
============================================================================
</TABLE>
(1) The proposed maximum offering price is estimated solely for the
purpose of determining the registration fee and calculated pursuant to Rule
457(c).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Subject to Completion, dated November 17, 1999
<PAGE>
Initial Public Offering
PROSPECTUS
LOGO
2,250,000 Shares of Common Stock
$2.00 per share
NFOX.COM
6216 South Sandhill Road, Suite C
Las Vegas, Nevada 89120
The Offering
<TABLE>
Per share Total
<S> <C> <C>
Public Price. $2.00 $4,500,000
Commissions. $0 $0
Proceeds to NFOX. $2.00 $4,500,000
</TABLE>
We are offering to the public a minimum of 500,000 and a maximum of
2,250,000 shares of common stock on a "best efforts" basis through our
officers, directors and employees.
This is our initial public offering, and no public market currently exists
for our shares. The offering price may not reflect the market price of our
shares after the offering.
Anticipated Over-the-Counter Bulletin Board symbol:
"NFOX"
________________________
An investment in our common stock involves a high degree of risk. You
should purchase our common stock only if you can afford a complete loss of
your purchase. See "Risk Factors" beginning on page 2 for a discussion of
certain matters that you should consider prior to purchasing any of our
common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if
this Prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
________________________
The information contained in this Prospectus is subject to completion or
amendment. We have filed a registration statement with the Securities and
Exchange Commission relating to the securities offered in this Prospectus.
These securities may not be sold by us nor may we accept any offers to buy
the securities prior to the time the registration statement becomes
effective. This Prospectus is not an offer to sell or a solicitation of an
offer to buy any securities. We shall not sell these securities in any
state where such offer, solicitation or sale would be unlawful before we
register or qualify the securities for sale in any such State.
THE DATE OF THIS PROSPECTUS IS _________________, 1999.
<PAGE>
Table of Contents
Prospectus Summary 1
Risk Factors 2
Use of Proceeds 6
Determination of Offering Price 7
Plan of Distribution 7
Capitalization 8
Summary Financial Information 9
Dilution 10
Litigation 10
Management 11
Principal Stockholders 12
Description of Securities 12
Legal Matters 14
Experts 14
Our Business 15
Reports to Stockholders 18
Management Discussion and Analysis 18
Facilities 20
Certain Transactions 20
Market Price of Common Stock 20
Dividends 20
Executive Compensation 21
Shares Eligible for Future Sale 23
Changes in and Disagreements with Accountants 24
Independent Auditors Report F-1
Balance Sheet F-2
Statement of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
<PAGE>
Prospectus Summary
NFOX is a Development Stage Company, incorporated in the State of
Nevada in April of 1999. We develop portable software components which
allow multiple applications to run in one operating system. Additionally,
we develop frameworks for the transportation and management of information
over computer networks particularly the Internet and related networks.
Frameworks are a technology for placing vast amounts of complex information
and software routines in a storage library for later projects to use. Our
unique software framework is carefully designed for processor and interface
portability, low memory footprint, internationalization, and low CPU and
network impact. This will allow us to enter a section of the market that
has previously been ignored.
NFOX's principal offices are located at 6216 S. Sandhill Rd., Suite C,
Las Vegas, NV 89120 and its telephone number is (702) 898-0456.
Except as otherwise indicated the share and per share information and
data in this Prospectus do not give effect to 1,500,000 shares of Common
Stock reserved for issuance under the Company's 1999 Stock Option Plan.
The net proceeds we will receive from this offering, after deducting
expenses of the Offering, including copying, printing and advertising of
$2,500, legal fees of $15,000, and other expenses estimated at $2,500, will
be approximately $980,000 upon meeting the Minimum Offering and $4,480,000
upon meeting the Maximum Offering.
The Offering
Securities Offered. 500,000 Shares Minimum
2,250,000 Shares Maximum of Common Stock
Price Per Share. $2.00
Common Stock Outstanding
before Offering. 4,517,950 Shares of Common Stock
Common Stock Outstanding
after Offering. 5,017,950 Shares - Minimum Offering
6,767,950 Shares - Maximum Offering
Estimated Net Proceeds. $4,500,000
Proposed OTCBB Symbol. NFOX
Use of Proceeds. The proceeds of the Offering will
be used for working capital to initiate the
Company's marketing and promotional program,
salaries and benefits for employees and
consultants, as working capital and to
establish a liquidity base to accommodate
cash flow requirements.
<PAGE>
Risk Factors
Limited History of Business Operations; Development Stage
We were organized in April of 1999. We have yet to generate revenues
from operations and have been focused on organizational and start-up
activities since we incorporated. Our future operating results will depend
on many factors, including our ability to raise adequate working capital,
demand for our products and services, the level of our competition and our
ability to attract and maintain key management and employees.
Sufficiency of Funds
We believe that the proceeds of this Prospectus, together with funds
from operations, will be sufficient to satisfy our anticipated cash
requirements for at least the 12 months following the completion of this
offering. We may be required to seek additional capital in the future to
pay salaries, develop new products and fund future growth and expansion
through additional equity or debt financing or credit facilities. We
cannot assure that such financing would be available, and if available
whether it will debt or equity. In either case, the financing could have
negative impact on our financial condition and our Stockholders.
Dependence on Key Personnel
We are dependent upon our current officers and directors, Karl Kraft,
Charles Catania, and Ray Waddell; all of whom we have entered into five (5)
year contracts with. We substantially depend upon the efforts and skills
of Karl Kraft, Chairman and the President of the Company. The loss of Mr.
Kraft's services, or his inability to devote sufficient attention to our
operations, could materially and adversely affect our operations. We
currently do not maintain key man life insurance on Mr. Kraft. The loss of
Mr. Kraft, Mr. Catania, Mr. Waddell or our inability to attract and retain
other qualified employees could have a material adverse effect on the
Company.
Our future success also depends on our ability to attract and retain
highly qualified technical, sales and managerial personnel. Competition for
such personnel is intense, and there can be no assurance that we can retain
key technical, sales and managerial employees or that we can attract,
assimilate or retain other highly qualified technical, sales and managerial
personnel in the future. In addition, there can be no assurance that our
current level of management is sufficient to perform all responsibilities
necessary or beneficial for management to perform.
Our success in attracting additional qualified personnel will depend
on many factors, including our ability to provide them with competitive
compensation arrangements, equity participation and other benefits. There
is no assurance that we will be successful in attracting highly qualified
individuals in key management positions.
We believe that we have ample experience to design and refine our
products. However, marketing and general operations requires management
experience of a different nature. We expect that we will have little or no
direct experience in the management operations and marketing of the types
of products and services we intend to market. Because of our lack of
experience, we may be more vulnerable than others to certain risks. We
also may be more vulnerable to errors in judgment that could have been
prevented by more experienced management. As a result, lack of previous
experience could materially and adversely affect our future operations and
prospects.
<PAGE>
Control by Existing Stockholders
Assuming we complete the maximum offering of 2,250,000 shares, our
existing stockholders will beneficially own 4,517,950 shares of common
stock, or approximately 67% of the outstanding voting stock. As a result,
our existing stockholders will continue to be able to elect a majority of
the board of directors, to dissolve, to merge, or to sell the assets of the
Company, and to direct and control our operations, policies and business
decisions.
Anti-takeover Effect of Possible Issuance of Preferred Stock and Nevada
Corporate Law
We are authorized to issue up to 10,000,000 shares of authorized but
unissued preferred stock. We may issue the preferred stock in one or more
series. Our board of directors, at the time of issuance, will determine
the terms of each series of preferred stock to be issued without further
action by stockholders. The preferred stock may include the following:
- voting rights (including the right to vote as a series on particular
matters);
- preferences as to dividends and liquidation;
- conversion and redemption rights; and
- sinking fund provisions.
We currently have no plans to issue any preferred stock. If, in the
future, we decide to issue preferred stock it could adversely affect the
rights of our stockholders, and reduce the value of our common stock and
make it less likely that our stockholders would receive a premium for the
sale of their shares. We could issue specific rights to future holders of
preferred stock to restrict our ability to merge with or sell our assets to
a third party, thereby preserving control of the Company by present owners.
Future Capital Needs; Uncertainty of Additional Financing
The Company currently has no constant and continual flow of revenues.
The Company's future liquidity and capital requirements will depend upon
numerous factors, including the success of existing and future services and
the success of the Company's products. The Company may need to raise
additional funds through public or private financing, strategic
relationships or other arrangements. There can be no assurance that such
additional funding (if needed), will be available on acceptable terms.
Furthermore, debt financing (if available and undertaken) may involve
restrictions limiting the Company's operating flexibility.
Moreover, if the Company were to issue equity securities to raise
additional funds, the following results may occur: the percentage ownership
of the existing stockholders will be reduced, the Company's stockholders
may experience additional dilution in net book value per share, and the new
equity securities may have rights, preferences or privileges senior to
those of the holders of the Company's Common Stock. The Company can not
predict any additional capital requirements because of the uncertainty of
the Company's actual growth. However, in order to pursue its business plan
as desired the Company believes that future capital requirements will
exceed its current financial position.
The Company expects to finance operations for fiscal 1999 through cash
flow from operations, funds raised from this Prospectus, and possible
future private placements of equity securities. If adequate funds are not
available on acceptable terms, the Company may be prevented from pursuing
future opportunities or responding to competitive pressures. The failure to
pursue future opportunities or respond properly to competitive pressures
could materially and adversely affect the Company's business, results of
operations and financial condition.
<PAGE>
Arbitrary Determination of Offering Price; No Public Market for the
Securities
The initial public offering price of the Shares has been determined
arbitrarily by the Company. Factors considered in such determination, in
addition to prevailing market conditions, included the history and
prospects for the industry in which the Company competes, the prospects of
the Company, its capital structure and certain other factors deemed
relevant. Therefore, the public offering price of the Shares do not
necessarily bear any relationship to established valuation criteria and may
not be indicative of prices that may prevail at any time or from time to
time in the public market for the Common Stock.
Immediate and Substantial Dilution
The offering price of the Shares will be substantially higher than the
net tangible book value of the Common Stock. Investors participating in
this offering will incur immediate and substantial dilution of
approximately $1.31 per share, if the Maximum Offering is achieved, in the
net tangible book value of their investment from the offering price.
No Secondary Trading Exemption
Secondary trading in the Common Stock will not be possible in each
state until the shares of Common Stock are qualified for sale under the
applicable securities laws of that state or the Company verifies that an
exemption, such as listing in certain recognized securities manuals, is
available for secondary trading in that state. There can be no assurance
that the Company will be successful in registering or qualifying the Common
Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails
to register or qualify, or obtain or verify an exemption for the secondary
trading of, the Common Stock in any particular state, the shares of Common
Stock could not be offered or sold to, or purchased by, a resident of that
state. In the event that a significant number of states refuse to permit
secondary trading in the Company's Common Stock, a public market for the
Common Stock will fail to develop and the shares could be deprived of any
value.
Year 2000 Issues
Based on information currently available, the Company believes that
the costs associated with Year 2000 compliance, and the consequences of
incomplete or untimely resolution of the Year 2000 problem, will not have a
material adverse effect on the Company's business, financial condition and
results of operations in any given year. However, even if the internal
systems of the Company are not materially affected by the Year 2000
problem, the Company's business, financial condition and results of
operations could be materially adversely affected through disruption in the
operation of the enterprises with which the Company interacts. There can be
no assurance that third party computer products used by the Company are
Year 2000 compliant. Further, even though the Company believes that its
current products are Year 2000 compliant, there can be no assurance that
under actual conditions such products will perform as expected or that
future products will be Year 2000 compliant. Any failure of the Company's
products to be Year 2000 compliant could result in the loss of or delay in
market acceptance of the Company's products and services, increased service
and warranty costs to the Company or payment by the Company of compensatory
or other damages which could have a material adverse effect on the
Company's business, financial condition and results of operations.
<PAGE>
About this Prospectus
You should only rely on the information contained in this Prospectus.
We have not authorized anyone to provide information different from that
contained in this Prospectus. We are offering to sell, and seeking offers
to buy, shares of our common stock only in jurisdictions where offers and
sales are permitted.
Available Information
We are not subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. Once our securities are registered under
the Securities Exchange Act of 1934, we will file reports and other
information with the Securities and Exchange Commission. We intend to
register our securities under Section 12(g) of the Exchange Act. Such
reports, proxy statements and other information may be inspected and copied
at the public reference facilities maintained by the commission at:
Public Reference Facilities at: Pacific Regional Office at:
450 Fifth Street, Room 1024 5670 Wilshire Boulevard
N.W. Judiciary Plaza 11th Floor
Washington, D.C. 20549 Los Angeles, California 90036
Chicago Regional Office at: New York Regional Office at:
Northwestern Atrium Center Seven World Trade Center
500 West Madison Street 13th Floor
Suite 1400 New York, New York 10048
Chicago, Illinois 60661
In addition, they can be reviewed through the SEC's Electronic Data
Gathering Analysis and Retrieval System which is publicly available through
the SEC's web site (http://www.sec.gov).
We intend to furnish to our stockholders annual reports containing
financial statements audited by our independent certified public
accountants and quarterly reports containing unaudited interim financial
statements for the first three-quarters of each fiscal year.
We have filed with the Commission a registration statement under the
Securities Act of 1933, as amended with respect to the securities offered
in this Prospectus. This Prospectus does not contain all the information
set forth in the registration statement, certain parts of which are omitted
in accordance with the rules and regulations of the SEC. For further
information with respect to us and the common stock offered hereby,
reference is made to such Registration Statement, exhibits and schedules.
Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the registration statement, each such statement
being qualified in all respects by such reference. A copy of the
registration statement, including the exhibits and schedules, may be
inspected without charge at the SEC's public reference facilities at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at
the SEC regional offices and copies of all or any part thereof may be
obtained at prescribed rates from the public reference section of the SEC.
Such reports and other information can be reviewed through EDGAR.
<PAGE>
USE OF PROCEEDS
The amounts and timing of expenditures described in the table for each
purpose may vary significantly depending on numerous factors, including,
without limitation, the progress of our marketing, distribution and further
development of our products and services, competing technological and
market developments, changes in our existing research relationships, our
ability to establish collaborative arrangements, the initiation of
commercialization activities, the purchase of capital equipment and the
availability of other financing. We anticipate, based on currently proposed
plans and assumptions relating to our operations, that our available cash
and short-term investments, the proceeds of this offering and cash flow
from operations, if any, will be adequate to satisfy our capital needs for
at least 12 months following consummation of this offering.
The proceeds from the sale of the shares of common stock offered
hereby are estimated to be approximately $1,000,000 upon meeting the
minimum offering and approximately $4,500,000 upon meeting the maximum
offering. We intend to utilize the estimated net proceeds during the 12-
month period following the offering for the following purposes:
<TABLE>
Minimum Amount Maximum Amount
<S> <C> <C>
Total Proceeds $1,000,000 $4,500,000
Less: Offering Expenses
Legal $15,000 $15,000
Copying, Printing & $2,500 $2,500
Advertising
Other expenses $2,500 $2,500
----------------- --------------
Net Proceeds from Offering $980,000 $4,480,000
================ ==============
Use of Net Proceeds
General and Administrative $650,000 $2,000,000
fees
Legal and Accounting fees $75,000 $150,000
Internet Server Hardware,
Software, and Services $50,000 $300,000
Advertising, Marketing, $50,000 $750,000
Promotion
Building and equipment leases $50,000 $150,000
Network Hardware Production -- $400,000
Equipment
Working Capital $105,000 $730,000
----------------- ---------------
Total Use of Proceeds $1,000,000 $4,500,000
</TABLE>
We intend to apply the balance of the proceeds of the offering to working
capital and general corporate purposes. Our management will have broad
discretion with respect to the use of proceeds retained as working capital.
Such proceeds may be used to defray overhead expenses and for future
opportunities and contingencies that may arise. We expect that our general
and administrative expenses will increase as we achieve progress in
developing our proposed business plan. For example, a portion of the
proceeds allocated to working capital may be used to pay the salaries,
benefits and fees to employees and consultants who assist in our business.
<PAGE>
DETERMINATION OF OFFERING PRICE
We have arbitrarily determined the initial public offering price of
the shares. We considered several factors in such determination.
Including the following:
* prevailing market conditions, including the history and prospects
for the industry in which we compete;
* our future prospects;
* our capital structure; and
* certain other factors which we deemed relevant.
Therefore, the public offering price of the shares does not
necessarily bear any relationship to established valuation criteria and may
not be indicative of prices that may prevail at any time or from time to
time in the public market for the common stock.
PLAN OF DISTRIBUTION AND TERMS OF THE OFFERING
We are offering a minimum five hundred thousand (500,000) shares and a
maximum of two million two hundred fifty thousand (2,250,000) shares, at
two dollars ($2.00) per share. We will sell the shares on a "best efforts
basis" through our officers, directors and employees who will not receive
any compensation, however, will be reimbursed for their reasonable expenses
in connection with the sale of shares.
You may purchase shares by completing and manually executing a
subscription agreement and delivering it with your payment in full for all
shares which you wish to purchase to our offices. Your subscription shall
not become effective until accepted by us and approved by our counsel.
Minimum Offering Amount. There will be a 500,000 share minimum offering
amount of shares that we are required to attain before funds are released
for our use. Funds received prior to reaching the 500,000 share minimum
will be held in an interest bearing money market account and will not be
used until the minimum offering is achieved. Our officers and directors
will have sole authority over the funds raised, including the funds prior
to the achievement of the minimum offering. If we were to be unsuccessful
in achieving the minimum offering, funds, along with any interest earned,
will be redistributed to all investors who have purchased the shares
offered in this Prospectus. Upon achieving the minimum offering and the
acceptance of a subscription for shares, our transfer agent will issue the
shares to the purchasers. We may continue to offer shares until the
earlier of the offering termination date or the sale of all securities
offered in this Prospectus.
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization at September
30, 1999, after giving effect to and as adjusted to give effect to the sale
of the 500,000 shares minimum and 2,250,000 shares maximum offered in this
Prospectus.
<TABLE>
ACTUAL AS
(unaudited) ADJUSTED
At
September Minimum Maximum
30, 1999 Offering Offering
<S> <C> <C> <C>
Current Liabilities: $39,084 $39,084 $39,084
Stockholders' Equity:
Common Stock, $0.001 par
value; 25,000,000 shares
authorized;
4,517,950 shares issued and 4,518
outstanding
5,017,950 shares issued and
outstanding as adjusted following
500,000 share minimum 5,018
6,767,950 shares issued and
outstanding as adjusted following
2,250,000 share maximum 6,768
Additional paid-in capital 294,432 1,272,432 4,722,432
Deficit accumulated during
development stage (263,007) (263,007) (263,007)
---------- ---------- ----------
Stockholders' Equity 35,943 1,014,443 4,466,193
---------- ---------- ----------
Total Capitalization $75,027 $1,053,527 $4,505,277
========== ========== ==========
</TABLE>
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following table sets forth summary financial data derived from our
financial statements. The data should be read in conjunction with the
financial statements, related notes and other financial information
included in this Prospectus.
<TABLE>
Operating Statement Data:
For the Period
April 14, 1999 For Three
(Inception) to Months
June 30, 1999 Ended
(audited) September
30, 1999
(unaudited)
<S> <C> <C>
Income Statement Data:
Revenues: $0 $0
Expenses:
Total Expenses: $101,750 $162,299
--------------- -----------
Other Income or Expenses
Interest Income $206 $836
============================
Net (Loss) from Operations $(101,544) $(161,463)
============================
Loss per share $(.02) $(.04)
----------------------------
</TABLE>
<TABLE>
Balance Sheet Data: At June 30, At
1999 (Audited) September
30, 1999
(Unaudited)
<S> <C> <C>
Total Assets. $216,170 $75,027
Liabilities. $20,764 $39,084
---------------------------
Stockholders' Equity. $195,406 $35,943
===========================
</TABLE>
<PAGE>
DILUTION
The difference between our initial public offering price per share of
common stock and the pro forma net tangible book value per share of common
stock after this offering constitutes the dilution to investors in this
offering. Our net tangible book value per share is determined by dividing
the net tangible book value of the Company (total tangible assets less
total liabilities) by the number of outstanding shares of common stock.
At September 30, 1999 our common stock had a pro forma net tangible
book value of approximately $35,943 or $0.01 per share. After giving
effect to the receipt of the net proceeds from the maximum offering offered
in this Prospectus at an assumed initial offering price of $2.00 per share,
the pro forma net tangible book value of the Company at September 30, 1999,
would have been $4,515,943 or $0.67 per share, representing an immediate
increase in net tangible book value of $0.66 per share to our present
stockholders, and immediate dilution of $1.33 per share to investors, or
67%. The following table illustrates dilution to investors on a per share
basis:
Offering price per share... $2.00
Net tangible book value per share before offering $0.01
Increase per share attributable to investors $0.66
Pro forma net tangible book value per share after offering $0.67
Dilution per share to investors $1.33
The following table summarizes, as of September 30, 1999, the
difference between the number of shares of common stock purchased from the
Company, the total cash consideration paid and the average price per share
paid by existing stockholders of common stock and by the new investors
purchasing shares in this offering. The table assumes the sale of the
2,250,000 shares maximum offered in this Prospectus at an assumed initial
public offering price of $2.00 per share and before any deduction of
estimated offering expenses.
<TABLE>
Average
Price
Total Cash Per
Shares Purchased Consideration Share
Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C>
Original 4,517,950 67% $296,950 6% $0.07
Stockholders
Public 2,250,000 33% $4,500,000 94% $2.00
Stockholders
----------- ------ ---------- -----
Total 6,767,950 100% $4,796,950 100%
=========== ====== ========== =====
</TABLE>
LITIGATION
We may from time to time be involved in routine legal matters
incidental to our business; however, at this point in time we are currently
not involved in any litigation, nor are we aware of any threatened or
impending litigation.
<PAGE>
MANAGEMENT
We are currently searching for a Chief Executive Officer and a Vice
President of Marketing. The members of our Board of Directors serve until
the next annual meeting of stockholders, or until their successors have
been elected. The officers serve at the pleasure of the Board of
Directors. Information as to the directors and executive officers are as
follows:
Name Age Title
Karl Kraft 29 President, Chairman of the Board
Charles Catania 54 Secretary, Treasurer and Director
Ray Waddell 63 Director
Duties, Responsibilities and Experience
Karl Kraft acts as the Company's President and Chairman of the Board. Mr.
Kraft is the principal designer of the frameworks used in the NFOX
operating system, and will be the leader of the technical team. He has
been involved with Internet communication technologies since 1985,
including news, web site development, web and application servers, and
email. From 1989-1999, Mr. Kraft was CEO and CTO for Ensuing Technologies,
a small software development firm focusing on mission critical custom
applications, and shrink wrap software for Unix based workstations. Mr.
Kraft has also created security and encryption components for the NeXTSTEP
and OpenStep operating systems that are now owned by Apple Computer Inc.
Charles Catania acts as Secretary/Treasurer and as a Director of the
Company. Mr. Catania attended California State University of Fullerton
earning a Bachelor of Arts Degree in Business Administration in 1973. Mr.
Catania has acted as President and a Director of MarJo Investment
Corporation since 1973, and is presently Vice President of TODO
Construction, a General Contracting Firm in Las Vegas, Nevada.
Ray Waddell is a Director of the Company. Mr. Waddell holds a BS in
Business Administration from Los Angeles State. From 1967 to 1975 he was a
general partner of Minnet-Waddell Investment Corporation. Since 1975 he has
been on the board of directors of several corporations including Latta-
Waddell, Todo Construction, Mulberry Hill Construction, Nova Wears and
Wearables, and Ensuing Technologies.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of the date of this
Prospectus, and as adjusted giving effect to the sale of 500,000 shares
minimum and 2,250,000 shares maximum of common stock in this Offering,
relating to the beneficial ownership of our common stock by those persons
known to us to beneficially own more than 5% of our capital stock, by each
of our directors, proposed directors and executive officers, and by all of
our directors, proposed directors and executive officers as a group. The
address of each person is care of the Company.
<TABLE>
Percent Percent
Name of Beneficial Owner Percent After After
Number Before Offering Offering
Of Shares Offering (Minimum) (Maximum)
<S> <C> <C> <C> <C>
Karl Kraft 2,400,000 53.12% 47.83% 35.46%
Charles Catania 770,000 17.04% 15.34% 11.38%
Ray Waddell 800,000 17.71% 15.94% 11.82%
-------- ------- ------ --------
All Directors, Officers
and Principle Stockholders
as a Group 3,970,000 87.87% 79.11% 58.66%
</TABLE>
"Beneficial ownership" means the sole or shared power to vote or to
direct the voting of, a security, or the sole or shared investment power
with respect to a security (i.e., the power to dispose of or to direct the
disposition of, a security). In addition, for purposes of this table, a
person is deemed, as of any date, to have "beneficial ownership" of any
security that such person has the right to acquire within 60 days from the
date of this Prospectus.
The figures in the table are rounded to the nearest percent. In
addition, the figures do not reflect 500,000 shares of stock options
granted to Mr. Kraft as part of his employment agreement, 100,000 shares of
stock options granted to Mr. Catania as part of his employment agreement or
75,000 shares of stock options granted to Mr. Waddell as part of his
consulting agreement.
DESCRIPTION OF SECURITIES
Common Stock
Our Articles of Incorporation authorizes the issuance of 25,000,000
shares of common stock, $0.001 par value per share, of which 4,517,950
shares were outstanding as of the date of this Prospectus. Upon sale of the
500,000 shares minimum and 2,250,000 share maximum, we will have
outstanding 5,017,950 or 6,767,950 shares of common stock, respectively.
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock
have no cumulative voting rights. Holders of shares of common stock are
entitled to share ratably in dividends, if any, as may be declared, from
time to time by the Board of Directors in its discretion, from funds
legally available to be distributed. In the event of a liquidation,
dissolution or winding up of the Company, the holders of shares of common
stock are entitled to share pro rata all assets remaining after payment in
full of all liabilities. Holders of common stock have no preemptive rights
to purchase our common stock. 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 validly issued, fully paid and non-
assessable.
<PAGE>
Preferred Stock
Our Articles of Incorporation authorizes the issuance of 10,000,000
shares of preferred stock, $.001 par value per share, of which no shares
were outstanding as of the date of this Prospectus. The preferred stock
may be issued from time to time by the Board of Directors as shares of one
or more classes or series. Our board of directors, subject to the
provisions of our Articles of Incorporation and limitations imposed by law,
is authorized to:
* adopt resolutions;
* to issue the shares;
* to fix the number of shares;
* to change the number of shares constituting any series; and
* to provide for or change the following:
- the voting powers;
- designations;
- preferences; and
- relative, participating, optional or other special rights,
qualifications, limitations or restrictions, including the following:
- dividend rights (including whether dividends are cumulative);
- dividend rates;
- terms of redemption (including sinking fund provisions);
- redemption prices;
- conversion rights; and
- liquidation preferences of the shares constituting any class or
series of the preferred stock.
In each of the listed cases, we will not need any further action or
vote by the stockholders.
One of the effects of undesignated preferred stock may be to enable
the Board of Directors to render more difficult or to discourage an attempt
to obtain control of the Company by means of a tender offer, proxy contest,
merger or otherwise, and thereby to protect the continuity of our
management. The issuance of shares of preferred stock pursuant to the Board
of Director's authority described above may adversely affect the rights of
holders of common stock. For example, preferred stock issued by us may rank
prior to the common stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into
shares of common stock. Accordingly, the issuance of shares of preferred
stock may discourage bids for the common stock at a premium or may
otherwise adversely affect the market price of the common stock.
Nevada Laws
The Nevada Business Corporation Law contains a provision governing
"Acquisition of Controlling Interest." This law provides generally that
any person or entity that acquires 20% or more of the outstanding voting
shares of a publicly-held Nevada corporation in the secondary public or
private market may be denied voting rights with respect to the acquired
shares, unless a majority of the disinterested stockholders of the
corporation elects to restore such voting rights in whole or in part. The
control share acquisition act provides that a person or entity acquires
"control shares" whenever it acquires shares that, but for the operation of
the control share acquisition act, would bring its voting power within any
of the following three ranges: (i) 20 to 331/3%, (ii) 331/3 to 50%, or
(iii) more than 50%. A "control share acquisition" is generally defined as
the direct or indirect acquisition of either ownership or voting power
associated with issued and outstanding control shares. The stockholders or
<PAGE>
board of directors of a corporation may elect to exempt the stock of the
corporation from the provisions of the control share acquisition act
through adoption of a provision to that effect in the articles of
incorporation or bylaws of the corporation. Our articles of incorporation
and bylaws do not exempt our common stock from the control share
acquisition act.
The control share acquisition act is applicable only to shares of
"Issuing Corporations" as defined by the act. An Issuing Corporation is a
Nevada corporation, which (1) has 200 or more stockholders, with at least
100 of such stockholders being both stockholders of record and residents of
Nevada; and (2) does business in Nevada directly or through an affiliated
corporation. At this time, we do not have 100 stockholders of record
resident of Nevada. Therefore, the provisions of the control share
acquisition act do not apply to acquisitions of our shares and will not
until such time as these requirements have been met. At such time as they
may apply to us, the provisions of the control share acquisition act may
discourage companies or persons interested in acquiring a significant
interest in or control of the Company, regardless of whether such
acquisition may be in the interest of our stockholders.
The Nevada "Combination with Interested Stockholders Statute" may also
have an effect of delaying or making it more difficult to effect a change
in control of the Company. This Statute prevents an "interested
stockholder" and a resident domestic Nevada corporation from entering into
a "combination," unless certain conditions are met. The Statute defines
"combination" to include any merger or consolidation with an "interested
stockholder," or any sale, lease, exchange, mortgage, pledge, transfer or
other disposition, in one transaction or a series of transactions with an
"interested stockholder" having (i) an aggregate market value equal to 5
percent or more of the aggregate market value of the assets of the
corporation; (ii) an aggregate market value equal to 5 percent or more of
the aggregate market value of all outstanding shares of the corporation; or
(iii) representing 10 percent or more of the earning power or net income of
the corporation. An "interested stockholder" means the beneficial owner of
10 percent or more of the voting shares of a resident domestic corporation,
or an affiliate or associate thereof. A corporation affected by the
Statute may not engage in a "combination" within three years after the
interested stockholder acquires its shares unless the combination or
purchase is approved by the board of directors before the interested
stockholder acquired such shares. If approval is not obtained, then after
the expiration of the three-year period, the business combination may be
consummated with the approval of the board of directors or a majority of
the voting power held by disinterested stockholders, or if the
consideration to be paid by the interested stockholder is at least equal to
the highest of (i) the highest price per share paid by the interested
stockholder within the three years immediately preceding the date of the
announcement of the combination or in the transaction in which he became an
interested stockholder, whichever is higher; (ii) the market value per
common share on the date of announcement of the combination or the date the
interested stockholder acquired the shares, whichever is higher; or (iii)
if higher for the holders of Preferred Stock, the highest liquidation value
of the Preferred Stock.
LEGAL MATTERS
The legality of the shares offered hereby will be passed upon for us
by the Law Offices of Sperry Young & Stoecklein, Las Vegas, Nevada. The
firm beneficially controls 100,000 shares of our common stock. We consent
to and understand this potential conflict of interest.
EXPERTS
The financial statements of NFOX.COM as of June 30,1999 are included
in this Prospectus and have been audited by Barrie L. Friedman, LLP, an
independent auditor, as set forth in his report thereon appearing elsewhere
herein and are included in reliance upon such reports given upon the
authority of such individual as an expert in accounting and auditing.
<PAGE>
OUR BUSINESS
Overview
We are a developer of portable software components and frameworks for
the transportation and management of information over computer networks
particularly the Internet and related networks. Frameworks are a technology
for placing complex or common software routines in a library for later
projects to leverage. Portable software components are multi-platform
applications that run in an
Operating System of some kind.
Our unique software framework is carefully designed for processor and
interface portability, low memory footprint, internationalization, and low
CPU and network impact. This will allow us to enter a section of the
market that has previously been ignored. We feel that with the industry
contacts we have obtained and with a solid capital foundation, we will
occupy a dominant position in several present and future key market spaces.
The targeted market spaces we intend to enter include enterprise
information and workflow, Internet browsers, information appliances,
personal digital assistants, set top boxes, screen phones, and embedded
network devices. Due to the variety of market spaces, we will be selling
products, services related to the products, and entering into licensing
agreements for third parties to use portions of our technology.
Our ability to occupy and be a major force in each of these market
spaces is based on the capability to cross use of component software on
both multiple processor and operating systems; such as IBM, Macintosh, Unix
and Linux, and also through different application delivery methods;
including Graphical user interfaces, command line, web sites, "net
stations", Java clients and Client/Server. As new components are
developed, innovative applications will be emphasized to take advantage of
emerging markets. In addition, the framework allows for components to be
shared and transported over networks, allowing the framework to be
functional and usable on lightweight platforms under heavy load.
The framework and certain components are proprietary to the Company.
We intend to file for various copyrights, trademarks, patents, and will use
certain trade secret agreements in order to protect our intellectual
property. The source code to certain components and the method for writing
components will be released openly and will generally be available to the
public at large.
Revenues will be generated through the use of our framework offered at
our public web site, which we intend to develop and operate. The web site
will commingle and sort information for many practical uses, including the
use of public company research, price comparisons, online shopping, and
other multi-source information services. This information will be offered
on a subscription basis.
As we grow we will grow our revenue base and streams by:
* increasing the number of components available to end-users;
* redeploying the framework and components as new products
such as retail software and set top boxes;
* providing development services to third parties for the
creation of custom components;
* licensing the framework and components, either in sections
or total content, to third parties.
<PAGE>
The overall strategy and portable design of the framework is unique,
and may give us a competitive advantage and ability to work in several
market spaces. Within capital expenditures, our diverse products will
initially focus primarily on expansion related to component design and
development. This will position us to act quickly as infrastructure and
markets develop for future products, such as screen phones, set top boxes,
and Internet appliances.
Our distribution strategies and revenue sources will remain flexible
in accordance with evolving product lines.
Impact of the Internet
The Internet has emerged as a global communications medium, enabling
millions of people to gather information, communicate and conduct business
electronically. The Internet's ability to empower customers, reduce
transaction costs and product development times and accelerate the pace of
business transactions has dramatically transformed the competitive
landscape of a wide range of industries. The Internet provides customers
with a broader selection, increased purchasing power and unparalleled
convenience while enabling businesses to reach a global audience, increase
economies of scale and operate with minimal infrastructure.
The Internet has facilitated the emergence of new competitors and is
increasingly affecting the methods by which incumbent competitors sell
goods and services and manage relationships with customers. For example, in
the software industry, the Internet is profoundly changing the way that
software is developed and distributed. The Internet has enabled multiple
groups of developers to collaborate on specific projects from remote
locations around the globe. Developers can write code alone or in groups,
make their code available over the Internet, give and receive comments on
other developers' code and modify it accordingly. The Internet has also
provided an avenue not only for less expensive and speedier delivery of
code, but also for support and other online services.
Competition
The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other
market activities of industry participants. Our products are targeted at
the emerging market for Internet software parts and programming tools and,
to a lesser extent, at the emerging Java market. Our competitors offer a
variety of products and services to address these markets. We believe that
the principal competitive factors in this market are product quality,
flexibility, performance, functionality and features, use of standards
based technology, quality of support and service, company reputation and
price. While price is less significant than other factors for corporate
customers, price can be a significant factor for individual programmers.
Direct competitors include Microsoft, IBM, ILOG and several privately held
companies. Microsoft is a particularly strong competitor due to its large
installed base. Microsoft may decide in the future to devote more resources
to or broaden the functions of its products in order to address and more
effectively compete with the functionality of our products. We face direct
competition in the Java market from Borland, JavaSoft (a business unit of
Sun Microsystems), Microsoft, Sybase, Symantec and other companies for our
proposed Java products and we expect to face significant competition in the
future from such companies with respect to other Java products we may
introduce. Software applications can also be developed using software parts
and programming tools in environments other than that in which we currently
are involved in. Indirect competitors with such offerings include
Microsoft, Borland, Oracle, ParcPlace-Digitalk and Powersoft (a subsidiary
of Sybase). Many of these competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
significantly greater name recognition and larger installed bases of
customers than us. In addition, several database vendors, such as Informix,
Oracle and Sybase are increasingly developing robust software parts for
inclusion with their database products and may begin to compete with us in
<PAGE>
the future. These potential competitors have well-established relationships
with current and potential customers and have the resources to enable them
too more easily offer a single vendor solution. Like our current
competitors, many of these companies have longer operating histories,
significantly greater resources and name recognition and larger installed
bases of customers than us. As a result, these potential competitors may
be able to respond more quickly to new or emerging technologies and changes
in customer requirements, or to devote greater resources to the
development, promotion and sale of their products than us.
We also face competition from systems integrators and internal
development efforts. Many systems integrators possess industry specific
expertise that may enable them to offer a single vendor solution more
easily, and already have a reputation among potential customers for
offering enterprise-wide solutions to software programming needs. There can
be no assurance that these third parties, many of which have significantly
greater resources than us, will not market competitive software products in
the future. It is also possible that new competitors or alliances among
competitors will emerge and rapidly acquire significant market share. We
also expect that competition will increase as a result of software industry
consolidation. Increased competition may result in price reductions,
reduced gross margins and loss of market share, any of which could
materially and adversely affect our business, operating results and
financial condition. There can be no assurance that we will be able to
compete successfully against current and future competitors or that
competitive pressures faced by us will not materially and adversely affect
our business, financial condition and results of operations.
Internet Servers
We have deployed two general-purpose servers to support our software
product, and to run our web site. One of these servers is located at our
principal place of business in Las Vegas, Nevada. The other is located in
San Jose at a co-location facility owned and operated by AboveNet [AboveNet
is in the process of being merged with a subsidiary of MetroMedia Fiber].
We plan to use part of the proceeds from this offering to acquire and place
additional servers in facilities in Vienna (Virginia, United States),
London (United Kingdom), and Japan.
In addition to these general-purpose servers, we also maintain several
servers that are capable of running our portable software components and
frameworks. We plan to use part of the proceeds to purchase additional
servers for this purpose, both for testing and assuring the portable nature
of the frameworks, and for providing operational support for our web
servers and clients.
Employees
We currently employ 8 people on a full time basis and no part time
employees. Our personnel structure can be divided into two broad
categories; finance and administration (2 of the 8 employees), and software
engineering personnel. Upon the successful closing of the maximum
offering, we have plans to hire additional software engineering personnel
and additional management personnel, an exact number of personnel to be
hired has not been determined.
None of our employees is represented by a labor union or subject to a
collective bargaining agreement.
<PAGE>
REPORTS TO STOCKHOLDERS
We are not subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. Once our securities are registered under
the exchange act, we will file reports and other information with the
Securities and Exchange Commission. We intend to register our securities
under Section 12(g) of the Exchange Act. Such reports, proxy statements and
other information may be inspected and copied at the public reference
facilities maintained by the commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the Pacific Regional Office located at 5670
Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648, the New
York Regional Office located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and the Chicago Regional Office located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and can be reviewed through the Commission's Electronic Data
Gathering Analysis and Retrieval System which is publicly available through
the Commission's web site (http://www.sec.gov).
We intend to furnish annual reports to stockholders, which will
include audited financial statements reported on by our Certified Public
Accountants. In addition, we may issue unaudited quarterly or other interim
reports to stockholders, as it deems appropriate.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by the financial statements section included
herein.
With the exception of historical matters, the matters discussed herein
are forward looking statements that involve risks and uncertainties.
Forward looking statements include, but are not limited to, statements
concerning anticipated trends in revenues and net income, the date of
introduction or completion of our products, projections concerning
operations and available cash flow. Our actual results could differ
materially from the results discussed in such forward looking statements.
The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and
the related notes thereto appearing elsewhere in this Prospectus.
Overview
NFOX.COM, which was organized in April 1999, is a Development Stage
Company, engaged in the business of developing portable software components
and frameworks for the transportation and management of information over
computer networks. We have a limited operating history and have not
generated revenues from the sale of any products. Our activities have been
limited to the development of prototypes and analyzing the market
conditions for the proprietary services and products. Consequently, we have
incurred the expenses of start-up. Future operating results will depend on
many factors, including our ability to raise adequate working capital,
demand for our services and products, the level of competition and our
ability to deliver services and products while maintaining quality and
controlling costs.
Results of Operations
Period from April 14, 1999 (Inception) to June 30, 1999 and quarter ending
September 30, 1999.
From inception through the end of the third quarter we achieved three
main goals; The formation of our organization to pursue our business
strategy, development of a production model and achieving the public
company status to assist in funding our objectives.
<PAGE>
Revenues. We are a development stage enterprise as defined in SFAS #7,
and have yet to generate any revenues. We are devoting substantially all of
our present efforts to: (1) developing our technology and other programs,
(2) developing our market, and (3) obtaining sufficient capital to commence
full operations.
Pre-Operating Expenses. Pre-Operating expenses for the period from
April 14, 1999 to June 30, 1999 were $101,544. Pre-Operating expenses for
the period from July 1, 1999 to September 30, 1999 were $161,463.
Research and Development. Research and Development expenses have not
been a significant portion of the total Pre-Operating expenses.
Plan of Operation
During the next 12 months we plan to focus our efforts on the
continued development of our proposed products, search for possible
collaborative partners in our industry and to release the first product on
a beta level to be tested by a limited number of end users.
Liquidity and Capital Resources
Cash and cash equivalents will be increasing primarily due to
commencement of operations. The receipt of funds from this Offering and
loans obtained through private sources by us are anticipated to offset the
near term cash equivalents of the Company. Since inception, we have
financed our cash flow requirements through issuance of common stock. As we
expand our activities, we may continue to experience net negative cash
flows from operations, pending receipt of sales revenues. Additionally we
may be required to obtain additional financing to fund operations through
common stock offerings and bank borrowings, to the extent available, or to
obtain additional financing to the extent necessary to augment our working
capital.
Over the next twelve months, we intend to increase our revenues by
releasing our products under development to our target markets. However, we
will continue the research and development of our products, increase the
number of our employees, and expand our facilities where necessary to meet
product development and completion deadlines. We believe that, funds from
the maximum offering, existing capital and anticipated funds from
operations will be sufficient to sustain operations and planned expansion
in the next twelve months. However, if we were only to achieve the minimum
offering we may have to seek additional financing in order to sustain
operations. There can be no assurance such additional funds will be
available or that, if available, such additional funds will be on terms
acceptable to us. In either case, the financing could have negative impact
on our financial condition and our stockholders.
We anticipate that we will incur operating losses in the next twelve
months. Our lack of operating history makes predictions of future operating
results difficult to ascertain. Our prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by companies
in their early stage of development, particularly companies in new and
rapidly evolving markets. Such risks for us include, but are not limited
to, an evolving and unpredictable business model and the management of
growth. To address these risks, we must, among other things, obtain a
customer base, implement and successfully execute our business and
marketing strategy, continue to develop and upgrade our technology and
products, provide superior customer services and order fulfillment, respond
to competitive developments, and attract, retain and motivate qualified
personnel. There can be no assurance that we will be successful in
addressing such risks, and the failure to do so can have a material adverse
effect on our business prospects, financial condition and results of
operations.
<PAGE>
Costs Associated with Year 2000 Problem
We have incurred minimal expenses associated with the Year 2000
Problem. As a result the Company being a Development Stage Enterprise, our
computer equipment is being purchased as Year 2000 compliant, where
possible.
FACILITIES
We have leased 2,370 square feet of office space located at 6216 S.
Sandhill Rd., Suite C, Las Vegas, Nevada 89120. The lease is for a three-
year term. We believe that our facilities are adequate for our purposes at
this time.
CERTAIN TRANSACTIONS
Consulting Contracts
In April of 1999, we retained the consulting services of Ray Waddell
to assist us in product development and market research. Mr. Waddell is
also one of our Directors. We agreed to pay Mr. Waddell at the rate of
$1,000 per month for his consulting services for a five (5) year term.
MARKET PRICE OF COMMON STOCK
We intend to file for inclusion of our common stock on the National
Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board;
however, there can be no assurance that NASD will approve the inclusion of
the common stock. Prior to the effective date of this offering, our common
stock was not traded.
As of November 1, 1999 there were approximately 127 stockholders of
our common stock.
DIVIDENDS
The payment by us of dividends is subject to the discretion of our
Board of Directors and will depend, among other things, upon our earnings,
our capital requirements, our financial condition, and other relevant
factors. We have not paid or declared any dividends upon our common stock
since our inception and, by reason of our present financial status and our
contemplated financial requirements, do not anticipate paying any dividends
upon our common stock in the foreseeable future.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation of our Chief
Executive Officer, Karl Kraft from inception (April 14, 1999) to June 30,
1999. No other officer or director has received or is anticipated to
receive remuneration in excess of $100,000 for fiscal 1999. The
remuneration described in the table does not include the cost to us of
benefits furnished to the named executive officer, including premiums for
health insurance and other benefits provided to such individual that are
extended in connection with the conduct of our business. The value of such
benefits cannot be precisely determined, but the executive officer named
below did not receive other compensation in excess of the lesser of $50,000
or 10% of such officer's cash compensation.
<TABLE>
Summary Compensation Table
Long Term
Annual Compensation Compensation
Name and Principal
Position Other Annual Restricted
YTD Salary Bonus Compensation Stock Options
<S> <C> <C> <C> <C> <C> <C>
Karl Kraft,
President, CEO 1999 $41,500 N/A N/A N/A 500,000
</TABLE>
Karl Kraft is subject to a five year employment agreement with annual
salary of $120,000 and a $600 per month auto allowance.
Key Officer Employment Agreements
Karl Kraft, Chief Executive Officer and President, pursuant to a written
agreement dated April 16, 1999 and continuing for five (5) years, in
consideration for his services, Mr. Kraft will receive an annual base
Salary of $120,000. Mr. Kraft has agreed to receive a reduced salary of
$5,000 per month and defer payment of the balance of his salary until we
release our first two products or have sufficient capital to pay his full
salary. As additional compensation, Mr. Kraft receives an auto allowance of
$600 per month, such allowance will be paid when our board of directors
determines we have become profitable and are generating sufficient revenue
to pay such allowance.
Charles Catania, Secretary and Treasurer, pursuant to a written agreement
dated April 16, 1999 and continuing for five (5) years, in consideration
for his services, Mr. Catania will receive an annual base Salary of $48,000
for the first year of employment, increasing to $84,000 per year in the
remaining years. Mr. Catania has agreed to receive a reduced salary of
$1,000 per month and defer payment of the balance of his salary until we
have sufficient capital to pay his full salary. As additional compensation,
Mr. Catania receives an auto allowance of $600 per month, such allowance
will be paid when our board of directors determines we have become
profitable and are generating sufficient revenue to pay such allowance.
Compensation Committee Interlocks and Insider Participation
We do not currently have a compensation committee of the Board of
Directors. However, the Board of Directors intends to establish a
compensation committee, which is expected to consist of three inside
directors and two independent members.
<PAGE>
Stock Option Plan and Non-Employee Directors' Plan
The following descriptions apply to stock option plans which we
adopted in April of 1999; 820,600 options have been granted as of the date
of this Prospectus.
We have reserved for issuance an aggregate of 1,500,000 shares of
common stock under our 1999 Stock Option Plan and Non-Employee Directors'
Plan. These plans are intended to encourage directors, officers, employees
and consultants to acquire ownership of common stock. The opportunity so
provided is intended to foster in participants a strong incentive to put
forth maximum effort for our continued success and growth, to aid in
retaining individuals who put forth such efforts, and to assist in
attracting the best available individuals to us in the future.
Stock Option Plan
Officers (including officers who are members of the Board of
Directors), directors (other than members of the stock option committee to
be established to administer the stock option plan and the directors' plan)
and other employees and consultants and its subsidiaries (if established)
will be eligible to receive options under the planned stock option plan.
The committee will administer the stock option plan and will determine
those persons to whom options will be granted, the number of options to be
granted, the provisions applicable to each grant and the time periods
during which the options may be exercised. No options may be granted more
than ten years after the date of the adoption of the stock option plan.
Non-qualified stock options will be granted by the committee with an
option price equal to the fair market value of the shares of common stock
to which the non-qualified stock option relates on the date of grant. The
committee may, in its discretion, determine to price the non-qualified
option at a different price. In no event may the option price with respect
to an incentive stock option granted under the stock option plan be less
than the fair market value of such common stock to which the incentive
stock option relates on the date the incentive stock option is granted.
Each option granted under the stock option plan will be exercisable
for a term of not more than ten years after the date of grant. Certain
other restrictions will apply in connection with this plan when some awards
may be exercised. In the event of a change of control (as defined in the
stock option plan), the date on which all options outstanding under the
stock option plan may first be exercised will be accelerated. Generally,
all options terminate 90 days after a change of control.
<PAGE>
Option Grants
The Board of directors adopted and the stockholders approved the
adoption of our 1999 stock option plan pursuant to which incentive stock
options or nonstatutory stock options to purchase up to 1,500,000 shares of
common stock may be granted to employees, directors and consultants.
Pursuant to the plan we granted stock options as follows:
<TABLE>
Date Granted Exercise Price Number of Shares
<S> <C> <C>
April 16, 1999
Granted $0.20 675,000
Exercised 0 0
Cancelled 0 0
July 1, 1999
Granted $1.00 145,600
Exercised 0 0
Cancelled 0 0
Total outstanding
November 1, 1999 820,600
</TABLE>
Transfer Agent
The transfer agent for the common stock will be Pacific Stock
Transfer, 5844 S. Pecos Road, Suite D, Las Vegas, Nevada 89120.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common
stock. Future sales of substantial amounts of common stock in the public
market could adversely affect market prices prevailing from time to time.
Furthermore, since only a limited number of shares will be available for
sale shortly after this offering because of certain restrictions on resale,
sales of substantial amounts of our common stock in the public market after
the restrictions lapse could adversely affect the prevailing market price
and our ability to raise equity capital in the future.
Upon completion of this offering, we will have outstanding an
aggregate of 6,767,950 shares of Common Stock, assuming:
(i) the maximum offering of 2,250,000 shares is achieved, and
(ii) no exercise of options to purchase 820,600 shares of common stock
outstanding as of the date of this Prospectus.
Of these shares, the 2,250,000 shares of common stock sold in this
offering will be freely tradable without restriction or further
registration under the Securities Act, unless such shares are purchased by
"affiliates" of the Company as that term is defined in Rule 144 under the
Securities Act. The remaining 4,517,950 shares of common stock held by our
existing stockholders are "restricted securities" as that term is defined
in Rule 144 under the Securities Act. Restricted shares may be sold in the
<PAGE>
public market only if registered or if they qualify for an exemption from
registration under Rule 144 or 701 promulgated under the Securities Act.
As a result of the provisions of Rules 144 and 701, additional shares will
be available for sale in the public market as follows:
(i) no restricted shares will be eligible for immediate sale on the date
of this Prospectus;
(ii) 140,000 restricted shares will be eligible for sale 90 days after the
date of this Prospectus; and
(iii)the remainder of the restricted shares will be eligible for sale
from time to time thereafter upon expiration of their respective one-year
holding periods, subject to restrictions on such sales by affiliates and
certain vesting provisions.
In general, under Rule 144 as currently in effect, beginning 90 days
after the Effective Date, an affiliate of the Company, or person (or
persons whose shares are aggregated) who has beneficially owned restricted
shares for at least one year will be entitled to sell in any three-month
period a number of shares that does not exceed the greater of:
(i) one percent of the then outstanding shares of our common
stock; or
(ii) the average weekly trading volume of our common stock in the
Over-the-Counter Bulletin Board during the four calendar
weeks immediately preceding the date on which notice of the
sale is filed with the SEC.
Sales pursuant to Rule 144 are subject to certain requirements
relating to manner of sale, notice, and the availability of current public
information about us. A person (or persons whose shares are aggregated)
who is not deemed to have been an affiliate of the Company at any time
during the 90 days immediately preceding the sale and who has beneficially
owned restricted shares for at least two years is entitled to sell such
shares under Rule 144(k) without regard to the resale limitations.
An employee, officer or director of or consultant to the Company who
purchased or was awarded shares or options to purchase shares pursuant to a
written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701 under the Securities Act, which permits Affiliates
and non- Affiliates to sell their Rule 701 Shares without having to comply
with Rule 144's holding period restrictions, in each case commencing 90
days after the date of this Prospectus. In addition, non-Affiliates may
sell Rule 701 Shares without complying with the public information, volume
and notice provisions of Rule 144.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
In July 1999, we engaged the services of Barrie L. Friedman, P.C. of
Las Vegas, Nevada, to provide an audit of our financial statements for the
period from April 14, 1999 (inception) to June 30, 1999. This was our first
auditor. We have no disagreements with our auditor through the date of
this Prospectus.
<PAGE>
NFOX.COM
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET - ASSETS F-2
BALANCE SHEET - LIABILITIES AND STOCKHOLDERS EQUITY F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7-10
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board Of Directors November 15, 1999
NFOX.COM
Las Vegas, Nevada
I have audited the Balance Sheet of NFOX.COM, (A Development Stage
Company), as of June 30, 1999, and the related Statements of Operations,
Stockholders' Equity and Cash Flows for the period April 14, 1999,
(inception) to June 30, 1999. These financial statements are the
responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audit provides
a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of NFOX.COM, (A
Development Stage Company), as of June 30, 1999, and the results of its
operations and cash flows for the period April 14, 1999, (inception) to
June 30, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #3 to the
financial statements, the Company has had no operations and has no
established source of revenue. This raises substantial doubt about its
ability to continue as a going concern. Management's plan in regard to
these matters are also described in Note #3. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Barry L. Friedman
Certified Public Accountant
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
BALANCE SHEET
ASSETS
As of As of
June 30, September
1999 30, 1999
(Audited) (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 205,923 $ 25,992
------------ -----------
TOTAL CURRENT ASSETS $ 205,923 $ 25,992
------------ -----------
FIXED ASSETS:
Equipment (Net) $ 6,610 $ 39,636
------------ -----------
TOTAL FIXED ASSETS $ 6,610 $ 39,636
------------ -----------
OTHER ASSETS:
Deposits $ 3,637 $ 3,637
Public Offering Costs 0 5,762
------------ -----------
TOTAL OTHER ASSETS $ 3,637 $ 9,399
------------ -----------
TOTAL ASSETS $216,170 $ 75,027
============ ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
As of As of
June 30, September
1999 30, 1999
(Audited) (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Payroll Taxes Payable $ 264 $ 10,550
Accounts Payable 0 434
Accrued Expenses 20,500 28,100
----------- ------------
TOTAL CURRENT LIABILITIES $ 20,764 $ 39,084
----------- ------------
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.001 par value
Authorized 10,000,000 shares
issued and outstanding at
September 30, 1999-None $ 0 $ 0
Common stock, $.001 par value
Authorized 25,000,000 shares
issued and outstanding at
September 30, 1999-4,517,950 shares 4,518 4,518
Additional paid-in capital 292,432 294,432
Deficit accumulated during
Development stage (101,544) (263,007)
------------- ------------
TOTAL STOCKHOLDER'S EQUITY $ 195,406 $ 35,943
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 216,170 $ 75,027
============= ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
STATEMENT OF OPERATIONS
April 14, For the
l999 Three Months
(Inception) Ended
to June 30, September
1999 30, 1999
(Audited) (Unaudited)
<S> <C> <C>
INCOME:
Revenue $ 0 $ 0
------------- ------------
EXPENSES:
Auto Allowance 3,000 3,600
Bank Charges 4 9
Consulting Services 37,500 0
Contract Labor 0 3,000
Data Processing 250 352
Depreciation 228 3,060
Dues and Subscriptions 0 600
Education and Seminars 0 450
Entertainment 245 2,497
Gifts 0 116
Insurance 0 572
Insurance - Medical 0 4,018
Interest Expense 0 2
Internet Expense 464 10,882
Legal Expense 10,000 0
Licensing Expense 120 0
Miscellaneous Expense 0 2,000
Moving Expense 0 1,000
Office Expense 0 3,797
Office Supplies 876 4,370
Organization Cost Expense 905 0
Postage 1,668 323
Printing 1,982 1,381
Professional Fees 0 3,095
Promotion 187 807
Public Offering Expense 590 (590)
Rent 3,318 10,737
Salary 35,000 89,328
Taxes - Other 239 50
Taxes - Payroll 1,794 8,935
Telephone 106 3,501
Trade Show Expense 1,099 690
Travel Expense 2,175 3,717
------------- ------------
TOTAL EXPENSES $ 101,750 $ 162,299
------------- ------------
NET LOSS OPERATIONS $ (101,750) $ (162,299)
Other income or expense
Interest Income 206 836
------------- ------------
NET INCOME(+)/ OR LOSS(-) $ (101,544) $ (161,463)
============= ============
Weighted average number of common shares
outstanding 4,237,666 4,517,950
============= ============
Net Loss Per Share $ (.02) $ (.04)
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
accumulated
Additional during
paid in development
Common Stock capital stage
Shares Amount
<S> <C> <C> <C> <C>
April 14, 1999
Issued for cash 4,000,000 $ 4,000 $ 0 $ 0
April 16, 1999
for corporate
services 140,000 140 34,860
May 14, 1999
Public offering
for cash 160,000 160 39,840
June 30,1999
Public offering
for cash 217,950 218 217,732
Net loss,
April 14, 1999 (inception)
To June 30,1999 (101,544)
----------- ------- ---------- -----------
Balance,
June 30,1999 4,517,950 $ 4,518 $ 292,432 $ (101,544)
=========== ========= ========== ===========
July 1, 1999 subscription
receivable for previous sale
of common stock - - $ 2,000
Net loss
Three Months Ended
September 30, 1999 (161,463)
Balance,
September 30, 1999 4,517,950 $ 4,518 $ 294,432 $ (263,007)
=========== ========= =========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
NFOX.COM
(A Development Stage Company)
STATEMENT OF CASH FLOWS
April 14, Three Months
l999 Ended
(Inception) September 30,
to June 30, 1999
1999 (Unaudited)
(Audited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income(+)/ Loss(-) $ (101,544) $ (161,463)
Adjustments to reconcile net income or
loss to net cash provided by operations:
Depreciation 228 3,060
Issue common stock for
Corporate Services 35,000 0
Accounts Payable 264 10,721
Accrued Expenses 20,500 7,600
------------ ------------
Net cash provided by Operating Activities $ (45,552) $ (140,082)
============ ============
INVESTING ACTIVITIES
Equipment (6,838) (36,085)
Deposits (3,637) 0
Public Offering Costs 0 (5,762)
------------ ------------
Net cash provided by Investing Activities $ (10,475) $ (41,847)
============ =============
FINANCING ACTIVITIES
Sale of Common Stock $ 261,950 $ 1,998
------------ -------------
Net cash provided by Financing Activities $ 261,950 $ 1,998
============ =============
Net increase in cash $ 205,923 $ (179,931)
Cash,
Beginning of period 0 205,923
------------ -------------
Cash,
End of period $ 205,923 $ 25,992
============ =============
</TABLE>
See accompanying notes to financial statements
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized April 14, 1999, under the laws of the State
of Nevada, as NFOX.COM. The Company has no operations and in accordance
with SFAS #7, the Company is considered a development stage company.
On April 14, 1999, the company issued 4,000,000 shares of its $0.001
par value common stock for cash of $4,000.00 to its directors.
On April 16, 1999, the Company issued a total of 140,000 shares of
common stock for services under Rule 701 of the Securities Act of 1933, as
amended. The shares were valued at $0.25 per share and are considered
"Restricted Securities". All of the shares were issued pursuant to written
agreements between the Company and the consultants on April 16, 1999.
On April 21, 1999, the Company initiated an exempt placement of
securities for 300,000 shares of common stock, pursuant to Rule 504 of Reg.
D, at a price of $0.25 per share. On May 14, 1999, the Company terminated
the Offering following the sale of 160,000 shares for $40,000 in cash
consideration.
On May 21, 1999, the Company initiated an exempt placement of
securities for 925,000 shares of common stock, pursuant to Rule 504 of Reg.
D, at a price of $1.00 per share. On June 30, 1999, the Company terminated
the Offering following the sale of 217,950 shares for $217,950 in cash
consideration.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. The cost of organization, $905.00, is being amortized over a period
of 60 months (April 14, 1999, through April 13, 2004).
3. Earnings per share is computed using the weighted average number of
shares of common stock outstanding.
4. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES CONTINUED
5. Income Taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting Standards
No. 109, (SFAS #109), "Accounting for Income Taxes." A deferred tax asset
or liability is recorded for all temporary differences between financial
and tax reporting. Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company has no current source
of revenue. Without realization of additional capital, it would be unlikely
for the Company to continue as a going concern. It is management's plan to
seek additional capital through future private placements or public
offerings.
NOTE 4 - RELATED PARTY TRANSACTION
The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
NOTE 5 - OFFICERS ADVANCES
While the Company is seeking additional capital through a private
placement or a public offering, an officer of the Company has advanced
funds on behalf of the Company to pay for any costs incurred by it. These
funds are interest free. As of June 30, 1999, the amount advanced is zero.
NOTE 6 - LEASES
On June 30, 1999, the Company entered into an operating lease for
2,370 square feet of executive office space in Las Vegas, Nevada, which
expires June 30, 2002. Total rent to be paid for the period July 1, 1999,
to June 30, 2002, is $119,448.
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 7 - EMPLOYMENT CONTRACTS
Karl Kraft, Chief Executive Officer and President, pursuant to a
written agreement dated April 16, 1999, and continuing for five (5) years,
in consideration for his services to the Company, Mr. Kraft will receive an
annual base salary of $120,000. Mr. Kraft has agreed to receive a reduced
salary of $5,000 per month and defer payment of the balance of his salary
until the Company releases its first two products or has sufficient capital
to pay his full salary. As additional compensation, Mr. Kraft receives an
auto allowance of $600 per month, such allowance will accrue and be paid
when the Company becomes profitable. In addition, Mr. Kraft received
options to purchase 500,000 shares of common stock at a price of $0.20 per
share for the term of his agreement. As of June 30, 1999, Mr. Kraft has
accrued $6,500 in consideration.
Charles Catania, Secretary and Treasurer, pursuant to a written
agreement dated April 16, 1999, and continuing for five (5) years, in
consideration for his services to the Company, Mr. Catania will receive an
annual base salary of $48,000 for the first year of employment, increasing
to $84,000 per year in the remaining years. Mr. Catania has agreed to
receive a reduced salary of $1,000 per month and defer payment of the
balance of his salary until the Company has sufficient capital to pay his
full salary. As additional compensation, Mr. Catania receives an auto
allowance of $600 per month, such allowance will accrue and be paid when
the Company becomes profitable. In addition, Mr. Catania received options
to purchase 100,000 shares of common stock at a price of $0.20 per share
for the term of his agreement. As of June 30, 1999, Mr. Catania has accrued
$11,500 in consideration.
On July 20, 1999, the board of directors of the Company agreed to
discontinue the accrual of the auto allowance as of July 1, 1999 to Messrs.
Kraft and Catania and will only pay the auto allowance when the Company
becomes profitable.
NOTE 8 - CONSULTING AGREEMENTS
On April 16, 1999, the Company retained the consulting services of Ray
Waddell to assist it in product development and market research. Mr.
Waddell is also a Director of the Company. The Company agreed to pay Mr.
Waddell at the rate of $1,000 per month for said consulting services for a
term of five (5) years. In addition, Mr. Waddell received options to
purchase 75,000 shares of common stock at a price of $0.20 per share for
the term of his agreement. As of June 30, 1999, Mr. Waddell has accrued
$2,500 in consideration.
<PAGE>
NFOX.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 9 - STOCK OPTIONS
The Board of directors adopted and the stockholders approved the
adoption of the Company's 1999 Stock Option Plan pursuant to which
incentive stock options or nonstatutory stock options to purchase up to
1,500,000 shares of common stock may be granted to employees, directors and
consultants. Pursuant to the plan, on April 16, 1999, the Company granted
675,000 stock options to key management and consultants pursuant to certain
employment and consulting agreements as follows:
<TABLE>
Exercise Price Number of Shares
<S> <C> <C>
Granted $0.20 675,000
Exercised 0 0
Cancelled 0 0
Total outstanding
June 30, 1999 675,000
</TABLE>
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
None of our directors will have personal liability to us or any of our
stockholders for monetary damages for breach of fiduciary duty as a
director involving any act or omission of any such director since
provisions have been made in the Articles of Incorporation limiting such
liability. The foregoing provisions shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or, which involve intentional misconduct or a knowing
violation of law, (iii) under applicable Sections of the Nevada Revised
Statutes, (iv) the payment of dividends in violation of Section 78.300 of
the Nevada Revised Statutes or, (v) for any transaction from which the
director derived an improper personal benefit.
The By-laws provide for indemnification of the directors, officers,
and employees of the Company in most cases for any liability suffered by
them or arising out of their activities as directors, officers, and
employees of the Company if they were not engaged in willful misfeasance or
malfeasance in the performance of his or her duties; provided that in the
event of a settlement the indemnification will apply only when the Board of
Directors approves such settlement and reimbursement as being for the best
interests of the Corporation. The Bylaws, therefore, limit the liability of
directors to the maximum extent permitted by Nevada law (Section 78.751).
Our officers and directors are accountable to us as fiduciaries, which
means they are required to exercise good faith and fairness in all dealings
affecting us. In the event that a stockholder believes the officers and/or
directors have violated their fiduciary duties to us, the stockholder may,
subject to applicable rules of civil procedure, be able to bring a class
action or derivative suit to enforce the stockholder's rights, including
rights under certain federal and state securities laws and regulations to
recover damages from and require an accounting by management. Stockholders
who have suffered losses in connection with the purchase or sale of their
interest in the Company in connection with such sale or purchase, including
the misapplication by any such officer or director of the proceeds from the
sale of these securities, may be able to recover such losses from us.
RECENT SALES OF UNREGISTERED SECURITIES
On April 14, 1999, we issued 4,000,000 shares of our $0.001 par value
common stock for cash of $4,000.00 to our three directors. All of the
shares were issued pursuant to Rule 4(2).
On April 16, 1999, we issued a total of 140,000 shares of common stock
to five individuals for various consulting services associated with the
structuring of our future public company status. The shares were issued
under Rule 701 of the Securities Act of 1933, as amended. The shares were
valued at $0.25 per share and are considered "Restricted Securities". All
of the shares were issued pursuant to written agreements between the
Company and the consultants on April 16, 1999.
In April of 1999, we initiated an exempt private placement of
securities of 300,000 shares of common stock, pursuant to Rule 504 of Reg.
D, at a price of $.25 per share. The shares were offered directly by us to
unaccredited investors which were known by our officers and directors. The
shares were considered "restricted securities." On May 14, 1999 we
terminated the offering following the sale of 160,000 shares for $40,000 in
cash consideration.
<PAGE>
On May 21, 1999, we initiated an exempt placement of securities for
925,000 shares of common stock, pursuant to Rule 504 of Reg. D, at a price
of $1.00 per share. Again, we offered the shares to unaccredited investors
known by us. On June 30, 1999, we terminated the offering following the
sale of 217,950 shares for $217,950 in cash consideration.
EXHIBITS
The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.
UNDERTAKINGS
A. The undersigned registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and Notwithstanding the
forgoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that
which was registered) and any deviation From the low or high end of
the estimated maximum offering range may be reflected in the form of
prospects filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
B.
(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
(2) In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of
the small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorize, in the City of Las Vegas, State of Nevada, on
November 17, 1999.
NFOX.COM
By: /s/ Karl Kraft
Karl Kraft, President
Special Power of Attorney
The undersigned constitute and appoint Karl Kraft their true and
lawful attorney-in-fact and agent with full power of substitution, for him
and in his name, place, and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this Form SB-2
Registration Statement, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the Securities and Exchange
Commission, granting such attorney-in-fact the full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that
such attorney in-fact may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated:
Signature Title Date
/s/ Karl Kraft President, Chief September 8, 1999
Karl Kraft Executive Officer,
Director
/s/ Charles Catania Vice President, September 8, 1999
Charles Catania Secretary, Director
/s/ Ray Waddell Director September 8, 1999
Ray Waddell
<PAGE>
EXHIBIT INDEX
Exhibit Description
Number
(1) N/A
(2) N/A
(3)(I) Articles of Incorporation
(a) Articles of Incorporation of Anonymous Data
Corporation
(3)(ii) Bylaws
(a) Bylaws of Anonymous Data Corporation
(4) Instruments defining the rights of security holders:
(4)(I) (a) Articles of Incorporation for Anonymous Data
Corporation, a Nevada Corporation
(b) Bylaws of Anonymous Data Corporation, a Nevada
Corporation
(c) Stock Certificate Specimen
(5)* Opinion re: Legality
(a) Sperry Young & Stoecklein
(6) N/A
(7) N/A
(8) N/A
(9) N/A
(10)(i) Material Contracts
(a) 1998 Stock Option Plan
* (b) Employment Agreement for Karl Kraft
* (c) Employment Agreement for Charles Catania
* (d) Consulting Agreement for Ray Waddell
* (e) Commercial Lease for Company's Facilities
* (f) Addendum for Commercial Lease
(11) Statement regarding computation of per share earnings
(a) Please see Statement of Operations of
the Audited Financials filed herewith
(12) N/A
(13) N/A
(14) N/A
(15) N/A
(16) N/A
(17) N/A
(18) N/A
(19) N/A
(20) N/A
(21) N/A
(22) N/A
(23)* Consent of experts
(a) Sperry Young & Stoecklein
(b) Barry L. Friedman, P.C.
(24) N/A
(25) N/A
(26) N/A
(27) Financial Data Schedule
*Filed herewith.
SPERRY YOUNG & STOECKLEIN
Telephone (702) 794-2590
Facsimile (702) 794-0744
DONALD J. STOECKLEIN
ATTORNEY AT LAW
Practice Limited to Federal Securities
- -------------------------------------------------------------------------------
1850 E. Flamingo Rd. Suite 111, Las Vegas, Nevada 89119
November 18, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: NFOX.COM REGISTRATION STATEMENT ON FORM SB-2
Ladies and Gentlemen:
As counsel to NFOX.COM (the "Company"), we are rendering
this opinion in connection with a proposed sale of those certain
shares of the Company's newly-issued Common Stock as set forth in
the Registration Statement on Form SB-2 to which this opinion is
being filed as Exhibit 5(a) & 23(a) (the "Shares") pursuant to
Rule 462(b) under the Securities Act of 1933, as amended. We have
examined all instruments, documents and records which we deemed
relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to the originals of all
documents submitted to us as copies.
We express no opinion with respect to (i) the availability
of equitable remedies, including specific performance, or (ii)
the effect of bankruptcy, insolvency, reorganization, moratorium
or equitable principles relating to or limiting creditors' rights
generally.
Based on such examination, we are of the opinion that the
Shares identified in the above-referenced Registration Statement
will be, upon effectiveness of the Registration Statement and
receipt by the Company of payment therefor, validly authorized,
legally issued, fully paid and nonassessable in accordance with
the Nevada General Corporation Laws.
We hereby consent to the filing of this opinion as an
exhibit to the above-referenced Registration Statement and to the
use of our name wherever it appears in said Registration
Statement, including the Prospectus constituting a part thereof,
as originally filed or as subsequently amended.
Respectfully submitted,
/s/ Donald J. Stoecklein
Sperry Young & Stoecklein
EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of April 16, 1999 by and
between NFOX.COM, a Nevada corporation of 1850 E. Flamingo Road, Suite
111B, Las Vegas, Nevada 89119 ("Employer"), and Karl Kraft, ("Executive").
Recitals
WHEREAS, Employer is a developer of portable software components and
frameworks for the transportation and management of information over
computer networks, and is desirous of acquiring the special skills and
abilities and background in and knowledge of Executive as it relates to
Employer's business and the industry.
WHEREAS, Employer seeks assurance of the association and services of
Executive in order to retain his experience, skills, abilities, background,
and knowledge, and is therefore willing to engage his services on the terms
and conditions set forth below.
WHEREAS, Executive desires to commence working with Employer and is
willing to do so on those terms and conditions.
NOW THEREFORE, in consideration of the above recitals and the mutual
promises and conditions in this Agreement, and other good and valuable
considerations, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. EMPLOYMENT. Employer shall employ Executive as President and Chief
Executive Officer ("CEO").
2. EXECUTIVE'S DUTIES.
2.1. Duties at Employer: Executive shall represent the Employer as
President and CEO of Employer. Executive shall possess the power and
authority to hire and fire all employees of Employer. Executive shall
assist in managing and conducting the business of Employer by setting and
implementing procedures and policies of Employer. Executive's duties shall
include, but not be limited to the following:
2.1.1 Directing the use and control of finances;
2.1.2 Appointing and dismissing all employees of Employer;
2.1.3 Implementing long-term strategies and policies by
defining and implementing short, medium, and long-term objectives;
2.1.4 Communicating the intentions and results of management to
Employer's Board on a regular basis.
<PAGE>
2.1.5 Borrowing or obtaining credit in any amount or executing
any guaranty, upon;
2.1.6 Approving a budget and any amendments thereto;
2.1.7 Determining and approving long-term policies and
strategies.
3. DEVOTION OF TIME. During the period of his employment hereunder,
Executive shall devote the majority of his business time, interest
attention, and effort to the faithful performance of his duties hereunder.
However, Executive may continue to serve on the boards of directors of, and
hold any other offices or positions in, companies or organizations which,
in the judgment of Employer's Board of Directors (the "Board" as expressed
in a written Board Resolution), will not present any conflict of interest
with Employer or adversely affect the performance of Executive's duties
pursuant to this Agreement.
4. NON COMPETITION DURING TERM OF EMPLOYMENT. During the employment term,
Executive shall not, directly or indirectly, whether as a partner,
employee, creditor, shareholder, or otherwise, promote, participate, or
engage in any activity or other business directly competitive with
Employer's business, except with express permission of the Board. In
addition, Executive, while employed, shall not take any action without
Employer's prior written consent to establish, form, or become employed by
a competing business on termination of employment by Employer, Executive's
failure to comply with the provisions of the preceding sentence shall give
Employer the right (in addition to all other remedies Employer may have) to
terminate any benefits or compensation to which Executive may be otherwise
entitled following termination of this Agreement.
5. VARIATION OF DUTIES. During the term hereof, Executive shall not vary
the terms of his employment with Employer, without the specific written
authorization from the Board of Directors.
6. TERM OF AGREEMENT. Subject to earlier termination as provided in this
Agreement, Executive shall be employed for a five (5) year term beginning
on the date first written above, and ending May 1, 2004.
6.1 TERM EXTENSION. At any time prior to the expiration of the Term,
as stated in section 6, Employer and Executive may, by mutual written
agreement, extend Executive's employment under the terms of this Agreement
for such additional periods as they may agree.
7. LOCATION OF EMPLOYMENT. Unless the parties agree otherwise in writing,
during the employment term Executive shall perform the services he is
required to perform under this Agreement at Employer's offices to be
located in Las Vegas, Nevada; provided, however, that Employer may from
time to time require Executive to travel temporarily to other locations on
Employer's business.
<PAGE>
8. COMPENSATION. Employer shall pay compensation to Executive in the
following amounts and on the following terms:
8.1 Salary. For all services rendered by Executive in any capacity
during the term of this Agreement, Employer shall pay Executive annual
compensation as follows, in equal, bi-monthly installments payable on the
1st and 16th day of each month, or in such other manner as is the general
practice of Employer:
8.1.1 First Year of Employment - $120,000
8.1.2 Second Year of Employment - $120,000
8.1.3 Third Year of Employment - $120,000
8.1.4 Fourth Year of Employment - $120,000
8.1.5 Fifth Year of Employment - $120,000
8.1.A Executive shall be paid a portion of their salary,
$5,000 per month, for the period between the signing of this Agreement and
the date of; either, Employer releases its first two products; or as
sufficient funds are available to Employer, with the additional amount to
accrue and be paid pursuant to above.
8.2 Salary Accrual. If for any reason Executive shall accrue any
portion of his salary beyond the time frame stated in section 8.1.A,
Executive may demand payment, at any time, by means of registered S-8 stock
of the Company. Employer shall pay for all costs of such registration.
Valuation of such stock will be based upon 85% of the 5 day average of the
Closing price of the Company's common stock as quoted on the Over the
Counter Bulletin Board or other stock exchange.
8.3 Stock Options. In addition to the basic salary provided for above,
Employer hereby grants to executive the right, privilege and option (the
"Stock Option") to purchase five hundred thousand (500,000) shares of the
common stock, $.001 par value. The "Option Shares" are to be fully vested
and become exercisable immediately. The exercise price of the Option Shares
shall be twenty cents ($.20) per share.
The option rights granted hereby shall be cumulative. Upon becoming
exercisable, the option rights shall be exercisable at any time and from
time to time, in whole or in part; provided, however, that options may be
exercised for no longer than five (5) years from the date of this
Agreement. The options shall be exercised by written notice directed to
Employer, accompanied by a check payable to Employer for the Option shares
being purchased. Employer shall make immediate delivery of such purchased
shares, fully paid and non-assessable, registered in the name of Executive.
The certificates evidencing such shares shall bear the following
restrictive legend, unless and until such shares have been registered in
accordance with the Securities and Exchange Act of 1933, as amended (the
"Act"):
<PAGE>
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), OR
THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ANY MANNER
UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND THE SECURITIES LAWS OR ANY
APPLICABLE JURISDICTIONS OR UNLESS PURSUANT TO ANY EXEMPTION THEREFROM.
Employer shall use its best efforts to register the Option Shares under the
Act at the earlier of such time as it registers shares issuable pursuant to
a qualified employee stock option plan or such time as it registers shares
beneficially owned by or issued to either or all of the following
individuals:
If, and to the extent that the number of shares of common stock of Employer
shall be increased or reduced by whatever action, including but not limited
to change of par value, split, reclassification, distribution or a dividend
payable in stock, or the like, the number of shares subject to the Stock
Option and the option price per share shall be proportionately adjusted. If
Employer is reorganized or consolidated or merged with another corporation,
Executive shall be entitled to receive options covering shares of such
reorganized, consolidated, or merged company in the same proportion, at an
equivalent price, and subject to the same conditions. For purposes of the
preceding sentence, the excess of the aggregate fair market value of the
shares subject to the option immediately after any such reorganization,
consolidation, or merger over the aggregate option price of such shares
shall not be more than the excess of the aggregate fair market value of all
shares subject to the Stock Option immediately before such reorganization,
consolidation, or merger over the aggregate option price of such shares,
and the new option or assumption of the old Stock Option shall not give
Executive additional benefits which he did not have under the old Stock
Option, or deprive him of benefits which he had under the old Stock Option.
Executive shall have no rights as a stockholder with respect to the Option
Shares until exercise of the Stock Option and payment of the Option Price
as herein provided.
9. BENEFITS. During the employment term, Executive shall be entitled to
receive all other benefits of employment generally available to Employer's
other executive and managerial employees when and as he becomes eligible
for them, including group health and life insurance benefits and an annual
vacation.
9.1 Vacation. Executive shall be entitled to a paid annual vacation of
three (3) weeks during the first year of employment, and four (4) weeks
during any subsequent years; provided however, that vacation time may not
be accumulated and must be taken by the end of the year in which it has
accrued.
9.2 Personal Leave. Executive shall be entitled, without any
adjustment in his compensation, to fifteen (15) days personal leave in each
fiscal year of employment. Personal leave may not be carried over from one
fiscal year to the next.
<PAGE>
9.3 Medical and Disability Coverage. Executive shall have the right to
all medical coverage and long term disability coverage on the same terms
and conditions as provided to other employees of Employer holding
management positions. It is agreed and understood that Employer shall
obtain reasonable medical, dental, and liability insurance for the benefit
of Executive and other members of management as soon hereafter as is
practical, and it shall use its best efforts to maintain such policies at
all time during the employment term.
9.4 Plans. Executive shall be entitled to participate in any and all
plans, arrangements, or distributions by Employer pertaining to or in
connection with any pension, bonus, profit sharing, stock options, and/or
similar benefits for its employees and/or executives, as determined by the
Board of Directors of committees thereof pursuant to the governing
instruments which establish and/or determine eligibility and other rights
of the participants and beneficiaries under such plans or other benefit
programs.
9.5 Automobile. For the term of this agreement and any extensions
thereof, Employer shall provide Executive with an automobile allowance, not
to exceed $600 per month. Such automobile shall be chosen and, if need be,
financed by Executive with monthly payments to be paid by Employer.
10. EXPENSE REIMBURSEMENT. During the employment term, Employer shall
reimburse Executive for reasonable out-of-pocket expenses incurred in
connection with Employer's business, including travel expenses, food, and
lodging when away from home, subject to such policies as Employer may from
time to time reasonably establish for its employees.
11. INTELLECTUAL PROPERTY. All processes, inventions, patents, copyrights,
trademarks, and other intangible rights that may be conceived or developed
by Executive, either alone or with others, during the term of Executive's
employment, whether or not conceived or developed during Executive's
working hours, and with respect to which the equipment, supplies,
facilities, or trade secret information of Employer was used, or that
relate at the time of conception or reduction to practice of the invention
to the business of the Employer or to Employer's actual or demonstrably
anticipated research and development, or that result from any work
performed by Executive for Employer, shall be the sole property of
Employer. Executive shall disclose to Employer all inventions conceived
during the term of employment, whether or not the property of Employer
under the terms of the preceding sentence, provided that such disclosure
shall be received by Employer in confidence. Executive shall execute all
documents, including patent applications and assignments, required by
Employer to establish Employer's rights under this Section.
12. INDEMNIFICATION OF EXECUTIVE. Employer shall, to the maximum extent
permitted by law, indemnify and hold Executive harmless against expenses,
including reasonable attorney's fees judgements, fines, settlement, and
other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of Executive's employment by Employer.
Employer shall advance to Executive any expense incurred in defending such
proceeding to the maximum extent permitted by law.
<PAGE>
13. TERMINATION BY EMPLOYER. Employer may terminate this Agreement at any
time, if termination is "For Cause", as hereinafter defined. "For Cause"
shall mean Employer's termination of Executive due to an adjudication of
Executive's fraud, theft, dishonesty to Employer regarding Executive's
duties or material breach of this Agreement, if Executive fails to cure
such breach within ten (10) days after written notice is given by the Board
of Directors to Executive and Executive fails with ten (10) days of such
notification to commence such cure and thereafter diligently prosecute such
cure to completion.
14. TERMINATION BY EXECUTIVE. Executive may terminate this Agreement by
giving Employer thirty (30) days prior written notice of resignation.
15. DEATH OF EXECUTIVE. If Executive dies during the initial term or during
any renewal term of this Agreement, this Agreement shall be terminated on
the last day of the calendar month of his death. Employer shall then pay to
Executive's estate any salary accrued but unpaid as of the last day of the
calendar month in which Executive dies. Employer shall have no further
financial obligations to Executive or his estate hereunder. Any and all
unexercised Stock Option shall survive Executive's death and shall be
exercisable by Executive's estate or its beneficiaries to whom such Stock
Options may be distributed in accordance with the original terms and
conditions of any such Stock Options.
16. AGREEMENT ON BUSINESS COMBINATION OR DISSOLUTION. This Agreement shall
not be terminated by Employer's voluntary or involuntary dissolution or by
any merger in which Employer is not the surviving or resulting corporation,
or on any transfer of all or substantially all of Employer's assets. In the
event any such merger or transfer of assets, the provisions of this
Agreement shall be binding on and inure to the benefit of the surviving
business entity or the business entity to which such assets shall be
transferred.
17. TRADE SECRETS AND CONFIDENTIAL INFORMATION:
17.1 Nondisclosure. Without the prior written consent of Employer,
Executive shall not, at any time, either during or after the term of this
Agreement, directly or indirectly, divulge or disclose to any person, firm,
association, or corporation, or use for Executive's own benefit, gain, or
otherwise, any customer lists, plans, products, data, results of tests and
data, or any other trade secrets or confidential materials or like
information (collectively referred to as the "Confidential Information") of
Employer and/or its Affiliates, as hereinafter defined, it being the intent
of Employer, with which intent Executive hereby agrees, to restrict
Executive from disseminating or using any like information that is
unpublished or not readily available to the general public.
17.1.1 Definition of Affiliate. For purposes of this Agreement,
the term "Affiliate" shall mean any entity, individual, firm, or
corporation, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with Employer.
17.2 Return of Property. Upon the termination of this Agreement,
Executive shall deliver to Employer all lists, books, records, data, and
other information (including all copies thereof in whatever form or media)
of every kind relating to or connected with Employer or its Affiliates and
their activities, business and customers.
<PAGE>
17.3 Notice of Compelled Disclosure. If, at any time, Executive
becomes legally compelled (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand, or similar process or
otherwise) to disclose any of the Confidential Information, Executive shall
provide Employer with prompt, prior written notice of such requirement so
that Employer may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement. In the event that
such protective order or other remedy is not obtained, that Employer waives
compliance with the provisions hereof, Executive agrees to furnish only
that portion of the Confidential Information which Executive is advised by
written opinion of counsel is legally required and exercise Executive's
best efforts to obtain assurance that confidential treatment will be
accorded such Confidential Information. In any event, Executive shall not
oppose action by Employer to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information.
17.4 Assurance of Compliance. Executive agrees to represent to
Employer, in writing, at any time that Employer so request, that Executive
has complied with the provisions of this section, or any other section of
this Agreement.
18. NON-COMPETITION. For a period of three (3) months after the termination
of this Agreement, Executive expressly covenants and agrees that Executive
will not and will not attempt to, without the prior written consent of the
Board of Directors, directly or indirectly, (except as to those entities
set forth in Paragraph 4, above):
18.1 Own, manage, operate, finance, join, control, or participate in
the ownership, management, operation, financing, or control of, or be
associated as an officer, director, employee, agent, partner, principal,
representative, consultant, or otherwise with, or use or permit his name to
be used in connection with, any line of business or enterprise that
competes with Employer or its Affiliates (as defined herein) in any
business of Employer or its Affiliates, existing or proposed, wherever
located, provided that Executive shall not be prohibited from owning,
directly or indirectly, less than one percent (1%) of the outstanding
shares of any Corporation, the shares of which are traded on a National
Securities Exchange or in the over-the-counter markets;
18.2 Interfere with or disrupt or attempt to interfere with or disrupt
or take any action that could be reasonably expected to interfere with or
disrupt any past or present or prospective relationship, contractual or
otherwise, between Employer and/or any of its Affiliates, and any customer,
insurance company, supplier, sales representative, or agent or employee of
Employer or any such affiliate of Employer.
18.3 Directly or indirectly solicit for employment or attempt to
employ or assist any other entity in employing or soliciting or attempting
to employ or solicit for employment, either on a full-time, part-time, or
consulting basis, any employee, agent, representative, or executive
(whether salaried or otherwise, union or non-union) who within three (3)
years of the time that Executive ceased to perform services hereunder has
been employed by Employer or its Affiliates.
<PAGE>
19. VIOLATION OF COVENANTS:
19.1 Injunctive Relief. Executive acknowledges and agrees that the
services to be rendered by Executive hereunder are of a special unique, and
personal character that gives them peculiar value; that the provisions of
this section are, in view of the nature of the business of Employer,
reasonable and necessary to protect the legitimate business interests of
Employer; that violation of any of the covenants or Agreements hereof would
cause irreparable injury to Employer, that the remedy at law for any
violation or threatened violation thereof would be inadequate; and that,
therefore, Employer shall be entitled to temporary and permanent injunctive
or other equitable relief as it may deem appropriate without the necessity
of proving actual damages and to an equitable accounting of all earnings,
profits, and other benefits arising, from any such violation, or attempted
violation, which rights shall be cumulative and in addition to all other
rights or remedies available to Employer.
19.2 Executive and Employer recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of certain of the provisions contained in this
section. It is the intention of Executive and Employer that the provisions
of this section shall be enforced to the fullest extent permissible under
the laws and public policies of each jurisdiction in which such enforcement
is sought, but that the invalidation (or modification to conform with such
laws or public policies) of any provision hereof shall not render
unenforceable or impair the remainder of this section. Accordingly, if any
provision of this section shall be determined to be invalid or
unenforceable, either in whole or in part this section shall be deemed to
delete or modify, as necessary, the offending provision and to alter the
balance of this section in order to render it valid and enforceable to the
fullest extent permissible as provided herein.
20. LIQUIDATED DAMAGES, EMPLOYER'S BREACH. In the event of any material
breach of this Agreement on the part of Employer, Executive at his sole
option, may terminate his employment under this Agreement and, at his sole
option, shall be entitled to receive as liquidated damages the amounts set
forth in the following subsection. The liquidated damages so received by
Executive shall not be limited or reduced by amounts that Executive might
otherwise earn or be able to earn during the period between termination of
his employment under this Agreement and payment of those liquidated
damages. The provisions of this Section 20 shall be in addition to any and
all rights Executive may have in equity or at law to require Employer to
comply with or to prevent the breach of this Agreement.
20.1 The present value on the payment date (as defined in this
section) of the full amount of his basic salary as provided for in this
Agreement for three (3) years following the payment due, discounted to the
payment date at a rate for quarterly periods based on prime interest rate
charged by Bank of America, for short term commercial loans on the payment
date. The amount payable to Executive under this subsection shall be due
and payable in full on the date of notification of Employer by Executive of
the exercise of his option to terminate his employment under this Agreement
(the "payment date").
<PAGE>
21. MISCELLANEOUS:
21.1 Authority to Execute. The parties herein represent that they
have the authority to execute this Agreement.
21.2 Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the rest of this Agreement shall remain in full
force and effect.
21.3 Successors. This Agreement shall be binding on and inure to
the benefit of the respective successors, assigns, and personal
representatives of the parties, except to the extent of any contrary
provision in this Agreement.
21.4 Assignment. This Agreement may not be assigned by either party
without the written consent of the other party.
21.5 Singular, Plural and Gender Interpretation. Whenever used
herein, the singular number shall include the plural, and the plural number
shall include the singular. Also, as used herein, the masculine, feminine
or neuter gender shall each include the others whenever the context so
indicates.
21.6 Captions. The subject headings of the paragraphs of this
Agreement are included for purposes of convenience only, and shall not
effect the construction or interpretation of any of its provisions.
21.7 Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the rights granted and the obligations assumed
in this instrument and supersedes any oral or prior written agreements
between the parties. Any oral representations or modifications concerning
this instrument shall be of no force or effect unless contained in a
subsequent written modification signed by the party to be charged.
21.8 Arbitration. Any controversy or claim arising out of, or
relating to, this Agreement, or the making, performance, or interpretation
thereof, shall be submitted to a panel of three (3) arbitrators. The
arbitration shall comply with and be governed by the provisions of the
American Arbitration Association. The panel of arbitrators shall be
composed of two (2) members chosen by Executive and Employer respectively
and one (1) member chosen by the arbitrators previously selected. The
findings of such arbitrators shall be conclusive and binding on the parties
hereto. The cost of arbitration shall be borne by the losing party or in
such proportions as the arbitrator shall conclusively decide.
21.9 No Waiver. No failure by either Executive or Employer to insist
upon the strict performance by the other of any covenant, agreement, term
or condition of this Agreement or to exercise the right or remedy
consequent upon a breach thereof shall constitute a waiver of any such
breach or of any such covenant, agreement, term or condition. No waiver of
any breach shall affect or alter this Agreement, but each and every
covenant, condition, agreement and term of this Agreement shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
<PAGE>
21.10 Time of the Essence. Time is of the essence of this
Agreement, and each provision hereof.
21.11 Counterparts. The parties may execute this Agreement in two
(2) or more counterparts, which shall, in the aggregate, be signed by both
parties, and each counterpart shall be deemed an original instrument as to
each party who has signed by it.
21.12 Attorney's Fees and Costs. In the event that suit be
brought hereon, or an attorney be employed or expenses be incurred to
compel performance the parties agree that the prevailing party therein be
entitled to reasonable attorney's fees.
21.13 Governing Law. The formation, construction, and performance
of this Agreement shall be construed in accordance with the laws of Nevada.
21.14 Notice. Any notice, request, demand or other communication
required or permitted hereunder or required by law shall be in writing and
shall be effective upon delivery of the same in person to the intended
addressee, or upon deposit of the same with an overnight courier service
(such as Federal Express) for delivery to the intended addressee at its
address shown herein, or upon deposit of the same in the United States
mail, postage prepaid, certified or registered mail, return receipt
requested, sent to the intended addressee at its address shown herein. The
address of any party to this Agreement may be changed by written notice of
such other address given in accordance herewith and actually received by
the other parties at least ten (10) days in advance of the date upon which
such change of address shall be effective.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
EXECUTIVE:
DATE:4/16/99 By:/s/Karl Kraft
--------------------- -------------------------
Karl Kraft
EMPLOYER:
NFOX.COM
DATE:4/16/99 By:/s/ Charles Catania
-------------------- --------------------------
EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of April 16, 1999 by and
between NFOX.COM, a Nevada corporation of 1850 E. Flamingo Road, Suite
111B, Las Vegas, Nevada 89119 ("Employer"), and Charles Catania,
("Executive").
Recitals
WHEREAS, Employer is a developer of portable software components and
frameworks for the transportation and management of information over
computer networks, and is desirous of acquiring the special skills and
abilities and background in and knowledge of Executive as it relates to
Employer's business and the industry.
WHEREAS, Employer seeks assurance of the association and services of
Executive in order to retain his experience, skills, abilities, background,
and knowledge, and is therefore willing to engage his services on the terms
and conditions set forth below.
WHEREAS, Executive desires to commence working with Employer and is
willing to do so on those terms and conditions.
NOW THEREFORE, in consideration of the above recitals and the mutual
promises and conditions in this Agreement, and other good and valuable
considerations, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. EMPLOYMENT. Employer shall employ Executive as Corporate Secretary and
Treasurer.
2. EXECUTIVE'S DUTIES.
2.1. Duties at Employer: Executive shall represent the Employer as
Corporate Secretary and Treasurer of Employer. Executive shall assist in
managing and conducting the business of Employer by setting and
implementing procedures and policies of Employer. Executive's duties shall
include, but not be limited to the following:
2.1.1 Notice all meetings of the Shareholders and
Board of Directors; attend and keep minutes of all meetings;
2.1.2 Maintaining proper documentation of all corporate books and
records, including the share register of the stockholders;
2.1.3 Overseeing the reporting standards of Employer;
2.1.4 Assisting in the implementation of short, medium, and long-term
objectives;
2.1.5 Maintain, or cause to be maintained, adequate and correct books
and records of accounts of the properties and business transactions of the
Employer;
<PAGE>
2.1.6 Deposit all moneys and other valuables in the name and to the
credit of the Employer with such depositaries as may be designated by the
President;
2.1.7 Shall cause to be disbursed, the funds of the Employer as may be
ordered by the President;
2.1.8 Causing to be filed all public disclosure documents with the
proper agencies;
2.1.9 Communicating the intentions and results of management
to Employer's Board on a regular basis.
3. DEVOTION OF TIME. During the period of his employment hereunder,
Executive shall devote the majority of his business time, interest
attention, and effort to the faithful performance of his duties hereunder.
However, Executive may serve, on the boards of directors of, and hold any
other offices or positions in, companies or organizations which, in the
judgment of Employer's Board of Directors (the "Board" as expressed in a
written Board Resolution), will not present any conflict of interest with
Employer or adversely affect the performance of Executive's duties pursuant
to this Agreement.
4. NON COMPETITION DURING TERM OF EMPLOYMENT. During the employment term,
Executive shall not, directly or indirectly, whether as a partner,
employee, creditor, shareholder, or otherwise, promote, participate, or
engage in any activity or other business directly competitive with
Employer's business, except with express permission of the Board. In
addition, Executive, while employed, shall not take any action without
Employer's prior written consent to establish, form, or become employed by
a competing business on termination of employment by Employer, Executive's
failure to comply with the provisions of the preceding sentence shall give
Employer the right (in addition to all other remedies Employer may have) to
terminate any benefits or compensation to which Executive may be otherwise
entitled following termination of this Agreement.
5. VARIATION OF DUTIES. During the term hereof, Executive shall not vary
the terms of his employment with Employer, without the specific written
authorization from the Board of Directors.
6. TERM OF AGREEMENT. Subject to earlier termination as provided in this
Agreement, Executive shall be employed for a five (5) year term beginning
on the date first written above, and ending May 1, 2004.
6.1 TERM EXTENSION. At any time prior to the expiration of the Term,
as stated in section 6, Employer and Executive may, by mutual written
agreement, extend Executive's employment under the terms of this Agreement
for such additional periods as they may agree.
7. LOCATION OF EMPLOYMENT. Unless the parties agree otherwise in writing,
during the employment term Executive shall perform the services he is
required to perform under this Agreement at Employer's offices to be
located in Las Vegas, Nevada; provided, however, that Employer may from
time to time require Executive to travel temporarily to other locations on
Employer's business.
<PAGE>
8. COMPENSATION. Employer shall pay compensation to Executive in the
following amounts and on the following terms:
8.1 Salary. For all services rendered by Executive in any capacity
during the term of this Agreement, Employer shall pay Executive annual
compensation as follows, in equal, bi-monthly installments payable on the
1st and 16th day of each month, or in such other manner as is the general
practice of Employer:
8.1.1 First Year of Employment - $48,000
8.1.2 Second Year of Employment - $84,000
8.1.3 Third Year of Employment - $84,000
8.1.4 Fourth Year of Employment - $84,000
8.1.5 Fifth Year of Employment - $84,000
8.1.A Executive shall be paid a portion of their salary,
$1,000 per month, for the period between the signing of this Agreement and
the date that Employer shall request full time employment of Executive or
as sufficient funds are available to Employer to pay Executive their entire
salary. The additional unpaid amount will accrue and be paid pursuant to
above.
8.2 Salary Accrual. If for any reason Executive shall accrue any
portion of his salary beyond the time frame stated in section 8.1.A,
Executive may demand payment, at any time, by means of registered S-8 stock
of the Company. Employer shall pay for all costs of such registration.
Valuation of such stock will be based upon 85% of the 5 day average of the
Closing price of the Company's common stock as quoted on the Over the
Counter Bulletin Board or other stock exchange.
8.3 Stock Options. In addition to the basic salary provided for above,
Employer hereby grants to executive the right, privilege and option (the
"Stock Option") to purchase one hundred thousand (100,000) shares of the
common stock, $.001 par value. The "Option Shares" are to be fully vested
and become exercisable immediately. The exercise price of the Option Shares
shall be twenty cents ($.20) per share.
The option rights granted hereby shall be cumulative. Upon becoming
exercisable, the option rights shall be exercisable at any time and from
time to time, in whole or in part; provided, however, that options may be
exercised for no longer than five (5) years from the date of this
Agreement. The options shall be exercised by written notice directed to
Employer, accompanied by a check payable to Employer for the Option shares
being purchased. Employer shall make immediate delivery of such purchased
shares, fully paid and non-assessable, registered in the name of Executive.
The certificates evidencing such shares shall bear the following
restrictive legend, unless and until such shares have been registered in
accordance with the Securities and Exchange Act of 1933, as amended (the
"Act"):
<PAGE>
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), OR
THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ANY MANNER
UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND THE SECURITIES LAWS OR ANY
APPLICABLE JURISDICTIONS OR UNLESS PURSUANT TO ANY EXEMPTION THEREFROM.
Employer shall use its best efforts to register the Option Shares under the
Act at the earlier of such time as it registers shares issuable pursuant to
a qualified employee stock option plan or such time as it registers shares
beneficially owned by or issued to either or all of the following
individuals:
If, and to the extent that the number of shares of common stock of Employer
shall be increased or reduced by whatever action, including but not limited
to change of par value, split, reclassification, distribution or a dividend
payable in stock, or the like, the number of shares subject to the Stock
Option and the option price per share shall be proportionately adjusted. If
Employer is reorganized or consolidated or merged with another corporation,
Executive shall be entitled to receive options covering shares of such
reorganized, consolidated, or merged company in the same proportion, at an
equivalent price, and subject to the same conditions. For purposes of the
preceding sentence, the excess of the aggregate fair market value of the
shares subject to the option immediately after any such reorganization,
consolidation, or merger over the aggregate option price of such shares
shall not be more than the excess of the aggregate fair market value of all
shares subject to the Stock Option immediately before such reorganization,
consolidation, or merger over the aggregate option price of such shares,
and the new option or assumption of the old Stock Option shall not give
Executive additional benefits which he did not have under the old Stock
Option, or deprive him of benefits which he had under the old Stock Option.
Executive shall have no rights as a stockholder with respect to the Option
Shares until exercise of the Stock Option and payment of the Option Price
as herein provided.
9. BENEFITS. During the employment term, Executive shall be entitled to
receive all other benefits of employment generally available to Employer's
other executive and managerial employees when and as he becomes eligible
for them, including group health and life insurance benefits and an annual
vacation.
9.1 Vacation. Executive shall be entitled to a paid annual vacation of
three (3) weeks during the first year of employment, and four (4) weeks
during any subsequent years; provided however, that vacation time may not
be accumulated and must be taken by the end of the year in which it has
accrued.
9.2 Personal Leave. Executive shall be entitled, without any
adjustment in his compensation, to fifteen (15) days personal leave in each
fiscal year of employment. Personal leave may not be carried over from one
fiscal year to the next.
<PAGE>
9.3 Medical and Disability Coverage. Executive shall have the right to
all medical coverage and long term disability coverage on the same terms
and conditions as provided to other employees of Employer holding
management positions. It is agreed and understood that Employer shall
obtain reasonable medical, dental, and liability insurance for the benefit
of Executive and other members of management as soon hereafter as is
practical, and it shall use its best efforts to maintain such policies at
all time during the employment term.
9.4 Plans. Executive shall be entitled to participate in any and all
plans, arrangements, or distributions by Employer pertaining to or in
connection with any pension, bonus, profit sharing, stock options, and/or
similar benefits for its employees and/or executives, as determined by the
Board of Directors of committees thereof pursuant to the governing
instruments which establish and/or determine eligibility and other rights
of the participants and beneficiaries under such plans or other benefit
programs.
9.5 Automobile. For the term of this agreement and any extensions
thereof, Employer shall provide Executive with an automobile allowance, not
to exceed $600 per month. Such automobile shall be chosen and, if need be,
financed by Executive with monthly payments to be paid by Employer.
10. EXPENSE REIMBURSEMENT. During the employment term, Employer shall
reimburse Executive for reasonable out-of-pocket expenses incurred in
connection with Employer's business, including travel expenses, food, and
lodging when away from home, subject to such policies as Employer may from
time to time reasonably establish for its employees.
11. INTELLECTUAL PROPERTY. All processes, inventions, patents, copyrights,
trademarks, and other intangible rights that may be conceived or developed
by Executive, either alone or with others, during the term of Executive's
employment, whether or not conceived or developed during Executive's
working hours, and with respect to which the equipment, supplies,
facilities, or trade secret information of Employer was used, or that
relate at the time of conception or reduction to practice of the invention
to the business of the Employer or to Employer's actual or demonstrably
anticipated research and development, or that result from any work
performed by Executive for Employer, shall be the sole property of
Employer. Executive shall disclose to Employer all inventions conceived
during the term of employment, whether or not the property of Employer
under the terms of the preceding sentence, provided that such disclosure
shall be received by Employer in confidence. Executive shall execute all
documents, including patent applications and assignments, required by
Employer to establish Employer's rights under this Section.
12. INDEMNIFICATION OF EXECUTIVE. Employer shall, to the maximum extent
permitted by law, indemnify and hold Executive harmless against expenses,
including reasonable attorney's fees judgements, fines, settlement, and
other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of Executive's employment by Employer.
Employer shall advance to Executive any expense incurred in defending such
proceeding to the maximum extent permitted by law.
<PAGE>
13. TERMINATION BY EMPLOYER. Employer may terminate this Agreement at any
time, if termination is "For Cause", as hereinafter defined. "For Cause"
shall mean Employer's termination of Executive due to an adjudication of
Executive's fraud, theft, dishonesty to Employer regarding Executive's
duties or material breach of this Agreement, if Executive fails to cure
such breach within ten (10) days after written notice is given by the Board
of Directors to Executive and Executive fails with ten (10) days of such
notification to commence such cure and thereafter diligently prosecute such
cure to completion.
14. TERMINATION BY EXECUTIVE. Executive may terminate this Agreement by
giving Employer thirty (30) days prior written notice of resignation.
15. DEATH OF EXECUTIVE. If Executive dies during the initial term or during
any renewal term of this Agreement, this Agreement shall be terminated on
the last day of the calendar month of his death. Employer shall then pay to
Executive's estate any salary accrued but unpaid as of the last day of the
calendar month in which Executive dies. Employer shall have no further
financial obligations to Executive or his estate hereunder. Any and all
unexercised Stock Option shall survive Executive's death and shall be
exercisable by Executive's estate or its beneficiaries to whom such Stock
Options may be distributed in accordance with the original terms and
conditions of any such Stock Options.
16. AGREEMENT ON BUSINESS COMBINATION OR DISSOLUTION. This Agreement shall
not be terminated by Employer's voluntary or involuntary dissolution or by
any merger in which Employer is not the surviving or resulting corporation,
or on any transfer of all or substantially all of Employer's assets. In the
event any such merger or transfer of assets, the provisions of this
Agreement shall be binding on and inure to the benefit of the surviving
business entity or the business entity to which such assets shall be
transferred.
17. TRADE SECRETS AND CONFIDENTIAL INFORMATION:
17.1 Nondisclosure. Without the prior written consent of Employer,
Executive shall not, at any time, either during or after the term of this
Agreement, directly or indirectly, divulge or disclose to any person, firm,
association, or corporation, or use for Executive's own benefit, gain, or
otherwise, any customer lists, plans, products, data, results of tests and
data, or any other trade secrets or confidential materials or like
information (collectively referred to as the "Confidential Information") of
Employer and/or its Affiliates, as hereinafter defined, it being the intent
of Employer, with which intent Executive hereby agrees, to restrict
Executive from disseminating or using any like information that is
unpublished or not readily available to the general public.
17.1.1 Definition of Affiliate. For purposes of this Agreement,
the term "Affiliate" shall mean any entity, individual, firm, or
corporation, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with Employer.
17.2 Return of Property. Upon the termination of this Agreement,
Executive shall deliver to Employer all lists, books, records, data, and
other information (including all copies thereof in whatever form or media)
of every kind relating to or connected with Employer or its Affiliates and
their activities, business and customers.
17.3 Notice of Compelled Disclosure. If, at any time, Executive
becomes legally compelled (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand, or similar process or
otherwise) to disclose any of the Confidential Information, Executive shall
provide Employer with prompt, prior written notice of such requirement so
<PAGE>
that Employer may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement. In the event that
such protective order or other remedy is not obtained, that Employer waives
compliance with the provisions hereof, Executive agrees to furnish only
that portion of the Confidential Information which Executive is advised by
written opinion of counsel is legally required and exercise Executive's
best efforts to obtain assurance that confidential treatment will be
accorded such Confidential Information. In any event, Executive shall not
oppose action by Employer to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information.
17.4 Assurance of Compliance. Executive agrees to represent to
Employer, in writing, at any time that Employer so request, that Executive
has complied with the provisions of this section, or any other section of
this Agreement.
18. NON-COMPETITION. For a period of three (3) months after the termination
of this Agreement, Executive expressly covenants and agrees that Executive
will not and will not attempt to, without the prior written consent of the
Board of Directors, directly or indirectly, (except as to those entities
set forth in Paragraph 4, above):
18.1 Own, manage, operate, finance, join, control, or participate in
the ownership, management, operation, financing, or control of, or be
associated as an officer, director, employee, agent, partner, principal,
representative, consultant, or otherwise with, or use or permit his name to
be used in connection with, any line of business or enterprise that
competes with Employer or its Affiliates (as defined herein) in any
business of Employer or its Affiliates, existing or proposed, wherever
located, provided that Executive shall not be prohibited from owning,
directly or indirectly, less than one percent (1%) of the outstanding
shares of any Corporation, the shares of which are traded on a National
Securities Exchange or in the over-the-counter markets;
18.2 Interfere with or disrupt or attempt to interfere with or disrupt
or take any action that could be reasonably expected to interfere with or
disrupt any past or present or prospective relationship, contractual or
otherwise, between Employer and/or any of its Affiliates, and any customer,
insurance company, supplier, sales representative, or agent or employee of
Employer or any such affiliate of Employer.
18.3 Directly or indirectly solicit for employment or attempt to
employ or assist any other entity in employing or soliciting or attempting
to employ or solicit for employment, either on a full-time, part-time, or
consulting basis, any employee, agent, representative, or executive
(whether salaried or otherwise, union or non-union) who within three (3)
years of the time that Executive ceased to perform services hereunder has
been employed by Employer or its Affiliates.
19. VIOLATION OF COVENANTS:
19.1 Injunctive Relief. Executive acknowledges and agrees that the
services to be rendered by Executive hereunder are of a special unique, and
personal character that gives them peculiar value; that the provisions of
this section are, in view of the nature of the business of Employer,
reasonable and necessary to protect the legitimate business interests of
Employer; that violation of any of the covenants or Agreements hereof would
cause irreparable injury to Employer, that the remedy at law for any
<PAGE>
violation or threatened violation thereof would be inadequate; and that,
therefore, Employer shall be entitled to temporary and permanent injunctive
or other equitable relief as it may deem appropriate without the necessity
of proving actual damages and to an equitable accounting of all earnings,
profits, and other benefits arising, from any such violation, or attempted
violation, which rights shall be cumulative and in addition to all other
rights or remedies available to Employer.
19.2 Executive and Employer recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of certain of the provisions contained in this
section. It is the intention of Executive and Employer that the provisions
of this section shall be enforced to the fullest extent permissible under
the laws and public policies of each jurisdiction in which such enforcement
is sought, but that the invalidation (or modification to conform with such
laws or public policies) of any provision hereof shall not render
unenforceable or impair the remainder of this section. Accordingly, if any
provision of this section shall be determined to be invalid or
unenforceable, either in whole or in part this section shall be deemed to
delete or modify, as necessary, the offending provision and to alter the
balance of this section in order to render it valid and enforceable to the
fullest extent permissible as provided herein.
20. LIQUIDATED DAMAGES, EMPLOYER'S BREACH. In the event of any material
breach of this Agreement on the part of Employer, Executive at his sole
option, may terminate his employment under this Agreement and, at his sole
option, shall be entitled to receive as liquidated damages the amounts set
forth in the following subsection. The liquidated damages so received by
Executive shall not be limited or reduced by amounts that Executive might
otherwise earn or be able to earn during the period between termination of
his employment under this Agreement and payment of those liquidated
damages. The provisions of this Section 20 shall be in addition to any and
all rights Executive may have in equity or at law to require Employer to
comply with or to prevent the breach of this Agreement.
20.1 The present value on the payment date (as defined in this
section) of the full amount of his basic salary as provided for in this
Agreement for three (3) years following the payment due, discounted to the
payment date at a rate for quarterly periods based on prime interest rate
charged by Bank of America, for short term commercial loans on the payment
date. The amount payable to Executive under this subsection shall be due
and payable in full on the date of notification of Employer by Executive of
the exercise of his option to terminate his employment under this Agreement
(the "payment date").
21. MISCELLANEOUS:
21.1 Authority to Execute. The parties herein represent that they
have the authority to execute this Agreement.
21.2 Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the rest of this Agreement shall remain in full
force and effect.
<PAGE>
21.3 Successors. This Agreement shall be binding on and inure to
the benefit of the respective successors, assigns, and personal
representatives of the parties, except to the extent of any contrary
provision in this Agreement.
21.4 Assignment. This Agreement may not be assigned by either party
without the written consent of the other party.
21.5 Singular, Plural and Gender Interpretation. Whenever used
herein, the singular number shall include the plural, and the plural number
shall include the singular. Also, as used herein, the masculine, feminine
or neuter gender shall each include the others whenever the context so
indicates.
21.6 Captions. The subject headings of the paragraphs of this
Agreement are included for purposes of convenience only, and shall not
effect the construction or interpretation of any of its provisions.
21.7 Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the rights granted and the obligations assumed
in this instrument and supersedes any oral or prior written agreements
between the parties. Any oral representations or modifications concerning
this instrument shall be of no force or effect unless contained in a
subsequent written modification signed by the party to be charged.
21.8 Arbitration. Any controversy or claim arising out of, or
relating to, this Agreement, or the making, performance, or interpretation
thereof, shall be submitted to a panel of three (3) arbitrators. The
arbitration shall comply with and be governed by the provisions of the
American Arbitration Association. The panel of arbitrators shall be
composed of two (2) members chosen by Executive and Employer respectively
and one (1) member chosen by the arbitrators previously selected. The
findings of such arbitrators shall be conclusive and binding on the parties
hereto. The cost of arbitration shall be borne by the losing party or in
such proportions as the arbitrator shall conclusively decide.
21.9 No Waiver. No failure by either Executive or Employer to insist
upon the strict performance by the other of any covenant, agreement, term
or condition of this Agreement or to exercise the right or remedy
consequent upon a breach thereof shall constitute a waiver of any such
breach or of any such covenant, agreement, term or condition. No waiver of
any breach shall affect or alter this Agreement, but each and every
covenant, condition, agreement and term of this Agreement shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
21.10 Time of the Essence. Time is of the essence of this
Agreement, and each provision hereof.
21.11 Counterparts. The parties may execute this Agreement in two
(2) or more counterparts, which shall, in the aggregate, be signed by both
parties, and each counterpart shall be deemed an original instrument as to
each party who has signed by it.
<PAGE>
21.12 Attorney's Fees and Costs. In the event that suit be
brought hereon, or an attorney be employed or expenses be incurred to
compel performance the parties agree that the prevailing party therein be
entitled to reasonable attorney's fees.
21.13 Governing Law. The formation, construction, and performance
of this Agreement shall be construed in accordance with the laws of Nevada.
21.14 Notice. Any notice, request, demand or other communication
required or permitted hereunder or required by law shall be in writing and
shall be effective upon delivery of the same in person to the intended
addressee, or upon deposit of the same with an overnight courier service
(such as Federal Express) for delivery to the intended addressee at its
address shown herein, or upon deposit of the same in the United States
mail, postage prepaid, certified or registered mail, return receipt
requested, sent to the intended addressee at its address shown herein. The
address of any party to this Agreement may be changed by written notice of
such other address given in accordance herewith and actually received by
the other parties at least ten (10) days in advance of the date upon which
such change of address shall be effective.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
EXECUTIVE:
DATE:4/16/99 By:/s/ Charles Catania
Charles Catania
EMPLOYER:
NFOX.COM
DATE:4/16/99 By:/s/ Karl Kraft
Karl Kraft, President
CONSULTANT AGREEMENT
This Consultant Agreement is effective as of April 16, 1999, by and
between NFOX.COM, ("NFOX"), and Ray Waddell, ("Consultant").
Recitals
WHEREAS, Consultant has been working with NFOX without a written
Consultant Agreement up to the date of this Agreement. Consultant and NFOX
have agreed to finalize the terms of Consultant's employment with NFOX and
reduce those terms to writing in this Agreement.
WHEREAS, Consultant has acquired outstanding and special skills and
abilities and an extensive background in and knowledge of NFOX's business
and the industry in which it is engaged.
WHEREAS, NFOX desires assurance of the continued association and
services of Consultant in order to retain his experience, skills,
abilities, background, and knowledge, and is therefore willing to engage
his services on the terms and conditions set forth below.
WHEREAS, Consultant desires to continue consulting for NFOX and is
willing to do so on those terms and conditions set forth herein.
NOW THEREFORE, in consideration of the above recitals and the mutual
promises and conditions in this Agreement, and other good and valuable
considerations, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. CONSULTANT. NFOX shall contract with Consultant in such capacity or
capacities NFOX's Board of Directors may from time to time prescribe and as
is acceptable to Consultant.
2. CONSULTANT'S DUTIES. Consultant shall act as consultant for product
development and market research for NFOX.
3. DEVOTION OF TIME. During the period of his agreement hereunder
Consultant shall devote such of his business time, interest attention, and
effort to the faithful performance of his duties hereunder, as may be
reasonably necessary and convenient to Consultant to the accomplishment and
fulfillment of those duties. Royal Products, Inc., Desert Health Products,
Inc., Aloe Vera Development Corp., and Jon Dar Corp., Inc.
4. NON COMPETITION DURING TERM OF CONSULTANT. During the agreement
term, Consultant shall devote all of his business time, interest attention,
and effort to the faithful performance of his duties hereunder. However,
Consultant may serve, on the boards of directors of, and hold any other
offices or positions in, companies or organizations which, in the judgment
of NFOX's Board of Directors (the "Board" as expressed in a written Board
Resolution), will not present any conflict of interest with NFOX or
adversely affect the performance of Consultant's duties pursuant to this
Agreement.
<PAGE>
5. TERM OF AGREEMENT. Subject to earlier termination as provided in
this Agreement, Consultant shall be employed for a term beginning April 16,
1999, and ending May 1, 2004. This agreement may be extended by and
between the parties upon written modification hereof.
6. LOCATION OF CONSULTANT. Unless the parties agree otherwise in
writing, during the agreement term Consultant shall perform the services he
is required to perform under this Agreement at NFOX's offices to be located
in Las Vegas, Nevada; provided, however, that NFOX may from time to time
require Consultant to travel temporarily to other locations on NFOX's
business.
7. COMPENSATION. NFOX shall pay Consultant in the following amounts
and on the following terms for all services rendered by Consultant in any
capacity during the term of this Agreement, NFOX shall pay Consultant
annual compensation as follows, in equal monthly installments payable on
the 1st of each month, or in such other manner as is the general practice
of NFOX:
7.1 First Year of Consultant - $12,000
7.2 Second Year of Consultant - $12,000
7.3 Third Year of Consultant - $12,000
7.4 Fourth Year of Consultant - $12,000
7.5 Fifth Year of Employment - $12,000
7.6 Stock Options. In addition to the basic compensation provided
for above, NFOX hereby grants to Consultant the right, privilege and option
(the "Stock Option") to purchase 75,000 shares of the common stock $.001
par value, of NFOX (the "Option Shares"), which are to be fully vested and
become exercisable immediately. The exercise price, "Option Price," of the
Option Shares shall be twenty cents ($.20) per share. The Option Price
shall not be adjusted upon the occurrence of a reverse stock split or other
recapitalization that effectively reduces the number of issued and
outstanding shares of Common Stock of NFOX.
The option rights granted hereby shall be cumulative. Upon
becoming exercisable, the option rights shall be exercisable at any time
and from time to time, in whole or in part; provided, however, that options
may be exercised for no longer than five (5) years from the date on which
they vest. The options shall be exercised by written notice directed to
NFOX, accompanied by a check payable to NFOX in the amount of the aggregate
Option Price. NFOX shall make immediate delivery of such purchased shares,
fully paid and non-assessable, registered in the name of Consultant. The
certificates evidencing such shares shall bear the following restrictive
legend, unless and until such shares have been registered in accordance
with the Securities and Exchange Act of 1933, as amended (the "Act"):
<PAGE>
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT"), OR
THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ANY MANNER
UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND THE SECURITIES LAWS OR ANY
APPLICABLE JURISDICTIONS OR UNLESS PURSUANT TO ANY EXEMPTION THEREFROM.
NFOX shall use its best efforts to register the Option Shares under the Act
at the earlier of such time as it registers shares issuable pursuant to a
qualified employee stock option plan or such time as it registers shares
beneficially owned by or issued to either or all of the following
individuals:
Except as otherwise provided in subparagraph 7.6, If, and to the extent
that the number of shares of common stock of NFOX shall be increased or
reduced by whatever action, including but not limited to change of par
value, split up, reclassification, distribution or a dividend payable in
stock, or the like, the number of shares subject to the Stock Option and
the option price per share shall be proportionately adjusted. If NFOX is
reorganized or consolidated or merged with another corporation, Consultant
shall be entitled to receive options covering shares of such reorganized,
consolidated, or merged company in the same proportion, at an equivalent
price, and subject to the same conditions. For purposes of the preceding
sentence, the excess of the aggregate fair market value of the shares
subject to the option immediately after any such reorganization,
consolidation, or merger over the aggregate option price of such shares
shall not be more than the excess of the aggregate fair market value of all
shares subject to the Stock Option immediately before such reorganization,
consolidation, or merger over the aggregate option price of such shares,
and the new option or assumption of the old Stock Option shall not give
Consultant additional benefits which he did not have under the old Stock
Option, or deprive him of benefits which he had under the old Stock Option.
Further, nothing contained herein shall prevent NFOX from effectuating a
split or reverse split of the shares of NFOX.
Consultant shall have no rights as a stockholder with respect to the Option
Shares until exercise of the Stock Option and payment of the Option Price
as herein provided. In the event that NFOX enters into an agreement for its
merger with another entity or for the sale or transfer of the business
assets or Capital Stock of NFOX, whereby causing the dissolution of NFOX as
a Corporation, NFOX shall provide reasonable advance notice of the
consummation of such transaction (but in no event less than thirty (30)
days prior to such consummation) to Consultant, and Consultant's Option
Shares, pursuant to subparagraph 7.6, shall fully vest, giving the
Consultant the right to purchase the entire amount of Option Shares at the
"Option Price".
8. BENEFITS. During the agreement term, Consultant shall be entitled to
receive all other benefits of employment generally available to NFOX's
other executive and managerial employees when and as he becomes eligible
for them, including group health and life insurance benefits and an annual
vacation.
8.1 Vacation. Consultant shall be entitled to a paid annual vacation
of three (3) weeks during the first year of agreement term, and four (4)
weeks during any subsequent years; provided however, that vacation time may
not be accumulated and must be taken by the end of the year in which it has
accrued.
<PAGE>
8.2 Personal Leave. Consultant shall be entitled, without any
adjustment in his compensation, to fifteen (15) days personal leave in each
fiscal year of agreement term. Personal leave may not be carried over from
one fiscal year to the next.
8.3 Medical and Disability Coverage. Consultant shall have the right
to all medical coverage and long term disability coverage on the same terms
and conditions as provided to other employees of NFOX holding management
positions. It is agreed and understood that NFOX shall obtain reasonable
medical, dental, and liability insurance for the benefit of Consultant and
other members of management as soon hereafter as is practical, and it shall
use its best efforts to maintain such policies at all time during the
agreement term.
8.4 Plans. Consultant shall be entitled to participate in any and all
plans, arrangements, or distributions by NFOX pertaining to or in
connection with any pension, bonus, profit sharing, stock options, and/or
similar benefits for its employees and/or executives, as determined by the
Board of Directors of committees thereof pursuant to the governing
instruments which establish and/or determine eligibility and other rights
of the participants and beneficiaries under such plans or other benefit
programs.
9. EXPENSE REIMBURSEMENT. During the agreement term, NFOX shall reimburse
Consultant for reasonable out-of-pocket expenses incurred in connection
with NFOX's business, including travel expenses, food, and lodging when
away from home, subject to such policies as NFOX may from time to time
reasonably establish for its employees, and/or consultants.
10. INTELLECTUAL PROPERTY. All processes, inventions, patents, copyrights,
trademarks, and other intangible rights ("Intangible Rights") that are
conceived or developed by Consultant, at the written request of NFOX either
alone or with others, during the term of Consultant's agreement shall be
the sole property of NFOX. All other Intangible Rights shall be the sole
property of Consultant.
11. INDEMNIFICATION OF CONSULTANT. NFOX shall, to the maximum extent
permitted by law, indemnify and hold Consultant harmless against expenses,
including reasonable attorney's fees judgements, fines, settlement, and
other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of, or in connection with, Consultant's
agreement by NFOX. NFOX shall advance to Consultant any expense incurred in
defending such proceeding to the maximum extent permitted by law.
12. LIABILITY INSURANCE. NFOX shall purchase and maintain adequate general
liability insurance.
13. TERMINATION BY NFOX. NFOX may terminate this Agreement at any time, if
termination is "For Cause", as hereinafter defined. "For Cause" shall mean
NFOX's termination of Consultant due to an adjudication of Consultant's
fraud, theft, dishonesty to NFOX regarding Consultant's duties or material
breach of this Agreement, if Consultant fails to cure such breach within
ninety (90) days after written notice is given by the Board of Directors to
Consultant and Consultant fails with ninety (90) days of such notification
to commence such cure and thereafter diligently prosecute such cure to
completion. NFOX may terminate this Agreement with ninety (90) days written
notice, in the event Consultant fails to perform Consultant's obligations
<PAGE>
pursuant the terms and conditions as set forth herein. In the event of any
termination, not for cause, Consultant shall receive at least 12 months
notice thereof, and shall receive, during such time, all compensation
provided for herein, including payments of Commissions, if any, as set
forth in paragraph 7.
14. TERMINATION BY CONSULTANT. Consultant may terminate this Agreement by
giving NFOX thirty (30) day's prior written notice of resignation. In such
event, Consultant shall receive all compensation provided herein, including
payments of commissions, if any, through the date of termination. In
addition, Consultant shall be entitled to the Stock Option's as provided in
subparagraph 7.6.
15. DEATH OF CONSULTANT. If Consultant dies during the initial term or
during any renewal term of this Agreement, this Agreement shall be
terminated on the last day of the calendar month of his death. NFOX shall
then pay to Consultant's estate any compensation accrued but unpaid as of
the last day of the calendar month in which Consultant dies. NFOX shall
have a continuous obligation to Consultant's estate for the payments as set
forth in Paragraph 8.4, above. Any and all unexercised Stock Option shall
survive Consultant's death and shall be exercisable by Consultant's estate
or its beneficiaries to whom such Stock Options may be distributed in
accordance with the original terms and conditions of any such Stock
Options.
16. AGREEMENT ON BUSINESS COMBINATION OR DISSOLUTION. This Agreement shall
not be terminated by NFOX's voluntary or involuntary dissolution or by any
merger in which NFOX is not the surviving or resulting corporation, or on
any transfer of all or substantially all of NFOX's assets. In the event any
such merger or transfer of assets, the provisions of this Agreement shall
be binding on and inure to the benefit of the surviving business entity or
the business entity to which such assets shall be transferred.
17. TRADE SECRETS AND CONFIDENTIAL INFORMATION:
17.1 Nondisclosure. Without the prior written consent of NFOX,
Consultant shall not, at any time, either during or after the term of this
Agreement, directly or indirectly, divulge or disclose to any person, firm,
association, or corporation, or use for Consultant's own benefit, gain, or
otherwise, any customer lists, plans, products, data, results of tests and
data, or any other trade secrets or confidential materials or like
information (collectively referred to as the "Confidential Information") of
NFOX and/or its Affiliates, as hereinafter defined, provided to or
communicated to Consultant by NFOX, it being the intent of NFOX, with which
intent Consultant hereby agrees, to restrict Consultant from disseminating
or using any like information that is unpublished or not readily available
to the general public.
17.1.1 Definition of Affiliate. For purposes of this Agreement,
the term "Affiliate" shall mean any entity, individual, firm, or
corporation, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with NFOX.
17.2 Return of Property. Upon the termination of this Agreement,
Consultant, or NFOX, respectively, shall deliver to NFOX, or Consultant, as
applicable, all lists, books, records, data, and other information
(including all copies thereof in whatever form or media) of every kind
relating to or connected with NFOX or Consultant or their Affiliates and
their activities, business and customers, which information or material was
<PAGE>
initially acquired by NFOX, or Consultant respectively. Consultant and or
NFOX respectively, shall be allowed to retain any and all information on
products, lists, books, records, data, or other information initially
produced by Consultant or NFOX respectively and provided to the other.
17.3 Notice of Compelled Disclosure. If, at any time, a party hereof
becomes legally compelled (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand, or similar process or
otherwise) to disclose any of the Confidential Information, such party
shall provide the other party with prompt, prior written notice of such
requirement so that the other party may seek a protective order or other
appropriate remedy and/or waive compliance with the terms of this
Agreement. In the event that such protective order or other remedy is not
obtained, that the other party waives compliance with the provisions
hereof, each agrees to furnish only that portion of the Confidential
Information which such party is advised by written opinion of counsel is
legally required and exercise such party's best efforts to obtain assurance
that confidential treatment will be accorded such Confidential Information.
In any event, the compelled party shall not oppose action by the other
party to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded the Confidential Information.
18. VIOLATION OF COVENANTS:
18.1 Injunctive Relief. Each party acknowledges and agrees; that
violation of any of the covenants or Agreements hereof would cause
irreparable injury to the other party, that the remedy at law for any
violation or threatened violation thereof would be inadequate; and that,
therefore, the other party shall be entitled to temporary and permanent
injunctive or other equitable relief.
18.2 Consultant and NFOX recognize that the laws and public policies
of the various states of the United States may differ as to the validity
and enforceability of certain of the provisions contained in this section.
It is the intention of Consultant and NFOX that the provisions of this
section shall be enforced to the fullest extent permissible under the laws
and public policies of each jurisdiction in which such enforcement is
sought, but that the invalidation (or modification to conform with such
laws or public policies) of any provision hereof shall not render
unenforceable or impair the remainder of this section. Accordingly, if any
provision of this section shall be determined to be invalid or
unenforceable, either in whole or in part this section shall be deemed to
delete or modify, as necessary, the offending provision and to alter the
balance of this section in order to render it valid and enforceable to the
fullest extent permissible as provided herein.
19. MISCELLANEOUS:
19.1 Authority to Execute. The parties herein represent that they
have the authority to execute this Agreement.
19.2 Severability. If any term, provision, covenant, or condition of
this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the rest of this Agreement shall remain in full
force and effect.
<PAGE>
19.3 Successors. This Agreement shall be binding on and inure to
the benefit of the respective successors, assigns, and personal
representatives of the parties, except to the extent of any contrary
provision in this Agreement.
19.4 Assignment. This Agreement may not be assigned by either party
without the written consent of the other party.
19.5 Singular, Plural and Gender Interpretation. Whenever used
herein, the singular number shall include the plural, and the plural number
shall include the singular. Also, as used herein, the masculine, feminine
or neuter gender shall each include the others whenever the context so
indicates.
19.6 Captions. The subject headings of the paragraphs of this
Agreement are included for purposes of convenience only, and shall not
effect the construction or interpretation of any of its provisions.
19.7 Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the rights granted and the obligations assumed
in this instrument and supersedes any oral or prior written agreements
between the parties. Any oral representations or modifications concerning
this instrument shall be of no force or effect unless contained in a
subsequent written modification signed by the party to be charged.
19.8 Arbitration. Any controversy or claim arising out of, or
relating to, this Agreement, or the making, performance, or interpretation
thereof, shall be submitted to a panel of three (3) arbitrators. The
arbitration shall comply with and be governed by the provisions of the
American Arbitration Association. The panel of arbitrators shall be
composed of two (2) members chosen by Consultant and NFOX respectively and
one (1) member chosen by the arbitrators previously selected. The findings
of such arbitrators shall be conclusive and binding on the parties hereto.
The cost of arbitration shall be borne by the losing party or in such
proportions as the arbitrator shall conclusively decide.
19.9 No Waiver. No failure by either Consultant or NFOX to insist
upon the strict performance by the other of any covenant, agreement, term
or condition of this Agreement or to exercise the right or remedy
consequent upon a breach thereof shall constitute a waiver of any such
breach or of any such covenant, agreement, term or condition. No waiver of
any breach shall affect or alter this Agreement, but each and every
covenant, condition, agreement and term of this Agreement shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
19.10 Time of the Essence. Time is of the essence of this
Agreement, and each provision hereof.
19.11 Counterparts. The parties may execute this Agreement in two
(2) or more counterparts, which shall, in the aggregate, be signed by both
parties, and each counterpart shall be deemed an original instrument as to
each party who has signed by it.
<PAGE>
19.12 Attorney's Fees and Costs. In the event that suit be
brought hereon, or an attorney be employed or expenses be incurred to
compel performance the parties agree that the prevailing party therein be
entitled to reasonable attorney's fees.
19.13 Governing Law. The formation, construction, and performance
of this Agreement shall be construed in accordance with the laws of Nevada.
19.14 Notice. Any notice, request, demand or other communication
required or permitted hereunder or required by law shall be in writing and
shall be effective upon delivery of the same in person to the intended
addressee, or upon deposit of the same with an overnight courier service
(such as Federal Express) for delivery to the intended addressee at its
address shown herein, or upon deposit of the same in the United States
mail, postage prepaid, certified or registered mail, return receipt
requested, sent to the intended addressee at its address shown herein. The
address of any party to this Agreement may be changed by written notice of
such other address given in accordance herewith and actually received by
the other parties at least ten (10) days in advance of the date upon which
such change of address shall be effective.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
CONSULTANT:
DATE:4/16/99 /s/ Ray Waddell
Ray Waddell
NFOX.COM
DATE:4/16/99 By:/s/ Karl Kraft
Karl Kraft, President
COMMERCIAL LEASE
A 140-10
R 140-04
This lease is made between Miwa Lock U.S.A. , of 6216 South
Sandhill Road, Las Vegas, Nevada , herein called Lessor, and
NFOX.COM , of Las Vegas, Nevada , herein called
Lessee. Lessee hereby offers to lease from Lessor the premises situated in
the City of Las Vegas , County of Clark, State of Nevada
, described as 6216 South Sandhill Road , upon the following
TERMS and CONDITIONS:
1. Term and Rent. Lessor demises the above premises for a term of Three
years, commencing July 1st , 1999 (year), and terminating on June
30th, 2002 (year), or sooner as provided herein at the annual rental
of Thirty none thousand, eight hundred Sixteen Dollars ( $ 39,816.00*
), payable in equal installments in advance on the first day of each month
for than month's rental, during the term of this lease. All rental
payments shall be made to Lessor, at the address specified above. *Payable
@ $3,318.00 per month.
2. Use. Lessee shall use and occupy the premises for 2,370 sq. ft of
office space The premises shall be used for no other purpose.
Lessor represents that the premises may lawfully be used for such purpose.
3. Care and Maintenance of Premises. Lessee acknowledges that the
premises are in good order and repair, unless otherwise indicated herein.
Lessee shall, at his own expense and at all times, maintain the premises in
good and safe conditions including plate glass, electrical wiring, pluming
and heating installations and any other system or equipment upon the
premises and shall surrender the same, at termination hereof, in as good
condition as received, normal wear and tear expected. Lessee shall be
responsible for all repairs required, expecting the roof, exterior walls,
structural foundations, and: all electrical i.e., outlets, air
conditioning, etc plumbing, elevator, outside landscaping , which shall
be maintained by Lessor.
4. Alterations. Lessee shall not, without first obtaining the written
consent of Lessor, make any alterations, additions, or improvements, in, to
or about the premises.
5. Ordinances and Statutes. Lessee shall comply with all statutes,
ordinances and requirements of all municipal, state and federal authorities
now in force, or which may hereafter be in force, pertaining to the
premises, occasioned by or affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease or
sublet any portion of the premises without prior written consent of the
Lessor, which shall not be unreasonably withheld. Any such assignment or
subletting without consent shall be void and, at the option of the Lessor,
may terminate this lease.
7. Utilities. Al applications and connections for necessary utility
services on the demised premises shall be made in the name of Lessee only,
and Lessee shall be solely liable for utility charges as they become due,
including those for telephone services. **see addendum**
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's agents to
enter upon the premises at reasonable times and upon reasonable notice, for
the purpose of inspection the same, and will permit Lessor at any time
within sixty (60) days prior to the expiration of this lease, to place upon
the premises any usual "to Let" or "For Lease" signs, and permit persons
desiring to lease the same to inspect the premises thereafter.
9. Possession. If Lessor is unable to deliver possession of the premises
at the commencement hereof, Lessor shall not be liable for any damage
caused thereby, no shall this lease be void or voidable, but Lessee shall
not be liable for any rent until possession is delivered. Lessee may
terminate this lease if possession is not delivered within _______ days of
the commencement of the term hereof.
10. Indemnification of Lessor. Lessor shall not be liable for any damage
or injury to Lessee, or any other person, or to any property, occurring on
the demised premises or any part thereof, and Lessee agrees to hold Lessor
harmless from any claims for damages, no matter how caused.
11. Insurance. Lessee, at his expense, shall maintain plate glass and
public liability insurance including bodily injury and property damage
insuring Lessee and Lessor with minimum coverage as follows:
100,000 bodily injury / 100,000 property damage.
Lessee shall provide Lessor with a Certificate of Insurance showing Lessor
as additional insured. The Certificate shall provide for a ten-day written
notice to Lessor in the event of cancellation or material change of
coverage. To the maximum extent permitted by insurance policies which may
be owned by Lessor or Lessee, Lessee and Lessor, for the benefit of each
other waive any and all rights of subrogation which might otherwise exist.
<PAGE>
12. Eminent Domain. If the premises or any part thereof or any estate
therein, or any other part of the building materially affecting Lessee's
use of the premises, shall be taken by eminent domain, this lease shall
terminate on the date when title vests pursuant to such taking. The rent,
and any additional rent, shall be apportioned as of the termination date,
and any rent paid for any period beyond that date shall be repaid to
Lessee. Lessee shall no be entitled to any part of the award for such
taking or any payment in lieu thereof, but Lessee may file a claim for any
taking of fixtures and improvements owned by Lessee, and for moving
expenses.
13. Destruction of Premises. In the event of a partial destruction of the
premises during the term hereof, from any cause, Lessor shall forthwith
repair the same, provided that such repairs can be made within sixty (60)
days under existing governmental laws and regulations, but such partial
destruction shall not terminate this lease, except that Lessee shall be
entitled to a proportionate reduction of rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with the business of Lessee on the premises. If such repairs
cannot be made with in said sixty (60) days, Lessor, at his option, any
make the same within a reasonable time, this lease continuing in effect
with the rent proportionately abated as aforesaid, and in the event that
Lessor shall not elect to make such repairs which cannot be made within
sixty (60) days, this lease maybe terminated at the option of either party.
In the event that the building in which the demised premises may be
situated is destroyed to an extent of not less than one-third of the
replacement costs thereof, Lessor may elect to terminate this lease whether
the demised premises be injured or not. A total destruction of the
building in which the premises may be situated shall terminate this lease.
14. Lessor's Remedies on Default. If the Lessee defaults in the payment
of rent, or any additional rent, or defaults in the performance of any of
the other covenants or conditions hereof, Lessor may give Lessee notice of
such default and if Lessee does not cure any such default within 10
days, after the giving of such notice (or if such other default is of such
nature that it cannot be completely cured within such period, if Lessee
does not commence such curing within such 10 days and thereafter
proceed with reasonable diligence and in good faith to cure such default),
then Lessor may terminate this lease on not less than 10 days' notice to
Lessee. On the date specified in such notice the term of this lease shall
terminate, and Lessee shall then quit and surrender the premises to Lessor,
but Lessee shall remain liable as hereinafter provided. If this lease
shall have been so terminated by Lessor, Lessor may at any time thereafter
resume possession of the premises by any lawful means and remove Lessee or
other occupants and their effect. No failure to enforce any term shall be
deemed a waiver.
15. Security Deposit. Lessee shall deposit with Lessor on the signing of
this lease the sum of ***Three thousand three hundred eighteen
Dollars ($3,318.00) as security for the performance of Lessee's
obligations under this lease, including without limitation the surrender of
possession of the premises to Lessor as herein provided. If Lessor applies
any part of the deposit to cure any default of Lessee, Lessee shall on
demand deposit with Lessor he amount so applied so that Lessor shall have
the full deposit on hand at all times during the term of this lease.
16. Tax Increase. In the event there is any increase during any year of
the term of this lease in the City, County or State real estate taxes over
and above the amount of such taxes assessed for the tax year during which
the term of this lease commences, whether because of increased rate or
valuation, Lessee shall pay to Lessor upon presentation of paid tax bills
and amount equal to 5% of the increase in taxes upon the land and
building in which the leased premises are situated. In the event that such
taxes are assessed for a tax year extending beyond the term of the lease,
the obligation of Lessee shall be proportionate to the portion of the lease
term included in such year.
17. Common Area Expenses. N/A
18. Attorney's Fees. In case suit should be brought for recovery of the
premises, or for any sum due hereunder, or because of any act which may
arise out of the possession of the premises by either party, the prevailing
party shall be entitled to all costs incurred in connection with such
action, including a reasonable attorney's fee.
19. Waiver. No failure of Lessor to enforce any term hereof shall be
deemed to be a waiver.
20. Notices. Any notice which either party may or is required to give,
shall be given by mailing the same, postage prepaid, to Lessee at the
premises, or Lessor at the address specified above, or at such other places
as may be designated by the parties from time to time.
21. Heirs, Assigns, Successors. This lease is binding upon and inures to
the benefit of the heirs, assigns and successors in interest to the
parties.
22. Option to Renew. Provided that Lessee is not in default in the
performance of this lease, Lessee shall have the option to renew the lease
for an additional term of 24 months commencing at the expiration of the
initial lease term. All of the terms and conditions of the lease shall
apply during the renewal term except that the monthly rent shall be the sum
of $ 3,800.00*********. The option shall be exercised by written notice
given to Lessor not less than sixty (60) days prior to the
expiration of the initial lease term. If notice is not given in the manner
provided herein within the time specified this option shall expire.
23. Subordination. This lease is and shall be subordinated to all
existing and future liens and encumbrances against the property.
24. Radon Gas Disclosure. As required by law, (Landlord)(Seller) makes
the following disclosure: "Radon Gas" is a naturally occurring radioactive
gas that, when it has accumulated in a building in sufficient quantities,
may present health risks to persons who are exposed to it over time.
Levels of radon that exceed feral and state guidelines have been found in
buildings in XXXXXXXXXXXX. Additional information regarding radon and
radon testing may be obtained from your county public health unit.
25. Entire Agreement. The foregoing constitutes the entire agreement
between the parties and may be modified only by writing signed by both
parties. The following Exhibits, if any, have been made a part of this
lease before the parties' execution hereof:
Signed this day of , (year)
By:/s/ Wilbur A. Schaff- Lessor By: /s/ Karl Kraft-Lessee
Wilbur A. Schaff, President
Miwa Lock U.S.A.
Addendum
Lease @ 6216 South Sandhill Road, Las Vegas, Nevada 89120
Miwa Lock U.S.A. (lessor) / NFOX.COM (lessee)
June 1999
1. To be supplied by lessor:
Build out to include drop ceiling, air conditioning, fighting, carpet
in upstairs unfinished area beyond fire door. Alarm pad to be placed
at back door which will be used as primary entrance for lessee. Lessor
to also provide two (2) doors from two (2) existing offices to build
out area.
2. Lessee to have roof access for the sole purpose of placing of antenna.
3. Lessee to provide own phone line requirements at their expense.
5. Second floor bathrooms to be considered as "common area" whereas the
Landlord/tenants may require the occasional use of during normal working
hours.
6. Elevator to be considered as "common area" whereas the
Landlord/tenants may require the occasional use of during normal
working hours
7. Amount of monthly power bill will be paid by Lessee based on the
amount of square footage usage. This will be billed to the Lessee as
the bills are received by the Lessor from Nevada Power.
8. Existing cleaning service to clean upstairs during their normal weekly
routine. This charge will be passed onto the Lessee on a monthly
basis.
9. If lessee should not be willing or able to fulfill the 3-year term of
the lease, lessee will give a minimum of 60 days notice of intent and
provide 4 months breaking of contract fee.
/s/ Wilbur A. Schaff /s/ Karl Kraft
SPERRY YOUNG & STOECKLEIN
Telephone (702) 794-2590
Facsimile (702) 794-0744
DONALD J. STOECKLEIN
ATTORNEY AT LAW
Practice Limited to Federal Securities
- -------------------------------------------------------------------------------
1850 E. Flamingo Rd. Suite 111, Las Vegas, Nevada 89119
November 18, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: NFOX.COM REGISTRATION STATEMENT ON FORM SB-2
Ladies and Gentlemen:
As counsel to NFOX.COM (the "Company"), we are rendering
this opinion in connection with a proposed sale of those certain
shares of the Company's newly-issued Common Stock as set forth in
the Registration Statement on Form SB-2 to which this opinion is
being filed as Exhibit 5(a) & 23(a) (the "Shares") pursuant to
Rule 462(b) under the Securities Act of 1933, as amended. We have
examined all instruments, documents and records which we deemed
relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to the originals of all
documents submitted to us as copies.
We express no opinion with respect to (i) the availability
of equitable remedies, including specific performance, or (ii)
the effect of bankruptcy, insolvency, reorganization, moratorium
or equitable principles relating to or limiting creditors' rights
generally.
Based on such examination, we are of the opinion that the
Shares identified in the above-referenced Registration Statement
will be, upon effectiveness of the Registration Statement and
receipt by the Company of payment therefor, validly authorized,
legally issued, fully paid and nonassessable in accordance with
the Nevada General Corporation Laws.
We hereby consent to the filing of this opinion as an
exhibit to the above-referenced Registration Statement and to the
use of our name wherever it appears in said Registration
Statement, including the Prospectus constituting a part thereof,
as originally filed or as subsequently amended.
Respectfully submitted,
/s/ Donald J. Stoecklein
Sperry Young & Stoecklein
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
CONSENT OF INDEPENDENT AUDITORS
To Whom It May Concern:
November 15, 1999
The firm of Barry L. Friedman, P.C., Certified Public Accountant
consents to the inclusion of their report of November 15, 1999, on the
Financial Statements of NFOX.COM, as of June 30, 1999, in any filings that
are necessary now or in the near future with the U.S. Securities and
Exchange Commission.
Very truly yours,
/s/ Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
