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As filed with the Securities and Exchange Commission on January 4, 2000
Registration No. __________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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iChargeit, Inc.
(Name of Small Business Issuer in its Charter)
Delaware 7373 33-0880427
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2184 West 190th Street
Torrance, California 90504
(310) 782-1122
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(Address and telephone number of principal executive offices)
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Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Title of Each Class Name of Each Exchange on Which
to be Registered Each Class is to be Registered
Common Stock, par value $0.001 OTC Bulletin Board
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PART I
Special Note Regarding Forward-Looking Statements.
This registration statement on Form 10-SB contains forward-looking
statements that involve risks and uncertainties that address:
- business strategies;
- expectations regarding our strategy;
- our financial condition or results of operations;
- forecasts;
- trends, including growth, in the electronic commerce market;
- new products; and
- Year 2000 computer problems.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"intends," "plans," "should," "seeks," "pro forma," "anticipates," "estimates,"
"continues," or other variations thereof (including their use in the negative),
or by discussions of strategies, opportunities, plans or intentions. Such
statements include but are not limited to statements under the captions "Risk
Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business," as well as captions elsewhere
in this prospectus. A number of factors could cause results to differ materially
from those anticipated by such forward-looking statements, including those
discussed under "Risk Factors" and "Business."
In addition, such forward-looking statements necessarily depend upon
assumptions and estimates that may prove to be incorrect. Although we believe
that the assumptions and estimates reflected in such forward-looking statements
are reasonable, we cannot guarantee that our plans, intentions or expectations
will be achieved. The information contained in this registration statement,
including the section discussing risk factors, identifies important factors that
could cause such differences.
BUSINESS
OVERVIEW
iChargeit, Inc., a Delaware corporation, is a development stage company
that is developing an on-line shopping mall on the Internet which offers a range
of goods and services for sale to consumers over the Internet. Our primary web
sites are www.iChargeit.com and www.Shoppingplanet.com. We sell computer
hardware, software, and other computer components
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and peripheral products to the retail end-user through our Shoppingplanet.com
web site and conduct direct marketing and sales to resellers through our
subsidiary Bay Micro Computers, Inc.
Our web sites host a variety of iChargeit-owned and third-party vendors
of Internet services, CD-ROMS, computers, artwork, clothing, gifts, baked goods,
leather goods, nutritional supplements, and other products and services. We
showcase featured vendors on our web site's main page, with each vendor
displaying a banner link to a separate vendor "store" hosted on our web site.
Our intent is to provide value to both the end-user and to our vendors by
providing a range of goods and services in one location. We believe that our
vendors may see increased traffic from customers arriving at our web site for
the purpose of browsing for an unrelated product or service.
We offer a full range of cost effective service solutions for
businesses seeking electronic commerce capabilities. Our auction, Slide Show
Search, and other custom features enable us to "plug" companies into our
existing infrastructure, thereby saving companies development time and reducing
the costs associated with launching an electronic commerce web site.
HISTORY
iChargeit, Inc. was incorporated on January 6, 1999 in the State of
Nevada. On March 10, 1999 iChargeit merged with and into Para-Link, Inc., a
Texas corporation incorporated on January 22, 1997. On March 16, 1999 Para-Link
changed its name to iChargeit, Inc. Para-Link was formed for the purpose of
engaging in network marketing of health and nutritional products, but was
inactive at the time of the merger with iChargeit, and had essentially no assets
and no operations. On November 12, 1999, iChargeit, Inc., a Texas corporation,
completed a Delaware reincorporation merger with a its wholly-owned Delaware
subsidiary corporation.
Prior to the merger of iChargeit with and into Para-Link, Para-Link had
entered into a Plan and Agreement of Exchange dated February 22, 1999 with
HerbRX, Inc., a Nevada corporation, wherein the parties intended to exchange 4
million shares of common stock of Para-Link for all of the outstanding shares of
HerbRX, and HerbRX was to become a wholly-owned subsidiary of Para-Link.
Pursuant to the terms of the Plan of Merger and Agreement between
iChargeit, Inc., a Nevada corporation, and Para-Link, Inc., a Texas corporation,
the iChargeit Nevada principals exchanged 100% of their outstanding shares of
stock of iChargeit Nevada for the shares of Para-Link which were held by the
HerbRX principals as a result of the Para-Link/HerbRX Agreement of Exchange. In
exchange for the Para-Link shares from the HerbRX principals, the iChargeit
Nevada principals pledged that they would cause Para-Link/iChargeit to spin off
approximately 80% of HerbRX to the HerbRX principals and undertake the
registration of such securities.
Due to certain misunderstandings of the parties involved with the
Para-Link/HerbRX Plan and Agreement of Exchange, HerbRX was merged with and into
Para-Link and its separate existence was terminated on March 15, 1999. As a
result of this, Para-Link and the former HerbRX shareholders entered into an
Agreement dated as of March 16, 1999 to void the Para-Link/HerbRX merger and
rescind the Agreement and Plan of Exchange between the parties. Pursuant to the
Rescission Agreement entered into as of March 16, 1999, Para-Link formed a new
Nevada corporation named HerbRX, Inc. and issued to the former HerbRX
shareholders shares of common stock in the new HebRX, in identical amounts and
with identical certificate numbers, and the former HerbRX shareholders released
and indemnified Para-Link for any and all obligations which may
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have existed pursuant to the original Plan and Agreement of Exchange between
HerbRX and Para-Link.
On November 12, 1999, we completed a merger with Bay Micro Computers,
Inc., a California corporation dba PC Shopping Planet, pursuant to which Bay
Micro Computers became a wholly-owned subsidiary of iChargeit. Bay Micro had
acquired PC Shopping Planet, including the Shoppingplanet.com domain name and
trademark, pursuant to an asset purchase in April of 1999. As a result of our
merger with Bay Micro Computers, we are engaged in consolidating Bay Micro's
internet operations with the iChargeit.com and Shoppingplanet.com web sites, and
Bay Micro will focus on direct marketing of computer hardware, software and
other computer components and peripheral products and on sales to resellers.
INDUSTRY BACKGROUND
The Internet is a world-wide series of interconnected electronic and/or
computer networks. Individuals and companies recently have recognized that the
technological capabilities of the Internet provide a medium not only for the
promotion and communication of ideas and concepts, but also for the presentation
and sale of information, goods and services. The Internet has been accessible
principally through personal computers, but recently several companies have
announced "Web TV" and hand-held wireless products designed to provide access to
the Internet through alternative devices. We believe that the new Web TV and
wireless products will increase the number of people shopping on-line through
the Internet.
The terms "Electronic Commerce" and "Internet commerce" encompass the
use of the Internet for selling goods and services. The use of the Internet as a
marketing and advertising tool is enhanced by the ability to communicate
information through the Internet to a large number of individuals, businesses
and other entities. Because of the "virtual" nature of electronic commerce, an
on-line presence in the form of a web site for merchants can reduce
significantly or eliminate the costs of maintaining a physical retail facility.
On-line merchants can also achieve significant savings by eliminating
traditional product packaging, print advertising and other point of purchase
materials. Marketing on the Internet can be especially advantageous for smaller
companies because it removes many physical and capital barriers to entry and
levels the competitive playing field by allowing smaller companies to compete
with larger companies effectively.
The unique characteristics of the Internet create a number of
advantages for online retailers and have dramatically affected the manner in
which companies distribute goods and services. Specifically, online retailers
use the Internet to:
- provide consumers with a broad selection of products and
services, increased information and enhanced convenience;
- operate with reduced overhead costs and greater economies of
scale;
- frequently adjust featured selections, editorial content and
pricing, providing significant merchandising flexibility;
- "display" a larger number of products than traditional
retailers at lower cost; and
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- obtain demographic and behavioral data about customers,
increasing opportunities for direct marketing and personalized
services.
The Internet also provides a powerful and convenient means for
consumers to order products and services. As a result of the increased use of
the Internet and the benefits of online retailing, we believe consumer spending
on the Internet will grow rapidly.
INTERNET SECURITY
One of the largest barriers to a potential customer's willingness to
conduct commerce over the Internet is the perceived ability of unauthorized
persons to access and use personal information about the user, such as credit
card account numbers, social security numbers and bank account information.
Concerns about the security of the Internet include the authenticity,
verification and certification of who users are, and privacy protection for
access to private information transmitted over the Internet. We believe recent
advances in this area greatly have reduced the possibility of such unauthorized
access or use, which in turn may increase acceptance by consumers of electronic
commerce. We are not aware of any occasion in which a user's credit card was
misappropriated while transacting business on our web site. "See Risk
Factors--Insecure transmission of confidential information and third party
misconduct could hurt consumer confidence in Internet commerce."
iChargeit's current electronic commerce services use secure sockets
layer, or SSL, protocol. SSL supports a fully digital encrypted session (up to
128-bit, depending on the browser) between the web browser and the web server.
This security method provides a high level of encryption protection for our
users' credit card numbers, bank account numbers, and other personal
information. To our knowledge, we have never experienced any significant
problems with security. However, we cannot assure you that we will never
experience such a problem in the future. See "Risk Factors--Insecure
transmission of confidential information and third party misconduct could hurt
consumer confidence in Internet commerce."
ELECTRONIC COMMERCE SERVICES
Electronic commerce services include the ability to import, organize
and retrieve products electronically, process transactions securely, and receive
credit card payments over the Internet. We have contracted with various third
party providers to create or service the various components of our web site,
such as our credit software, auction software and contest software. Depending on
the agreement, third party providers receive up-front payment or transaction
fees, or a combination of both. We do not own any proprietary rights to the
software used to power the various components of our web site. See "Business -
Intellectual Property."
PRODUCTS AND SERVICES
As a result of our merger with Bay Micro Computers, we are
consolidating Bay Micro's Shoppingplanet.com web site, which sells computers and
computer components and peripheral products directly to the end-user, with
iChargeit's internet operations. Our subsidiary, Bay Micro Computers, will
conduct direct marketing and sales of computer hardware, software and other
computer components and peripheral products to resellers. Our internet business
will be referred to as the "iChargeit Shopping Planet," with the primary web
site address at Shoppingplanet.com, as well as our iChargeit.com web site. All
of the e-commerce software, products and services currently available on the
iChargeit.com web site will be included under the Shoppingplanet.com brand and
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web site. We intend to devote the majority of our advertising and marketing
efforts to develop the Shopping Planet name. The combined Shopping Planet and
iChargeit content will be divided into the following five areas of interest on
our main web site, which will guide users to the products and services
available:
- PC SHOPPING PLANET, which will target the computer retail
market;
- SHOP THE PLANET, which will target the on-line shopper by
offering a wide selection of products, as well as links to our
affiliate partner web sites;
- ENJOY THE PLANET, which will offer a selection of content
driven and game oriented sites to attract repeat visitors and
develop brand loyalty;
- CONNECT THE PLANET, which will offer people the ability to
connect to the Internet using various iChargeit-branded
Internet related products and services; and
- B2B SHOPPING PLANET, which we intend to build as a web site
for computer resellers and manufacturers to conduct business
to business commerce over the Internet.
Users can view each of iChargeit's properties by accessing the
iChargeit web site. To purchase items offered by iChargeit, the user simply can
submit an order on-line and enter a credit card number.
PC SHOPPING PLANET
PC Shopping Planet originally was founded in September 1995 as a mail
order business, and began selling over the Internet approximately two months
later. Bay Micro acquired PC Shopping Planet, including the Shoppingplanet.com
domain name and trademark, pursuant to an asset purchase in April 1999.
Currently, PC Shopping Planet is an Internet retailer of computers, computer
components and peripherals, and computer upgrade kits. The PC Shopping Planet
web site is at www.Shoppingplanet.com.
PC Shopping Planet offers a wide range of high-quality personal
computer hardware, including mother boards, memory chips, multi-media kits,
video/graphics products, accelerators, and peripherals, as well as additional
products and accessories for replacement and upgrades, all at the lowest
possible prices. PC Shopping Planet offers upgrade kits as a cost-effective
alternative to the replacement of existing personal computers. PC Shopping
Planet offers rapid order processing, 24-hour on-line ordering and a toll-free
number at 800-422-9381 for phone orders.
The Shoppingplanet.com web site sets forth a straight-forward layout
with distinct departments and product categories. A "HOTBUYS" section features
new products and current specials. PC Shopping Planet also offers discount
pricing for corporate and volume purchases. In addition to on-line ordering,
customer service representatives are available during normal business hours to
answer all product questions and to provide technical support. PC Shopping
Planet also sends informative e-mail newsletters to its customers providing
product announcements, technical tips and computer news to its customers.
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SHOP THE PLANET
Shop the Planet will be the section of Shoppingplanet.com which will
contain four of iChargeit's main web sites, including iChargeit.com,
iSwapit.com, iDownloadit.com and Shoppersgateway.net.
ICHARGEIT.COM. The iChargeit.com e-commerce software includes credit
software, membership software, auction software, and other features such as
Slide Show Search.
CREDIT SOFTWARE. We plan to launch the iChargeit.com credit software in
the first quarter of 2000. The credit software gives iChargeit the ability to
deposit iChargeit credits into any customer's account who has registered as a
member. iChargeit member-customers can create and maintain balances of
artificial currency called iChargeit credits, which have the same dollar value
as real money when shopping anywhere in the iChargeit web site. For example,
$10.00 worth of iChargeit credits purchase $10.00 worth of goods on any of our
web sites, subject to our ability to determine on a per product basis which
items can be paid for with iChargeit credits.
When a member customer with iChargeit credits in their account wishes
to purchase a product from our web site using these credits, they proceed in the
same manner as if they were purchasing with a credit card. Our shopping cart
offers the customer the option of paying wholly with iChargeit credits, or a
combination of iChargeit credits and credit card. A member customer will earn
iChargeit dollars through a two percent rebate on all purchases made on many of
our web sites, which are then deposited in member accounts after each purchase.
MEMBERSHIP SOFTWARE. Our membership software tracking system allows us
to create and maintain an interactive membership database. To register, a
customer selects a user name and password for logging on iChargeit.com, which
gives the customer the ability to store frequent shipping destinations, billing
information and other information useful for online ordering of products through
our web sites. A registered customer not only will earn iChargeit dollars with
each eligible purchase, but upon entering their name and password, can select
pre-formatted delivery information and enter their credit card information. Once
they are finished shopping, their on-line order is complete, allowing for an
express check-out. The membership software allows each member to view their
previous order history, the status of any open orders they have placed, and
access their iChargeit dollars credit balance.
The membership software also allows us to assign various members
sharing similar characteristics to different user groups. For example, we may
offer different pricing structures or mark-ups to various user groups, and
quantity discounts and other rewards for large orders or repeat buyers.
SLIDE SHOW SEARCH. Slide Show Search is a multimedia slide show search
software on the iChargeit.com mall web site. The search software is in a slide
show format which moves from product-to-product, automatically allowing the
shopper to go backward or forward among the merchandise being shown. Viewers may
examine or buy products and services, while controlling the time they wish to
spend on any one product and/or service. iChargeit also plans to offer this
service to web sites that store their products in a database.
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ISWAPIT.COM
AUCTION SOFTWARE. Our auction software appears on our iSwapit.com web
site and offers two major features. The first feature functions like a
traditional auction, and allows individuals the ability to place items up for
auctions on the iSwapit.com auction web site. Any of our members can create an
on-line auction ad, which can include a photo image of the product for viewing
by a potential bidder during an auction. Initially, we are not charging members
for placing auction ads in order to encourage sellers to place their items up
for auction with iChargeit. The seller will have the choice of accepting payment
in the form of credit cards, COD, personal checks, on-line escrow or iChargeit
credits. Customers interested in bidding on a seller's product either can place
a bid for such item, or contact the seller directly. Eventually, we expect to
earn revenues by charging a fee to set up an auction or collecting a percentage
of the final bid price in a successful auction, or a combination of both.
A seller also can place individual items up for auction on our web site
iBarterit.com. iBarterit.com will function substantially the same as
iSwapit.com, with the difference being that a potential purchaser at auction
will not be bidding with cash, but will be offering something else in trade, as
in an exchange transaction. iBarterit.com also will appear under the B2B
Shopping Planet interest area of our web site. Again, currently we will not be
charging initially to place an auction on iBarterit.com. However, eventually we
expect to earn revenues through iBarterit.com from a combination of transaction
fees and advertising.
The second feature of the auction software allows a retailer who has
set up an electronic storefront on our web site to list any product and sell it
either directly through the storefront and/or through the iSwapit.com auction
site. We offer on-line retailers in our iChargeit.com cybermall storefront all
of the functions and features available from our e-commerce software. All of the
retail stores in our cybermall can offer all or any of their products for sale
directly from the storefront or through an iSwapit.com auction. In addition, our
mall allows retail storefronts to show different pricing for predetermined
member groups. All retailers appearing in the iChargeit.com cybermall have their
entire product line available through the iChargeit search databases, and can
accept or award iChargeit credits.
IDOWNLOADIT.COM
SOFTWARE STOREFRONT. We offer the ability to purchase downloadable
software on our web site iDownloadit.com, by virtue of a resellers agreement
with Digital River, a distributor of software. The hosting, creation,
maintaining and order processing and fulfillment are handled by Digital River.
We receive a monthly commission on all sales through the iDownloadit.com web
site. We offer approximately 170,000 software titles through iDownloadit.com.
SHOPPERSGATEWAY.NET.
Shoppersgateway.net is our on-line shopping directory of links under
various categories to top shopping sites across the Internet.
Shoppersgateway.net is an integral component of iChargeit's overall strategy to
provide users with one central doorway specifically geared for easy to navigate
shopping. Shoppersgateway.net allows users to browse and select from either a
"Directory of Stores" or a "Popular Categories" menu to view an array of
iChargeit mall tenants and fulfillment partners. Shoppersgateway.net is
accessible from the iChargeit.com cybermall. From Shoppersgateway.net, users
also can view iChargeitnews.com or iQuizshow.com. Users also can
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register for a newsletter which provides updates regarding special items. We
receive a percentage of all sales resulting from these links from purchases made
on other shopping web sites or other Internet retailers. We also have affiliate
revenue sharing arrangements with approximately 100 other shopping web sites and
Internet retailers.
ENJOY THE PLANET
CONTEST SOFTWARE. Our contest software is located on the iQuizshow.com
web site. We intend to offer weekly and monthly contests offering prizes
consisting of iChargeit credits, and various merchandise such as palm pilots or
personal computers. The contests appearing on iQuizshow.com are intended to
direct traffic to our web sites. The contests are comprised of a series of
multiple choice questions, and contestants receive their scores upon completion
of a quiz. The winners are the three contestants who have the most correct
answers to the contest questions. In the event more than three contestants are
tied for the three highest scores, a tie breaker question will be e-mailed to
each of the finalists. Winners of each contest are notified automatically via
e-mail upon completion of each contest.
ICHARGEITNEWS.COM. Through an agreement with United Press
International, or UPI, iChargeitnews.com features headline news, daily
horoscopes and a daily almanac. Approximately 350 news articles are updated
daily. We realize revenues from this site through the sale of banner
advertising.
ICHARGEIT.NET. iChargeit.net is a search portal powered by
FindWhat.com, Inc., a version of pay for position search software through which
advertisers bid for high listings under the various search keywords. We receive
$0.03 per search for all search requests generated by the iChargeit.net web
site and directed to FindWhat key word search results. We also receive 100% of
all banner ad sales on search result pages generated on the iChargeit.net web
site.
INTERNET SERVICE
We plan to introduce and offer branded Internet service beginning in
the first quarter of 2000, pursuant to a reseller agreement with StarNet, Inc.,
a third-party Internet service provider. Pursuant to our agreement with StarNet,
we will offer dial-up Internet access accounts with local access phone numbers
in 520 cities in the United States and Canada, as well as high speed DSL
subscriber lines in approximately ten selected cities, with additional cities to
be added in the future. Our Bay Micro support staff will offer telephone
technical support for all of our internet service provider, or ISP, accounts.
ICHARGEIT.NET ISP. We plan to market iChargeit.net ISP as a standard
ISP. We will market the service primarily by distributing free CD Roms
containing an Internet explorer browser and desktop navigation toolbar which
will link to our Internet services and shopping destinations. The CD Roms will
offer free Internet access for a period of ninety (90) days, and will be
distributed with each private-label Bay Micro personal computer sold.
KIDSAFEISP. We plan to introduce an Internet service provider targeted
at children and marketed to parents and schools under the brand name Kidsafe
ISP. Kidsafe ISP will offer all of the services of a traditional ISP, but will
filter unwanted or objectionable material, such as adult content. The goal of
the iChargeit Kidsafe ISP is to protect children from inappropriate and unwanted
material. The content filtering process is initiated at the server level to
ensure that the unwanted
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material does not reach the end-user, instead of at the computer. The
filtering process developed by N2H2, Inc. uses people instead of computers to
evaluate thousands of suspect web pages each day to determine their
acceptability. This process has created a database with over 6 million pages
in more than 30 categories which are child-safe and free from objectionable
content. We anticipate that demand for child-safe Internet access will
increase as more parents become aware of the difficulty in preventing their
children's exposure to such content.
CONNECT THE PLANET
INTERNET PAY TERMINALS. We have entered into a co-branded marketing
agreement with Info Touch Technologies to market computer kiosks to provide
users with Internet access in public locations. Customers can access the
Internet to browse the web or send and receive e-mail. The end-user will be
charged on a per minute basis and can pay with either cash or a credit card. We
intend to market these Internet pay terminals, or IPTs, to owners of hotels,
bars, restaurants, coffee shops, shopping malls and other high traffic
locations. Although originally we contemplated purchasing turn-key kiosks from
Info Touch, with our acquisition of Bay Micro Computers, we have begun building
IPTs using Bay Micro's computer equipment and Info Touch's software and housing.
We expect this to lower our cost per terminal. We intend to begin marketing the
IPTs in 2000. A full line of terminals will be available on the iChargeit.com
web site for users to view and purchase. The purchaser or lessee of an IPT will
generate income through per the minute charges incurred by the user.
We will offer the IPT for sale, and for lease through a third party
leasing agreement similar to any equipment leasing transaction. We expect that
businesses with satisfactory credit will be able to lease an iChargeit IPT for
approximately $200 per month. Through our agreement with a third party leasing
company, we would receive payment in full for the sale of the IPT within 48
hours of delivery of the IPT to a potential lessee. We expect the retail cost of
an IPT to be approximately $5,000. We also may finance and deploy iChargeit
owned IPTs and place such IPTs in high traffic locations, and would share the
revenue generated by the IPT with the owner of the high traffic venue.
Additionally, we have established links to 100 Internet shopping destinations
where we share sales commissions with the owner of the IPT from online orders
placed through the IPT.
WEBPAGE-MAIL.COM. We have developed an e-mail tool called Object
Transfer Technology. This technology allows people to e-mail live web pages
complete with images and banner ads to almost any e-mail recipient. When the
mail arrives, the live HTML appears in the body of the e-mail instead of as an
attachment at the bottom of the e-mail.
We plan to generate revenue from the Webpage-mail.com in several ways.
First, we intend to give free access to a version of Webpage-mail.com technology
that places our banner ads at the top of each e-mail sent using
Webpage-mail.com. Second, we offer the ability of other web sites to integrate
this technology into their web site. On each web site which incorporates our
technology, there will be an input window to e-mail the web page to a friend.
When any visitor e-mails this independent web page from a retailer who has
incorporated our Webpage-mail.com technology, a third party advertiser's banner
ad will appear at the top of the e-mail when it is opened. Third, we expect to
market an unlocked version of Webpage-mail.com which does not include our banner
ads and branding. This unlocked version will be licensed to web sites for a
monthly fee.
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B2B SHOPPING PLANET
IBARTERIT.COM. We plan to introduce iBarterit.com as an electronic
commerce system for business-to-business transactions. iBarterit.com enables
businesses to exchange goods and/or services on the iChargeit.com web site for
selected products available in the iChargeit.com cybermall or for other items
available from iBarterit.com. The "seller" will possess the option at the end of
a business day to accept cash, merchandise or services in any combination, in
exchange for the product. In addition, transactions can be consummated using
partial payments in cash and partial payments with iChargeit credits.
BAYMICRO.NET. We intend to launch Baymicro.net in the spring of 2000 as
an anchor tenant of our B2BShoppingplanet.com web site. Baymicro.net will be a
password protected web site available only to computer resellers.
BAY MICRO COMPUTERS
Bay Micro Computers is a wholeseller and direct marketer of computer
hardware, software and other computer components and peripheral products,
primarily to a network of resellers, universities, school districts and
government agencies. Bay Micro offers a line of desktop personal computers under
the brand name Bay Micro Computers. Bay Micro was one of the largest resellers
of AMD computer chips in Southern California for the second quarter of 1999. Due
to the volume level of AMD chip sales, AMD contributes up to $3,500 per quarter
towards Bay Micro advertising that includes the AMD logo and AMD products
available through Bay Micro. Bay Micro also has relationships with several other
leading computer hardware manufacturers, including SOYO and iWill, both
motherboard manufacturers. The ability of Bay Micro to maintain these
relationships, as well as establishing additional direct relationships with
other leading computer manufacturers, is essential to Bay Micro's ability to
remain competitive, in order to obtain competitive pricing and joint marketing
assistance.
INTERNET FULFILLMENT CENTER
We maintain an inventory of most of the computer products and equipment
sold by PC Shopping Planet and Bay Micro Computers at our headquarters in
Torrance, California. If the inventory is in stock, our staff will pack and ship
from the warehouse a customer's order normally within five days of receipt. We
also can provide our storefront customers with warehousing, packing, and
shipping fulfillment capabilities through the iChargeit fulfillment center, or
IFC, pursuant to a joint venture with E.C. Net, L.L.C. Members of the IFC
program ship their products or merchandise in bulk to our fulfillment center.
Our software routes orders to our fulfillment center and assures accurate income
processing. As soon as orders are received from the merchant's storefront
through our web site, IFC's fulfillment processors will pack and ship the
product directly to the ordering customer. As inventory depletes to
pre-determined levels, the IFC system will notify suppliers of the portion of
their inventory that needs to be replenished.
Our joint venture fulfillment center is located at E.C. Net's warehouse
in Louisville, Kentucky. E.C. Net's warehouse is part of a warehouse owned by an
affiliate of EC Net and is located within three miles of a UPS air hub. None of
our customers have utilized this service.
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STRATEGY
Our strategy is to continue to develop the iChargeit.com web site by
adding new features such as a membership generator and database, a fully
automated contest software, credit software, a database to maintain credit
balances, a shopping cart system which accepts iChargeit credits on a store by
store basis among iChargeit properties, and the auction software.
SALES AND MARKETING
We intend to attract visitors to our web site in order to increase our
advertising revenue and sales of products offered by us and our merchants
through a combination of advertising and promotion efforts. Although we
currently do not have the cash resources to engage in large scale or high
profile advertising campaigns, we intend to raise additional funds in the future
in order to increase our advertising by conducting direct mail campaigns
targeted to computer households, placing advertisements in newspapers, and
eventually through radio and television campaigns. In addition, we currently
offer and will continue to offer rebate promotion on certain products using
iChargeit dollars, or credits, which can be applied towards future purchases.
We intend to pursue several avenues relating to sales and marketing in
the next year of operations. We believe that on-line affiliations are one of the
most efficient formats for brand building and we currently are weighing
affiliations with portals and service providers due to their strength with our
target customer bases.
COMPETITION
The on-line commerce market is new, rapidly evolving and intensely
competitive. Our current or potential competitors include (i) e-commerce
solution providers that provide shopping cart based transaction products such
as: Yahoo/Viaweb, Icat and Pandesic; (ii) Web developers that incorporate
E-commerce products in their solutions such as Mercantec, Hiway and Simplenet;
(iii) on-line shopping malls and auction houses such as The Internet Mall,
Branch Mall, iMall, the Yahoo Store, Amazon.com, eBay and Zauction; and (iv)
product search software and comparison shopping sites such as Excite's Jengo,
Yahoo Junglee, MSN's Sidewalk.com and Webmarket.com.
We believe the principal competitive factors in this market are brand
recognition, selection, personalized services, convenience, price,
accessibility, customer service, quality of search tools, quality of editorial
and other site content, reliability and speed of fulfillment. We are a
development stage company with limited resources and operating history. Most of
our competitors have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing and other
resources than we do. Some of our competitors may be able to secure merchandise
from vendors on more favorable terms, devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing or inventory availability
policies and devote substantially more resources to web site and systems
development than we can. Increased competition may result in reduced operating
margins, loss of market share and a diminished brand franchise.
GOVERNMENT REGULATION
We currently are not subject to direct regulation by any government
agency, other than regulations applicable to businesses in general. For example,
the formation of a licensed insurance
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agency web site to sell insurance will be subject to all of the laws and
regulations applicable to insurance agencies generally. However, there currently
are few laws or regulations directly applicable to Internet access or electronic
commerce. It is possible that in the future laws and regulations may be adopted
with respect to the Web, covering issues such as user privacy, pricing,
characteristics and quality of products and services. Moreover, the application
of existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes, libel and personal privacy is uncertain and
may take years to resolve.
EMPLOYEES
As of December 1, 1999, including Bay Micro Computers, we have 20
salaried employees and 3 hourly employees.
INTELLECTUAL PROPERTY
We do not possess any patents. We rely on a combination of trademark,
copyright and trade secret laws to protect our proprietary rights. We have
registered the trademark "Shopping Planet" in the United States and have applied
for the trademark "iChargeit." In addition, we own most of the domain names of
the web sites appearing in our cybermall.
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks, including the ones listed below. You should carefully consider
these risk factors, as well as the other information contained in this
registration statement, in evaluating an investment in our securities.
WE HAVE A LIMITED OPERATING HISTORY
We began conducting an electronic commerce based business on March 10,
1999. Since that time, we are continuing to develop our web site and expand the
range of products and services we offer. We have not generated significant
recurring revenues from on-line electronic commerce services. Accordingly, we
have a limited operating history, which makes an evaluation of our business and
prospects difficult. Our business and 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 as on-line electronic commerce. These risk and
difficulties include, but are not limited to:
- an evolving and unpredictable business model;
- our ability to anticipate and adapt to a developing and rapidly
changing market;
- unforeseen changes and developments in our strategic partners'
activities and direction;
- lack of sufficient customers, orders, sales or cash flow; and
- lack of widespread acceptance of the Internet as a means of
purchasing products and services.
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In order to address these risks, we must, among other things:
- implement and execute our business strategy successfully;
- continue to develop and upgrade our technology;
- improve our web site and product offerings in response to
competitive developments;
- provide superior customer service;
- attract, retain and motivate qualified personnel; and
- meet the expectations of our strategic partners.
We cannot assure you that we will succeed in addressing these risks,
and our failure to do so could have a material adverse effect on our business,
prospects, financial condition and results of operations.
WE HAVE EXPERIENCED HISTORICAL LOSSES AND ANTICIPATE FUTURE LOSSES
Since our inception, we have incurred significant operating losses, and
as of September 30, 1999, we had an accumulated deficit of $9,003,000. We
expect to increase our operating expenses significantly to expand our marketing
operations, and increase our level of capital expenditures to further develop
and maintain our proprietary software. Such increases in operating expense
levels and capital expenditures will adversely affect short-term operating
results, and therefore we believe that we will incur substantial losses in the
foreseeable future. We cannot assure you that we ever will achieve or maintain
profitability or generate cash from operations.
WE CANNOT ACCURATELY PREDICT OUR REVENUES DUE TO OUR LIMITED OPERATING HISTORY
In light of our limited operating history and the rapidly evolving
nature of the markets in which we compete, our revenues and operating revenues
are difficult to predict. We expect to experience significant fluctuations in
our future quarterly operating results due to a variety of factors, many of
which are outside our control. Factors that may adversely affect our quarterly
operating results include the following:
- our ability to attract and retain merchants on our web site;
- the level of traffic on our web site and our ability to convert
visitors to our web site into customers;
- consumer confidence in encrypted transactions on the Internet;
- the level of use of the Internet and on-line services;
- increasing consumer acceptance of the Internet as a medium for
commerce;
- our ability to upgrade and develop our systems and infrastructure
that we use to process customer's orders and payments;
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- the announcement or introduction of new sites, services and
products by us and our competitors;
- consumer demand and acceptance of the products and services we
offer;
- the level of product returns;
- unexpected increases in shipping costs or delivery times;
- technical difficulties, system downtime or Internet brownouts;
- the amount and timing of operating costs and capital;
- expenditures relating to expansion of our business;
- any future governmental regulation;
- the termination of existing or failure to develop new
relationships with our business partners; and
- general economic conditions and economic conditions specific to
the Internet and on-line commerce.
We also face unforeseeable seasonal sales fluctuations related to our
increasing focus on retail Internet commerce. Due to the above factors, our
operating results likely will fluctuate in the future, making period to period
comparisons difficult and possibly unreliable. Any change in the above factors
could reduce our gross margins in future periods. If our operating results fall
below the expectations of our stockholder and/or securities analysts and
investors, the trading price of our common stock would likely decrease
significantly. See "Item 2 - Management's Discussion and Analysis or Plan of
Operation."
WE NEED TO GENERATE REVENUE
Our future success will depend in part on our ability to generate
substantial revenue. We have been engaged in electronic commerce for less than
one year, and are continuing to upgrade our web site and increase the number of
products and services we offer. So far, we have seen the number of visitors to
our web site increase substantially. However, our future success depends on our
ability to convert visitors into customers who make repeated purchases over
time. If we fail to attract customers and repeat purchasers, growth will be
limited and our revenues likely would decline.
WE MUST MANAGE OUR GROWTH
We believe that we must expand our present operations significantly in
order to maximize potential growth. This expansion would likely place a
significant strain on our management, operational and financial resources. We
may hire new employees for a number of key managerial and technical positions,
and we will need to integrate them into our management team. In order to manage
our growth, we must continue to implement and improve our operational and
financial systems, expand existing operations, attract and retain superior
management and train, manage and expand our employee base. Further, our
management will have to maintain relationships with
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various merchants and other third parties. We cannot assure you that we
will manage the expansion of our operations effectively, that our systems,
procedures or controls will support our operations adequately or that our
management will implement our business plan successfully. If we cannot manage
our growth effectively, then our business, financial condition and results of
operations could suffer a material adverse effect.
WE EXPECT THAT WE WILL REQUIRE ADDITIONAL FUNDING TO EXPAND OUR BUSINESS; GROWTH
AND ACQUISITIONS MAY STRAIN OUR MANAGEMENT, OPERATIONAL AND FINANCIAL RESOURCES
We expect that we will require additional financing in order to expand
our business. Our working capital requirements in the foreseeable future will
depend on a variety of factors, including our ability to implement our business
plan. We cannot assure you that we will successfully negotiate or obtain
additional financing, or that we will obtain financing on terms favorable or
acceptable to us. We do not have any commitments for additional financing. Our
ability to obtain additional capital depends on market conditions, the national
economy and others factors outside our control. If we do not obtain adequate
financing or such financing is not available on acceptable terms, our ability to
finance our expansion, develop or enhance services or products or respond to
competitive pressures would be limited significantly. Our failure to secure
necessary financing could have a material adverse effect on our business,
prospects, financial condition and results of operations. "Item 2 Management's
Discussion and Analysis or Plan of Operation."
WE ARE DEPENDENT ON THE CONTINUED GROWTH OF INTERNET COMMERCE
The market for the sale of goods over the Internet is a new and
emerging market. Rapid growth in the use of, and interest in, the Internet is a
recent phenomenon and may not continue to develop. Our business could be harmed
if any of the following situations occur:
- the use of the Internet does not continue to grow or grows more
slowly than expected;
- the Internet's infrastructure does not effectively support the
growth that may occur; and
- the Internet does not become a viable commercial marketplace.
OUR REVENUES DEPEND UPON KEY ALLIANCES
We recently entered into and may continue to enter into contractual
strategic alliances, such as our relationships with Netgateway, Inc., Winners
Internet Network, and Massimo de Milano. Our revenues in the past have depended
and in the future will continue to depend, in part, on these relationships. We
cannot assure you that any of these alliances will develop successfully, if at
all, or that these alliances will generate revenues or earnings for us. If we
fail to manage these relationships successfully, or if our alliances or partners
fail to perform as we expect, we could suffer substantial losses in sales and
customers. Any such losses would have a material adverse effect on our business
results of operations and financial condition. If we fail to manage these
relationships successfully, or if our alliances or partners fail to perform as
we expect, we could suffer substantial losses in sales and customers. Any such
losses would have a material adverse effect on our business, results of
operations and financial condition.
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WE DEPEND ON OUR ABILITY TO PROTECT AND ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS
We believe that our trademarks and other proprietary rights are
important to our success and competitive position. However, we do not possess
any patents. We rely on a combination of trademark, copyright and trade secret
laws to protect our proprietary rights. We have registered the "Shoppingplanet"
trademark in the United States and claim trademark rights in, and have applied
for trademark registrations in the United States for iChargeit. We cannot
assure you that we will secure significant protection for our proprietary rights
or that claims will not be made against us in connection with our proprietary
rights. The actions we take to establish and protect our trademarks and other
proprietary rights may be inadequate to prevent imitation of our services or
products or to prevent others from claiming violations of their trademarks and
proprietary rights by us. In addition, others may develop similar technology
independently or assert rights in our trademarks and other proprietary rights.
The laws of other countries may afford us little or no effective protection of
our additional property.
INTELLECTUAL PROPERTY CLAIMS AGAINST US CAN BE COSTLY AND COULD IMPAIR OUR
BUSINESS
Other parties may assert infringement or unfair competition claims
against us. We cannot predict whether third parties will assert claims of
infringement against us, or whether any past or future assertions or
prosecutions will harm our business. If we are forced to defend against any such
claims, whether they are with or without merit or are determined in our favor,
then we may face costly litigation, diversion of technical and management
personnel, or product shipment delays. As a result of such a dispute, we may
have to develop non-infringing technology or enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may be
unavailable on terms acceptable to us, or at all. If there is a successful claim
of product infringement against us and we are unable to develop non-infringing
technology or license the infringed or similar technology on a timely basis, it
could impair our business.
OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO ADAPT TO RAPIDLY CHANGING
TECHNOLOGIES IN OUR INDUSTRY
The market in which we compete is characterized by rapidly changing
technology, evolving industry standards, frequent new service and product
announcements, introductions and enhancements, and changing customer demands.
These market characteristics are exacerbated by the emerging nature of the
Internet and the introduction by companies from multiple industries of web-based
based products and services. Accordingly, our future success will depend on our
ability to adapt to these changes and to improve the performance, features and
reliability of our service in response to competitive service and product
offerings, emerging technology and evolving demands of the marketplace. If we
fail to adapt to these changes, there would be a material adverse effect on our
business, results of operations and financial condition. In addition, the
widespread adoption of new Internet, networking or telecommunications
technologies or other technological changes could require us to make substantial
expenditures to modify or adapt our services or infrastructure, which could have
a material adverse effect on our business, results of operations and financial
condition.
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The success of our services will depend in large part upon industry
development of an infrastructure for providing Internet access and services. A
number of these issues are beyond our control:
- The Internet could lose its viability due to delays in the
development or adoption of new standards and protocols intended to
handle increased levels of Internet activity, or due to increased
governmental regulation.
- The recent growth in the use of the Internet has caused frequent
periods of performance degradation, requiring the upgrade of
routers and switches, telecommunications links and other
components forming the infrastructure of the Internet service
providers and other organizations with links to the Internet. Any
actual or perceived degradation in the performance of the Internet
as a whole could decrease the demand for our services.
- Our ability to increase the speed with which we provide services
to customers and the scope of such services ultimately is limited
by and reliant upon the speed and reliability of the networks
operated by third parties. Thus, the emergence and growth of the
market for our services is dependent on improvements being made to
the entire Internet infrastructure to alleviate overloading and
congestion.
If the infrastructure or complementary services necessary to make the
Internet a viable commercial marketplace are not developed or if the Internet
does not become a viable commercial marketplace, our business, results of
operations and financial condition will be materially adversely affected.
THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OPERATIONS
Our performance depends substantially on the continued services and
performance of our senior management and other key personnel particularly Jesse
Cohen, our Chief Executive Officer. Our performance also depends on our ability
to retain and motivate our other officers and key employees. We have relatively
few senior personnel, and thus the loss of any single individual could interrupt
our operations significantly. The loss of the services of any of our executive
officers or other key employees could have a material adverse effect on our
business, prospects, financial condition and results of operations. All of our
senior management joined us in the part year. Our future success depends on the
ability of these officers working together effectively. Our future success also
depends on our ability to identify, attract, hire, train, retain and motivate
other highly skilled technical, managerial and marketing personnel. Competition
for such personnel is intense, and we cannot assure you that we will succeed in
attracting and retaining such personnel. Our failure to attract and retain the
necessary technical, managerial and marketing personnel could have a material
adverse effect on our business, prospects, financial condition and results of
operations.
THE MARKETS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE, AND MANY OF OUR
COMPETITORS ARE LARGER AND HAVE SIGNIFICANTLY GREATER RESOURCES THAN WE DO.
The on-line electronic commerce market, particularly over the web, is
new, rapidly evolving and intensely competitive. Our current or potential
competitors include the following:
- E-commerce solution providers that provide shopping cart based
transaction products such as Yahoo/Viaweb, icat and Pandesic;
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- Web developers that incorporate E-commerce products in their
solutions such as Mercantec, Hiway and Simplenet;
- on-line shopping malls and auction houses such as The Internet
Mall, iMall, Branch Mall, the Yahoo Shopping Guide, eBay and
Amazon.com; and
- product search software and comparison shopping sites such as
Excite's Jango, Yahoo Junglee, MSN's sidewalk and
Webmarket.com.
We believe that the principal competitive factors in our market are:
- brand recognition;
- brand selection;
- personalized services;
- convenience;
- price;
- accessibility;
- customer service;
- quality of search tools;
- quality of editorial and other site content; and
- reliability and speed of fulfillment.
Many of our competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial,
marketing and other resources. Certain of our competitors may secure merchandise
from vendors on better terms, devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing or inventory availability
policies and devote substantially more resources to web site and systems
development. If our competitors are able to offer products and services on more
favorable terms, we will suffer result in reduced operating margins, loss of
market share and a diminished brand franchise. We cannot assure you that we will
compete successfully against our current and future competitors.
We expect that competition in the on-line commerce market will
intensify in the future. For example, as various market segments obtain large,
loyal customer bases, participants in those segments may seek to leverage their
market power to the detriment of participants in other market segments.
Competitive pressures created by any one of our competitors, or by our
competitors collectively, could have a material adverse effect on our business,
prospects, financial condition and results of operations.
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INSECURE TRANSMISSION OF CONFIDENTIAL INFORMATION AND THIRD PARTY MISCONDUCT
COULD HURT CONSUMER CONFIDENCE IN INTERNET COMMERCE
Many consumers are concerned about transmitting confidential
information, such as credit card numbers, over the Internet. Public confidence
in secure transmissions is a significant barrier to Internet commerce and
communications. We rely on encryption technology licensed from third parties to
transmit confidential information, including customer credit card numbers. In
addition, our servers are vulnerable to computer viruses, physical or electronic
break-ins, deliberate attempts by third parties to exceed the capacity of our
systems and similar disruptive problems. Computer viruses, break-ins or other
problems caused by third parties could lead to interruptions, delays, loss of
data or cessation in service to users of our services and products. The law
relating to the liability of Internet service companies for information carried
on or disseminated through their services currently is unsettled. It possible
that claims could be made against Internet service companies under both U.S. and
foreign law for defamation, libel, invasion of privacy, negligence, copyright or
trademark infringement or other theories based on the nature and content of the
materials disseminated through their services. Concerns regarding liability for
information disseminated over the Internet and the adoption of any additional
laws or regulations may decrease the growth of the Internet, which could
decrease the demand for our Internet services and harm our business.
OUR NET SALES AND GROSS MARGINS WOULD DECREASE IF WE EXPERIENCE SIGNIFICANT
CREDIT CARD FRAUD.
A failure to adequately control fraudulent credit card transactions
would reduce our net sales and our gross margins because we do not carry
insurance against this risk. We have developed technology to help us to detect
the fraudulent use of credit card information. Under current credit card
practices, we are liable for fraudulent credit card transactions because we do
not obtain a cardholder's signature.
WE ARE AT RISK OF SYSTEM FAILURE
Our success is largely dependent upon our communications hardware and
computer hardware, substantially all of which is located at the Netgateway, Inc.
co-location facility housed by Exodus in Irvine, California. Our systems are
vulnerable to damage from earthquake, fire, flood, power loss, telecommunication
failure, break-in and similar events. Though we have servers in two locations,
we do not have redundant systems.
A substantial interruption in these systems would have a material
adverse effect on our business, results of operations and financial condition.
To date, we have experienced variable interruptions to our service as a result
of loss of power and telecommunications connections. Our property and business
interruption insurance coverage may not be adequate to compensate us for all
losses that may occur.
Despite our implementation of network security measures and firewall
security, our servers also are vulnerable to computer viruses, physical or
electronic break-ins, deliberate attempts by third parties to exceed the
capacity of our systems, and similar disruptive problems. Computer viruses,
break-ins or other problems caused by third parties could lead to interruptions,
delays, loss of data or cessation in service to users of our services and
products. The occurrence of any of these risks could have a material adverse
effect on our business, results of operations and financial condition.
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IF WE EXPERIENCE PROBLEMS IN OUR DISTRIBUTION OPERATIONS, WE COULD LOSE
CUSTOMERS
We rely upon third-party carriers for product shipments, including
shipments to and from our distribution facility. We are therefore subject to the
risks, including employee strikes and inclement weather, associated with such
carriers' ability to provide delivery services to meet our shipping needs. In
addition, failure to deliver products to our customers in a timely manner would
damage our reputation and brand. We also depend upon temporary employees to
adequately staff our distribution facility, particularly during the holiday
shopping season. If we do not have sufficient sources of temporary employees, we
could lose customers.
ADDITIONAL REGULATIONS COULD BE IMPOSED ON OUR INDUSTRY
We are not currently subject to direct regulation by any government
agency other than regulations applicable to businesses generally, laws
applicable to auction companies and auctioneers, and laws or regulations
directly applicable to access to or commerce on the Internet. However, due to
the increasing popularity and use of the Internet, it is possible that a number
of laws and regulations may be adopted with respect to the Internet, covering
issues such as user privacy, pricing and characteristics and quality of products
and services. Furthermore, the growth and development of the market for Internet
commerce may prompt calls for more stringent consumer protection laws that may
impose additional burdens on those companies conducting business over the
Internet.
The adoption of any additional laws or regulations may decrease the
growth of the Internet, which, in turn, could decrease the demand for our
Internet auctions and other services and increase our cost of doing business.
Any decrease in the growth of the Internet or laws which increase our cost of
doing business would have an adverse effect on our business, results of
operations and financial condition.
Moreover, the applicability to the Internet of existing laws in various
jurisdictions governing issues such as property ownership, auction regulation,
sales tax, libel and personal privacy is uncertain and may take years to
resolve. In addition, because our service is available over the Internet in
multiple states and we sell to numerous consumers in such states, such
jurisdictions may claim that we are required to qualify to do business as a
foreign corporation in each such state. Failure to qualify as a foreign
corporation in a jurisdiction where we are required to do so could subject us to
taxes and penalties for the failure to qualify. Any such new legislation or
regulation, or the application of laws or regulations from jurisdictions whose
laws do not currently apply to our business, could have a material adverse
effect on our business, results of operations and financial condition.
STATES COULD IMPOSE OBLIGATIONS TO COLLECT SALES TAXES
Generally, we do not collect sales or other similar taxes with respect
to goods sold by users through our on-line service. However, one or more states
may seek to impose sales tax collection obligations on out-of-state companies
such as ours, which engage in or facilitate on-line commerce, and a number of
proposals have been made at the state and local level that would impose
additional taxes on the sale of goods and services through the Internet. Such
proposals, if adopted, could impair the growth of electronic commerce
substantially and could affect adversely our opportunity to derive financial
benefit from such activities. Moreover, a successful assertion by one or more
states or any foreign country that we should collect sales or other taxes for
the exchange of merchandise on its
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system could have a material adverse effect on our business, results of
operations and financial condition.
WE ARE LARGELY CONTROLLED BY MANAGEMENT
Our officers and directors currently own or control a substantial
majority of our outstanding common stock. If they act in concert, they will be
able to exercise voting control over iChargeit for the foreseeable future and
will be able to elect the entire Board of Directors, set dividend policy and
determine our management affairs. This management control could preclude, or
make it more difficult to effect, a sale of iChargeit that is not on terms
acceptable to our management.
FAILURE TO SOLVE YEAR 2000 COMPLIANCE PROBLEMS MAY IMPACT OUR BUSINESS
Many computer systems and software products are coded to accept only
two-digit entries in the date code field and cannot reliably distinguish dates
beginning on January 1, 2000 from dates prior to the year 2000. Many companies'
software and computer systems may need to be upgraded or replaced in order to
correctly process dates beginning in 2000 and to comply with the "Year 2000"
requirements. We have reviewed our internal programs and have determined that
there are no significant Year 2000 issues within our Internet systems or
services. Our internal inventory and office management systems, however, may
require upgrades to become Year 2000 compliant. However, although we believe
that our systems are or will be Year 2000 compliant, we utilize third-party
equipment and software that may not be Year 2000 compliant. We also rely on the
Internet for customers to access our web site, and there is no guarantee that
the Internet will be unaffected in the year 2000. We have not developed a
contingency plan to address situations that may result if our vendors or other
third parties are unable to achieve Year 2000 compliance. Further, a significant
disruption in the ability of consumers to access the Internet or to use their
credit cards would have an adverse effect on demand for our services and would
have a material adverse effect on us. Failure of third-party equipment or
software to properly process dates for the year 2000 and thereafter, or any such
similar impact on the Internet, could require us to incur unanticipated expenses
to remedy any problems, which could have a material adverse effect on our
business, results of operations and financial condition.
INTEGRATING NEW ACQUISITIONS INTO OUR BUSINESS MAY BE DIFFICULT
If appropriate opportunities present themselves, we intend to acquire
businesses, technologies, services or products that we believe will grow our
business. We currently have no understandings, commitments or agreements with
respect to any material acquisition and no material acquisition currently is
being pursued. We cannot assure you that we will be able to identify, negotiate
or finance future acquisitions successfully, or integrate such acquisitions into
our current business. The process of integrating an acquired business,
technology, service, product or personnel may result in unforeseen operating
difficulties and expenditures, and may absorb significant management attention
that would otherwise be available for ongoing development of our business.
Moreover, we cannot assure you that the anticipated benefits of any acquisition
will be realized. Any future acquisitions of other businesses, technologies,
services or products might require us to obtain additional equity or debt
financing, which may not be available on terms favorable to us, or available at
all, and such financing, if available, might result in substantial dilution to
our stockholders.
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WE HAVE A LARGE NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE. THE SALE OF SOME OR
ALL OF OUR SHARES COULD CAUSE OUR STOCK PRICE TO FALL.
As of December 16, 1999 and assuming there was no exercise of options
or warrants after December 16, 1999, 11,306,260 shares of our common stock were
issued and outstanding. Of this number, 2,363,760 shares are freely tradable
without restriction or further registration under the Securities Act of 1933, as
amended. However, of the total shares outstanding, 4,971,801 of these shares are
held by "affiliates" as that term is defined in Rule 144, and are subject to
certain limitations and restrictions that are described below.
8,942,500 shares of our common stock out of 11,306,260 shares are
"restricted shares" as that term is defined in Rule 144 and therefore may not be
sold publicly unless they are registered under the Securities Act or are sold
pursuant to Rule 144 or another exemption from registration. In addition to Rule
144 restrictions, the principals of Bay Micro Computers, Inc., who hold an
aggregate of 4,000,000 shares of our common stock, have entered into "lock-up
agreements" with us. These lock-up agreements provide that, except under limited
exceptions, the stockholder may not offer, sell, contract to sell or otherwise
dispose of any of our common stock or securities that are convertible into or
exchangeable for, or that represent the right to receive, our common stock until
August 4, 2000. The Bay Micro principals acquired our shares upon the
effectiveness of our acquisition of Bay Micro on November 12, 1999.
As of December 16, 1999, there were a total of 3,715,000 shares of
common stock subject to outstanding options under our 1999 Stock Incentive Plan
(the "Plan"), 2,167,500 of which were vested. We intend to file registration
statements on Form S-8 under the Securities Act to register all of the shares of
common stock issued or reserved for future issuance under the Plan. After the
effective dates of the registration statements on Form S-8, shares purchased
upon exercise of options granted pursuant to the Plan generally would be
available for resale in the public market.
In general, under Rule 144 as currently in effect, beginning 90 days
after the date of this registration statement, a person who beneficially has
owned shares of our common stock for at least one year would be entitled to
sell, within any three-month period, a number of shares that does not exceed the
greater of:
- 1% of the number of shares of common stock then outstanding, which
will equal approximately 113,063 shares as of December 16, 1999;
or
- the average weekly trading volume of the common stock on the
Nasdaq Over the Counter Bulletin Board during the four calendar
weeks preceding the filing of a notice on Form 144 with respect to
such sale.
Sales under Rule 144 are also subject to certain other requirements
regarding the manner of sale, notice of filing and the availability of current
public information about us.
RULE 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our
"affiliates" at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
generally including the holding period of any prior owner other than an
"affiliate," is entitled to sell such shares without complying with the manner
of sale, notice filing,
22
<PAGE>
volume limitation or notice provisions of Rule 144. Therefore, unless otherwise
restricted, "144(k) shares" may be sold immediately upon the effectiveness of
this registration statement.
RULE 701
In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchase shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this registration statement is entitled to resell such shares
90 days after the effective date of this registration statement in reliance on
Rule 144, without having to comply with certain restrictions, including the
holding period, contained in Rule 144.
The SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, along with the shares acquired upon
exercise of such options (including exercises after the date of this
prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual restrictions described above, beginning 90 days
after the date of this prospectus, may be sold by persons other than
"affiliates," as issued in reliance on Rule 701 may be sold by "affiliates"
under Rule 144 without compliance with its one year minimum holding period
requirement.
THERE IS A LIMITED TRADING MARKET FOR OUR WARRANTS
There currently is no trading market for warrants to purchase our
common stock. None of our warrants currently are listed on any exchange or
securities quotation system. The trading market for, and liquidity of, the
warrants, if any, will be limited.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
YOU SHOULD READ THE FOLLOWING DISCUSSION IN CONJUNCTION WITH OUR
FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS
REGISTRATION STATEMENT. ALL STATEMENTS IN THIS REGISTRATION STATEMENT RELATED TO
ICHARGEIT'S CHANGING FINANCIAL OPERATIONS AND EXPECTED FUTURE GROWTH CONSTITUTE
FORWARD-LOOKING STATEMENTS. THE ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED OR EXPRESSED IN SUCH STATEMENTS. SEE "SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS."
GENERAL
IChargeit is a development stage company that develops Internet
resources to provide internet users with a comprehensive web site where they can
obtain goods and services. We are in the process of implementing our business
model and entering into contracts with merchants who can provide the goods and
services to be sold through our web site. We launched our website
www.ichargeit.com, on March 1, 1999. As a result of the completion of our
acquisition in November 1999 of Bay Micro Computers, Inc., a California
corporation dba PC Shopping Planet our primary web sites are www.iChargeit.com
and www.Shoppingplanet.com. We currently intend to raise additional capital in
the next six months, either in the form of equity, debt, or a combination
thereof. Additional funding may be unavailable, or if it is available, the terms
of such financing may be unacceptable to us.
In the March 1999 merger of iChargeit, Inc., a Nevada corporation and
Para-link, a Texas corporation, iChargeit Nevada's principals exchanged 100% of
their outstanding shares of stock of
23
<PAGE>
iChargeit Nevada for 4,000,000 shares of Para-Link As a result of this
transaction, the separate legal existence of iChargeit Nevada ceased and
Para-link continued as the surviving corporation and changed its name to
iChargeit, Inc., a Texas corporation.
Management of iChargeit Nevada chose to effect this merger because it
believed this approach would be less expensive and less time-consuming than
effecting an underwritten public offering of iChargeit's common stock.
Furthermore, a merger eliminates the risk associated with an initial public
offering, or IPO. Many companies invest a substantial amount of time and capital
during the IPO process and are not able to effectuate a successful transaction
as a result of market conditions or poor performance of the underwriter.
Management thus believed that a merger was a better approach than an IPO as a
result of the reduced cost, risk and time. The officers of iChargeit prior to
the merger and the officers of Para-link determined the number of shares of
common stock to be issue to the historical shareholders of iChargeit by
negotiation. The value of such issuance was not based on iChargeit's book value
or any established valuation criteria. A primary consideration in determining
the number of shares to be issue to the original shareholders was the offering
of adequate consideration to gain control by the shareholders of iChargeit
Nevada.
On November 12, 1999, we completed our acquisition of Bay Micro
Computers, Inc. by merging a wholly-owned subsidiary of ours with and into Bay
Micro. Pursuant to the acquisition, we issued 4,000,000 shares of our common
stock for all of the outstanding common stock of Bay Micro. As a result of this
acquisition, Bay Micro Computers, Inc. now operates as a wholly-owned subsidiary
of iChargeit, Inc. See "Business-History."
We expect our future revenue to be derived from several sources
including: (i) retail sales of goods to consumers; (ii) commissions or royalties
paid by strategic partners for orders received through us; (iii) advertising on
our web sites, and (iv) fees for electronic commerce services and fees paid by
store vendors featured on our web site. We also expect significant growth in
revenues in future periods to reflect our acquisition of Bay Micro Computers,
Inc., and specifically revenues generated by Bay Micro's internet web site at
www.shoppingplanet.com.
We expect to hire between two to ten additional employees in the next
six months, depending on demand for the products and services we offer and the
growth of our operations generally, as may be necessary to sustain growth and to
remain competitive.
Because we have a limited operating history, we believe that
year-to-year comparisons prior to fiscal 2000, and quarterly comparisons prior
to the second quarter of fiscal 2000, do not provide a meaningful analysis of
our operating results. Accordingly, we provide below a discussion and analysis
of our results of operation for the three months ended September 30, 1999 and
for the fiscal period ended June 30, 1999. Future periods will reflect the
consolidation of our operations with the operations of Bay Micro Computers, Inc.
We completed our acquisition of Bay Micro Computers, Inc. on November 12, 1999.
24
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999.
SERVICE REVENUES. Our service revenues are comprised of merchandise
sales, advertising revenues and fees paid for a presence in our Internet
Cyber-Mall. We recognize revenue when merchandise is shipped or services are
performed. Service Revenues for the three months ended September 30, 1999 were
$19,000. We intend to raise additional funds in the future in order to increase
our advertising by conducting direct mail campaigns targeted to consumer
households, placing advertisements in newspapers, and eventually through radio
and television campaigns. We expect advertising to drive additional traffic to
our web sites thereby increasing our revenues through increased sales of our
products. We intend to cross-promote the various iChargeit Internet sites with
the Shopping Planet brand name, further allowing us to broaden our customer
base.
INTERNET COST OF REVENUE. Our internet cost of revenue consists of the
merchandise costs of any products sold online, shipping and related expenses,
and the costs of constructing and operating our web sites and storefronts.
Internet cost of revenue is affected by our ability to source merchandise cost
effectively, to attract significant traffic to our web sites, and to achieve a
favorable balance between visitors and visitors who purchase merchandise from
us. Our gross profit margin for the three months ended September 30, 1999 was
$7,000, or approximately 54.0% of revenues. The gross profit margin reflects
advertising revenue and sales commission.
GENERAL AND ADMINISTRATIVE. Our General and Administrative expenses for
the three months ended September 30, 1999 were $142,000. General and
Administrative expenses consists of payroll expenses, sales and marketing
expenses including advertising and promotional expenditures, technology and
development expenses including expenses related to the development of our web
sites and related software and legal and accounting expenses.
NON-CASH COMPENSATORY EXPENSES. Our non-cash compensatory expenses
for the three months ended September 30, 1999 were $2,256,000. These non-cash
compensatory expenses consisted of charges relating to the issuance of
815,000 shares of common stock to certain officers of the corporation in
connection with their employment agreements which is being amortized over the
vesting period.
NET LOSS. We had a net loss of $2,390,000 for three months ended
September 30, 1999. The loss was due in part to expenses incurred with the
organization of our web business, and to legal and auditing expenses relating
to our Delaware re-incorporation merger, and the preparation of this
registration statement and non-cash compensatory charges of $2,256,000. We
expect to continue to increase our revenue as we are able to raise additional
funds and make investments in expanding our customer base and Internet
operations.
FISCAL PERIOD ENDED JUNE 30, 1999.
SERVICE REVENUES. Service revenues for the fiscal period ended June
30, 1999 were $31,000. We intend to raise additional funds in the future in
order to increase our advertising by conducting direct mail campaigns
targeted to computer households, placing advertisements in newspapers, and
eventually through radio and television campaigns. We expect advertising to
drive additional traffic tour web sites, thereby increasing our revenues. We
intend to cross-promote the various iChargeit Internet sites with the
Shopping Planet brand name, further broadening our customer base.
INTERNET COST OF REVENUE. Internet cost of revenue for the fiscal
period ended June 30, 1999 was $91,000. The Internet cost of revenue reflects
the merchandise costs of products sold online, shipping and related expenses,
and the costs of operating our web sites and storefronts. Internet cost of
revenue was approximately 1% of our net loss for the fiscal period ended June
30, 1999.
25
<PAGE>
GENERAL AND ADMINISTRATIVE. Our General and Administrative expenses for
the fiscal period ended June 30, 1999 were $207,000. General and Administrative
expenses consist of payroll expenses, sales and marketing expenses including
advertising and promotional expenditures, technology and development expenses
including expenses related to the development of our web sites and related
software and legal and accounting expenses. Our General and Administrative
expenses for the fiscal period ended June 30, 1999 were approximately 3% of our
net loss for the fiscal period ended June 30, 1999.
NON-CASH COMPENSATORY EXPENSES. Our non-cash compensatory expenses
for the fiscal period ended June 30, 1999 were $6,348,000. These non-cash
compensatory expenses consisted of charges relating to the issuance of
1,471,000 shares of common stock to certain shareholders and consultants for
services which were valued at $4,881,000 and the Company also issued 815,000
shares of common stock to certain officers of the corporation in connection
with their employment agreements. These shares were valued at $6,274,000
which is being amortized over the vesting period. These non-cash compensatory
expenses accounted for 96% of our net loss for the fiscal period ended June
30, 1999.
NET LOSS. We had a net loss of $6,614,000 for the fiscal period ended
June 30, 1999. The loss was due to expenses incurred to build our website,
general and administrative expenses and to a non-cash charge for compensatory
expenses relating to the granting of 2,286,000 shares of the Company's common
stock to certain consultants and officers of the Company. The grant of 1,785,000
of the 2,286,000 shares of common stock granted was rescinded in November 1999.
INCOME TAXES. We had a net operating loss since our inception in 1997.
No benefits for income taxes was provided in 1998 or 1999 due to the uncertainty
of realization of these benefits in future years.
LIQUIDITY AND CAPITAL RESOURCES.
From our inception through September 30, 1999, we financed our
operations primarily through private sales of our securities, and deferred
payment of salaries and other expenses due to related parties. From January 1999
through June 1999, we issued 2,286,000 shares of our common stock for services
provided in the fiscal year ended June 30, 1999.
From April through July 1999 we sold 301,750 shares of our common stock
to private investors. We realized net proceeds of $603,500 from these sales, of
which $578,500 was received through June 30, 1999.
On June 17, 1999, a principal stockholder agreed to transfer 157,686
shares of our common stock into escrow for the benefit of the Company. In
connection therewith, we recorded the 157,686 shares of common stock as treasury
stock at its fair market value on the day it was placed in the escrow. From July
through October of 1999, we received approximately $153,000 from the sale of the
shares held in escrow, which will be treated as a capital contribution.
At September 30, 1999, we had $232,000 in cash. Our financing
activities provided $638,000 in cash in fiscal 1999, primarily from the issuance
of capital stock through private placements. Through June 30, 1999, these
private placements yielded the Company $578,500. Net cash used in operating
activities was $325,000.
26
<PAGE>
In November and December 1999 the Company raised an aggregate of
$750,000 of which, after fees, it received $653,000, from the sale of 230,771
units consisting of five shares of common stock and one warrant to purchase one
additional share of the Company's common stock for an exercise price of $2.50
per share expiring September 1, 2002.
We anticipate that we will have negative cash flows for the foreseeable
future. Net proceeds from our private placement are being used for working
capital needs, including advertising, brand development, and development of our
e-commerce web site infrastructure. Through September 30, 1999, we incurred
$86,000 in one time web site development expenses. Through September 30, 1999,
we incurred legal and auditing expenses for preparations relating to becoming a
reporting company pursuant to the Securities Exchange Act of 1934, as amended.
These expenditures include $105,000 in legal expenses and $ 38,000 for audit
expenses. Other than normal, recurring legal and audit expenses, we expect our
expenses for legal and auditing services to decrease substantially upon
completion of the process of our registering as a public reporting company
pursuant to the Exchange Act, which we expect to be substantially complete by
the end of our third fiscal quarter ending March 31, 2000.
We intend to retain any earnings for the foreseeable future for use in
the operation and expansion of our business. Consequently, we do not anticipate
paying any cash dividends on our common stock to our stockholders for the
foreseeable future.
We believe that cash on hand and cash provided from operations will be
sufficient to support our working capital expenditure requirements for at least
the next twelve months. However, we cannot assure that future cash requirements
to fund operations will not require us to seek additional capital sooner than
the twelve months, or that such additional capital will be available when
required on terms acceptable to us.
ACQUISITIONS
If opportunities present themselves, we intend to acquire businesses,
technologies, services and/or products that we believe will grow our business.
We currently have no understandings, commitments or agreements with respect to
any material acquisitions and no material acquisitions currently are being
pursued.
IMPACT OF THE YEAR 2000
Many currently installed computer systems and software products are
written using two digits rather than four to define the applicable year. These
systems may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failures or miscalculations causing disruption
of operations for any company using such computer systems or software,
including, among other things, a temporary inability to process transactions,
send invoices or engage in normal business activities. As a result, many
companies' computer systems may need to be upgraded or replaced in order to
avoid this "Year 2000" issue.
We are a relatively new enterprise, and, accordingly, the majority of
the software and hardware we use to manage our business has been purchased or
developed since our recent inception. Generally, hardware and software design
within the current decade and the past several years in particular has
considered and addressed the Year 2000 issue. All the software codes we have
27
<PAGE>
developed internally to drive our e-commerce software and support our web site
are designed to be Year 2000 compliant.
We have not performed any surveys to determine the level of Year 2000
compliance currently realized by our third-party suppliers and vendors. Any
significant disruptions to the business and operations of major suppliers or
vendors could harm our business and results of operation.
ITEM 3. DESCRIPTION OF PROPERTY
iChargeit recently relocated its operations to the headquarters of Bay
Micro Computers, Inc. at 2184 West 190th Street, Torrance, California 90504. We
occupy approximately 9,700 square feet of commercial office and warehouse space
pursuant to a three year lease that commenced on November 1, 1999, with Bay
Micro Computers, Inc. as the original, sole lessee. iChargeit and BayMicro
currently share use of the Torrance facility. The total monthly rent is $6,900
during the term of the lease.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to iChargeit
regarding the ownership of iChargeit's common stock as of December 16, 1999 by
(i) each stockholder known to iChargeit to be a beneficial owner of more than
five percent (5%) of iChargeit's common stock, (ii) each director, (iii) the
executive officers (as such term is defined under the caption "Executive
Compensation -- Summary of Cash and Certain Other Compensation") and (iv) all
current directors and officers of iChargeit as a group.
Beneficial ownership has been determined in accordance with rules of
the Securities and Exchange Commission, and unless otherwise indicated,
represents shares for which the beneficial owner has sole voting and investment
power. The number of shares of common stock beneficially owned includes any
shares issuable pursuant to stock options that may be exercised within 60 days
after December 16, 1999. Shares issuable pursuant to such options are deemed
outstanding for computing the percentage of the person holding such options but
are not deemed to be outstanding for computing the percentage of any other
person.
28
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES PERCENT OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES (1)
------------------------------------ ------------------ ----------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Saeid "Andrew" Akavan(2) 2,224,301 19.48%
2184 West 190th Street
Torrance California 90504
- ----------------------------------------------------------------------------------------------------------------------
Jesse Cohen (3) 2,172,500 18.65%
2184 West 190th Street,
Torrance, California 90504
- ----------------------------------------------------------------------------------------------------------------------
Future Holdings Corp. (4) 1,185,000 10.33%
133 Rolling Hills Road
Clifton, New Jersey 07103
- ----------------------------------------------------------------------------------------------------------------------
James F. Carroll (5) 481,325 4.11%
2184 West 190th Street,
Torrance, California 90504
- ----------------------------------------------------------------------------------------------------------------------
Alexis Quintana 378,882 3.35%
2184 West 190thStreet
Torrance, California 90504
- ----------------------------------------------------------------------------------------------------------------------
Randall S. Waldman(6) 257,500 2.20%
2184 West 190th Street,
Torrance, California 90504
- ----------------------------------------------------------------------------------------------------------------------
All directors and officers as a group (5 persons) (7) 5,514,508 44.55%
- ----------------------------------------------------------------------------------------------------------------------
Total Principal Stockholders (8) 6,684,508 53.31%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
(1) Applicable percentages are based on 11,306,260 shares, which represents
all the issued and outstanding shares on December 16, 1999.
(2) Includes 112,500 shares subject to options exercisable within 60 days
of December 16, 1999.
(3) Includes 337,500 shares subject to options exercisable within 60 days
of December 16, 1999.
(4) Includes 25,000 shares of iChargeit restricted common stock held by
Janice Nichols, wife of the Future Holdings Corp. President, Michael
Nichols. Include 160,000 options exercisable within 60 days of December
16, 1999.
(5) Includes 400,000 shares subject to options exercisable within 60 days
of December 16, 1999. Includes 15,000 shares of iChargeit restricted
common stock held by Patricia Carroll, wife of Jim Carroll.
(6) Includes 222,500 shares subject to options exercisable within 60 days
of December 16, 1999.
(7) Includes 1,072,500 shares subject to options exercisable within 60 days
of December 16, 1999.
(8) Includes 1,232,500 shares subject to options exercisable within 60 days
of December 16, 1999.
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<PAGE>
CHANGES IN CONTROL
We are unaware of any contract or other arrangement, the operation of
which may result in a change in control of iChargeit. See "Item 6. EXECUTIVE
COMPENSATION - Management Contracts and Change-In-Control Agreements."
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS AND PROMOTERS
The following sets forth certain information as of December 1, 1999,
with respect to each person who is an executive officer or director of
iChargeit.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ---------
<S> <C> <C>
Jesse Cohen 38 Chief Executive Officer, Secretary
and Director
Saeid "Andrew" Akavan 39 President and Director
Randall S. Waldman 42 Chief Operating Officer, Vice
President and Director
James F. Carroll 43 Chief Financial Officer, Treasurer
and Director
Alexis Quintana 36 Director
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
JESSE COHEN, 38, has served as iChargeit's Chief Executive Officer,
Secretary and a Director since he founded the Company in March 1999. From March
1999 until November 1999, he was also President of iChargeit. Prior to founding
iChargeit, from 1991 to 1998, he was President of Printersign Display Service
Inc. ("Printersign"), a producer of signage for the retail industry.
Printersign's main clients were Federated Department Stores, Macy's East and
CarMax, a division of Circuit City. Prior to joining Printersign, from 1983 to
1991, Mr. Cohen was a freelance producer for various New York City animation and
graphics production houses including I.F. Studios Inc.
RANDALL S. WALDMAN, 42, has served as iChargeit's Chief Operational
Officer, Vice President and a Director since June 1, 1999. Mr. Waldman has been
involved in the Internet commerce area for the last four years. Prior to
jointing iChargeit, from January 1999 to April 1999, Mr. Waldman was Senior Vice
President for Netgateway, Inc., a provider of e-commerce solutions. In April
1995, Mr. Waldman founded EC.Net Manufacturing L.L.C. ("EC.Net"), one of the
first Internet commerce web sites, offering a turn-key solution for companies
desiring to conduct business through the Internet. From April 1995 to December
1998, Mr. Waldman was the President of EC.Net. From March 1990 to March 1994,
Mr. Waldman was a territory manager for Sybase, Inc., a software company. Mr.
Waldman is a member of Who's Who of Society and Business and 2000 Notable
American Men as well as Sterling Who's Who of Society Executive Edition. Mr.
Waldman received a B.A. degree in marketing from the University of Louisville in
1984.
30
<PAGE>
JAMES F. CARROLL, 43, has served as the Chief Financial Officer and
Treasurer of iChargeit since May 1, 1999. He has served as a director of
iChargeit since November 12, 1999. From December 1973 to April 1999, Mr. Carroll
was employed by F. Schumacher & Co., a New York Fabric Company, as a manager of
Production, Purchasing and Inventory. Mr. Carroll is a Certified Public
Accountant. Mr. Carroll received a B.A. degree in accounting from Pace
University of New York in 1985.
SAEID "ANDREW" AKAVAN, 39 has been President and Director of iChargeit
since November 12, 1999. Prior to joining iChargeit, Mr. Akavan served as
President of Bay Micro Computers Inc. since its formation in 1998. Prior to that
from 1994 to 1998 Mr. Akavan served as CEO of Nicom Computers Inc. He managed
Nicom's retail store and transformed the company into a computer distributor.
Monthly sales increased under Mr. Akavan from $20,000 per month in 1994 to
$800,000 per month by 1996. Mr. Akavan graduated with a B.A. degree in Mythology
from the University of Tehran in 1982.
ALEXIS QUINTANA, 36, has been a director of iChargeit since November
12, 1999. Prior to joining iChargeit, Mr. Quintana was the President of PC
Shopping Planet from its formation in 1995 until April 1999. Currently, Mr.
Quintana is involved in e-commerce operations, serving as the Vice President of
Uninet Imaging, Inc., the Marketing Director at Informed Corp., the Vice
President of Hispano Bancard Corp., and the President of Anroch Pharmaceutical,
Inc. Mr. Quintana graduated from the University of Buenos Aires in 1987 with a
B.A. degree in Architecture.
COMMITTEES
iChargeit has no nominating, audit, compensation or executive
committees.
INSURANCE
iChargeit currently does not carry any key-man life insurance on any
of its officers.
FAMILY RELATIONSHIPS
There are no family relationships among any of the directors or
executive officers of the Company.
ITEM 6. EXECUTIVE COMPENSATION
The following table summarizes the aggregate compensation paid during
to iChargeit's Chief Executive Officer and the four most highly compensated
executive officers other than the CEO (the "Executive Officers") during the
fiscal year ended June 30, 1999.
31
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION AWARDS OPTIONS(3)
- --------------------------- ---- ------ ----- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jesse Cohen 1999 $35,000 $35,000(4) -- -- --
Chief Executive Officer, 2000 $70,000 -- -- -- 900,000
Secretary and Director
Randall S. Waldman 1999 $4,167 -- -- -- --
Vice President, Chief 2000 $20,833 $11,700 -- -- 445,000
Operating Officer and
Director
James F. Carroll 1999 $8,330 $10,000(5) -- -- --
Treasurer, Chief Financial 2000 $50,000 -- -- -- 450,000
Officer and Director
Saeid "Andrew" Akavan(6) 1999 -- -- -- -- --
President, Director 2000 $60,000 -- -- -- 450,000
</TABLE>
(1) Amounts for 1999 represent actual amounts paid in fiscal 1999. Amounts
for 2000 represent pro-forma amounts based on compensation estimated to
be paid on an annual basis.
(2) Employees are eligible for a performance bonus in fiscal 2000 at the
discretion of the Board of Directors.
(3) Amounts for 2000 represent actual amounts granted to date in fiscal
2000.
(4) Bonus represents compensation for work performed prior to the date Mr.
Cohen's employment agreement entered into as of March 11, 1999. Of this
amount $26,250 was paid in fiscal 2000 and $8,750 has not been paid.
(5) Bonus represents a one-time payment as compensation for work performed
prior to the date of Mr. Carroll's employment agreement entered into
May 1, 1999. Bonus was paid in fiscal 2000.
(6) Mr. Akavan became President of iChargeit effective on November 12,
1999, the effective date of the acquisition by iChargeit of Bay Micro
Computers, Inc. Amounts in 2000 represent pro forma amounts estimated
to be paid to Mr. Akavan on an annual basis as President of iChargeit.
STOCK OPTIONS
The following table provides information with respect to the stock
option grants made during the 1999 fiscal year under iChargeit's 1999 Stock
Incentive Plan to the Executive Officers. No stock appreciation rights were
granted during such fiscal year to the Executive Officers.
32
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR(1)
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------
NUMBER OF SECURITIES % OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EMPLOYEES EXERCISE OR BASE
NAME GRANTED (1) IN FISCAL YEAR (2) PRICE ($/SH)(3) EXPIRATION DATE
---- ----------- ------------------ --------------- ---------------
<S> <C> <C> <C> <C>
Jesse Cohen 900,000 32.79% $1.00 11/12/04(4)
Randall S. Waldman 320,000 11.66% $1.00 11/12/09(5)
125,000 4.55% $1.00 11/12/09(6)
James F. Carroll 100,000 3.64% $1.00 11/12/09(7)
250,000 9.11% $1.00 11/12/09(8)
100,000 3.64% $1.00 11/12/09(9)
Andrew Akavan(10) 450,000 16.39% $1.00 11/12/04
</TABLE>
(1) The options listed in the table were granted in fiscal 2000 under
iChargeit's 1999 Stock Incentive Plan, which was adopted by the Board
of Directors on August 17, 1999 subject to shareholder approval, which
was obtained on November 12, 1999. No options were granted during
fiscal 1999.
(2) Based upon options granted for an aggregate of 2,745,000 shares to
employees in fiscal 2000, including the Executive Officers.
(3) The exercise price was based on the fair market value of iChargeit
common stock on the effective date of grant. The exercise price may be
paid in cash, in shares of iChargeit's common stock valued at fair
market value on the exercise date or through a cashless exercise
procedure involving a same-day sale of the purchased shares. iChargeit
may also finance the option exercise by loaning the optionee sufficient
funds to pay the exercise price for the purchased shares, together with
any federal and state income tax liability incurred by the optionee in
connection with such exercise. The Board of Directors, as the Plan
Administrator of iChargeit's 1999 Stock Incentive Plan, has the
discretionary authority to reprice the options through the cancellation
of the options and grant of replacement options with an exercise price
based on the fair market value of the option shares on the grant date.
(4) The options expire five (5) years from the date of grant and vest
quarterly in equal installments during the first two years of Mr.
Cohen's employment beginning on March 11, 1999.
(5) The options vest quarterly in equal installments during the first two
years of Mr. Waldman's employment agreement beginning on June 1, 1999.
(6) These options were fully vested as of November 4, 1999.
(7) These option vest quarterly in equal installments during the two
quarters of Mr. Carroll's amended employment agreement, first dated May
1, 1999.
(8) These options were fully vested as of November 4, 1999, and expire ten
(10) years from the date of grant.
(9) These options were fully vested as of November 1, 1999, and expire ten
(10) years from the date of grant
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(10) These options were granted on November 12, 1999 and expire ten (10)
years from the date of grant. Mr. Akavan was not an employee of
iChargeit until the acquisition by iChargeit of Bay Micro Computers,
Inc. on November 12, 1999.
OPTION EXERCISES AND HOLDINGS.
None.
DIRECTOR COMPENSATION
None. We will compensate directors for reasonable expenses incurred in
attending a meeting of the Board of Directors.
MANAGEMENT CONTRACTS AND CHANGE-IN-CONTROL AGREEMENTS
We have entered into employment agreements with the following named
executive officers on the terms set forth below:
On March 11, 1999, iChargeit entered into a two year employment
contract with Jesse Cohen. Pursuant to the agreement, Mr. Cohen is employed as
Chief Executive Officer, President and Secretary of iChargeit and will receive
an annual base salary of $70,000 and Mr. Cohen received a one-time bonus of
$35,000 for work performed prior to the date of Mr. Cohen's employment
agreement. The base salary will be reviewed annually by the Board of Directors.
Mr. Cohen also (i) received grants to purchase 315,000 restricted common shares
of iChargeit for $.001 per share, (ii) was granted options to purchase 900,000
shares of iChargeit common stock pursuant to iChargeit's 1999 Stock Incentive
Plan, vesting quarterly during the initial two year term of the agreement, and
(iii) is eligible to receive standard employee benefits. iChargeit owes Mr.
Cohen $8,750 in salary for work performed prior to signing his employment
contract. The grant of 315,000 shares of restricted stock was rescinded in
November 1999 with Mr. Cohen's written consent.
On June 1, 1999, iChargeit entered into a two year employment contract
with Randall Waldman. Pursuant to the agreement, Mr. Waldman is employed as
Chief Operational Officer and Vice President of iChargeit and will receive an
annual base salary of $50,000. In December 1999, the term of this contract was
reduced to one year and the base salary was eliminated and instead changed to a
commission of 1.2% on all revenue which occurs due to strategic alliances
generated by Mr. Waldman for iChargeit. Mr. Waldman also received (i) grants to
purchase 250,000 restricted common shares of iChargeit for $.001 per share, (ii)
an $11,700 signing bonus, (iii) was granted options to purchase 320,000 shares
pursuant to iChargeit's 1999 Stock Incentive Plan, vesting quarterly during the
one year term of the contract, and (iv) is eligible to receive standard employee
benefits. The grant of 250,000 shares of restricted stock was rescinded in
November 1999 and 125,000 options to purchase common stock at the fair market
value on the date of the grant of $1.00 per share were issued in lieu of the
restricted stock with Mr. Waldman's written consent. The modifications to Mr.
Waldman's employment agreement were made pursuant to an oral agreement between
iChargeit and Mr. Waldman.
On May 1, 1999, iChargeit entered into an employment contract with
James Carroll. Pursuant to the agreement, Mr. Carroll is employed as Chief
Financial Officer and Treasurer of iChargeit for a term of six months and will
receive a base salary totaling $25,000. In November 1999, Mr. Carroll's contract
was extended for another six month term pursuant to an oral agreement between
the parties. The base salary will be reviewed annually by the Board of
Directors. Mr.
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Carroll also (i) received grants to purchase 250,000 restricted common shares of
iChargeit for $.001 per share, (ii) was granted options to purchase 100,000
shares pursuant to iChargeit's 1999 Stock Incentive Plan, vesting at the end of
the six month term of the employment contract, and (iii) is eligible to receive
standard employee benefits. Pursuant to the agreement, iChargeit also provides
Mr. Carroll with an electronic storefront on its web site in exchange for a
percentage of sales generated through such storefront in an amount to be
determined pursuant to a sales agency agreement to be entered into between
iChargeit and Mr. Carroll. iChargeit owes Mr. Carroll $2,500 salary for work
performed prior to signing his employment contract. The grant of 250,000 shares
of restricted stock was rescinded and 250,000 options to purchase common stock
at the fair market value on the date of the grant of $1.00 per share were
granted with Mr. Carroll's written consent.
The employment agreements listed above for Messrs. Cohen, Waldman and
Carroll terminate immediately upon the employee's death or total disability, and
we also may terminate the employment agreement without "cause" at any time upon
at least thirty days prior written notice to the employee. The employee is
entitled to terminate the employment for "good reason," as that term is defined
in the employment agreements, including a reduction in base salary without the
employee's prior written consent, the relocation of employee outside of
employee's place of employment and for certain other breaches. If during the
term of the employment agreement, the employee resigns for one of the "good
reasons," or if we terminate employee's employment for a reason other than
employee's death or disability, or without "cause," the employee is entitled to:
- The portion of his then current base salary which has accrued
through his date of termination;
- Any payments for unused vacation and reimbursement expenses, which
are due, accrued or payable at the date of employee's termination;
- Severance payments in an amount equal to the employee's then
current base salary, payable for the remainder of the term; and
- All of employee's options to purchase shares of iChargeit's common
stock and restricted stock shall accelerate and automatically
vest, and such options shall otherwise be exercisable in
accordance with their terms.
If we terminate the employee's employment upon death or disability or
for "cause," or if the employee voluntarily resigns for other than a "good
reason," then the employee shall be entitled to only the compensation set forth
in the first two bullet points above.
Saeid "Andrew" Akavan is not party to a written employment agreement
with iChargeit. However, we have reached an oral understanding with Mr. Akavan
pursuant to which Mr. Akavan shall be paid a base salary, bonus and options at a
level roughly equivalent to that of Mr. Cohen.
MATERIAL FEATURES OF THE 1999 STOCK INCENTIVE PLAN
iChargeit's Board of Directors adopted the 1999 Stock Incentive Plan
(the "1999 Plan") subject to stockholder approval. The stockholders approved the
adoption of the 1999 Plan at a special meeting of stockholders held on November
12, 1999. The 1999 Plan is funded initially with 4,000,000 shares of our common
stock reserved for issuance.
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The purpose of the 1999 Plan is to attract, retain and motivate
employees, directors, officers and consultants through the issuance of options
or rights to purchase common stock of iChargeit and to encourage ownership of
common stock by most employees, directors and certain consultants of iChargeit.
The 1999 Plan will be administered by the Board of Directors, or a Compensation
Committee of the Board of Directors if one is formed (the "Committee"). Subject
to the provisions of the 1999 Plan, the Committee determines the persons to whom
options or stock purchase rights will be granted, the number of shares to be
covered by each option or stock purchase right and the terms and conditions upon
which an option or stock purchase right may be granted. All employees, directors
and consultants of iChargeit and its affiliates (as defined in the 1999 Plan,
"Affiliates") are eligible to participate in the 1999 Plan, although iChargeit
has discretion in identifying those people who actually receive grants.
Options granted under the 1999 Plan may be either (i) options intended
to qualify as "incentive stock options" under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or (ii) non-qualified stock
options. Other than certain minimum requirements described below, the Committee
has the discretion to fix the terms of options granted under the 1999 Plan.
Incentive stock options may be granted under the 1999 Plan to employees of
iChargeit and its Affiliates. Non-qualified stock options may be granted, in
iChargeit's discretion, to consultants, directors and employees of iChargeit and
its Affiliates.
Incentive stock options granted under the 1999 Plan may not be granted
with an exercise price less than the fair market value of the common stock on
the date of grant (or 110% of fair market value in the case of incentive stock
options granted to participants holding 10% or more of the voting stock of
iChargeit). Stock options granted under the 1999 Plan expire not more than ten
years from the date of grant, or not more than five years from the date of grant
in the case of incentive stock options granted to a person holding more than 10%
of the voting stock of iChargeit. The aggregate fair market value (determined at
the time of grant) of shares issuable pursuant to incentive stock options which
become exercisable in any calendar year under any incentive stock option plan of
iChargeit by an employee may not exceed $100,000. An option granted under the
1999 Plan is not transferable by an optionholder except by (i) will or by the
laws of descent and distribution or (ii) as determined by the Committee and set
forth in the Option Agreement. An option is exercisable only by the optionholder
or one who receives the option pursuant to a permitted transfer.
An incentive stock option granted under the 1999 Plan may be exercised
after the termination of the optionholder's employment with iChargeit (other
than by reason of death, disability or termination for cause as defined in the
1999 Plan) to the extent exercisable on the date of such termination, for up to
one month following such termination, provided that such incentive stock option
has not expired on the date of such exercise. In granting any non-qualified
stock option, the Committee may specify that such non-qualified stock option
shall be subject to such termination or cancellation provisions as the Committee
may specify. In the event of death or permanent and total disability while an
optionholder is employed by iChargeit or within one month of termination of
employment, incentive stock options and non-qualified stock options may be
exercised, to the extent exercisable on the date of termination of employment
(as calculated under the 1999 Plan), by the optionholder or the optionholder's
survivors at any time prior to the earlier of the option's specified expiration
date or one year from the date of the optionholder's termination of employment
(all as more specifically provided in the 1999 Plan).
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Stock purchase rights may be granted under the 1999 Plan. Stock
purchase rights entitle the participant to purchase shares of common stock at a
specified price, which may be nominal but not less than the par value of the
common stock, within ten days of the date of grant. The shares acquired upon
purchase are restricted from transfers and are subject to a repurchase right
held by iChargeit. The repurchase right lapses with respect to specified numbers
or percentages of the shares over a period of time specified in the restricted
stock purchase agreement that applies to the stock purchase right. The
repurchase right entitles iChargeit to repurchase the shares at the same price
paid for the shares by the participant in the event the individual's employment
or services with iChargeit terminates before the lapsing of the repurchase right
occurs, subject to the terms of the restricted stock purchase agreement, which
may provide for accelerated lapsing of the repurchase right in the case of
terminations due to death, disability or for terminations by iChargeit other
than for cause. Stock purchase rights and shares subject to the repurchase right
are not transferable by the participant except (i) by will or by the laws of
descent and distribution or (ii) as determined by the Committee and set forth in
the restricted stock purchase agreement. Stock purchase rights are exercisable
only by the holder or one who receives the stock purchase rights pursuant to a
permitted transfer.
If the shares of common stock are subdivided or combined into a greater
or smaller number of shares or if iChargeit issues any shares of common stock as
a stock dividend on its outstanding common stock, the number of shares of common
stock deliverable upon the exercise of an option or stock purchase right granted
under the 1999 Plan shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend. If
provided in a specific stock option agreement or restricted stock purchase
agreement, in the event of
(i) the acquisition (with certain exceptions) of more than 50% of
the outstanding common stock or voting power by an individual,
entity or group acting together,
(ii) a merger or consolidation in which iChargeit is not the
surviving entity (except for a transaction whose principal
purpose is to change iChargeit's state of incorporation),
(iii) a reverse merger in which iChargeit is the surviving entity but
in which securities possessing more than fifty percent (50%) of
the total voting power of iChargeit's outstanding securities are
transferred to or acquired by a person or persons different from
the persons holding those securities immediately prior to such
merger,
(iv) the sale, transfer or other disposition of all or substantially
all of the assets of iChargeit, or
(v) a complete liquidation or dissolution of iChargeit,
each option or stock purchase right outstanding as of the date of such
transaction may be:
(x) assumed or new rights substituted therefore by the successor
corporation,
(y) terminated upon written notice to the participants stating that
all options (with all options then outstanding being deemed to
be exercisable for purposes of this section) or stock purchase
rights must be exercised within a specified number of days (not
less than 15), at the end of which period any options or stock
purchase rights not exercised will terminate, or
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(z) terminated in exchange for a cash payment equal to the excess of
the value of the cash or property the holder of the option or
the stock purchase right would have received pursuant to the
change in control transaction over the exercise or purchase
price (with all options then outstanding being deemed to be
exercisable for purposes of this section),
provided that the administrator of the 1999 Plan shall select which, if
any, treatment to provide and under certain circumstances can determine to
provide shares of common stock or other consideration with value equal to the
cash or other consideration that otherwise would be received by a participant.
If provided in the specific option agreement or restricted stock
agreement, each option or the lapsing of the repurchase right on shares issued
with respect to stock purchase rights that are assumed or replaced in connection
with such a transaction shall automatically accelerate and such options shall
become fully exercisable and vested or the repurchase right shall fully lapse on
the earliest of (a) the original vesting or lapsing date, or (b) the date the
transaction is determined to have occurred, or such other events as may be
provided in the agreement. In the event of other reorganizations,
recapitalizations, mergers or consolidations (not meeting the criteria described
above), pursuant to which securities of iChargeit or of another corporation are
issued with respect to the outstanding shares of common stock, a participant
upon exercising an option or stock purchase right will be entitled to receive
for the purchase price paid upon such exercise the securities he or she would
have received if he or she had exercised such option or stock purchase right
prior to such reorganization, recapitalization, merger or consolidation.
The stockholders of iChargeit may amend the 1999 Plan. The 1999 Plan
may also be amended by the Board of Directors or the Committee, provided that
any amendment approved by the Board of Directors or the Committee which is of a
scope that the Committee determines requires stockholder approval, shall be
subject to obtaining such stockholder approval. The Committee may amend
outstanding option agreements or restricted stock purchase agreements as long as
the amendment is not materially adverse to the participant. Amendments that are
materially adverse to the participant can be effected only with the consent of
the participant.
The Committee has not made any awards under the 1999 Plan. The maximum
number of options or stock purchase rights that can be granted to an individual
in any fiscal year of iChargeit is options or stock purchase rights, or a
combination thereof, to purchase 500,000 shares, as such number may be adjusted
in accordance with the 1999 Plan.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of certain U.S. Federal income tax
consequences of the 1999 Plan:
INCENTIVE STOCK OPTIONS. An incentive stock option ("ISO") does not
result in taxable income to the optionee or a deduction to iChargeit at the time
it is granted or exercised, provided that the optionee does not dispose of any
acquired ISO shares within two years after the date the ISO was granted or
within one year after he acquires the shares (the "ISO holding period").
However, the difference between the fair market value of the stock on the date
he exercises the option (and acquires the stock) and the option price therefor
will be an item of tax preference includible in "alternative minimum taxable
income." Upon disposition of the stock after the
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expiration of the ISO holding period, the optionee will generally recognize long
term capital gain or loss based on the difference between the disposition
proceeds and the option price paid for the stock. If the stock is disposed of
prior to the expiration of the ISO holding period, the optionee generally will
recognize ordinary income, and iChargeit will have a corresponding deduction, in
the year of the disposition equal to the excess of the fair market value of the
stock on the date of exercise of the option over the option price. If the amount
realized upon such a disqualifying disposition is less than the fair market
value of the stock on the date of exercise, the amount of ordinary income will
be limited to the excess of the amount realized over the optionee's adjusted
basis in the stock.
NON-QUALIFIED STOCK OPTIONS. The grant of a non-qualified stock option
will not result in taxable income to the optionee or deduction to iChargeit at
the time of grant. When the Optionee exercises his or her option to purchase the
stock, the amount of the excess of the then fair market value of the shares
acquired over the option price is treated as supplemental compensation and is
taxable as ordinary income. iChargeit is entitled to a corresponding deduction.
STOCK PURCHASE RIGHTS. The grant of a stock purchase right will not
result in taxable income to the participant or a deduction to iChargeit at the
time of grant. The participant will recognize ordinary income (taxable as
compensation), and iChargeit will have a corresponding deduction, subject to
limitations that may be imposed under Section 162(m) of the Internal Revenue
Code, at the time the repurchase right in favor of iChargeit lapses and
restrictions on transfer of shares are removed. The taxable compensation income
will be equal to the excess of the then fair market value of the shares for
which all restrictions on transfer and repurchase rights have lapsed over the
purchase price.
DEDUCTIBILITY OF COMPENSATION. If the stockholders approve the 1999
Plan, options granted under this Plan will qualify as "performance-based"
compensation under Section 162(m) of the Internal Revenue Code, so as to allow
iChargeit to take corresponding deductions for all supplemental income that
Optionees realize upon the exercise of their stock options. Stock purchase
rights granted under the 1999 Plan will not qualify as "performance-based"
compensation under Section 162(m) of the Internal Revenue Code, and to the
extent stock purchase rights are granted to "covered employees," as such term is
defined under Section 162(m), iChargeit will not be able to deduct related
compensation expenses to the extent such expenses exceed $1,000,000 in any year.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1999, iChargeit and Susannah Altman of Enchanted Bookery
entered into an agreement pursuant to which Enchanted Bookery became the
exclusive book related gift basket supplier for baskets sold on iChargeit's web
site. iChargeit pays Enchanted Bookery for the preparation and delivery of each
basket ordered from the web site. Susannah Altman is the sister of iChargeit
Chief Executive Officer Jesse Cohen.
In February 1999, iChargeit and EC Net Manufacturing L.L.C. ("EC.Net")
entered into an agreement pursuant to which EC.Net agreed to provide warehousing
and staffing through its associates for the purpose of storing and shipping
products for iChargeit customers. Pursuant to the agreement, EC.Net received
20,000 shares of iChargeit common stock. Randall Waldman is President of EC.Net,
and is the Chief Operating Officer and a Director of iChargeit.
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In March 1999, iChargeit issued 25,000 shares of its common stock to
Randall Waldman in exchange for consulting services regarding initial
incorporation, financing matters and mergers. Mr. Waldman did not have any
relationship with iChargeit at the time other than on a consulting basis;
however, Mr. Waldman is now the Chief Operating Officer and a Director of
iChargeit.
In March 1999, Patricia Carroll received 15,000 shares of restricted
common stock in consideration for providing legal consultation on an as needed
basis to iChargeit. Patricia Carroll is the wife of iChargeit's Chief Financial
Officer, James Carroll.
In March 1999, iChargeit entered into a contract with Future Holdings,
Corp. for services commencing on January 6, 1999 in connection with the
coordination and preparation of Para-Link's merger with iChargeit. Future
Holdings, Corp. received grants to purchase 210,000 shares of restricted common
stock at $.001 per share as consideration for its services. In November 1999,
160,000 shares of Future Holding's restricted stock were cancelled and 160,000
options with an exercise price at the fair market value on the date of the grant
of $1.00 per share were issued. Future Holdings, Corp. is the holder of
approximately 10.33% of iChargeit's shares of outstanding common stock. See
"Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS IN MANAGEMENT." Mike
Nichols is the President of Future Holdings, Corp and at the time of the
agreement in March 1999, was serving as a consultant to iChargeit. Janice
Nichols, the wife of Mike Nichols, received an additional 25,000 shares of
iChargeit common stock pursuant to a consulting agreement entered into in March
1999, for clerical services provided pursuant to the iChargeit/Para-Link merger.
In August 1999, Lewis Cohen & Company received 140,000 stock options
with an exercise price at the fair market value on November 12, 1999, the
effective date of the grant of $1.00 for assisting in the design of the
iChargeit logo and assisting in the design and maintenance of other iChargeit
web sites. Additionally, iChargeit pays Lewis Cohen & Company $1400 per month
for site maintenance. Lewis Cohen is the father of iChargeit's Chief Executive
Officer Jesse Cohen.
ITEM 8. DESCRIPTION OF SECURITIES
The following summary does not purport to be complete and is subject
to, and is qualified in its entirety by, all of the provisions of our
Certificate of Incorporation and Bylaws, including the definitions therein of
certain terms. Copies of the Certificate of Incorporation and Bylaws are filed
as exhibits to the registration statement.
COMMON STOCK
iChargeit's Certificate of Incorporation authorizes the issuance of an
aggregate of 50,000,000 shares of common stock, par value $.001 per share. As of
December 16, 1999, there were 11,306,260 shares of common stock issued and
outstanding held by approximately 157 stockholders of record.
The following summarizes the rights of holders of our common stock:
- each holder of shares of common stock is entitled to one vote per
share on all matters to be voted on by stockholders generally,
including the election of directors;
- there are no cumulative voting rights;
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- holders of common stock may not take action by written consent
in lieu of a meeting;
- the holders of our common stock are entitled to dividends and
other distributions as may be declared from time to time by
the Board of Directors out of funds legally available for that
purpose, if any;
- upon our liquidation, dissolution or winding up, the holders
of shares of common stock will be entitled to share ratably in
the distribution of all of our assets remaining available for
distribution after satisfaction of all our liabilities and the
payment of the liquidation preference of any outstanding
preferred stock; and
- the holders of common stock have no preemptive or other
subscription rights to purchase shares of our stock, nor are
they entitled to the benefits of any redemption or sinking
fund provisions.
PREFERRED STOCK
Pursuant to iChargeit's Certificate of Incorporation, the board of
directors has the authority to issue up to five million (5,000,000) shares of
preferred stock, par value $.001, which may be issued with such designations,
powers, preferences and rights, including redemption and voting rights, as the
Board of Directors may determine.
WARRANTS
Pursuant to a private placement which occurred between November and
December 1999, we sold Units consisting of five shares of our common stock and
one warrant. As a result of this private placement, we have issued 230,771
warrants. The warrants have an exercise price of $2.50 per share and are
exercisable until their expiration date which is the earlier of September 1,
2002 or the business day preceding a Redemption Date. The Redemption Date is
fixed by a notice sent by the Company and permits the Company to redeem the
warrants for $.05 per share of common stock receivable upon exercise of the
warrant. The Company may only set a Redemption Date if the Closing price of
iChargeit's common stock on its principal trading exchange in twenty of the
thirty trading days prior to the Redemption Date is more than 200% of the
adjusted exercise price of the warrant.
Pursuant to a private placement in September 1997, we issued warrants
to purchase 202,500 shares of common stock at a purchase price of $2.50 per
share, all of which currently are outstanding and will expire August 8, 2000.
These warrants were sold for an average price of $0.98 per share.
ANTITAKEOVER EFFECTS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS.
Some provisions of our Certificate of Incorporation and Bylaws may be
deemed to have an anti-takeover effect and may delay, defer or prevent a tender
offer or takeover attempt that a stockholder might consider in its best
interest, including those attempts that might result in a premium over the
market price for the shares held by our stockholders. These provisions include:
- STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. Our
Certificate of Incorporation provides that stockholders may
not take action by written consent, but
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only at a duly called annual or special meeting of
stockholders. This may limit our stockholders' ability to
alter corporate policies or actions with which they disagree.
- AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued
shares of common stock and preferred stock are available for
future issuance without stockholder approval. These additional
shares may be utilized for a variety of corporate purposes,
including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The
existence of authorized but unissued and unreserved common
stock and preferred stock could render more difficult or
discourage an attempt to obtain control of iChargeit by means
of a proxy contest, tender offer, merger or otherwise.
TRANSFER AGENT AND REGISTRAR
Florida Atlantic Stock Transfer, Inc. has been appointed as the
transfer agent and registrar for iChargeit's common stock.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
Since March 18, 1999, iChargeit common stock has traded on the Nasdaq
OTC Bulletin Board under the symbol "BB:ICHG." From February 9, 1999 through
March 17, 1999, iChargeit common stock traded on the Nasdaq OTC Bulletin Board
under the symbol "PLNKD." From September 9, 1997 through February 8, 1999,
iChargeit common stock traded on the Nasdaq OTC Bulletin Board under the symbol
"PLNK." iChargeit's stock is held by approximately 157 holders of record.
iChargeit's common stock commenced trading on the Nasdaq OTC Bulletin
Board on September 19, 1997. The following table sets forth, for the calendar
quarters indicated, the reported high and low bid information for iChargeit's
common stock as reported on the Nasdaq OTC Bulletin Board. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
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<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
CALENDAR 1997 $1 1/2 $1 1/4
Fourth Quarter
CALENDAR 1998
First Quarter $3 1/2 $ 5/8
Second Quarter 2 3/8 3/8
Third Quarter 7/8 1/8
Fourth Quarter 7/20 1/32
CALENDAR 1999 (PLNK)
First Quarter $ 3/8 $ 1/8
CALENDAR 1999 (PLNKD)
First Quarter $4 3/4 $ 1/4
CALENDAR 1999 (ICHG)
First Quarter $4 5/8 $3
Second Quarter 29 3 1/2
Third Quarter 4 13/16 3/4
Fourth Quarter (through December 16, 1999) 1 7/8 27/32
</TABLE>
DIVIDENDS
iChargeit has not paid a dividend and does not anticipate paying
dividends in the foreseeable future. The Board of Directors intends to retain
earnings, if any, to finance growth. Accordingly, any payment of dividends by us
in the future will depend upon our need for working capital and our financial
condition at the time.
ITEM 2. LEGAL PROCEEDINGS
iChargeit is not currently a party to any material legal proceeding or
proceeding before a governmental authority. To the best of iChargeit's
knowledge, neither type of proceeding is currently pending against it.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
iChargeit has not changed its accountants in the last two fiscal years,
and there are no disagreements with iChargeit's accountants concerning
accounting and financial disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
ISSUANCES
The following is a summary of transactions by iChargeit during the last
three years preceding the date hereof involving sales of iChargeit's securities
that were not registered under the Securities Act. All share amounts set forth
in this registration statement reflect a 5 for 1 reverse stock split of
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iChargeit's common stock. No consideration was paid by the Company in connection
with this stock split.
1. In August 1997, the Registrant issued a total of 1,088,000
shares of restricted common stock to the founders of Para-Link, predecessor
of iChargeit, in connection with the organization of Para-Link in January of
1997. The issuance claimed to be exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act as a
transaction not involving any public offering.
2. During the period from August 1997 through November 1997, the
Registrant sold an aggregate of 24,000 shares of common stock at an average
price of $1.00 per share, in a private placement to 31 private investors
pursuant to Rule 504 of the Securities Act, for aggregate consideration of
$24,000.
3. In September 1997, the Registrant issued to 6 private
investors warrants to purchase an aggregate of 184,000 shares of iChargeit
common stock at an exercise price of $2.50 per share. The warrants expire
August, 2000. The Registrant received aggregate consideration of $18,032 for
this sale. The Registrant made these sales in reliance upon Rule 504 of the
Securities Act.
4. In October 1997, the Registrant issued 20,000 shares of its
common stock to PR Sources in exchange for services rendered to iChargeit. This
transaction was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) and/or Rule 506 of the Securities Act.
5. In November 1997, the Registrant issued 10,000 shares of its
common stock to Benjamin Fairchild in exchange the forgiveness of a note held by
the Registrant in the initial principal amount of $15,000. This transaction was
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) and/or Rule 506 of the Securities Act.
6. During the period from November 1997 through August 1998, the
Registrant sold 65,475 shares of its common stock to 23 private investors
pursuant to warrants exercised at an exercise price of $2.691 per share,
pursuant to warrants issued in September 1997 which are described in Item 3,
above. The Registrant received aggregate consideration of $176,193 pursuant to
these warrant exercises. These sales were exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and/or Rule 504 of
the Securities Act.
7. In March 1998, the Registrant issued 100,000 shares of its
common stock in exchange for services rendered to the Registrant. This
transaction was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) and/or Rule 506 of the Securities Act.
8. In June 1998, the Registrant sold 56,180 shares of its common
stock to C.Jones & Company at approximately $0.17 per share in consideration for
investor relations services and assistance in designing a Para-Link web site.
These sales were exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) and/or Rule 504 of the Securities Act.
9. In March 1999, iChargeit issued 30,000 shares of its common
stock to DeMonte Associates in exchange for services rendered as iChargeit's
investor relations advisor. This issuance was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and/or Rule 504 of
the Securities Act.
44
<PAGE>
10. In March 1999, iChargeit issued 20,000 shares of its common
stock to EC Net Manufacturing L.L.C. pursuant to an agreement entered into
between the parties for certain warehousing and staffing services provided in
conjunction with storing and shipping products for iChargeit customers. This
issuance was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) and/or Rule 504 of the Securities Act.
11. In March 1999, iChargeit issued 5,000 shares of its common
stock to Dean Dumont in exchange for certain consulting and advisory services
regarding mergers and acquisitions, and assistance rendered in connection with
obtaining additional financing for iChargeit. These sales were exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) and/or
Rule 504 of the Securities Act.
12. In March 1999, iChargeit issued 10,000 shares of its common
stock to Dean Dumont in exchange for consulting and advisory services regarding
mergers and acquisitions, and assistance with obtaining possible additional
financing for iChargeit. This transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and/or Rule 506 of
the Securities Act.
13. In March 1999, iChargeit issued 350,000 shares of its common
stock to Dean Dumont in exchange for consulting and advisory services regarding
mergers and acquisitions and assistance with obtaining possible additional
financing for iChargeit. This transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and/or Rule 506 of
the Securities Act. The issuance of these 350,000 shares of restricted stock was
rescinded in November 1999 and 350,000 options to purchase common stock at the
fair market value on the date of grant of $1.00 per share were granted with Mr.
Dumont's written consent.
14. In March 1999, iChargeit issued 15,000 shares of its common
stock to Vic McCall in exchange for legal services rendered in connection with
the Para-Link merger with iChargeit and the iChargeit Rule 506 private
placement. These sales were exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) and/or Rule 504 of the Securities Act.
15. In March 1999, iChargeit issued 21,000 shares of its common
stock to Domain Giant, Inc., in exchange for Domain Giant's rights to the
Internet domain yohoo.com and the pending trademark application for yohoo. In
connection with this sale, iChargeit also paid Domain Giant $22,500 and
allocated a percentage of revenue in a `to be developed' classified advertising
web site and a webstore to be built for the Domain Giant principals located in
one of iChargeit's malls. iChargeit claimed an exemption from registration under
the Securities Act for 10,000 of such shares pursuant to Section 4(2) and/or
Rule 504 of the Securities Act, and for 11,000 shares in reliance on Section
4(2) and/or Rule 506 of the Securities Act.
16. In March 1999, iChargeit issued 315,000 shares of its common
stock in partial consideration for an employment contract entered into with Mr.
Cohen. This transaction was exempt from the registration requirements of the
Securities Act pursuant to Rule 506 of the Securities Act. In November 1999, the
issuance of these 315,000 shares of common stock was rescinded.
17. In March 1999, iChargeit issued 5,000 shares of its common
stock to Arash Aziz-Golshani in consideration for consultation with
iLeathershop.com and search software registration for iChargeit's other web
sites. This transaction was exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) and/or Rule 506 of the Securities Act.
45
<PAGE>
18. In March 1999, iChargeit issued 25,000 shares of its common
stock to Eagle Holding Investments in exchange for services rendered in
connection with the preparation of iChargeit's financial statements for the Rule
506 sale. This transaction was exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) and/or Rule 506 of the Securities Act
19. In March 1999, iChargeit issued 25,000 shares of its common
stock to James Wrobel in exchange for services rendered in connection with the
production of iChargeit's Toner Town web site. This transaction was exempt from
the registration requirements of the Securities Act pursuant to Section 4(2)
and/or Rule 506 of the Securities Act.
20. In March 1999, iChargeit issued 2,000 shares of its common
stock to Jeff Crandell in exchange for consulting and initial design services on
Shoppers and Merchants newsletters. This transaction was exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) and/or
Rule 506 of the Securities Act.
21. In March 1999, iChargeit issued 2,000 shares of its common
stock to Jon Crandell in exchange for consulting and initial design services on
Shoppers and Merchants newsletters. This transaction was exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) and/or
Rule 506 of the Securities Act.
22. In August 1999, iChargeit issued 140,000 options to purchase
common stock of iChargeit at an exercise price at the fair market value on the
effective date of the grant of $1.00 per share to Lewis Cohen & Company, in
exchange for assistance rendered to iChargeit in the design of the iChargeit
logo and the design and maintenance of many of iChargeit's web sites. iChargeit
claims the issuance to be exempt from registration under the Securities Act in
reliance on Section 4(2) of the Securities Act as a transaction not involving
any public offering.
23. In March 1999, iChargeit issued 110,000 shares of its common
stock to Mac-Group, Inc. in exchange for services rendered in connection with
Para-Link's merger with iChargeit, Inc. This transaction was exempt from the
registration requirements of the Securities Act pursuant Section 4(2) and/or to
Rule 506 of the Securities Act. This issuance was rescinded in November 1999 and
110,000 options to purchase common stock at the fair market value on the date of
the grant of $1.00 per share were granted pursuant to the mutual consent of the
parties. iChargeit claims the issuance to be exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act as a
transaction not involving any public offering.
24. In March 1999, iChargeit issued 15,000 shares of its common
stock to Patricia Carroll in exchange for legal consultation delivered on an as
needed basis to iChargeit. This transaction was exempt from the registration
requirements pursuant to Section 4(2) and/or Rule 506 of the Securities Act.
25. In March 1999, iChargeit issued 25,000 shares of its common
stock to Sherrie Carter in exchange for clerical services and documentation
preparation regarding the Para-Link Inc.-iChargeit merger. This transaction was
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) and/or Rule 506 of the Securities Act.
26. In March 1999, iChargeit issued 210,000 shares of its common
stock to Twitchell Corporation in exchange for services rendered since January
1999 in connection with the coordination and preparation of Para-Link's merger
with iChargeit, Inc. This transaction was exempt
46
<PAGE>
from the registration requirements of the Securities Act pursuant to Section
4(2) and/or Rule 506 of the Securities Act. The issuance of these 210,000 shares
of common stock was rescinded in November 1999 and 210,000 options to purchase
common stock at the fair market value on the date of the grant of $1.00 per
share were granted pursuant to the mutual consent of the parties iChargeit
claims the issuance to be exempt from registration under the Securities Act in
reliance on Section 4(2) of the Securities Act as a transaction not involving
any public offering.
27. In March 1999, iChargeit issued 25,000 shares of its common
stock to Randall Waldman in exchange for consultation provided regarding initial
incorporation and financing matters and mergers involving iChargeit, Inc. This
transaction was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) and/or Rule 506 of the Securities Act.
28. In March 1999, iChargeit issued 25,000 shares of its common
stock to Janice Nichols in exchange for clerical services and documentation
preparation provided with respect to the Para-Link merger with iChargeit, Inc.
This transaction was exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) and/or Rule 506 of the Securities Act.
29. In March 1999, iChargeit issued 210,000 shares of its common
stock to Future Holdings, Inc. in exchange for coordination and preparation
services delivered with respect to Para-Link's merger with iChargeit, Inc. This
transaction was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) and/or Rule 506 of the Securities Act. The issuance of
160,000 of these shares of restricted stock was rescinded in November 1999 and
160,000 options to purchase common stock at the fair market value on the date of
the grant of $1.00 per share were granted pursuant to the mutual consent of the
parties. iChargeit claims the issuance to be exempt from registration under the
Securities Act in reliance on Section 4(2) of the Securities Act as a
transaction not involving any public offering.
30. In March 1999, iChargeit issued 79,000 shares of its common
stock to Joseph Merdith in exchange for services rendered in connection with the
preparation of Para-Link's merger with iChargeit Inc. This transaction was
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) and/or Rule 506 of the Securities Act.
31. In March 1999, iChargeit issued 55,000 shares of its common
stock to Bob Roberts in exchange for services rendered in connection with
preparing for Para-Link's merger with iChargeit Inc. This transaction was exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) and/or Rule 506 of the Securities Act.
32. In March 1999, iChargeit issued 50,000 shares of its common
stock to the Renoir Trust in exchange for services rendered in connection with
the preparation of Para-Link's merger with iChargeit Inc. This transaction was
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) and/or Rule 506 of the Securities Act.
33. During the period from March 1999 through July 1999,
iChargeit sold an aggregate of 301,750 shares of common stock at $2.00 per
share in a private placement to 72 accredited investors. This transaction was
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) and/or Rule 506 of the Securities Act.
34. In April 1999, iChargeit issued 10,000 shares of its common
stock to the law firm of Madigan & Boyer in consideration for legal consulting
services regarding employment and vendor
47
<PAGE>
agreements. This transaction was exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) and/or Rule 506 of the Securities
Act.
35. In May 1999 iChargeit issued 250,000 shares of its common
stock to James Carroll as partial consideration for an employment contract
entered into with Mr. Carroll. This transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and/or Rule 506 of
the Securities Act. The issuance of these 250,000 shares was rescinded in
November 1999 and 250,000 options to purchase common stock at the fair market
value on the date of the grant of $1.00 per share were granted pursuant to the
mutual consent of the parties. iChargeit claims the issuance to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act as a transaction not involving any public offering and pursuant
to Rule 701 promulgated under Section 3(b) of the Securities Act as transactions
pursuant to compensatory benefit plans and contracts relating to compensation.
36. In June 1999 iChargeit issued 250,000 shares of its common
stock to Randall Waldman as partial consideration for an employment contract
entered into with Mr. Waldman. This transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and/or Rule 506 of
the Securities Act. The issuance of these 250,000 shares was rescinded in
November 1999 and 250,000 options to purchase common stock at the fair market
value on the date of the grant of $1.00 per share were granted pursuant to the
mutual consent of the parties. iChargeit claims the issuance to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act as a transaction not involving any public offering and pursuant
to Rule 701 promulgated under Section 3(b) of the Securities Act as transactions
pursuant to compensatory benefit plans and contracts relating to compensation.
37. In June 1999 iChargeit issued 5,000 shares of its common stock
to Brian Wharton for services rendered in connection with the iChargeit Internet
pay terminals. This transaction was exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) and/or Rule 506 of the Securities
Act.
38. In June 1999, iChargeit issued 2,000 shares of its common
stock to Raymond Meredith in exchange for the forgiveness of a $5,000 loan
previously made by Mr. Meredith to iChargeit.
39. In November 1999, iChargeit issued 6,000 shares of its common
stock to Bob Roberts in exchange for forgiveness of a $7,500 loan previously
made by Mr. Roberts to iChargeit.
40. iChargeit sold an aggregate of 230,769 Units for total
consideration of $750,000 to two accredited investors in a private placement
which occurred in three tranches on November 3, November 12, 1999 and December
16, 1999. Each Unit consisted of five shares of our common stock and a warrant
to acquire one additional share of common stock at an exercise price of $2.50.
iChargeit claims an exemption from registration under the Securities Act in
reliance on Rule 504 of the Securities Act pursuant to a merit review
registration in the state of Kentucky.
41. On November 16, 1999, iChargeit granted an aggregate of
950,000 incentive stock options pursuant to its 1999 Stock Incentive Plan at an
exercise price equal to the fair market value on the date of the grant of $1.00
per share to 18 employees. iChargeit claims an exemption from registration under
the Securities Act in reliance on Section 4(2) of the Securities Act as a
transaction not involving any public offering and pursuant to Rule 701
promulgated under Section 3(b) of the
48
<PAGE>
Securities Act as transactions pursuant to compensatory benefit plans and
contracts relating to compensation.
ITEM 5. LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Our Certificate of Incorporation and Bylaws limit the liability of and
provide indemnification for our directors and officers. Our Certificate of
Incorporation provides that our directors may not be held personally liable to
us or our stockholders for monetary damages arising from a breach of fiduciary
duty, except for liability:
- for breach of the director's duty of loyalty to iChargeit or
its stockholders;
- for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of the law;
- under Section 174 of the Delaware General Corporation Law,
relating to prohibited dividends, distributions, repurchases
or redemptions of stock; and
- for any transaction from which the director derives an
improper benefit.
Our Bylaws provide that we shall indemnify our directors and officers,
certain other employees and agents, and the directors and officers of other
business enterprises serving at our request, for actions taken in good faith on
our behalf, while in their official capacity as a director or officer or in any
other capacity while serving as a director or officer. The Bylaws also provide
that we shall advance expenses incurred by officers, directors, employees and
agents in defending themselves for actions taken on our behalf under certain
circumstances. Finally, the Bylaws provide that directors, officers, employees,
and agents may bring suit to compel payment of claims not paid in full within
forty-five (45) days after we receive notice of such claims.
49
<PAGE>
PART F/S
FINANCIAL INFORMATION
TABLE OF CONTENTS
<PAGE>
iCHARGEIT, INC.
(a development stage company)
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PRO FORMA FINANCIAL STATEMENTS
Unaudited Pro forma condensed financial statements F-1
Pro forma condensed balance sheet as of September 30, 1999 (unaudited) F-2
Pro forma condensed statement of operations for the period ended June 30, 1999 (unaudited) F-3
Pro forma condensed statement of operations for the three months ended
September 30, 1999 (unaudited) F-4
Notes to financial statements F-5
iCHARGEIT, INC.
Independent auditors' report F-6
Balance sheet as of June 30, 1999 F-7
Statement of operations for the period January 6, 1999 (inception) through June 30, 1999 F-8
Statement of changes in stockholders' equity for the period January 6, 1999 (inception)
through June 30, 1999 F-9
Statement of cash flows for the period January 6, 1999 (inception) through June 30, 1999 F-10
Notes to financial statements F-11
Balance sheet dated September 30, 1999 (unaudited) F-16
Statement of operations for the three months ended September 30, 1999
(unaudited) and for the period January 6, 1999 (inception) through
September 30, 1999 F-17
Statement of stockholders equity for the three months ended September 30, 1999 (unaudited) F-18
Statement of cash flows for the three months ended September 30, 1999
(unaudited) and for the period January 6, 1999 (inception) through
September 30, 1999 F-19
Notes to financials statements (unaudited) F-20
PARA-LINK, INC.
Independent auditors' report F-24
Financial position at December 31, 1998 F-25
Statement of operations for the period from January 22, 1997 through December
31, 1997 and for the year ended December 31, 1998 and for the period
January 22, 1997 (inception) through December 31, 1998 F-26
Statement of changes in capital deficiency for the period from January 22,
1997 (inception) through December 31, 1997 and for the year December 31, 1998 F-27
Statement of cash flows for the period from January 22, 1997 (inception)
through December 31, 1997 and for the year ended December 31, 1998 and for
the period January 22, 1997 (inception) through December 31, 1998 F-28
Notes to financial statements F-29
<PAGE>
iCHARGEIT, INC.
(a development stage company)
CONTENTS (CONTINUED)
<CAPTION>
PAGE
------
<S> <C>
BAY MICRO COMPUTERS, INC.
Independent auditors' report F-32
Balance sheet as of June 30, 1999 F-33
Statement of operations for the period from August 28, 1998 (inception) through June 30, 1999 F-34
Statement of changes in stockholders' equity for the period from August 28,
1998 (inception) through June 30, 1999 F-35
Statement of cash flows for the period from August 28, 1998 (inception)
through June 30, 1999 F-36
Notes to financial statements F-37
Balance sheet at September 30, 1999 (unaudited) F-40
Statement of operations for the three months ended September 30,1999
and 1998 (unaudited) F-41
Statement of cash flow for the three months ended September 30, 1999 (unaudited) F-42
Notes to financial statements F-43
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements give effect to
the acquisition of Bay Micro Computers Inc. ("Bay Micro").
The unaudited pro forma condensed financial statements are based on the
respective historical financial statements and notes thereto of iChargeit Inc.
("iChargeit" or the "Company") and Bay Micro. The unaudited pro forma condensed
balance sheet assumes that the merger took place on September 30, 1999 and
combines iChargeit's and Bay Micro's September 30, 1999 balance sheets. The
unaudited pro forma condensed statements of operations assume that the merger
took place as of the beginning of the periods presented and combines the
statement of operations of iChargeit for the period from January 6, 1999 through
June 30, 1999 with Bay Micro's statements of operations for the six months ended
June 30, 1999 and for the three month period ended September 30, 1999.
The transaction has been accounted for as a purchase in accordance with
accounting standards. In the opinion of management of the Company, all
adjustments necessary to present fairly such pro forma financial data have been
made.
The pro forma adjustments have been made solely for purposes of developing such
pro forma information for illustrative purposes necessary to comply with the
disclosure requirements and is not necessarily indicative of the operating
results or financial position that would have occurred if the acquisition had
been consummated on the dates indicated, nor is it necessarily indicative of
future operating results or financial position.
These unaudited pro forma condensed financial statements should be read in
conjunction with the historical financial statements and the related notes
thereto of iChargeit and Bay Micro which are included herein and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
F-1
<PAGE>
iCHARGEIT, INC.
(a development stage company)
PRO FORMA CONDENSED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
SEPTEMBER 30, 1999
---------------------------- PRO FORMA
iCHARGEIT BAY MICRO ADJUSTMENTS PRO FORMA
--------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 232,000 $ 50,000 $ 282,000
Accounts receivable, net 256,000 256,000
Inventories 11,000 267,000 278,000
Securities at market value 81,000 81,000
Prepaid expenses and other assets 60,000 1,000 61,000
--------------- ------------ ---------------
Total current assets 384,000 574,000 958,000
Equipment, net 74,000 74,000
Restricted cash 46,000 46,000
Receivable from Bay Micro 80,000 $ (80,000)
Customer list and other intangibles, net of
accumulated amortization 169,000 169,000
Other assets 5,000 8,000 13,000
Goodwill 5,457,000 (1) 5,457,000
--------------- ------------ --------------- ---------------
$ 469,000 $ 871,000 $5,377,000 $ 6,717,000
--------------- ------------ --------------- ---------------
--------------- ------------ --------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 58,000 $ 193,000 $ 251,000
Accrued expense 200,000 200,000
Loans and other current liabilities 23,000 100,000 123,000
--------------- ------------ ---------------
Total current liabilities 81,000 493,000 574,000
Payable to iChargeit 80,000 $ (80,000)
Loan payable, less current portion 13,000 13,000
Loans payable - officer/stockholder 262,000 262,000
--------------- ------------ --------------- ---------------
81,000 848,000 (80,000) 849,000
--------------- ------------ --------------- ---------------
Stockholders' equity:
Common stock 8,000 180,000 4,000 (1) 12,000
(180,000)(3)
Additional paid-in capital 12,021,000 52,000 5,476,000 (1) 17,497,000
(52,000)(3)
Deficit accumulated during development
stage (9,003,000) (209,000) 209,000 (3) (9,003,000)
Unearned compensation (2,552,000) (2,552,000)
Accumulated other comprehensive income 48,000 48,000
Subscription receivable (2,000) (2,000)
Treasury stock (132,000) (132,000)
--------------- ------------ --------------- ---------------
Total stockholders' equity 388,000 23,000 5,457,000 5,868,000
--------------- ------------ --------------- ---------------
$ 469,000 $ 871,000 $5,377,000 $ 6,717,000
--------------- ------------ --------------- ---------------
--------------- ------------ --------------- ---------------
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS F-2
<PAGE>
iCHARGEIT, INC.
(a development stage company)
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------
PERIOD PERIOD
JANUARY 6, JANUARY 1,
1999 THROUGH 1999 THROUGH
JUNE 30, JUNE 30,
1999 1999
---------------- --------------- PRO FORMA
iCHARGEIT BAY MICRO ADJUSTMENTS PRO FORMA
---------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C>
Net sales $ 2,426,000 $ 2,426,000
Service and other revenue $ 31,000 31,000
Cost of goods sold (2,182,000) (2,182,000)
---------------- --------------- ----------------
Gross profit 31,000 244,000 275,000
---------------- --------------- ----------------
Costs and expenses:
Internet charges and cost of service
revenue 91,000 91,000
General and administrative (excluding
equity compensatory charges) 207,000 460,000 $273,000 940,000
Equity compensatory charges 6,347,000 6,347,000
---------------- --------------- --------------- ----------------
6,645,000 460,000 273,000 7,378,000
---------------- --------------- --------------- ----------------
NET LOSS $ (6,614,000) $ (216,000) $(273,000) $ (7,103,000)
================ =============== =============== ================
LOSS PER SHARE - BASIC AND DILUTED $(1.10) $(.71)
====== ======
WEIGHTED AVERAGE SHARES OUTSTANDING -
BASIC AND DILUTED 6,038,897 4,000,000 10,038,897
================ =============== ================
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS F-3
<PAGE>
iCHARGEIT, INC.
(a development stage company)
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------
THREE MONTH
PERIOD ENDED
SEPTEMBER 30, 1999 PRO FORMA
-------------------------------
iCHARGEIT BAY MICRO ADJUSTMENTS (3) PRO FORMA
------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 2,000 $ 1,882,000 $ 1,884,000
Service and other revenue 19,000 19,000
Cost of goods sold (1,000) (1,695,000) (1,696,000)
------------- ------------- ---------------
Gross profit 20,000 187,000 207,000
------------- ------------- ---------------
Cost and expenses:
Internet charges and cost of service
revenue 12,000 12,000
General and administrative 142,000 181,000 $ 136,000 (2) 459,000
(excluding equity compensatory charges)
Equity compensation charges 2,256,000 2,256,000
------------- ------------- -------------- ---------------
2,410,000 181,000 136,000 2,727,000
------------- ------------- -------------- ---------------
NET INCOME (LOSS) $ (2,390,000) $ 6,000 $(136,000) $ (2,520,000)
============= ============= ============== ===============
LOSS PER SHARE - BASIC
AND DILUTED $(.30) $(.21)
===== =====
WEIGHTED AVERAGE SHARES OUTSTANDING -
BASIC AND DILUTED 7,891,694 4,000,000 11,891,694
============= =============== ===============
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS F-4
<PAGE>
iCHARGEIT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 1
Reflects 4,000,000 shares of common stock of iChargeit as consideration for the
acquisition of 100% of the issued common stock of Bay Micro on October 5, 1999
and approved by stockholders on November 12, 1999.
The tentative allocation of the purchase price among the identifiable tangible
and intangible assets was based on a preliminary assessment of the fair market
value of those assets.
NOTE 2
Reflects the adjustment for amortization of goodwill. The Company is using a
straight-line, ten year period to record amortization based on estimated useful
life.
NOTE 3
Reflects the elimination of capital accounts of Bay Micro.
NOTE 4
Pro forma net loss per share - basic and diluted for the period ended September
30, 1999 is computed using the historical weighted average number of iChargeit
common stock outstanding plus the number of shares issuable to Bay Micro's
stockholders pursuant to the acquisition.
F-5
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
iChargeit, Inc.
Huntington Beach, California
We have audited the accompanying balance sheet of iChargeit, Inc. (a development
stage company) as of June 30, 1999 and the related statements of operations,
changes in stockholders' equity and cash flows for the period from January 6,
1999 (inception) through June 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of iChargeit, Inc. as of June 30,
1999, and the results of its operations and its cash flows for the period from
January 6, 1999 (inception) through June 30, 1999 in conformity with generally
accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
November 1, 1999
With respect to the fourth paragraph of Note A and Notes C, E and H
November 12, 1999
F-6
<PAGE>
iCHARGEIT, INC.
(a development stage company)
BALANCE SHEET
JUNE 30, 1999
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 349,963
Securities - available for sale at market value (cost of $15,000) 47,000
Inventory 10,600
Prepaid expenses and other current assets 40,150
---------------
Total current assets 447,713
Other assets 1,500
---------------
$ 449,213
===============
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 106,790
---------------
Commitments (Note G)
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value; 5,000,000 shares authorized; none issued
Common stock - $.001 par value; 50,000,000 shares authorized;
7,931,405 shares issued and outstanding 7,931
Additional paid-in capital 13,090,898
Deficit accumulated during development stage (6,613,575)
Unearned Compensation (4,807,500)
Accumulated other comprehensive income - unrealized gain on marketable securities 32,000
Subscription receivable (2,012,500 common shares) (27,000)
Treasury stock at cost (157,686 common shares) (1,340,331)
---------------
342,423
---------------
$ 449,213
===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-7
<PAGE>
iCHARGEIT, INC.
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 6, 1999 (INCEPTION) THROUGH JUNE 30, 1999
<TABLE>
<S> <C>
Service revenue $31,421
-----------------
Costs and expenses:
Internet charges and cost of revenue 90,997
General and administrative (excluding equity related charges) 207,249
Noncash equity compensatory charges 6,346,750
-----------------
6,644,996
-----------------
NET LOSS $(6,613,575)
=================
NET LOSS PER SHARE:
Basic and diluted $(1.10)
======
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and diluted 6,038,897
=================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-8
<PAGE>
iCHARGEIT, INC.
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 6, 1999 (INCEPTION) THROUGH JUNE 30, 1999
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
-------------------- PAID-IN COMPREHENSIVE DEVELOPMENT UNEARNED
SHARES AMOUNT CAPITAL LOSS STAGE COMPENSATION
--------- --------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares issued to founders on January 6, 1999 4,000,000 $ 4,000
Issuance of common stock for services from
January 26, 1999 to June 25, 1999 2,286,000 2,286 $11,151,964 (4,807,500)
Recapitalization resulting from the acquisition
of Para-Link on March 10, 1999 1,343,655 1,343 (4,595)
Issuance of common stock on May 15, 1999 301,750 302 603,198
Common stock received through escrow on
June 17, 1999 1,340,331
Net loss $ (6,613,575) $ (6,613,575)
Other comprehensive loss
Unrealized gain on securities 32,000
-------------
Comprehensive loss $ (6,581,575)
------------ --------- ----------- ============= -------------
BALANCE - JUNE 30, 1999 7,931,405 $ 7,931 $13,090,898 $ (6,613,575) (4,807,500)
============ ========= =========== ============= ==========
<CAPTION>
ACCUMULATED
OTHER TREASURY STOCK
COMPREHENSIVE SUBSCRIPTION --------------------------
INCOME RECEIVABLE SHARES AMOUNT TOTAL
------------- ------------ ---------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Shares issued to founders on January 6, 1999 $(2,000) $ 2,000
Issuance of common stock for services from
January 26, 1999 to June 25, 1999 6,346,750
Recapitalization resulting from the acquisition
of Para-Link on March 10, 1999 (3,252)
Issuance of common stock on May 15, 1999 (25,000) 578,500
Common stock received through escrow on
June 17, 1999 157,686 $ (1,340,331) 0
Net loss (6,613,575)
Other comprehensive loss
Unrealized gain on securities $ 32,000 32,000
--------
Comprehensive loss
-------- ----------- ------------- -------------
BALANCE - JUNE 30, 1999 $ 32,000 $(27,000) 157,686 $ (1,340,331) $ 342,423
======== ======== =========== ============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-9
<PAGE>
iCHARGEIT, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 6, 1999 (INCEPTION) THROUGH JUNE 30, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,613,575)
Adjustments to reconcile net loss to net cash used in operating activities:
Compensation paid with stock
to consultants and employees 6,346,750
Receipt of securities in payment of fees (15,000)
Changes in:
Inventory (10,600)
Other current assets (40,150)
Other assets (1,500)
Accounts payable and accrued expenses 103,538
----------------
Net cash used in operating activities (230,537)
----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock 580,500
----------------
NET INCREASE IN CASH AT JUNE 30, 1999 $ 349,963
================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-10
<PAGE>
iCHARGEIT, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE A - THE COMPANY
Para-Link, Inc. ("Para-Link" or the "Company"), an inactive company was
incorporated in the State of Texas on January 22, 1997.
On March 10, 1999, Para-Link acquired 100% of the outstanding capital stock of
iChargeit Inc. ("iChargeit"). iChargeit, which was incorporated on January 6,
1999 in the State of Nevada to launch an internet-based shopping mall to market
goods and services to Internet users, as well as, allowing customers to play
online video and racing games at a virtual arcade. The launching of iChargeit's
website was March 1, 1999. The acquisition was consummated through an exchange
of shares that resulted in the stockholders of the iChargeit receiving control
of Para-Link; the transaction has been treated as a recapitalization. In
connection therewith, the Company's historic capital accounts were retroactively
adjusted to reflect the equivalent number of shares issued by Para-Link in the
transaction while iChargeit's historical accumulated deficit was carried
forward. The statement of operations reflects the activities of iChargeit from
the commencement of its operations on January 6, 1999. On March 17, 1999, the
Company changed its name to iChargeit.
The Company is in the development stage and its efforts are devoted to
developing the Internet resources to provide Internet users a comprehensive
website where they can obtain goods and services as well as participate in
online video games. The Company is in the process of entering into contracts
with local and national merchants who can provide such goods and services.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. For the period from inception through June
30, 1999, the Company has deficit accumulated during the development stage of
$6,613,575 and negative cash flows from operating activities. In order to
fund its current operations, the Company obtained additional financing of
$348,000 in November of 1999 through an equity offering in which, it sold
123,080 units which consisted of 615,400 shares of common stock, and 123,080
warrants to purchase 123,080 shares of the Company's common stock at an
exercise price of $2.50 and expiring on September 1, 2002. In addition, the
Company has sold stock it held in treasury (see Note C[3]).
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
[1] USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from these
estimates.
[2] INVENTORIES:
Inventory consists of kiosks which contain computers that feature high
speed Internet access. Inventory is stated at the lower of cost
(first-in, first-out) or market.
[3] VALUATION OF SECURITIES:
Marketable securities are classified as available-for-sale and are
recorded at their market value. Unrealized gains and losses are recorded
as other comprehensive income.
F-11
<PAGE>
iCHARGEIT, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[4] REVENUE RECOGNITION:
Revenue is recognized when merchandise is shipped to a customer or
services are performed. In addition, the Company earns fees in the form
of securities. These securities are valued at market on the date they are
earned.
[5] FINANCIAL INSTRUMENTS:
The carrying amounts for the Company's cash, accounts payable and accrued
expenses approximate fair value.
[6] PER SHARE DATA:
Basic and diluted loss per share is based on the weighted average number
of outstanding shares of common stock and excludes the effect of stock
options and warrants. In computing the weighted average number of shares
outstanding, the 4,000,000 shares of Para-Link issued in connection with
the transaction were treated as if they were outstanding for the entire
period.
[7] STOCK-BASED COMPENSATION:
The Company has elected to follow the intrinsic value method set forth in
Accounting Principles Board Opinion 25, "Accounting for Stock Issued to
Employees" in accounting for its stock option incentive plan. As such,
compensation expense would be recorded on the date of grant if the
current market price of the underlying stock exceeded the exercise price
of the option.
[8] CONCENTRATION OF CREDIT RISK:
Financial instruments which potentially subject the Company to
concentration of credit risk consist of cash, and securities. The Company
primarily holds its cash in one bank insured by the Federal Deposit
Insurance Corporation ("FDIC"). At June 30, 1999, the Company maintained
$301,000 in cash balances in excess of the FDIC limit.
[9] INCOME TAXES:
The Company accounts for income taxes using the liability method.
Deferred income taxes are measured by applying enacted statutory rates to
net operating loss carryforwards and to the differences between the
financial reporting and tax bases of assets and liabilities. Deferred tax
assets are reduced, if necessary, by a valuation allowance for any tax
benefits, which are not expected to be realized.
NOTE C - STOCKHOLDERS' EQUITY
[1] STOCK SPLIT:
On January 5, 1999 the Board of Directors authorized a one for five
reverse common stock split effective February 7, 1999 for all
stockholders on record as of the close of business on February 1, 1999.
All the share and per share amounts in the accompanying financial
statements have been restated to give effect to the reverse stock split.
F-12
<PAGE>
iCHARGEIT, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE C - STOCKHOLDERS' EQUITY (CONTINUED)
[2] COMMON STOCK:
During the period ended June 30, 1999 the Company issued 1,471,000 shares
of common stock to certain shareholders and consultants for services to
the Company, which were valued at $4,880,500.
In addition the Company also issued 815,000 shares of common stock to
certain officers of the corporation in connection with their employment
agreements (see Note G[2]). These shares were valued at $6,273,750 and
are being amortized over the vesting period.
On May 15, 1999, the Company commenced a private offering of its common
stock at $2.00 per share. The Company issued a total of 301,750 shares of
common stock, which yielded net proceeds of $603,500.
In November, 1999, certain officers and consultants of the Company
exchanged 1,785,000 shares of the Company's common stock for 1,470,000
options to acquire the Company's common stock at an exercise price of
$1.00 (see Note E).
[3] TREASURY STOCK:
On June 17, 1999, a principal stockholder agreed to put in escrow for the
benefit of the Company 157,686 shares of the Company's common stock. The
Company recorded the 157,686 shares of common stock as treasury stock at
its fair market value on the day it was placed in escrow. From July
through October of 1999, the Company received approximately $153,000 from
the sale of the shares held in escrow which will be treated as a capital
contribution.
[4] WARRANTS:
From September to November of 1997, Para-Link raised $18,101 through the
sale of 184,000 common stock purchase warrants in a private placement.
Each warrant entitles the registered holder to purchase one share of
common stock at an initial exercise price of $2.50 per share (subject to
adjustments for stock splits, combinations and reclassifications) at any
time prior to August 2000. As of June 30, 1999, 138,525 warrants are
outstanding with a weighted average exercise price of $2.79 and a
weighted average contractual life of 20 months.
NOTE D - INCOME TAXES
At June 30, 1999, the Company has a net operating loss carryforward for federal
income tax purposes of approximately $1,857,000 which expires through 2019.
At June 30, 1999, the Company has a deferred tax asset of approximately
$631,000. The Company has not recorded a benefit from its net operating loss
carryforward, because realization of the benefit is uncertain and, therefore, a
valuation allowance of $631,000 has been provided for the deferred tax asset.
The difference between the statutory tax rate of 34% and the Company's effective
tax rate of 0% is due to the increase in the valuation allowance of $631,000. In
addition, during the period ended June 30, 1999, the Company had approximately
$4,757,000 in expenses for equity compensation which were not deductible for tax
purposes.
F-13
<PAGE>
iCHARGEIT, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE E - STOCK OPTION PLAN
On August 17, 1999, the Company adopted a stock option plan (the "1999 Plan")
subject to stockholder approval for granting options to purchase up to 4,000,000
shares of common stock, pursuant to which employees, consultants, officers and
directors are eligible to receive incentive and/or nonqualified stock options.
Options granted under the 1999 Plan are exercisable for a period of up to 10
years from the date of grant at an exercise price which is not less than the
fair value on date of grant, except that the exercise price of options granted
to a stockholder owning more than 10 percent of the outstanding capital stock
may not be less than 110 percent of the fair value of the common stock at the
date of grant. Options issued under the plan vest as determined by the plan
administrator.
As of November 12, 1999, the Company's shareholders approved the 1999 Plan
underlying the grant of (i) 1,640,000 options issued in connection with
employment agreements (see Note G[2]), (ii) 1,470,000 options were issued in
exchange for 1,785,000 shares of common stock (see Note C[2]) and (iii) 950,000
options granted to employees.
In addition, in November 1999, 445,000 options granted to the Chief Operating
Officer were cancelled as a result of an amendment to the employment
agreement reducing the term from two years to one year.
NOTE F- RELATED PARTY TRANSACTIONS
On March 11, 1999 the Company entered into a consulting agreement with an entity
controlled by a relative of an officer/stockholder to perform consulting
services. This agreement provides for the issuance of 140,000 shares (fair value
- - $455,000) of the Company's common stock (see Note C) and monthly payments of
$1,400 for site maintenance.
In addition, on March 11, 1999, 15,000 shares (fair value - $49,000) were issued
to the wife of the chief financial officer for legal services (see Note C).
On February 19, 1999, the Company entered into an agreement with an entity
controlled by the chief operations officer of the Company. Pursuant to this
agreement the Company is to receive warehousing and fulfillment services for its
customers. In exchange for these services, the Company issued 20,000 shares of
common stock which were valued at $70,000 (see Note C) and must issue an
additional 10,000 shares of common stock if the Company is not a reporting
entity with the Securities and Exchange Commission by December 1, 1999.
NOTE G - COMMITMENTS
[1] LEASES:
The Company leases facilities on a month-to-month basis. Rental expense
under this lease for the period ended June 30, 1999 amounted to $3,000.
[2] EMPLOYMENT AGREEMENTS:
On March 11, 1999, the Company entered into a two year employment
agreement with its chief executive officer. The agreement provides for a
base salary of $70,000 per annum and bonuses. It also provides for the
granting of 315,000 shares of common stock and options to acquire 900,000
shares of common stock at an exercise price of $1.00, subject to approval
of the 1999 Plan (which is the fair market value at November 12, 1999
(the date of grant)) vesting over two years (See Note E).
F-14
<PAGE>
iCHARGEIT, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE G - COMMITMENTS (CONTINUED)
[2] EMPLOYMENT AGREEMENTS: (CONTINUED)
On June 1, 1999, the Company entered into a two year employment agreement
with its chief operations officer, subsequently amended (see Note E).
The agreement orignally provided for a base salary of $50,000 and a
signing bonus of $11,700. The agreement also provides for a bonus and a
granting of 250,000 shares of common stock and of options to acquire
640,000 shares of common stock at an exercise price of $1.00 subject to
approval of the 1999 Plan (which is the fair market value at November 12,
1999 (the date of grant)) vesting over two years. The amendment was
occasioned by a 1.2 % commission on all revenues which occur due to a
strategic alliance generated by the chief operations officer.
On May 1, 1999, the Company entered into a six month employment agreement
with its chief financial officer. The agreement provides for a base
salary of $25,000 for the six months the agreement provides for the
granting of 250,000 shares of common stock and options to acquire 100,000
shares of common stock at an exercise price of $1.00 (which is the fair
market value at November 12, 1999 (the grant date) vesting over six
months (see Note E).
[3] INTERNET OPERATIONS:
Many of the Company's operations are dependent on third party providers
for website design, content, maintenance, goods and services. The Company
has entered into various agreements with those third party providers.
NOTE H - SUBSEQUENT EVENTS
ACQUISITION:
On October 5, 1999, the Company entered into an agreement and plan of merger
with Bay Micro Computers Inc. ("Bay Micro") pursuant to which Bay Micro would
become a subsidiary to the Company. The stockholders of Bay Micro received
approximately 4,000,000 shares of the Company's common stock. In addition, the
Company advanced to Bay Micro $80,000 and $120,000 in August and October of
1999, respectively, pursuant to unsecured promissory notes bearing interest at
7% and are payable in three years from the date of advance.
REINCORPORATION:
On November 5, 1999, the Company was reincorporated in Delaware.
The acquisition and reincorporation indicated above were approved by
stockholders on November 12, 1999.
F-15
<PAGE>
iChargeit, Inc.
(A Development Stage Company)
Balance Sheet (Unaudited)
September 30, 1999
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash $232,000
Securities 81,000
Inventory 11,000
Prepaid Expenses and Other Current Assets 60,000
-------------------
Total Current assets 384,000
-------------------
Loans Receivable - Bay Micro 80,000
Other Assets 5,000
-------------------
TOTAL ASSETS $469,000
===================
LIABILITIES & EQUITY
Current Liabilities
Accounts Payable $58,000
Other Current Liabilities 23,000
-------------------
Total Current Liabilities 81,000
-------------------
Total Liabilities 81,000
Equity
Capital Stock 8,000
Additional Paid in Capital 12,021,000
Subscriptions receivable (2,000)
Treasury Stock (132,000)
Deficit accumulated during development stage (9,003,000)
Unearned compensation (2,552,000)
Unrealized gain in Marketable securities 48,000
-------------------
Total Equity 388,000
-------------------
TOTAL LIABILITIES & EQUITY $469,000
===================
</TABLE>
See Notes to financial statements F-16
<PAGE>
iChargeit, Inc.
(A Development Stage Company)
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE THREE JANUARY 6, 1999
MONTHS ENDED (INCEPTION) THROUGH
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
<S> <C> <C>
Net Sales $ 2,000 $ 2,000
Cost of Goods Sold 1,000 1,000
----------------- -----------------
Gross Profit 1,000 1,000
Services and Other Revenue 19,000 51,000
----------------- ------------------
20,000 52,000
----------------- ------------------
Costs and Expenses
Internet services 12,000 104,000
General and administrative
(excludes equity related charges) 142,000 349,000
Compensatory 2,256,000 8,602,000
----------------- ------------------
Total Expense 2,410,000 9,055,000
----------------- ------------------
Net Loss $ (2,390,000) $ (9,003,000)
================= ==================
Net Loss per share
Basic and diluted $ (0.30)
Weighted average shares outstanding 7,891,694
Basic and diluted
</TABLE>
See Notes to financial statements F-17
<PAGE>
iCHARGEIT, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (NOTES A AND C)
(UNAUDITED)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
------------------- PAID-IN COMPREHENSIVE DEVELOPMENT UNEARNED
SHARES AMOUNT CAPITAL INCOME STAGE COMPENSATION
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance - June 30, 1999 7,931,405 $ 8,000 $13,091,000 $ (6,613,000) (4,808,000)
Sale of treasury stock (1,070,000)
Proceeds from sale of stock
Amoritization of compensation
charges 2,256,000
Net loss $ (2,390,000) $ (2,390,000)
Other Comprehensive loss
Unrealized gain on securities 16,000
-----------------
Comprehensive loss $ (2,374,000)
--------------------------------=================----------------
BALANCE - SEPTEMBER 30, 1999 7,931,405 $ 8,000 $12,021,000 $ (9,003,000) (2,552,000)
================================ ===============================
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE SUBSCRIPTION TREASURY STOCK
INCOME RECEIVABLE SHARES AMOUNT TOTAL
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance - June 30, 1999 $ 32,000 $ (27,000) 157,686 $(1,340,000) 343,000
Sale of treasury stock (142,176) 1,208,000 138,000
Proceeds from sale of stock 25,000 25,000
2,256,000
Net loss (2,390,000)
Other Comprehensive loss
Unrealized gain on securities $ 16,000 16,000
Comprehensive loss
-------------------------------------------------------------------
BALANCE - SEPTEMBER 30, 1999 $ 48,000 $ (2,000) 15,510 $ (132,000) $ 388,000
===================================================================
</TABLE>
See notes to financial statements
F-18
<PAGE>
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE PERIOD FROM
MONTHS ENDED JANUARY 6, 1999 (INCEPTION)
SEPTEMBER 30, 1999 THROUGH SEPTEMBER 30, 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($2,390,000) ($9,003,000)
Adjustments to reconcile Net Loss
to net cash used in operating activities:
Compensation paid with stock
to consultants and employess 2,256,000 8,602,000
Receipt of marketable securities in
payment of fees (13,000) (28,000)
Inventory (11,000)
Other Current Assets 27,000 (65,000)
Accounts payable and other liabilities (76,000) 78,000
------------------------- ----------------------------
Net cash used in Operating Activities ($196,000) ($427,000)
------------------------- ----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Securities acquired ($5,000) ($5,000)
Loans Receivable (80,000) (80,000)
------------------------- ----------------------------
Net cash used in Investing Activities ($85,000) ($85,000)
------------------------- ----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of Common Stock 163,000 744,000
------------------------- ----------------------------
Net cash provided by Financing Activities 163,000 744,000
------------------------- ----------------------------
(Decrease) increase in cash ($118,000) $232,000
Cash, beginning of period 350,000 0
------------------------- ----------------------------
Cash at September 30, 1999 $232,000 $232,000
========================= ============================
</TABLE>
See Notes to financial statements F-19
<PAGE>
ICHARGEIT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE A - THE COMPANY AND BASIS OF PRESENTATION
Para-Link, Inc. ("Para-Link" or the "Company"), an inactive company was
incorporated in the state of Texas on January 22, 1997.
On March 10, 1999, Para-Link acquired 100% of the outstanding capital stock of
iChargeit Inc. iChargeit, Inc. ("iChargeit") was incorporated on January 6, 1999
in the State of Nevada to launch an internet-based shopping mall to market goods
and services to internet users, as well as, allowing customers to play online
video and racing games at a virtual arcade. The launching of iChargeit's website
was March 1, 1999. The acquisition was consummated through an exchange of shares
that resulted in the stockholders of iChargeit receiving control of Para-Link;
the transaction has been treated as a recapitalization. In connection therewith,
the Company's historic capital accounts were retroactively adjusted to reflect
the equivalent number of shares issued by Para-Link in the transaction while
iChargeit's historical accumulated deficit was carried forward. The statement of
operations reflects the activities of iChargeit from the commencement of its
operations on January 6, 1999. On March 17, 1999, the Company changed its name
to iChargeit, Inc.
The Company is in the development stage and its efforts are devoted to
developing the Internet resources to provide Internet users a comprehensive
website where they can obtain goods and services as well as participate in
online video games. The Company is in the process of entering into contracts
with local and national merchants who can provide such goods and services.
The information contained herein with respect to the three month period ended
September 30, 1999 has not been audited but was prepared in conformity with
generally accepted accounting principles for interim financial information.
Accordingly, the condensed financial statements do not include information and
footnotes required by generally accepted accounting principles for financial
statements. Included are the adjustments, which in the opinion of management are
necessary for a fair presentation of the financial information at September 30,
1999 and for the three month period ended September 30, 1999 and since
inception. The results are not necessarily indicative of results to be expected
for the year.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
[1] USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.
[2] INVENTORIES:
Inventories consist of kiosks, which contain computers that feature
high speed Internet access. Inventory is stated at the lower of cost (first-in,
first-out) or market.
[3] VALUATION OF SECURITIES:
F-20
<PAGE>
Marketable securities are classified as available-for-sale and are
recorded at their market value. Unrealized gains and losses are recorded as
other comprehensive income.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[4] REVENUE RECOGNITION:
Revenue is recognized when merchandise is shipped to a customer or
services are performed. In addition, the Company earns fees in the form of
securities. These securities are valued at market on the date they are earned.
[5] FINANCIAL INSTRUMENTS:
The carrying amounts for the Company's cash, accounts receivable and
accrued expenses approximate fair value.
[6] PER SHARE DATA:
Basic and diluted loss per share is based on the weighted average
number of outstanding shares of common stock and excludes the effect of stock
options and warrants. In computing the weighted average number of shares
outstanding, the 4,000,000 outstanding shares of Para-Link prior to the merger
were treated as if they were outstanding for the entire period.
[7] STOCK-BASED COMPENSATION:
The Company has elected to follow the intrinsic value method set forth in
Accounting Principles Board Opinion 25. " Accounting for Stock Issued to
Employees" in accounting for its stock option incentive plan. As such,
compensation expense would be recorded on the date of grant if the current
market price of the underlying stock exceeded the exercise price of the option.
[8] CONCENTRATION OF CREDIT RISK:
Financial instruments which potentially subject the Company to
concentration of credit risk consists of cash, and securities. The Company
primarily holds its cash in one bank insured by the Federal Deposit Insurance
Corporation ("FDIC"). At September 30, 1999, the Company maintained cash
balances of $107,000, in excess of the FDIC limit.
[9] INCOME TAXES:
The Company accounts for income taxes using the liability method.
Deferred income taxes are measured by applying enacted statutory rates to net
operating loss carryforwards and to the differences between the financial
reporting and tax bases of assets and liabilities. Deferred tax assets are
reduced, if necessary, by a valuation allowance for any tax benefits, which are
not expected to be realized.
NOTE C - STOCKHOLDERS' EQUITY
[1] STOCK SPLIT:
On January 5, 1999 the Board of Directors authorized a one for five
reverse common stock split effective February 7, 1999 for all stockholders on
record as of the close of business on February 1, 1999. All the share and per
share amounts in the accompanying financial statements have been restated to
give effect to the reverse stock split.
[2] WARRANTS:
F-21
<PAGE>
From September to November of 1997, Para-Link raised $18,101 through
the sale of 184,000 common stock purchase warrants in a private placement. Each
warrant entitles the registered holder to purchase one share of common stock at
an initial exercise price of $2.50 per share (subject to adjustments for stock
splits, combinations and reclassifications) at any time prior to August 2000. As
of September 30, 1999, 138,525 warrants are outstanding with a weighted average
price of $2.79 and a weighted average contractual life of 17 months.
[3] TREASURY STOCK:
On June 17, 1999, a principal stockholder agreed to put in escrow for
the benefit of the Company 157,686 shares of the Company's common stock. The
Company recorded the 157,686 shares of common stock as treasury stock at its
fair market value on the day it was placed in escrow. Through September 30, 1999
the Company yielded proceeds of $137,500 from the sale of 142,176 shares of
common stock which was treated as a capital contribution.
NOTE D - STOCK OPTION PLAN
On August 17, 1999 the Company adopted a stock option plan (the "1999
Plan") subject to stockholder approval for granting options to purchase up to
4,000,000 shares of common stock, pursuant to which employees, consultants,
independent contractors, officers and directors are eligible to receive
incentive and/or nonqualified stock options. Options granted under the 1999 Plan
are exercisable for a period of up to 10 years from the date granted at an
exercise price which is not less than the fair value on the date of the grant,
except that the exercise price of options granted to a stockholder owing more
than 10 percent of the outstanding capital stock may not be less than 110
percent of the fair value of the common stock at the date of grant. Options
issued under the plan vest as determined by the plan administrator.
As of November 12, 1999, the Company had granted 3,715,000 options to employees
and consultants.
NOTE E - COMMITMENTS
LEASES:
The Company leases facilities under month-to-month lease. The Company's
rental expense under this lease for the period ended June 30, 1999 amounted to
$3,000.
NOTE F - SUBSEQUENT EVENTS
ACQUISITION
On October 5, 1999, the Company entered into an agreement and plan of
merger with Bay Micro Computers Inc. ("Bay Micro") pursuant to which Bay Micro
would become a subsidiary to the Company. The shareholders of Bay Micro received
approximately 4,000,000 shares of the Company's common stock. In addition the
Company advanced to Bay Micro $80,000 in August of 1999 pursuant to an unsecured
promissory note bearing interest at 7% and payable in August of 2002 and $20,000
in October of 1999 pursuant to a secured promissory note bearing interest at 7%
and payable in October 2002.
REINCORPORATION
On November 5, 1999, the Company was reincorporated in Delaware.
The above acquisition and reincorporation were approved by stockholders on
November 12, 1999.
F-22
<PAGE>
PRIVATE PLACEMENT
In November and December 1999 the Company raised an aggregate of
$750,000 of which, after fees, it received $653,000 from the sale of 230,771
units consisting of five shares of common stock and one warrant to purchase one
additional share of the Company's common stock for an exercise price of $2.250
per share expiring September 1, 2002.
F-23
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Para-Link, Inc.
We have audited the accompanying statement of financial position of Para-Link,
Inc. (a development stage company) as of December 31, 1998 and the related
statements of operations and changes in stockholders' equity (capital
deficiency) and cash flows for the period from January 22, 1997 (inception)
through December 31, 1997, the year ended December 31, 1998 and the period
January 22, 1997 (inception) through December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Para-Link, Inc. as of December 31,
1998 and the results of its operations and its cash flows for the period from
January 22, 1997 (inception) through December 31, 1997, the year ended December
31, 1998 and the period January 22, 1997 (inception) through December 31, 1998
in conformity with generally accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
September 23, 1999
F-24
<PAGE>
PARA-LINK, INC.
(a development stage company)
(Note A[1])
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1998
<TABLE>
<S> <C>
LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses $ 3,252
-----------
Commitments
Capital deficiency:
Preferred stock - $1.00 par value; 5,000,000 authorized; none issued Common
stock - $.001 par value; 50,000,000 shares authorized,
1,343,655 shares issued and outstanding 1,344
Additional paid-in capital 590,928
Deficit accumulated during the development stage (595,524)
-----------
(3,252)
-----------
$ 0
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-25
<PAGE>
PARA-LINK, INC.
(a development stage company)
(Note A[1])
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD PERIOD
FROM JANUARY 22, FROM JANUARY 22,
1997 (INCEPTION) 1997 (INCEPTION)
YEAR ENDED THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998
--------------- ---------------- -----------------
<S> <C> <C> <C>
Net sales $ 43 $ 4,553 $ 4,596
Cost of sales 16 20,029 20,045
--------------- ---------------- -----------------
Gross profit (loss) 27 (15,476) (15,449)
Write-off of investment (92,564) (92,564)
Selling, general and administrative expenses (398,361) (101,225) (499,586)
--------------- ---------------- -----------------
Loss before extraordinary item (490,898) (116,701) (607,599)
Extraordinary item - gain on forgiveness of debt 12,075 12,075
--------------- ---------------- -----------------
NET LOSS $ (490,898) $(104,626) $(595,524)
=============== ================ =================
BASIC AND DILUTED:
Loss before extraordinary item $(.39) $(.10)
Extraordinary item .00 .01
--------------- ----------------
NET LOSS $(.39) $(.09)
===== =====
WEIGHTED AVERAGE SHARES:
Basic and diluted 1,265,379 1,116,964
=============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-26
<PAGE>
PARA-LINK, INC.
(a development stage company)
(Note A[1])
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
----------------------- PAID-IN DEVELOPMENT CAPITAL
SHARES AMOUNT CAPITAL STAGE DEFICIENCY
---------- --------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
JANUARY 22, 1997 (INCEPTION)
Issuance of common stock - August, 1997 1,088,000 $ 1,088 $ 35,142 $ 36,230
Sale of common stock and 184,000 warrants
less expenses of $39,748 - August and
November, 1997 24,000 24 2,329 2,353
Exercise of warrant 4,000 4 19,996 20,000
Issuance of warrants for services - October, 1997 30,000 30,000
Common stock issued in payment of loan -
November, 1997 10,000 10 14,990 15,000
Net loss for the period $(104,626) (104,626)
----------- --------- ----------- --------- -----------
BALANCE - DECEMBER 31, 1997 1,126,000 1,126 102,457 (104,626) (1,043)
Common shares issued for services - March,
1998 100,000 100 322,400 322,500
Sale of common stock - June, 1998 56,180 57 12,444 12,501
Exercise of warrants 61,475 61 153,627 153,688
Net loss for the year (490,898) (490,898)
----------- --------- ----------- --------- -----------
BALANCE - DECEMBER 31, 1998 1,343,655 $ 1,344 $ 590,928 $(595,524) $ (3,252)
----------- --------- ----------- --------- -----------
----------- --------- ----------- --------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-27
<PAGE>
PARA-LINK, INC.
(a development stage company)
(Note A[1])
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD PERIOD
FROM JANUARY 22, FROM JANUARY 22,
1997 (INCEPTION) 1997 (INCEPTION)
YEAR ENDED THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998
-------------- --------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (490,898) $ (104,626) $(595,524)
Valuation of warrants for consulting 30,000 30,000
Shares issued for services 322,500 322,500
Changes in:
Other assets
Accounts payable and accrued expenses 2,095 1,157 3,252
---------- ---------- ---------
Net cash used in operating activities (166,303) (73,469) (239,772)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock and exercise of warrants 166,189 73,583 239,772
---------- ---------- ---------
NET (DECREASE) INCREASE IN CASH (114) 114 0
Cash - beginning of year 114
---------- ---------- ---------
CASH - END OF YEAR $ 0 $ 114 $ 0
========== ========== =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Write-off of investment $ 92,564 $ 92,564
Gain on forgiveness of debt $ 12,075 $ 12,075
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-28
<PAGE>
PARA-LINK, INC.
(a development stage company)
(Note A[1])
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE A - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
[1] Para-Link, Inc. (the "Company") was incorporated in Texas in January 22,
1997. The Company was formed to engage in research, development,
production, and distribution of nutritional health and weight loss
supplements and skin care products.
Para-Link is a development stage company and has incurred losses from
inception and has not yet generated any significant sales.
In April 1998, the Company entered into an agreement to acquire 30,000
shares of common stock of Life Time of Health, Inc. for $200,000. The
Company had paid $92,564 in connection with this agreement through
November 25, 1998 when the Company entered into a Mutual Revocation and
Release Agreement, which provided for the rescission of the original
agreement and the return of the shares of common stock to Life Time of
Health, Inc. In connection therewith the Company wrote-off its investment
of $92,564.
On February 22, 1999, the Company consummated a Plan of Merger with
HerbRx, Inc. (a development stage company) ("HerbRx"), which is a
distributor of herbal food supplements. On March 16, 1999, the merger was
rescinded. Operations of HerbRx during the period from February 22
through March 16, 1999 were insignificant.
On March 10, 1999, the Company entered into a Plan of Merger with
iChargeit, Inc., a Nevada corporation, incorporated on January 6, 1999 (a
development stage company) ("iChargeit") in a reverse acquisition
consummated through a share exchange ("Share Exchange") that resulted in
a change in control of the Company. iChargeit is an internet-based
shopping mall marketing goods and services to internet users, as well as
allowing customers to play online video and racing games at a virtual
arcade. Information included herein with respect to the Company prior to
March 17, 1999 refers to the Company as constituted prior to the Share
Exchange.
In connection with the Share Exchange, the Company issued 4,000,000
shares of common stock in exchange for the outstanding common shares of
iChargeit.
On March 17, 1999, the Company changed its name to iChargeit, Inc.
[2] USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues, costs and expenses during
the reporting period. Actual results could differ from those estimates.
[3] REVENUE RECOGNITION:
Revenue is recognized when product is shipped. Estimated sales returns
are provided for.
[4] PER SHARE DATA:
Basic and diluted loss per share is based on the weighted average number
of outstanding shares of common stock and excludes the effect of stock
options and warrants as they would be antidilutive.
F-29
<PAGE>
NOTE A - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[5] INCOME TAXES:
The Company accounts for income taxes using the liability method.
Deferred income taxes are measured by applying enacted statutory rates to
net operating loss carryforwards and to the differences between the
financial reporting and tax bases of assets and liabilities. Deferred tax
assets are reduced, if necessary, by a valuation allowance for any tax
benefits, which are not expected to be realized.
NOTE B - STOCKHOLDERS' EQUITY
[1] STOCK SPLIT:
On January 5, 1999 the Board of Directors authorized a one for five
reverse common stock split effective February 7, 1999 for all
stockholders on record as of the close of business on February 1, 1999.
All share and per share amounts in the accompanying financial statements
have been restated to give effect to the reverse common stock split.
[2] COMMON STOCK:
In August 1997, the Company issued a total of 1,088,000 shares of
restricted common stock for $36,230.
In August 1997 and November 1997, the Company issued an aggregate of
24,000 shares of common stock at an average price of $1.00.
In November 1997, the Company issued 10,000 shares of restricted common
stock for $1.50 per share in payment of a loan of $15,000.
In March 1998, the Company issued 100,000 shares of common stock for
services rendered to the Company which was valued at $3.23 per share.
In June 1998, the Company issued 56,180 shares of common stock for an
aggregate proceeds of $12,501.
NOTE C - WARRANTS
From September to November of 1997, the Company raised $18,101 through the sale
of 184,000 common stock purchase warrants in a private placement. Each warrant
entitles the registered holder to purchase one share of common stock at an
initial exercise price of $2.50 per share (subject to adjustments for stock
splits, combinations and reclassifications) at any time prior to August 2000.
On October 7, 1997, the Company issued 20,000 warrants to purchase common stock
at an exercise price of $5.00 per share, exercisable prior to October 2000 for
consulting services. The issuance has resulted in a charge to operations of
$30,000 in 1997 based on the fair value of the warrants ($1.50 per warrant). The
fair value of these warrants was estimated using the Black-Scholes pricing model
with the following assumptions: interest rate of 5.40% dividend yield of 0%,
volatility factor of 3.95 and an average expected life of three years.
F-30
<PAGE>
NOTE C - WARRANTS (CONTINUED)
A summary of the Company's warrants and related information for the years ended
December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1998 1997
--------------------------- --------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
WARRANTS PRICE WARRANTS PRICE
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Outstanding at beginning of period 200,000 $2.70
Granted or exchanged 204,000 $2.75
Exercised (61,475) $2.50 (4,000) $5.00
---------- ----------
Outstanding at end of period 138,525 $2.79 200,000 $2.70
========== ==========
Exercisable at end of period 138,525 $2.79 200,000 $2.70
========== =========
Weighted average remaining months
of contractual life at year end 20 32
========== ==========
</TABLE>
NOTE D - INCOME TAXES
At December 31, 1998 the Company has a net operating loss carryforward for
federal income tax purposes of approximately $230,000 which expires through
2018.
Temporary differences in recognition of expense for tax and financial accounting
purposes at December 31, 1998 result from net operating loss and capital loss
carryforwards for federal income tax purposes. At December 31, 1998 the Company
has a deferred tax asset of approximately $109,000. The Company has not recorded
a benefit from its net operating loss carryforward or capital loss carryforward,
because realization of the benefit is uncertain and, therefore, a valuation
allowance of $109,000 has been provided for the deferred tax asset. The
difference between the statutory tax rate of 34% and the Company's effective tax
rate of 0% is due to the increase in the valuation allowance of $73,000 and
$36,000 in 1998 and 1997, respectively. In addition, during 1998 the Company had
approximately $273,000 in expenses which were not deductible for tax purposes.
Because of the change in control described in Note A[1], the Company's annual
limitation on the utilization of its net operating loss carryforward pursuant to
Section 382 of the Internal Revenue Code is zero.
F-31
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Bay Micro Computers Inc.
We have audited the accompanying balance sheet of Bay Micro Computers Inc. as of
June 30, 1999 and the related statements of operations, changes in stockholders'
equity and cash flows for the period from August 28, 1998 (inception) through
June 30, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Bay Micro Computers Inc. as of June
30, 1999 and the results of its operations and cash flows for the period from
August 28, 1998 (inception) through June 30, 1999 in conformity with generally
accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
October 15, 1999
F-32
<PAGE>
BAY MICRO COMPUTERS INC.
BALANCE SHEET
JUNE 30, 1999
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 32,954
Accounts receivable, net 156,109
Inventories 140,980
-----------
Total current assets 330,043
Equipment, net 77,421
Restricted cash 28,000
Customer list and other intangibles, net of accumulated
amortization of $15,763 173,387
Other assets 8,432
-----------
$ 617,283
-----------
-----------
LIABILITIES
Current liabilities:
Accounts payable $ 176,813
Accrued expenses 66,219
Payable to Pinamar 80,000
Current portion of loan payable 2,981
-----------
Total current liabilities 326,013
Loan payable, less current portion 13,564
Loans payable - officer/stockholder 260,871
-----------
600,448
-----------
Commitments and other matters
STOCKHOLDERS' EQUITY
Common stock, no par value; 100,000 shares authorized,
1,250 shares issued and outstanding 180,000
Additional paid-in capital 51,897
Accumulated deficit (215,062)
-----------
16,835
-----------
$ 617,283
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-33
<PAGE>
BAY MICRO COMPUTERS INC.
STATEMENT OF OPERATIONS
PERIOD FROM AUGUST 28, 1998 (INCEPTION) THROUGH JUNE 30, 1999
<TABLE>
<S> <C>
Net sales $ 3,363,917
Cost of goods sold 2,992,776
---------------
Gross profit 371,141
Selling, general and administrative expenses 586,203
---------------
NET LOSS $ (215,062)
===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-34
<PAGE>
BAY MICRO COMPUTERS INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM AUGUST 28, 1998 (INCEPTION) THROUGH JUNE 30, 1999
<TABLE>
<CAPTION>
COMMON STOCK
------------------------- ADDITIONAL TOTAL
NUMBER OF PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
----------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Issuance of founders' common stock 1,000 $ 100,000 $ 100,000
Issuance of common stock (Note C) 250 80,000 80,000
Contribution of portion of loans
payable to capital by principal
stockholder $51,897 51,897
Net loss $ (215,062) (215,062)
---------- ----------- ------- ------------ --------
BALANCE - JUNE 30, 1999 1,250 $ 180,000 $51,897 $ (215,062) $ 16,835
========== =========== ======= ============ ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-35
<PAGE>
BAY MICRO COMPUTERS INC.
STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 28, 1998 (INCEPTION) THROUGH JUNE 30, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (215,062)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 33,576
Compensation accrued to officer 136,000
Changes in:
Inventories (140,980)
Accounts receivable (156,109)
Other assets (8,432)
Accounts payable and accrued expenses 243,032
------------
Net cash used in operating activities (107,975)
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (67,131)
Acquisition of assets (40,000)
Restricted cash (28,000)
------------
Net cash used in investing activities (135,131)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 100,000
Repayment of loan (708)
Proceeds from officer's loans 176,768
------------
Net cash provided by financing activities 276,060
------------
NET INCREASE IN CASH 32,954
Cash - beginning of period ------------
CASH - END OF PERIOD $ 32,954
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 341
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS F-36
<PAGE>
BAY MICRO COMPUTERS INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE A - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
[1] BUSINESS:
Bay Micro Computers Inc. (the "Company") was incorporated in California
in August 1998. The Company is primarily a wholesaler and assembler of
computers and related hardware components. The Company also operates an
internet website, Shoppingplanet.com, which sells computer hardware
components.
On October 5, 1999, the Company and its shareholders entered into an
agreement and plan of merger with iChargeit, Inc. pursuant to which a
subsidiary of iChargeit, Inc. merged with and into the Company and the
Company became a wholly owned subsidiary of iChargeit, Inc. The
shareholders of the Company will receive approximately 3,106 shares of
iChargeit, Inc. common stock for each share of common stock of the
Company.
In August 1999 and October 1999 iChargeit advanced $80,000 pursuant to an
unsecured promissory note and $120,000 pursuant to a promissory note
secured by 680 shares of common stock of the Company. These notes bear
interest at 7% and are payable in three years from date of advance.
[2] CASH EQUIVALENTS:
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
[3] INVENTORIES:
Inventories, which consist of merchandise purchased for resale, are stated
at the lower of average cost or market.
[4] EQUIPMENT:
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the lives of
the asset, generally five to seven years.
[5] INCOME TAXES:
The Company provides for income taxes under the provisions of SFAS No. 109
"Accounting for Income Taxes". Deferred income tax assets and liabilities
are recorded to reflect the tax consequences on future years of net
operating loss carryforwards and temporary differences between the
financial reporting and tax basis of assets and liabilities. A valuation
allowance is recognized, if it is considered more likely than not that
some or all of a deferred tax asset may not be realized.
[6] REVENUE RECOGNITION:
Revenue is recognized when a product is shipped, or when services are
performed. Provision is made for an estimate of product returns.
[7] USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent asset and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
F-37
<PAGE>
NOTE B - RESTRICTED CASH
Restricted cash represents an operating reserve held by a bank in an escrow
account in order to process credit card transactions for the Company.
NOTE C - ACQUISITION OF ASSETS
On April 1, 1999, the Company acquired the website Shoppingplanet.com and other
related assets from Pinamar Corporation in exchange for $120,000 ($20,000 on
execution of agreement and five consecutive monthly payments of $20,000
beginning no later than May 15, 1999) and 250 common shares representing a 20%
equity interest in the Company valued at $80,000. The purchase price has been
allocated to acquired assets as follows:
<TABLE>
<S> <C>
Equipment $ 10,850
Customer lists and other intangibles 189,150
-----------
Cost of acquisition $ 200,000
===========
</TABLE>
The customer lists and other intangibles are being amortized over three years.
As of June 30, 1999, the Company has made $40,000 payments to Pinamar.
NOTE D - EQUIPMENT
Equipment consists of the following:
<TABLE>
<S> <C>
Computer and office equipment $ 61,075
Vehicles 26,254
Furniture and fixtures 7,905
-----------
95,234
Less accumulated depreciation 17,813
-----------
$ 77,421
===========
</TABLE>
NOTE E - LEASES
The Company has lease agreements for its office facilities and storage
facilities through June 2002.
At June 30, 1999, future annual minimum rental commitments were as follows:
<TABLE>
<CAPTION>
YEAR ENDING
JUNE 30,
-----------
<S> <C>
2000 $ 64,000
2001 80,000
2002 80,000
-----------
Total lease payments $ 224,000
===========
</TABLE>
Rent expense for office facilities aggregated approximately $25,000 for the
period ended June 30, 1999.
F-38
<PAGE>
NOTE F - LOAN PAYABLE
Loan payable consists of an auto loan payable to a financial institution in
monthly installments of $350, including interest at a rate of 8.02% through
March 6, 2004 secured by the vehicle.
The balance at June 30, 1999 is due as follows:
<TABLE>
<CAPTION>
YEAR ENDING
JUNE 30,
-----------
<S> <C>
2000 $ 2,981
2001 3,229
2002 3,498
2003 3,789
2004 3,048
-----------
$ 16,545
===========
</TABLE>
At June 30, 1999, the net book value of the vehicle was approximately $18,000.
NOTE G - LOANS PAYABLE - OFFICER/STOCKHOLDER
Loans payable to an officer/stockholder are noninterest bearing and have no
fixed date of repayment. At June 30, 1999, a $136,000 bonus was accrued to the
officer which has been included in the loan payable. The officer/stockholder has
agreed not to demand repayment of the loan until July 1, 2000.
NOTE H - INCOME TAXES
At June 30, 1999, the Company has available for federal income tax purposes a
net operating loss carryforward of approximately $78,000 expiring in 2019 that
may be used to offset future taxable income.
The Company has a deferred tax asset of approximately $86,000 relating to the
carryforward and certain expenses not currently deductible for which a valuation
allowance of $86,000 has been provided.
F-39
<PAGE>
Bay Micro Computers Inc.
Balance Sheet (Unaudited)
September 30, 1999
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash $50,000
Accounts Receivable 256,000
Inventory 267,000
Other Current Assets 1,000
-------------
Total Current assets 574,000
-------------
Property and Equipment - Net of accum. depreciation 74,000
Restricted Cash 46,000
Other Assets 177,000
-------------
TOTAL ASSETS 871,000
=============
LIABILITIES & EQUITY
Current Liabilities
Accounts Payable $193,000
Accrued Expenses 200,000
Other Current Liabilities 100,000
-------------
Total Current Liabilities 493,000
Payable to iChargeit 80,000
Other Long Term Liabilities 13,000
Officers Loans 262,000
-------------
Total Liabilities 848,000
-------------
Equity
Additional Paid in Capital 52,000
Capital Stock 180,000
Treasury Stock
Deficit accumulated during development stage (209,000)
-------------
Total Equity 23,000
-------------
TOTAL LIABILITIES & EQUITY $871,000
=============
</TABLE>
F-40
<PAGE>
Bay Micro Computers Inc.
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, 1999 September 30, 1998
<S> <C> <C>
Net Sales or Services $1,882,000 $34,000
Cost of Goods Sold 1,695,000 31,000
------------ -------------
Gross Profit 187,000 3,000
Expenses
General Administrative 181,000 26,000
------------ -------------
Total Expense 181,000 26,000
------------ -------------
Net Income (Loss) $6,000 ($23,000)
============ =============
</TABLE>
F-41
<PAGE>
BAY MICRO COMPUTERS, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
JULY THROUGH SEPTEMBER 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $6,000
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATIONS:
ACCOUNTS RECEIVABLE (100,000)
INVENTORY (126,000)
OTHER CURRENT ASSETS (9,000)
ACCOUNTS PAYABLE 16,000
ACCRUED EXPENSES AND OTHER PAYABLES 231,000
--------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 18,000
--------------
INVESTING ACTIVITIES
ACQUISITION OF PROPERTY AND EQUIPMENT (1,200)
--------------
NET CASH USED IN INVESTING ACTIVITIES (1,200)
--------------
FINANCING ACTIVITIES
LOAN FROM OFFICER 300
--------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 300
--------------
NET CASH DECREASE OF JULY 1, 1999 THROUGH SEPTEMBER 30, 1999 300
--------------
CASH AT JULY 1, 1999 33,000
--------------
CASH AT SEPTEMBER 30, 1999 $50,100
==============
</TABLE>
F-42
<PAGE>
BAY MICRO COMPUTERS INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE A - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
[1] BUSINESS AND BASIS OF PRESENTATION
Bay Micro Computers Inc. (the "Company") was incorporated in
California in August 1998. The Company is primarily a wholesaler and
assembler of computers and related hardware components. The Company also
operates an Internet website, Shoppingplanet.com that sells computer hardware
components.
On October 5, 1999, the Company and its shareholders entered into an
agreement and plan of merger with iChargeit, Inc. pursuant to which a
subsidiary of iChargeit, Inc. who merged with and into the Company and the
Company became a wholly owned subsidiary of iChargeit, Inc. The shareholders
of the Company will receive approximately 3,106 shares of iChargeit, Inc.
common stock for each share of common stock of the Company.
In August 1999 and October 1999, iChargeit, Inc. advanced $80,000
and $120,000, pursuant to a promissory note secured by 680 shares of common
stock of the Company. These promissory notes bear interest at 7% and are
payable in three (3) years from the date of the respective advances.
The information contained herein with respect to the three month period ended
September 30, 1999 has not been audited but was prepared in conformity with
generally accepted accounting principles for interim financial information.
Accordingly, the condensed financial statements do not include information
and footnotes required by generally accepted accounting principles for
financial statements. Included are the adjustments, which in the opinion of
management are necessary for a fair presentation of the financial information
at September 30, 1999 and for the three month period ended September 30, 1999
and 1998. The results are not necessarily indicative of results to be
expected for the year.
[2] CASH EQUIVALENTS:
The Company considers all liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
[3] INVENTORIES:
Inventories, which consist of merchandise purchased for resale, are
stated at the lower of average cost or market.
[4] EQUIPMENT:
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the lives of the
asset, generally five to seven years.
[5] INCOME TAXES:
The Company provides for income taxes under the provisions of SFAS No.
109 "Accounting for Income Taxes". Deferred income tax assets and liabilities
are recorded to reflect the tax consequences on future years of net operating
loss carryforwards and temporary differences between the financial reporting and
tax basis of assets and liabilities. A valuation allowance is recognized, if it
is considered more likely than not that some or all of a deferred tax asset may
not be realized.
F-43
<PAGE>
[6] REVENUE RECOGNITION:
Revenue is recognized when a product is shipped, or when services are
performed. Provision is made for an estimate of product returns.
[7] USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.
NOTE B - RESTRICTED CASH
Restricted cash represents an operating reserve held by a bank in an escrow
account in order to process credit card transactions for the Company.
NOTE C - ACQUISITION OF ASSETS
On April 1, 1999, the Company acquired the website Shoppingplanet.com and other
related assets from Pinamar Corporation in exchange for $120,000 payable in six
consecutive monthly payments of $20,000 beginning no later than May 15, 1999,
and 250 common shares representing a 20% equity in the Company valued at
$80,000. The purchase price has been allocated to acquired assets as follows:
<TABLE>
<S> <C>
Equipment $ 11,000
Customer lists and other intangibles 189,000
--------
Cost of acquisition $200,000
--------
</TABLE>
The customer lists and other intangibles are being amortized over three years.
As of September 30, 1999, the Company has made $80,000 payments to Pinamar.
NOTE D - EQUIPMENT
Equipment consists of the following:
<TABLE>
<S> <C>
Computer and office equipment $62,000
Vehicles 26,000
Furniture & Fixtures 8000
--------
96,000
Less accumulated depreciation 23,000
--------
$73,000
--------
</TABLE>
F-44
<PAGE>
NOTE E - LEASES
The Company has lease agreements for its office and storage facilities through
June 30, 2002.
At June 30, 1999, future annual minimum rental commitments were as follows:
<TABLE>
Year Ending
June 30,
-----------
<S> <C>
2000 $64,000
2001 80,000
2002 80,000
Total lease payments $224,000
---------
</TABLE>
Rent expense for office and storage facilities aggregated approximately $25,000
for the period ended September 30, 1999.
NOTE F - LOAN PAYABLE
Loan payable consists of an auto loan payable to a financial institution in
monthly installments of $350, including interest at a rate of 8.02% through
March 6, 2004 secured by the vehicle.
The balance is due as follows:
<TABLE>
<CAPTION>
Year Ending
June 30,
--------------
<S> <C>
2000 $3,000
2001 $3,000
2002 $3,000
2003 $4,000
2004 $3,000
-------
Total $17,000
-------
</TABLE>
At September 30, 1999, the net book value of the vehicle is
approximately $17,000
NOTE G - LOANS PAYABLE - OFFICER/STOCKHOLDER
Loans payable to an officer/stockholder are non-interest bearing and
have no fixed date of repayment. At June 30, 1999, $136,000 bonus was
accrued to the officer, which has been included in the loan payable
amount. The officer/stockholder has agreed not to demand repayment
until July 1, 2000.
F-45
<PAGE>
PART III
ITEM 1 AND ITEM 2. INDEX TO EXHIBITS DESCRIPTION OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
2.1 Certificate of Incorporation of Registrant as filed on November 5,
1999.
2.2 ByLaws of Registrant, Inc., as adopted November 6, 1999.
6.1 Agent Agreement, dated January 25, 1999, by and between Preferred
Voice, Inc. and Registrant.
6.2 Agreement dated January 26, 1999 by and between Netgateway and
Registrant.
6.3 Bookinabasket Agreement, dated February 7, 1999, by and between
Susannah Altman and Registrant.
6.4 Software License Agreement, dated February 11, 1999, by and
among Winners Internet Network, Inc., CyberLink Monetary System,
EST and Registrant.
6.5 Amendment to Software Licensing Agreement dated February 11, 1999
by and between Winners Internet Network, Inc.
6.6 Investor Relations Agreement, dated February 16, 1999, by and
between DeMonte Associates and Registrant.
6.7 Agreement dated February 19, 1999, by and between EC Net
Manufacturing L.L.C. and Registrant.
6.8 Sales Agreement dated March 10, 1999, by and between Domain Giant,
Inc. and Registrant.
6.9 Sales Agency Agreement, dated March 11, 1999, by and between
Massiano de Milano and Registrant.
6.10 Term Sheet, dated March 31, 1999, by and between Info Touch
Technologies Corp. and Registrant.
6.11 Attorney/Client Retainer Agreement dated April 2, 1999 by and
between Madigan & Boyer and Registrant.
6.12 Leasing Services Agreement, dated April 5, 1999, by and between
Leasing Group, Inc. and Registrant.
6.13 Development Agreement, dated April 7, 1999, by and between First
Institutional Marketing, Inc. and Registrant.
6.14 Game Site Production Licensing Term Sheet, dated April 27, 1999,
by and between Total Entertainment Network and Registrant.
6.15 Fee Agreement dated April 28, 1999 by and between Stradling Yocca
Carlson & Rauth and Registrant.
6.16 Sales Agency Agreement dated May 1, 1999, by and between Future
Care Fabrics, Inc. and Registrant.
</TABLE>
III-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
6.17 Wholesale Service Agreement dated May 8, 1999 by and between
Starnet, Inc. and Registrant.
6.18 Distributor Agreement dated May 15, 1999 by and between UPI and
Registrant.
6.19 Commercial Server License Agreement, dated May 15, 1999, by and
between Communities.Com and Registrant.
6.20 Sales Agency Agreement, dated May 26, 1999, by and between
Shopping Planet and Registrant.
6.21 Internet Web Site Agreement, dated May 28, 1999, by and between
24/7 Media Inc. and Registrant.
6.22 Advertising Agreement dated January 1, 2000 by and between
Stockcom, Inc. and the Registrant.
6.23 Electronic Commerce Services Agreement dated October 1, 1999 by
and between Netgateway, Inc. and Registrant.
6.24 Affiliate Agreement, dated October 27, 1999, by and between
FindWhat.Com and Registrant.
6.25 Form of Subscription Agreement.
6.26 Form of Warrant.
6.27 1999 Stock Incentive Plan.
6.28 Form of Stock Option Agreement.
6.29 Consulting Agreement dated April 27, 1998 by and between C. Jones
& Company and Registrant.
6.30 Consulting Agreement dated March 4, 1999, by and between Joseph
Meredith and Registrant.
6.31 Consulting Agreement dated March 4, 1999 by and between Bob
Roberts and Registrant.
6.32 Consulting Agreement dated March 4, 1999 by and between Renoir
Trust and Registrant.
6.33 Consulting Agreement dated March 11, 1999, by and between Janice
Nichols and Registrant.
6.34 Consulting Agreement dated March 11, 1999 by and between Future
Holdings, Corp. and Registrant.
6.35 Consulting Agreement, dated March 11, 1999, by and between Randy
Waldman and Registrant.
6.36 Consulting Agreement, dated March 11, 1999, by and between
Patricia M. Carroll and Registrant.
</TABLE>
III-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
6.37 Consulting Agreement, dated March 11, 1999, by and between Lewis
Cohen & Company and Registrant.
6.38 Consulting Agreement, dated March 11, 1999, by and between James
Wrobel and Registrant.
6.39 Consulting Agreement, dated March 11, 1999, by and between Jon
Crandell and Registrant.
6.40 Consulting Agreement, dated March 11, 1999, by and between Jeff
Crandell and Registrant.
6.41 Consulting Agreement, dated March 11, 1999, by and between Vic
McCall and Registrant.
6.42 Consulting Agreement, dated March 11, 1999, by and between Sherrie
Carter and Registrant.
6.43 Consulting Agreement, dated March 11, 1999, by and between
Twitchell Corporation and Registrant.
6.44 Consulting Agreement, dated March 12, 1999, by and between Dean S.
Dumont and Registrant.
6.45 Consulting Agreement, dated March 12, 1999, by and between Dean S.
Dumont and Registrant.
6.46 Consulting Agreement, dated March 26, 1999, by and between Eagle
Holding Investments, Ltd. and Registrant.
6.47 Consulting Agreement, dated March 26, 1999, by and between
Mac-Group, Inc. and Registrant.
6.48 Consulting Agreement, dated June 10, 1999, by and between Brian
Wharton and the Registrant.
6.49 Consulting Agreement, dated June 10, 1999, by and between Arash
Aziz-Golshani and Registrant.
6.50 Consulting Agreement, dated March 11, 1999, by and between Dean S.
Dumont and Registrant.
6.51 Consulting Agreement dated August 1, 1999 by and between James
Carroll and Registrant.
6.52 Employment Agreement dated March 11, 1999, by and between Jesse
Cohen and Registrant.
6.53 Employment Agreement dated May 1, 1999, by and between James
Carroll and Registrant.
6.54 Employment Agreement dated June 1, 1999, by and between Randall
Waldman and Registrant.
</TABLE>
III-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
6.55 Employment Agreement dated September , 1999, by and between
Saeid R. Akavan and Registrant.
6.56 Stock Purchase Agreement dated March 11, 1999, by and between
James F. Carroll and Registrant.
6.57 Stock Purchase Agreement dated March 11, 1999, by and between
Jesse Cohen and Registrant.
6.58 Stock Purchase Agreement dated March 11, 1999 by and between
Future Holding Corp. and Registrant.
6.59 Stock Purchase Agreement dated March 11, 1999 by and between Dean
Dumont and Registrant.
6.60 Stock Purchase Agreement dated March 11, 1999 by and between Eagle
Holdings Investments, Ltd. and Registrant.
6.61 Stock Purchase Agreement dated March 11, 1999 by and between James
J. Wrobel and Registrant.
6.62 Stock Purchase Agreement dated March 11, 1999 by and between
Mac-Group, Inc. and Registrant.
6.63 Stock Purchase Agreement dated March 11, 1999 by and between
Twitchell Corporation and Registrant.
6.64 Stock Purchase Agreement dated June 1, 1999, by and between Randy
Waldman and Registrant.
8.1 Plan and Agreement of Merger, dated March 10, 1999 by and between
iChargeit, Inc., a Nevada Corporation, and Registrant.
8.2 Agreement and Plan of Merger, dated November 11, 1999 by and
between iChargeit, Inc., a Delaware corporation, and Registrant,
effecting a reincorporation of the Company from Texas to Delaware.
8.3 Agreement and Plan of Merger, dated November 12, 1999 by and
between BMC Acquisition Corp. and Bay Micro Computers, Inc.
12.1 Subsidiaries of Registrant.
27.1 Financial Data Schedule.
</TABLE>
III-4
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of
1934, the registrant has caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
iChargeit, Inc.
By: /s/ Jesse Cohen
----------------------------------
Name: Jesse Cohen, President
January 3, 2000
III-5
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ICHARGEIT, INC.
ARTICLE 1
The name of this Corporation is iChargeit, Inc.
ARTICLE 2
The registered office of the Corporation in the State of Delaware is
located at 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at that address is Corporation
Service Company.
ARTICLE 3
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware, as amended from time to time.
ARTICLE 4
The total number of shares of all classes of stock which this
Corporation shall have authority to issue is 55,000,000, of which (i) 50,000,000
shares shall be designated "Common Stock" and shall have a par value of $0.001
per share; and (ii) 5,000,000 shares shall be designated "Preferred Stock" and
shall have a par value of $0.001 per share. The Board of Directors is
authorized, subject to limitations prescribed by law, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof. The authority of
the Board with respect to each series shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law and, if so, the terms of such voting rights;
<PAGE>
(d) Whether that series shall have conversion privileges and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable and,
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable and the amount per share payable in
case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series and, if so, the terms and amount of such
sinking fund; and
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series.
ARTICLE 5
(a) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors and elections of directors need
not be by written ballot unless otherwise provided in the Bylaws. The number of
directors which shall be fixed from time to time by the Board of Directors
either by a resolution or Bylaw adopted by the affirmative vote of a majority of
the entire Board of Directors.
(b) Meetings of the stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the Delaware Statutes) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or by the Bylaws of the Corporation.
ARTICLE 6
A director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this provision shall not eliminate or limit
the liability of a director (i) for any breach of his duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
under Section 174 of the General Corporation Law of the State of Delaware, or
(iv) for any transaction from which the director derives an improper personal
benefit. If the General Corporation Law of the State of Delaware is hereafter
amended to authorize corporate action further limiting or eliminating the
personal liability of directors, then the liability of the directors of the
Corporation shall be limited or eliminated to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended from time to
time. Any repeal or modification of this Article 6 by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
2
<PAGE>
ARTICLE 7
In furtherance and not in limitation of the power conferred upon the
Board of Directors by law, the Board of Directors of the Corporation shall have
the power to make, alter, amend, change, add to or repeal the Bylaws of the
Corporation.
ARTICLE 8
Stockholders of the Corporation may not take action by written consent
in lieu of a meeting. Any action contemplated by the stockholders must be taken
at a duly called annual or special meeting.
ARTICLE 9
The name and address of the Incorporator of the Corporation is as
follows:
Timothy F. O'Brien, Esq.
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
I, THE UNDERSIGNED, being the Incorporator, for the purpose of forming
a corporation under the laws of the state of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and accordingly, have hereunto set my hand this ___ day of November, 1999.
----------------------------------------
Timothy F. O'Brien
3
<PAGE>
BYLAWS
OF
ICHARGEIT, INC.,
A DELAWARE CORPORATION
AS ADOPTED _________, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I OFFICES................................................................................................1
SECTION 1. REGISTERED OFFICE......................................................................................1
SECTION 2. OTHER OFFICES..........................................................................................1
SECTION 3. BOOKS..................................................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS..............................................................................1
SECTION 1. PLACE OF MEETINGS......................................................................................1
SECTION 2. ANNUAL MEETINGS........................................................................................1
SECTION 3. SPECIAL MEETINGS.......................................................................................1
SECTION 4. NOTIFICATION OF BUSINESS TO BE TRANSACTED AT MEETING...................................................2
SECTION 5. NOTICE; WAIVER OF NOTICE...............................................................................2
SECTION 6. QUORUM; ADJOURNMENT....................................................................................2
SECTION 7. VOTING.................................................................................................2
SECTION 8. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING................................................3
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE..................................................................3
SECTION 10. STOCK LEDGER..........................................................................................3
SECTION 11. INSPECTORS OF ELECTION................................................................................3
SECTION 12. ORGANIZATION..........................................................................................3
SECTION 13. ORDER OF BUSINESS.....................................................................................4
ARTICLE III DIRECTORS.............................................................................................4
SECTION 1. POWERS.................................................................................................4
SECTION 2. NUMBER AND ELECTION OF DIRECTORS.......................................................................4
SECTION 3. VACANCIES..............................................................................................4
SECTION 4. TIME AND PLACE OF MEETINGS.............................................................................4
SECTION 5. ANNUAL MEETING.........................................................................................4
SECTION 6. REGULAR MEETINGS.......................................................................................5
SECTION 7. SPECIAL MEETINGS.......................................................................................5
SECTION 8. QUORUM; VOTE REQUIRED FOR ACTION; ADJOURNMENT..........................................................5
SECTION 9. ACTION BY WRITTEN CONSENT..............................................................................5
SECTION 10. TELEPHONE MEETINGS....................................................................................5
SECTION 11. COMMITTEES............................................................................................6
SECTION 12. COMPENSATION..........................................................................................6
SECTION 13. INTERESTED DIRECTORS..................................................................................6
ARTICLE IV OFFICERS..............................................................................................6
SECTION 1. OFFICERS...............................................................................................6
SECTION 2. APPOINTMENT OF OFFICERS................................................................................7
SECTION 3. SUBORDINATE OFFICERS...................................................................................7
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS....................................................................7
SECTION 5. VACANCIES IN OFFICES...................................................................................7
SECTION 6. CHAIRMAN OF THE BOARD..................................................................................7
SECTION 7. VICE CHAIRMAN OF THE BOARD.............................................................................7
SECTION 8. CHIEF EXECUTIVE OFFICER................................................................................7
SECTION 9. PRESIDENT..............................................................................................8
SECTION 10. VICE PRESIDENT........................................................................................8
-i-
<PAGE>
SECTION 11. SECRETARY.............................................................................................8
SECTION 12. CHIEF OFFICER.........................................................................................8
ARTICLE V STOCK.................................................................................................9
SECTION 1. FORM OF CERTIFICATES...................................................................................9
SECTION 2. SIGNATURES.............................................................................................9
SECTION 3. LOST CERTIFICATES......................................................................................9
SECTION 4. TRANSFERS..............................................................................................9
SECTION 5. RECORD HOLDERS.........................................................................................9
ARTICLE VI INDEMNIFICATION.......................................................................................9
SECTION 1. RIGHT TO INDEMNIFICATION...............................................................................9
SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT.....................................................................10
SECTION 3. NON-EXCLUSIVITY OF RIGHTS.............................................................................11
SECTION 4. INSURANCE.............................................................................................11
SECTION 5. INDEMNIFICATION OF EMPLOYEES OR AGENTS OF THE CORPORATION.............................................11
SECTION 6. INDEMNIFICATION CONTRACTS.............................................................................11
SECTION 7. EFFECT OF AMENDMENT...................................................................................11
ARTICLE VII GENERAL PROVISIONS...................................................................................11
SECTION 1. DIVIDENDS.............................................................................................11
SECTION 2. DISBURSEMENTS.........................................................................................11
SECTION 3. FISCAL YEAR...........................................................................................11
SECTION 4. CORPORATE SEAL........................................................................................12
SECTION 5. RECORD DATE...........................................................................................12
SECTION 6. VOTING OF STOCK OWNED BY THE CORPORATION..............................................................12
SECTION 7. CONSTRUCTION AND DEFINITIONS..........................................................................12
SECTION 8. AMENDMENTS............................................................................................12
</TABLE>
-ii-
<PAGE>
BYLAWS
OF
ICHARGEIT, INC.,
A DELAWARE CORPORATION
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
in the State of Delaware shall be in the City of ___________, County of
_____________.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
SECTION 3. BOOKS. The books of the Corporation may be kept within or
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of stockholders for the
election of directors shall be held at such place either within or without the
State of Delaware as may be fixed from time to time by the Board of Directors,
or at such other place either within or without the State of Delaware as shall
be designated from time to time by the Board of Directors and stated in the
notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
SECTION 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be
held at a time and date designated by the Board of Directors for the purpose of
electing directors and transacting such other business as may properly be
brought before the meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President and shall be called
by the President or Secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of a stockholder or
stockholders owning stock of the Corporation possessing ten percent (10%) of the
voting power possessed by all
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of the then outstanding capital stock of any class of the Corporation
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 4. NOTIFICATION OF BUSINESS TO BE TRANSACTED AT MEETING. To be
properly brought before a meeting, business must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a stockholder entitled to vote at the meeting.
SECTION 5. NOTICE; WAIVER OF NOTICE. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise required by law, such notice shall be given not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the mail, postage prepaid,
directed to the stockholder at his address as it appears on the records of the
Corporation. A written waiver of any such notice signed by the person entitled
thereto, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 6. QUORUM; ADJOURNMENT. Except as otherwise required by law, or
provided by the Certificate of Incorporation or these Bylaws, the holders of a
majority of the capital stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at all meetings of the stockholders. A meeting
at which a quorum is initially present may continue to transact business,
notwithstanding the withdrawal of enough votes to leave less than a quorum, if
any action taken is approved by at least a majority of the required quorum to
conduct that meeting. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting of the time and place of the adjourned meeting, until a quorum shall
be present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. If the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder entitled to vote at the meeting.
SECTION 7. VOTING. Except as otherwise required by law, or provided
by the Certificate of Incorporation or these Bylaws, any question brought
before any meeting of stockholders at which a quorum is present shall be
decided by the vote of the holders of a majority of the stock represented and
entitled to vote thereat. Unless otherwise provided in the Certificate of
Incorporation, each stockholder represented at a meeting of stockholders
shall be entitled to cast one vote for each share of the capital stock
entitled to vote thereat held by such stockholder. Such votes may be cast in
person or by proxy, but no proxy shall be voted on or after three (3) years
from its date, unless such proxy provides for a longer period. Elections of
directors need not be by ballot unless the Chairman
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of the meeting so directs or unless a stockholder demands election by ballot
at the meeting and before the voting begins.
SECTION 8. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is present.
SECTION 9. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 9 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 10. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors may appoint one or more persons (who shall
not be candidates for office) as inspectors of election to act at the meeting or
any adjournment thereof. If an inspector or inspectors are not so appointed, or
if an appointed inspector fails to appear or fails or refuses to act at a
meeting, the Chairman of any meeting of stockholders may, and on the request of
any stockholder or his proxy shall, appoint an inspector or inspectors of
election at the meeting. The duties of such inspector(s) shall include:
determining the number of shares outstanding and the voting power of each; the
shares represented at the meeting; the existence of a quorum; the authenticity,
validity and effect of proxies; receiving votes, ballots or consents; hearing
and determining all challenges and questions in any way arising in connection
with the right to vote; counting and tabulating all votes or consents;
determining the result; and such acts as may be proper to conduct the election
or vote with fairness to all stockholders. In the event of any dispute between
or among the inspectors, the determination of the majority of the inspectors
shall be binding.
SECTION 11. ORGANIZATION. At each meeting of stockholders the Chairman
of the Board of Directors, if one shall have been elected, (or in his absence or
if one shall not have been elected, the President) shall act as Chairman of the
meeting. The Secretary (or in his absence or inability to act, the person whom
the Chairman of the meeting shall appoint secretary of the meeting) shall act as
secretary of the meeting and keep the minutes thereof.
SECTION 12. ORDER OF BUSINESS. The order and manner of transacting
business at all meetings of stockholders shall be determined by the Chairman of
the meeting.
ARTICLE III
DIRECTORS
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SECTION 1. POWERS. Except as otherwise required by law or provided by
the Certificate of Incorporation, the business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
SECTION 2. NUMBER AND ELECTION OF DIRECTORS. Subject to any limitations
in the Certificate of Incorporation, the authorized number of directors of the
Corporation shall be no less than (3) and no more than (7) with the number
initially set at five (5) until changed by an amendment to this Bylaw adopted by
the affirmative vote of a majority of the entire Board of Directors. Directors
shall be elected at each annual meeting of stockholders to replace directors
whose terms then expire, and each director elected shall hold office until his
successor is duly elected and qualified, or until his earlier death, resignation
or removal. Any director may resign at any time effective upon giving written
notice to the Board of Directors, unless the notice specifies a later time for
such resignation to become effective. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. If
the resignation of a director is effective at a future time, the Board of
Directors may elect a successor prior to such effective time to take office when
such resignation becomes effective. Directors need not be stockholders.
SECTION 3. VACANCIES. Subject to the limitations in the Certificate of
Incorporation, vacancies in the Board of Directors resulting from death,
resignation, removal or otherwise and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, although less than a quorum, or by a sole
remaining director. Each director so selected shall hold office for the
remainder of the full term of office of the former director which such director
replaces and until his successor is duly elected and qualified, or until his
earlier death, resignation or removal. No decrease in the authorized number of
directors constituting the Board of Directors shall shorten the term of any
incumbent directors.
SECTION 4. TIME AND PLACE OF MEETINGS. The Board of Director shall hold
its meetings at such place, either within or without the State of Delaware, and
at such time as may be determined from time to time by the Board of Directors.
SECTION 5. ANNUAL MEETING. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the Board of Directors may be held at such
place, either within or without the State of Delaware, on such date and at such
time as shall be specified in a notice thereof given as hereinafter provided in
Section 7 of this Article III or in a waiver of notice thereof.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such places within or without the State of Delaware at such date
and time as the Board of Directors may from time to time determine and, if so
determined by the Board of Directors, notices thereof need not be given.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the President, the
Secretary or by any director. Notice of the date, time and place of special
meetings shall be delivered personally or by telephone to each director or
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sent by first-class mail or telegram, charges prepaid, addressed to each
director at the director's address as it is shown on the records of the
Corporation. In case the notice is mailed, it shall be deposited in the
United States mail at least four (4) days before the time of the holding of
the meeting. In case the notice is delivered personally or by telephone or
telegram, it shall be delivered personally or by telephone or to the
telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. The notice need not specify the purpose of the
meeting. A written waiver of any such notice signed by the person entitled
thereto, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 8. QUORUM; VOTE REQUIRED FOR ACTION; ADJOURNMENT. Except as
otherwise required by law, or provided in the Certificate of Incorporation or
these Bylaws, a majority of the directors shall constitute a quorum for the
transaction of business at all meetings of the Board of Directors and the
affirmative vote of not less than a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board of Directors.
If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting, from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
A meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum to conduct that meeting.
When a meeting is adjourned to another time or place (whether or not a quorum is
present), notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the Board of Directors may transact any business which
might have been transacted at the original meeting.
SECTION 9. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the Certificate of Incorporation, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 10. TELEPHONE MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, members of the Board of Directors of the
Corporation, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee, as the
case may be, by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section 10 shall constitute presence
in person at such meeting.
SECTION 11. COMMITTEES. The Board of Directors may, by resolution
passed unanimously by the entire Board, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate
members of any such committee, who may replace any absent or disqualified
member at any meeting of the committee. In the event of absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the committee member or members present at any
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meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member. Any committee, to the extent allowed by law and as provided in the
resolution establishing such committee, shall have and may exercise all the
power and authority of the Board of Directors in the management of the
business and affairs of the Corporation, but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending
the Bylaws of the Corporation; and, unless the resolution or the Certificate
of Incorporation expressly so provides, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of
stock. Each committee shall keep regular minutes of its meetings and report
to the Board of Directors when required.
SECTION 12. COMPENSATION. The directors may be paid such compensation
for their services as the Board of Directors shall from time to time determine.
SECTION 13. INTERESTED DIRECTORS. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or the committee thereof
which authorizes the contract or transaction, or solely because his of their
votes are counted for such purpose if: (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall be a
President, a Secretary and a Chief Financial Officer. The Corporation may also
have, at the discretion of the Board of Directors, a Chairman of the Board, a
Vice Chairman of the Board, a Chief Executive Officer, one or more Vice
Presidents, one or more Assistant Financial Officers and Treasurers, one or more
Assistant Secretaries and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article IV.
SECTION 2. APPOINTMENT OF OFFICERS. The officers of the Corporation,
except such officers as may be appointed in accordance with the provisions of
Section 3 or Section 5 of this
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Article IV, shall be appointed by the Board of Directors, and each shall
serve at the pleasure of the Board, subject to the rights, if any, of an
officer under any contract of employment.
SECTION 3. SUBORDINATE OFFICERS. The Board of Directors may appoint,
and may empower the Chief Executive Officer or President to appoint, such other
officers as the business of the Corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in the Bylaws or as the Board of Directors may from time to time
determine.
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights
of an officer under any contract, any officer may be removed at any time, with
or without cause, by the Board of Directors or, except in case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation shall be without prejudice to
the rights of the Corporation under any contract to which the officer is a
party.
SECTION 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in these Bylaws for regular appointments to that
office.
SECTION 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer is elected, shall, if present, preside at meetings of the stockholders
and of the Board of Directors. He shall, in addition, perform such other
functions (if any) as may be prescribed by the Bylaws or the Board of Directors.
SECTION 7. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board,
if such an officer is elected, shall, in the absence or disability of the
Chairman of the Board, perform all duties of the Chairman of the Board and when
so acting shall have all the powers of and be subject to all of the restrictions
upon the Chairman of the Board. The Vice Chairman of the Board shall have such
other powers and duties as may be prescribed by the Board of Directors or the
Bylaws.
SECTION 8. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
Corporation shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and the officers of
the Corporation. He shall exercise the duties usually vested in the chief
executive officer of a corporation and perform such other powers and duties as
may be assigned to him from time to time by the Board of Directors or prescribed
by the Bylaws. In the absence of the Chairman of the Board and any Vice Chairman
of the Board, the Chief Executive Officer shall preside at all meetings of the
stockholders and of the Board of Directors.
SECTION 9. PRESIDENT. The President of the Corporation shall,
subject to the control of the Board of Directors and the Chief Executive
Officer of the Corporation, if there be such an officer, have general powers
and duties of management usually vested in the office of president of a
corporation and shall have such other powers and duties as may be prescribed
by the Board of Directors or the Bylaws or the Chief Executive Officer of the
Corporation. In the absence of the
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Chairman of the Board, Vice Chairman of the Board and Chief Executive
Officer, the President shall preside at all meetings of the Board of
Directors and stockholders.
SECTION 10. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Directors or, if not ranked, a Vice President designated by the Board
of Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the Bylaws, and the President, or the Chairman of the
Board.
SECTION 11. SECRETARY. The Secretary shall keep or cause to be kept, at
the principal executive office or such other place as the Board of Directors may
direct, a book of minutes of all meetings and actions of Directors, committees
of Directors, and stockholders, with the time and place of holding, whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at Directors' meetings or committee meetings, the number of
shares present or represented at stockholders' meetings, and a summary of the
proceedings.
The Secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the Corporation's transfer agent or
registrar, as determined by resolution of the Board of Directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors required by the Bylaws or by
law to be given, and he shall keep or cause to be kept the seal of the
Corporation if one be adopted, in safe custody, and shall have such powers and
perform such other duties as may be prescribed by the Board of Directors or by
the Bylaws.
SECTION 12. CHIEF OFFICER. The Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the
Corporation. The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He shall make such
disbursements of the funds of the Corporation as are authorized and shall render
from time to time an account of all of his transactions as Chief Financial
Officer and of the financial condition of the Corporation. The Chief Financial
Officer shall also have such other powers and perform such other duties as may
be prescribed by the Board of Directors or the Bylaws.
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name
of the Corporation (i) by the Chairman or Vice Chairman of the Board of
Directors, or the President or a Vice President and (ii) by the Chief
Financial Officer or the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant
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Secretary of the Corporation, certifying the number of shares owned by such
stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Corporation may issue a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation, alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate to be lost,
stolen or destroyed. The Corporation may, in the discretion of the Board of
Directors and as a condition precedent to the issuance of such new certificate,
require the owner of such lost, stolen, or destroyed certificate, or his legal
representative, to give the Corporation a bond (or other security) sufficient to
indemnify it against any claim that may be made against the Corporation
(including any expense or liability) on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws or in any agreement with the
stockholder making the transfer. Transfers of stock shall be made on the books
of the Corporation only by the person named in the certificate or by his
attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be canceled before a new certificate shall be
issued.
SECTION 5. RECORD HOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the record
holder of shares to receive dividends, and to vote as such record holder, and to
hold liable for calls and assessments a person registered on its books as the
record holder of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise required by law.
ARTICLE VI
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is made
a party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director or officer of the Corporation or is or was serving
at the request of the Corporation as a director or officer of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director or officer or in any other capacity while
serving as a director or officer, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than such law
permitted the Corporation to provide prior to such amendment),
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against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in Section 2 of this Article VI with respect to
proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation. The
right to indemnification conferred in this Section shall be a contract right
and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
indemnitee, including without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking,
by or on behalf of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right to appeal that such indemnitee is not entitled to be
indemnified for such expenses under this Article VI or otherwise (hereinafter
an "undertaking").
SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section
1 of this Article VI is not paid in full by the Corporation within forty-five
(45) days after a written claim has been received by the Corporation, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or part in any
such suit or in a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
(i) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met the applicable standard of
conduct set forth in the Delaware General Corporation Law. Neither the failure
of the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) to have made a determination prior to the commencement of
such suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right hereunder, or by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified or to such advancement of expenses
under this Article VI or otherwise shall be on the Corporation.
SECTION 3. NON-EXCLUSIVITY OF RIGHTS. The rights of indemnification
and to the advancement of expenses conferred in this Article VI shall not be
exclusive of any other right which
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any person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 4. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
SECTION 5. INDEMNIFICATION OF EMPLOYEES OR AGENTS OF THE CORPORATION.
The Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses,
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article VI with respect to the indemnification and
advancement of expenses of directors or officers of the Corporation.
SECTION 6. INDEMNIFICATION CONTRACTS. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in this
Article VI.
SECTION 7. EFFECT OF AMENDMENT. Any amendment, repeal or modification
of any provision of this Article VI by the stockholders or the directors of the
Corporation shall not adversely affect any right or protection of a director or
officer of the Corporation existing at the time of such amendment, repeal or
modification.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Subject to limitations contained in the General
Corporation Law of the State of Delaware and the Certificate of Incorporation,
the Board of Directors may declare and pay dividends upon the shares of capital
stock of the Corporation, which dividends may be paid either in cash, securities
of the Corporation or other property.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The Corporation shall have a corporate seal
in such form as shall be prescribed by the Board of Directors.
SECTION 5. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
-11-
<PAGE>
exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty (60)
days nor less than ten (10) days before the date of such meeting, nor more
than sixty (60) days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting. Stockholders on the record date are entitled to notice and
to vote or to receive the dividend, distribution or allotment of rights or to
exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after the record date, except as
otherwise provided by agreement or by applicable law.
SECTION 6. VOTING OF STOCK OWNED BY THE CORPORATION. The Chairman of
the Board, the Chief Executive Officer, the President and any other officer of
the Corporation authorized by the Board of Directors shall have power, on behalf
of the Corporation, to attend, vote and grant proxies to be used at any meeting
of stockholders of any corporation (except this Corporation) in which the
Corporation may hold stock.
SECTION 7. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction and definitions in the
General Corporation Law of the State of Delaware shall govern the construction
of these Bylaws.
SECTION 8. AMENDMENTS. Subject to the General Corporation Law of the
State of Delaware, the Certificate of Incorporation and these Bylaws, the Board
of Directors may by the affirmative vote of a majority of the entire Board of
Directors amend or repeal these Bylaws, or adopt other Bylaws as in their
judgment may be advisable for the regulation of the conduct of the affairs of
the Corporation. Unless otherwise restricted by the Certificate of
Incorporation, these Bylaws may be altered, amended or repealed, and new Bylaws
may be adopted, at any annual meeting of the stockholders (or at any special
meeting thereof duly called for that purpose) by a majority of the combined
voting power of the then outstanding shares of capital stock of all classes and
series of the Corporation entitled to vote generally in the election of
directors, voting as a single class, provided that, in the notice of any such
special meeting, notice of such purpose shall be given.
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<PAGE>
AGENT AGREEMENT
This AGREEMENT is signed between PVI and Agent as designated below:
PVI: PREFERRED VOICE, INC.
SUITE #570
6500 GREENVILLE AVENUE
DALLAS, TEXAS - USA 75206-1002
PHONE: 214-265-9580 FAX 214-265-9663
AGENT: iChargeit.com
8162 CAPE HOPE CIRCLE
SUITE 201
HUNTINGTON, CA 92646
(O) 888-815-4390 (F) 800-572-7739
THIS AGENT AGREEMENT (hereinafter the "Agreement"), is made and entered into as
of the 25th day of January, 1999 by and between PVI, a corporation organized and
existing under the laws of the State of Delaware authorized to do business in
Texas, and Agent, a corporation organized and existing under the laws of the
State of Nevada.
BACKGROUND
PVI is in the business of providing certain voice recognition products and
services having multiple applications in the telecommunication industry
(collectively referred to hereinafter, as the "Services").
Agent is a member of an affiliated group of companies incorporated in Nevada,
with offices in New York and California that provides Internet sites at which
consumers may purchase various products and services, which is also known as a
mall site. In order to increase its sales of the Services, PVI is establishing a
national distribution network by entering multiple Marketing Agreements (the
"Marketing Agreements"). The Agent desires to establish a Marketing Agreement
and PVI has agreed to grant the Agent the marketing rights set forth herein.
Accordingly in consideration of the mutual covenants and agreements set forth
below, PVI and Agent agree as follows:
OPERATIVE PROVISIONS
1. DEFINITIONS: (AS USED IN THIS AGREEMENT)
1.1 AGENT means the entity described in the first paragraph of
this Agreement.
1.2 MALL SITE means an Internet web site that customers around the
world may access to purchase services and products.
1.3 END-USERS means customers using and paying for PVI's Services.
1.4 MARK(S) means any trademark, service mark, trade dress or
trade name which PVI may designate, use, or adopt from time to
time to identify its Services.
<PAGE>
1.5 SERVICES means any telecommunication service(s) or equipment
offered by PVI. It is understood that the Service is an
elective, supplement service and not a primary means of
obtaining telecommunications service such as dedicated service
(T-l's) or local dial tone.
1.6 PROPRIETARY INFORMATION means any Information, written or
oral, which may reasonably be deemed confidential or
proprietary, including, without limitation, any technical
and/or design information on the Services, and any information
relating to the present or future business operations,
financial condition, plans, sales, marketing and promotional
efforts, customers and price lists of PVI and its subsidiaries
and affiliates, and this Agreement and its terms.
2. APPOINTMENT AND DUTIES OF AGENT
2.1 Subject to the provisions of Section 2.2 hereof, PVI hereby
appoints Agent, and Agent hereby accepts appointment, as a PVI
agent solely for purposes of marketing Services on the
Internet.
2.2 Agent shall market and sell the Services at its Mall Sites at
the prices set forth in Exhibit 2 attached hereto. PVI may
change the prices for its Services at any time due to business
conditions or regulatory changes. PVI will not offer pricing
lower than the pricing defined herein through other agents
without making that same pricing structure available to the
Agent. It is understood by the Agent that national accounts
and affinity groups may require other rate plans, and PVI will
not be required to offer those rate plans through the Agent.
Any special pricing requested by the Agent is subject to the
approval of PVI, at PVI's sole discretion, and the Agent's
commissions may be modified as a part of such approval.
2.3 Agent shall be paid commissions in accordance with the
commission schedule set forth in Exhibit 3 attached hereto.
Commissions shall be paid quarterly based upon collections
during the prior quarter. The commission rates may not be
reduced without Agent's prior written consent, however,
certain commission rates may be temporarily increased from
time to time by PVI as part of a sales promotion or incentive.
Prior to Agent's sale of any additional Services on behalf of
PVI for which no commission rate is set forth on Exhibit 3,
Agent and PVI shall mutually agree upon a commission schedule
particular to that Service, which schedule shall be added to
Exhibit 3 to this Agreement. Commissions will be paid on
accounts sold outside the Agent's Market Area.
2.4 Agent will not list any product or service on any Mall Site
that the Agent operates that competes with the business of
PVI, whether through the sale of services that are
substantially equivalent to, or competitive with, PVI's
Services or through sale of products that are intended to be
used to provide capabilities equivalent to the Services. Agent
may not enter into any joint venture, establish a new
corporation, acquire any interest in a company (or entity) in
order to engage in such competition. In the event that PVI
begins selling its Services on the Internet by any means other
than through Agent, the restrictions placed on Agent in this
Section 2.4 shall terminate; provided, however, for a period
of two (2) years after PVI commences such other sales, Agent
shall not solicit any PVI End-User acquired through Agent
2
<PAGE>
during the term of this Agreement for a competitive service.
Agent will ensure that the web-site will not contain
pornography or any material or products which are racially
offensive.
2.5 Agent does not have exclusive marketing rights on the Internet
for Services.
3. RIGHTS AND OBLIGATIONS OF AGENT
3.1 Agent may market and sell the Services directly on the
Internet or through sub-agents or dealers with Internet sites.
PVI shall not be a party to any arrangements between Agent and
its sub-agents or dealers, should those relationships exist,
nor will PVI in any manner be bound by such relationship or
have any legal obligation in respect thereof. It will be the
Agent's responsibility to design commission plans for its
sub-agents and dealers as it relates to the Agent's business,
and the Agent will have the sole right to adjust those plans
as required or as necessary. Agent shall be, solely
responsible for training and compensating any and all its
sub-agents and dealers should those relationships exist.
3.2 Agent agrees that it is not, nor shall it represent itself to
be, a PVI employee or officer of PVI, nor shall it assume or
create any obligations or responsibility on behalf of PVI,
unless otherwise agreed upon, in writing, by PVI.
3.3 Agent shall, in its sole discretion, determine the amount of
any advertising and shall be solely responsible for the
resultant costs and expenses incurred. Agent will be solely
responsible for maintaining all equipment as it relates t6 the
Internet and offering PVI Services through the Internet. PVI
may, at its sole discretion, provide such advertising, at no
expense to Agent, as it deems appropriate. These activities
shall be considered in any determination of whether the
inactivity clause set for in Section 7.3 should be invoked;
however, any inactivity determination will always be at PVI's
sole discretion.
3.4 Agent shall send copies of all advertising and sales promotion
material and literature relating to the Services to PVI for
review. This includes the Internet site web page that
represents PVI Services. AT NO TIME will the Agent have
authority to change, alter, rearrange or add anything to the
web page(s) that represent the Services offered by PVI without
PVI's prior written approval.
3.5 In all advertising, trade shows, conventions, and other
promotions, as well as in all sales and technical literature,
the name of PVI and the Trade Marks shall be evidenced and
respected. Agent shall use the Trade Marks in their original
form, unless otherwise approved in advance in writing by PVI.
3.6 Agent shall forward to PVI any money collected for PVI
Services sold to an End User subscribing to PVI Services on a
weekly basis.
3.7 Should PVI be acquired or merge with another company or change
ownership in any way, this Agent Agreement shall remain in
full force as long as the Agent is in compliance with the
terms of this Agreement.
3
<PAGE>
4. PROPRIETARY RIGHTS INDEMNITY
4.1 If timely and promptly notified of any action (and all claims
relating to such action) brought against Agent based upon a
claim that the Service(s) or the use thereof infringes a
United States patent, trade mark, service mark, or copyright
("Infringement Claim"), PVI shall defend and hold harmless the
Agent against such action at its expense and pay the costs and
damages awarded in any such action, provided that PVI shall
have sole control of the defense of any such action and all
negotiations for its settlement or compromise. At any time
during the course of any Infringement Claim, or if in PVI's
opinion, the Services are likely to become the subject of an
Infringement Claim, PVI may, at its option and its sole
expense, either procure the right to continue using the
Service(s), or replace or modify the same so that such
Service(s) becomes non-infringing. PVI will not have any
liability to Agent for an Infringement Claim, if such claim
results from Agent's modification of the Services in any
manner, but Agent confirms he has no right to make any such
modification.
4.2 The foregoing states the entire liability of PVI with respect
to an Infringement Claim. No costs or expenses will be
incurred by the Agent in defense of any such claim, without
PVI's prior written approval.
4.3 The purchase of the Services contemplated by this Agreement
may result in an implied license to the End-User to use the
Services patented by PVI. No license to make, sell, or use the
Services shall be created other than that explicitly set forth
in PVI's Service forms with the End-Users.
5. RIGHTS, SERVICES, AND OBLIGATIONS OF PVI
5.1 PVI reserves the right to modify the characteristics of its
Services. The Agent shall be advised by PVI of any significant
changes in Service(s) specifications. Agent will have the
right to sell all existing and any new PFVI products.
5.2 PVI shall provide the Agent with documents and system
documentation to assist Agent in marketing and selling the
Services, which shall remain the property of PVI. Such
documents and documentation may be in written form or
transmitted by tape, diskettes, e-mail, or other software
media, as determined by PVI.
5.3 PVI. shall provide the Agent with pertinent technical and
sales information and collateral support materials. PVI shall
inform the Agent on a regular basis about the development of
new Services and applications, trends, and competition in the
market.
5.4 PVI shall:
(a) Develop and produce original copy (i.e. layout,
verbiage, plates, negatives, dies, and/or other setup
materials) of its advertising and collateral support
materials for marketing the Services;
4
<PAGE>
(b) Provide and maintain all equipment (hardware,
software, and co-location facilities) reasonably
necessary to support the PVI Services marketed and
sold by the Agent;
(c) Provide and maintain the connectivity necessary to
provision the PVI Services marketed and sold by the
Agent;
(d) Perform all fulfillment of the PVI Services marketed
and sold by the Agent.
(e) Pay all Agent commissions in accordance with section
2.3 of this Agreement.
(f) Use reasonable efforts at all times maintain the
network and equipment to provide the Services defined
herein.
5.5 PVI warrants that it has the regulatory authority and will
maintain compliance during the term of this Agreement.
5.6 PVI warrants that it is licensed to utilize the necessary
technologies required to offer Service(s) and will maintain
said technology licenses during the term of this Agreement.
5.7 PVI has the right to cancel this agreement on thirty (30) days
notice for any reason as stated in 7.2.
6. LIMITATION OF LIABILITIES
EXCEPT AS SET FORTH IN SECTION 5, PVI MAKES NO WARRANTIES, EXPRESSED OR IMPLIED,
TO THE AGENT WITH RESPECT TO THE SERVICES, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE AGENT
AGREES THAT PVI SHALL NOT BE LIABLE FOR ANY SPECIAL INCIDENTAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES, OR FOR THE LOSS OF PROFIT, REVENUE OR SERVICES EVEN IF
PVI SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE
7. DURATION AND TERMINATION OF THE AGREEMENT
7.1 This Agreement shall be effective for an initial term
commencing on the date of execution of this Agreement by both
parties and ending three (3) calendar years thereafter. If not
terminated by notice by either party at least sixty (60) days
prior to the end of the initial term hereof or any renewal
term, the Agreement will renew automatically from year to year
thereafter.
7.2 Either party may, without incurring any liability to the other
party, unilaterally and with immediate effect, terminate this
Agreement at any time by a written notice sent to the other
party in the event that:
(a) The other party fails, for any reason(s) whatsoever,
to perform any of its obligations under this
Agreement and falls to remedy such default within
thirty (30) days after the receipt of written notice
of default and request for cure; or
5
<PAGE>
(b) The other party becomes insolvent, files or is
subject to the filing of judicial process under any
law relating to bankruptcy or insolvency, consents to
a receivership, adopts an arrangement with creditors,
is dissolved, enters into liquidation, or ceases
doing business; or
(c) The Agent uses the name of PVI, or any form thereof,
as a corporate name for doing business, or trade
name, or otherwise, without the prior written consent
of PVI; or
(d) The Agent puts any material on the web page on which
the Services are displayed that PVI finds
unacceptable.
7.3 PVI will monitor all Agent marketing. It is understood by the
Agent that a requirement to maintain the agency is consistent
marketing efforts, to be judged by, but not but not solely by,
consistently adding new customers at a reasonable rate
expected of agents, after an initial start-up period. Any
inactivity, AS DEEMED AT THE SOLE DISCRETION OF PVI, will be
grounds for termination of this Agreement. Should PVI
terminate this Agreement for inactivity, the Agent will be
subject to a non-compete for a period of two (2) years. During
the non-competition period the Agent will not contact,
solicit, or offer any services competitive with PVI Services
to PVI End Users nor enter into any relationship that would
compete with the business of PVI.
8. EFFECT OF TERMINATION
8.1 Upon expiration or termination of this Agreement, the Agent
shall immediately (i) remove from its Mall Sites all
advertising of the Services or use of the Marks, (ii) cease to
engage in advertising or promotional activities concerning
PVI's Services and use of its Marks, (iii) cease to represent
in any manner that the Agent has been designated by PVI as
such, and (iv) deliver to PVI at the Agent's expense, all
price lists, sales manuals, service manuals, and any other
documents concerning PVI's Services which are in the Agent's
possession.
8.2 Agent shall, upon termination of this Agreement, have the
right to claim reimbursement or compensation for sales by
Agents, its dealers and other agents but shall not have the
right to any compensation for alleged loss of goodwill, loss
of profits on anticipated sales, or the like, or have any
other liability for losses or damages resulting from the
termination this Agreement
9. PROTECTION OF PROPRIETARY INFORMATION
9.1 The Agent agrees to maintain in confidence and not to copy,
reproduce, distribute, or disclose to any third party, without
the prior written approval of PVI, any Proprietary
Information.
9.2 All sales of the Service are of the Services only. These sales
do not include the sale of Services design or source and/or
object codes pertaining to PVI's software, which are
proprietary to PVI. To the extent any such Proprietary
Information is made available to the Agent, it is done on a
confidential basis. The Agent will neither
6
<PAGE>
disclose circuitry design details nor principles, nor software
codes of any kind related to the Services, nor copy them for
purposes of manufacture, nor attempt to reverse-engineer
(de-compile) or otherwise alter the Services for any purpose
whatsoever.
9.3 With respect to the Proprietary Information relating to the
Agent's business which is made available to PVI by the Agent
to allow PVI to perform its obligations under this Agreement,
PVI will instruct its personnel to keep such information
confidential by using the same care and discretion that PVI
uses with data which PVI designates as Proprietary
Information. However, PVI shall not be required to keep
confidential any data which is or becomes publicly available,
is already in PVI's possession, is independently developed by
PVI outside the scope of this Agreement, or is legally
obtained form third parties. In addition, PVI shall not be
required to keep confidential and may use for PVI's benefit
any ideas, concepts, know-how, or techniques relating to PVI's
Services submitted to PVI or developed during the term of this
Agreement by PVI personnel or jointly by PVI and the Agent's
personnel, unless otherwise mutually agreed to by PVI and
Agent.
9.4 The obligations of the parties under this Section 9 shall
survive the expiration or termination of this Agreement, for
whatever reason, and shall be binding upon the Parties, their
successors and/or assigns.
9.5 The parties acknowledge that the obligations and promises
under this Section 9 are of a special, unique character which
gives them particular value, and that a breach thereof could
result in irreparable and continuing damage for which there
can be no reasonable or adequate damages, remedy, or
compensation in an action of law. Each party shall be entitled
to injunctive relief, a decree for specific performance,
and/or other equitable relief in the event of any breach, or
threatened breach by the other of its obligations or promises
under this Section 9, in addition to any other rights or
remedies which it may possess (including monetary damages, if
appropriate).
10. GENERAL
10.1 THIS AGREEMENT SHALL BE INTERPRETED AND ITS EFFECT SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
10.2 All disputes are subject to binding arbitration. Both parties
will select an arbitrator and the arbitrators selected by both
parties will select a third arbitrator. The three arbitrators
will rule on any dispute. Any ruling by the arbitrators will
be final. The arbitrators selected will be subject to the
venues agreed to herein.
10.3 The Agent and PVI consents to venue, and the jurisdiction of
the courts of Texas and may only file with courts located in
Dallas County and both parties agree that any dispute arising
under this Agreement shall be resolved in such jurisdiction.
10.4 This Agreement cannot be assigned or sold to any third party
or any other entity without the prior written consent of PVI,
which shall not be unreasonably withheld.
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<PAGE>
10.5 All notices and demands of any kind which either party may
require or desire to serve upon the other shall be in writing
and shall be delivered either by personal service or by mail
at the address of the receiving party set forth below (or at
such different addresses as may be designated by such party by
written notice to the other party) or by facsimile. Such
notice shall be deemed received on the earlier of (i) the date
when was actually received or (ii) in the case of mailing,
five (5) business days after being deposited in the United
States mall with sufficient prepaid postage, registered, or
certified mail with return receipt requested and properly
addressed, or (iii) if by facsimile when the sending Party
shall have received facsimile confirmation that the message
has been received by the receiving Party's facsimile machine.
If notice is sent by facsimile, a confirmed copy of such
facsimile shall be sent by mall to the receiving party.
The address and facsimile numbers of the Parties, for purposes
of the Agreement are as follows:
PVI AGENT
Preferred Voice, Inc. iChargeit, Inc.
6500 Greenville Ave., Ste. 570 8162 Cape Hope, Suite 201
Dallas, TX 75206-1002 Huntington, CA 92646
Facsimile: 214-265-9663 Facsimile: 800-572-7739
Attention: G. Ray Miller Attention: Jesse Cohen
10.6 Any provision of the Agreement held to be invalid under
applicable law shall not render this Agreement invalid as a
whole, and in such event, such provision shall be interpreted
so as to best accomplish the intent of the Parties within the
limits of applicable law.
10.7 A valid contract binding upon PVI and the Agent comes into
being upon execution of this Agreement by duly authorized
representatives of PVI and the Agent. This Agreement contains
the exclusive terms and conditions between the parties hereto
with respect to the subject matter hereof and does not operate
as an acceptance of any conflicting or additional terms and
provisions of the Agent's agreements with dealers or
sub-agents which shall not be deemed to alter the terms
hereof. Amendments to this Agreement may be effected only in
writing, when signed by the parties hereto specifically
stating it is intended to amend this Agreement.
10.8 If any action is commenced by either party concerning this
Agreement, the party which prevails in such action will be
entitled to a judgement against the other party for the costs
of such arbitration or action, including court cost,
reasonable expenses of litigation, and reasonable attorneys'
fees.
10.9 The Agent acknowledges that it is an independent contractor.
8
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IN WITNESS WHEREOF, PVI and the Agent hereby have duly executed, signed, and
initialed each page of this Agent Agreement in duplicate originals on the dates
indicated herein.
PREFERRED VOICE, INC. iChargeit, INC.
/s/ Richard K. Stone /s/ Jesse Cohen
- --------------------------------------- ---------------------------------
By Richard K Stone, Vice-President By Jesse Cohen
Authorized Signature Agent
Authorized Signature
Date: 1-25-99 Date: 1/25/99
---------------------------------- ----------------------------
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EXHIBIT 1 A
Market Area: Internet Marketing
<PAGE>
EXHIBIT 2 PRODUCT 1
EMMA VIRTUAL PERSONAL ASSISTANT
SERVICE DESCRIPTION: VIP 800 VPA is a revolutionary service that addresses four
important areas for the average business person: time management, connectivity,
single number simplicity and low cost. It allows the business user to never miss
a call and allows them the ability to receive a call, via the revolutionary
ability to call forward a personal 800 toll free number to any number, from any
phone anywhere at anytime. It allows them to screen out calls to voice mail that
they wish not to take and utilize the most advanced speaker independent voice
recognition technology, to place calls by speaking the name of the individual or
business they wish to call from their pre-programmed voice directory. Best of
all it is reliable, convenient, user friendly and the predatory pricing makes it
affordable for everyone.
SERVICE APPLICATION: VIP 800 VPA is specifically designed for the business
person that is on the move or dealing with multiple time zones. They can receive
calls from their cellular phone, office phone, home phone, hotel phone, clients
phone, friend's cellular phone and any phone they choose etc. Basically the
business person can receive a call anytime anywhere from any phone. They also
have the ability to screen calls to voice mail that they do not want. They will
also be able to put into storage their Palm Pilots and address books with all of
their contacts and phone numbers loaded into their voice directory by PVI. They
simply speak the name from their directory and the call is completed. This
service is the answer to the four aforementioned challenges to the business
person today: time management, connectivity, single number simplicity and low
cost. The business person's customers and potential customers will only have one
number to remember, not 3 to 4 numbers for their contact person as they have
today.
TARGET MARKET: Local, regional, national and international business travelers.
Large corporations right down to the home based business and individuals.
<TABLE>
<CAPTION>
PRODUCT FEATURES & BENEFITS:
- ------------------------------------------------ -------------------------------------------
<S> <C>
- - Single number - Home base pricing
- ------------------------------------------------ -------------------------------------------
- - Single number locate - Voice dialing directory
- ------------------------------------------------ -------------------------------------------
- - Call screening - No numbers to remember
- ------------------------------------------------ -------------------------------------------
- - Availability at all times - No manual dialing
- ------------------------------------------------ -------------------------------------------
- - Ultimate customer service - Eliminates hard fraud
- ------------------------------------------------ -------------------------------------------
- - Becomes LD calling card - Local access to voice directory
- ------------------------------------------------ -------------------------------------------
- - Time Management - Connectivity
- ------------------------------------------------ -------------------------------------------
</TABLE>
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies, Executive Suites,
Shared Tenant Providers and TAS Companies.
<TABLE>
<CAPTION>
PRODUCT PRICING:
- ------------------------------------------------ ------------------------------------------
<S> <S>
- - $4.95 - 800 number reservation - $4.95 call screening
- ------------------------------------------------ ------------------------------------------
- - $0.12 per/min -- home base calls - $5.00 Local locate
- ------------------------------------------------ ------------------------------------------
- - $0.22 per/min -- outside home base - Expanded local dialing (varies)
- ------------------------------------------------ ------------------------------------------
- - Adds moves & changes ($.025) - $29.95 Set-up fee
- ------------------------------------------------ ------------------------------------------
</TABLE>
<PAGE>
AGENT COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: Certain companies that offer locate type functions through voice
mail today such as, Wild Fire and various other non-voice touch tone activated
service. The problem the competition faces against the PVI EMMA product line is
they are not competitively priced (due to their equipment architecture costs and
software deficiencies) and they are not user friendly unlike EMMA.
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<PAGE>
EXHIBIT 2 PRODUCT 2
EMMA FAMILY & FRIENDS
SERVICE DESCRIPTION: VIP 800 family & friends is a user friendly service that
gives family and friends the ability to dial the family toll free number and
access a common directory of names. The caller simply speaks the name of someone
in the directory and they will be connected to them. It's just that simple, no
numbers to look up or dial and the only authorized users are those family and
friends with the VIP 800 number.
SERVICE APPLICATION: Many families are scattered across the state and country.
This VIP' 800 service allows you to always stay in touch, whether it is for
normal everyday communication or in the case of an emergency. Grandparents can
provide their grand-children with a number that they can reach them on, the
parents can provide the grand-parents a number that they can reach them anywhere
in the USA. PVI can provide nap-sack tags for the smaller children and even dog
tags can be ordered with the family 800 number on the tag. The convenient easy
to use speaker independent voice directory will be pre-programmed with all of
the participants numbers: office, home, cellular etc. This service also comes
with a locate feature so that if your children or other family members need you,
they can easily find you no matter where you are: work, cell phone, lake house,
home, hotel, etc. This VIP 800 service can also be set-up with a "fraud free"
guarantee, which is great for kids in college.
As with all VIP 800 services, family & friends is priced for all budgets.
TARGET MARKET: Families and friends.
<TABLE>
<CAPTION>
PRODUCT FEATURES & BENEFITS:
- --------------------------------------------------- -------------------------------------------------
<S> <C>
- - Emergency's - Only one number to remember
- --------------------------------------------------- -------------------------------------------------
- - Fraud control - Connectivity
- --------------------------------------------------- -------------------------------------------------
- - Everyday communication - Single number locate
- --------------------------------------------------- -------------------------------------------------
</TABLE>
PRODUCT DISTRIBUTION: Affinity Groups, Telecom Resellers, Internet Service
Providers, Multi-Level Marketing Companies, Paging Companies.
<TABLE>
<CAPTION>
PRODUCT PRICING:
- --------------------------------------------------- -------------------------------------------------
<S> <C>
- - $4.95- 800 number reservation - $4.95 call screening
- --------------------------------------------------- -------------------------------------------------
- - $0.12 per/min - home base calls - Local locate no cost
- --------------------------------------------------- -------------------------------------------------
- - $0.22 per/min - outside home base - Expanded local dialing (varies)
- --------------------------------------------------- -------------------------------------------------
- - Adds moves & changes ($.025) - $29.95 Set-up fee
- --------------------------------------------------- -------------------------------------------------
</TABLE>
AGENT COMMISSIONS: Up-front and residual commissions can be earned.
COMPETITION: None that has been identified other than 800 numbers offered by the
long distance carriers that terminate at the home (one number) only.
<PAGE>
EXHIBIT 2 PRODUCT 3
EMMA VIRTUAL OFFICE
PRODUCT DESCRIPTION: EMMA Virtual Office creates an identity and a professional
answering service for companies that have offices in more than one location.
PRODUCT APPLICATION: EMMA V.0. is a product designed for companies and
consultants that are in different offices/locations. It could be different
offices in the same city or offices in a located different states. It gives the
company the appearance of one central office/location. EMMA answers the phone
professionally and connects the caller to their party or sends the call to their
current voice mail system.
TARGET MARKET: Business people that work from home, companies with offices in
more than one location and consultants that work on projects for consulting
firms. Realtors such as Re Max and others.
<TABLE>
<CAPTION>
PRODUCT FEATURES & BENEFITS
- ------------------------------------------------- ---------------------------------------------------
<S> <C>
- - Consistent professional receptionist - 24 hours 7 days a week
- ------------------------------------------------- ---------------------------------------------------
- - Call Screening - Single number locate
- ------------------------------------------------- ---------------------------------------------------
- - Call forwarding to remote offices - No CPE required
- ------------------------------------------------- ---------------------------------------------------
- - Time management - Connectivity
- ------------------------------------------------- ---------------------------------------------------
</TABLE>
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Agent" will be secured in each market area, the most likely candidates will
be current TAS, voice mail and paging providers with established customers
within the specific market area.
<TABLE>
<CAPTION>
PRODUCT PRICING:
- ------------------------------------------------- ---------------------------------------------------
<S> <C>
- - $19.95 Monthly cost - $49.95 Set-up fee
- ------------------------------------------------- ---------------------------------------------------
- - $4.95 Per one number locate - Expanded Local (varies)
- ------------------------------------------------- ---------------------------------------------------
- - $4.95 Locate screening - $0.18 per minute
- ------------------------------------------------- ---------------------------------------------------
- - $.05 Per call cost (local)
- ------------------------------------------------- ---------------------------------------------------
</TABLE>
A GENT COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
<PAGE>
EXHIBIT 2 PRODUCT 4
EMMA INTERNATIONAL DIRECT
PRODUCT DESCRIPTION: EMMA I.D. will allow companies that would like to have a
presence in the United States with their own toll free 800 number. EMMA will
call forward the 800 number to an office(s) internationally.
PRODUCT APPLICATION: EMMA I.D. allows a company that is doing business in the
states to forward calls to an office located internationally for handling.
Currently companies that are located in other country cannot have an 800 number
that terminates into another country. This is the only 800 number that allows
voice call forwarding to single or multiple locations. In addition, when
companies that use this service have employees traveling in the states the 800
number becomes a calling card.
TARGET MARKET: International companies doing business in the United States that
do not have offices here or need to send calls to an international office for
handling.
<TABLE>
<CAPTION>
PRODUCT FEATURES & BENEFITS
- -------------------------------------------------- -----------------------------------------------
<S> <C>
- - Consistent professional receptionist - 24 hours 7 days a week
- -------------------------------------------------- -----------------------------------------------
- - Intelligent Call Forwarding - Smart calling card
- -------------------------------------------------- -----------------------------------------------
- - Single number dialing for customers - No CPE required
- -------------------------------------------------- -----------------------------------------------
</TABLE>
PRODUCT DISTRIBUTION: A franchise approach will be used for product deployment.
A "Agent" will be secured in each market area, the most likely candidates will
be current TAS, voice mail and paging providers with established customers
within the specific market area. Affinity groups will also secure business
opportunities for this product.
<TABLE>
<CAPTION>
PRODUCT PRICING:
- -------------------------------------------------- -----------------------------------------------
<S> <C>
- - $9.95 per month - $99.95 Set-up fee
- ---------------------------------------------------------------------------------------------------
- -Per minute charges based on country
- ---------------------------------------------------------------------------------------------------
</TABLE>
AGENT COMMISSIONS: Up-front and residual commissions can be earned
COMPETITION: Wildfire and touch tone driven services.
<PAGE>
THE "SMART" BUSINESS LINE
SERVICE DESCRIPTION: The SBL gives any person the competitive edge. It is
specifically designed for persons on the move who do business from two or more
locations, i.e., office, home, cellular phone, hotel room, etc. With SBL anyone
can receive or make important local and long distance calls anywhere in the USA.
SBL also gives you the convenience and safety of making calls by using a
voice-activated telephone directory of your most frequently called names and
numbers.
SERVICE APPLICATION: The telephone company, after 100 years, is still providing
local business lines that only ring at one location. SBL is a portable (on the
go) business line that rings you at any phone no matter where you go, locally or
anywhere in the USA. You never have to miss an important call again. It also
gives you the option to screen your incoming calls on any phone you use. The
Intelligent Call Screening (ICS) function tells you the name of the person
calling you and you have the choice of either accepting the call, sending the
call to voice mall, or having SBL tell the caller you are not available at this
time. The service also offers you low cost long distance (1+ dialing, incoming
800 service and calling card). SBL also provides you with the ability to make
calls by speaking the name of the person or location you are calling. You never
have to remember a telephone number or dial a lot of digits. This revolutionary
service has the potential to alter the telecommunications industry as we know it
today.
TARGET MARKET: Real Estate Agents, Pilots, Flight Attendants, Appraisers,
Service Technicians, Consultants, Engineering firms, Brokers, Attorneys etc
<TABLE>
<CAPTION>
SERVICE PRICING:
- ------------------------------------------ ------------------------------------------
<S> <C>
SBL $19.95 monthly charge
- ------------------------------------------ ------------------------------------------
Set-up fee $40.00 one time charge
- ------------------------------------------ ------------------------------------------
Custom Greeting $10.00 one time charge
- ------------------------------------------ ------------------------------------------
Custom Greeting $2.95 monthly
- ------------------------------------------ ------------------------------------------
Expanded local calling $9.95
- ------------------------------------------ ------------------------------------------
(pricing will vary slightly by area)
</TABLE>
DISTRIBUTION: Master Distributors and Agents. Commissions available.
COMPETITION: None
<PAGE>
EXHIBIT 3
Commission Schedule:
$5.00 Per customer
5% Override (paid Quarterly)
All Commissions are paid on collected revenue only
<PAGE>
TERM SHEET
THIS TERM SHEET ("TERM SHEET") sets forth the basic terms of the Agreement
between Netgateway on the one hand, and iChargeit.com ("ICI") on the other
hand and is dated January 26, 1999 for reference purposes.
- - EXCLUSIVITY. Netgateway in conjunction with its Storesonline.com
subsidiary (collectively, "Netgateway") will be ICI's exclusive electronic
commerce ("eCommerce") provider. The parties acknowledge that ICI has
relationships with credit card processors outside of the United States.
Transactions with such non-United States processors will not conflict with
this exclusivity clause.
- - INITIATIVES. The relationship will initially be comprised of three
initiatives to be performed by Netgateway for or in conjunction with ICI and
will be embodied by such agreements as appropriate. The Initiatives will
include the following:
- ICHARGEILT.COM INTERNET COMMERCE SOLUTION. Netgateway shall create
a new iChargeit.com Internet home page consistent with the pricing structure
set forth in this Term Sheet that ICI may elect to host at ICI's facility.
The home page will include a number of electronic links to various ICI
merchandise departments (i.e., "Cigar Bar", "CD2Ttrade") to be designed and
hosted by Netgateway and commerce enabled through its Internet Commerce
Center. Netgateway will design, host and manage up to 30 such departments
pursuant to the initial pricing structure set forth herein. The Internet
Commerce Center's capabilities will be made available to each department
and/or overall project, consisting of (1) advanced business reporting, (2)
web site design and development, (3) commerce server solutions, (4)
clearinghouse functions, including real time credit card processing through
ICI's merchant account (5) training and (6) help desk and technical support
for ICI (as opposed to ICI's clients). Netgateway has the right to display
its logos and appropriate "Powered by" language on the home page and
department sites.
- ICI STORESONLINE. In conjunction with the ICI Internet Commerce
Solution, ICI will resell StoresOnline storefronts to merchants who will be
linked to the ICI Internet Commerce Solution and may, at Netgateway's
discretion, be listed on the various electronic malls in the Netgateway
Online Mall Network ICI initially anticipates launching 1,000 - 1,200 such
storefronts. Netgateway will create and host each electronic storefront using
its standard format and content allowances. ICI and/or each individual
merchant will provide Netgateway the data required to create the storefronts.
If required, Netgateway will facilitate the process between third party
merchants and a United States credit card processor for the merchant to apply
for a credit card merchant account.
- - PRICING AND REVENUE. The following pricing and revenue will apply;
- ICI will pay Netgateway an initial fee of twenty five thousand
dollars ($25,000) for the Initial development of the iChargeit.com Internet
Commerce Solution.
ICI will pay Netgateway an additional five hundred dollars ($500) maintenance
fee each month for the duration of the Agreement in exchange for maintenance
support for the ICI Internet Commerce Solution (not to exceed 8 hours per
month on a non-cumulative). ICI will also pay Netgateway a nominal fee (not
to exceed $1,500 per new department) for each new department launched
following the initial launch of the ICI Internet Commerce Solution.
<PAGE>
- ICI will pay Netgateway the greater of fifty cents ($.50) or 2% of
the gross revenue of each transaction processed through the Internet Commerce
Center.
- ICI will pay Netgateway the greater of $150 or 50% of the gross
revenue ICI receives for setting up each ICI StoresOnline electronic
storefront. Netgateway will also receive a monthly service fee of $80 per
month from ICI for each active ICI StoresOnline electronic storefront. ICI
guarantees Netgateway a minimum of six months of service fees for each ICI
StoresOnline electronic storefront ($80 x 6 mos. = $480 per storefront
minimum to Netgateway).
- ICI and Netgateway shall split on a 50%-50% basis all third party
revenue generated on the ICI Internet Commerce Solution sites and links,
except for that revenue as specifically noted above and revenue to which ICI
is not a party. Examples of such third party revenue includes, but is not
limited to, banner advertising and sales of featured products from third
parties. ICI shall oversee the efforts of such sales and shall provide
Netgateway with appropriate third party documentation and a monthly
reconciliation. ICI shall require approval of any advertising and/or products
placed on the ICI Internet Commerce Solution site by Netgateway.
- In the event ICI requires additional development outside the scope
of this Term Sheet, Netgateway shall provide a programming development
allowance to ICI equal to 30% of the aggregate monthly revenues derived from
the ICI StoresOnline storefronts. A discounted hourly rate of $70 per hour
will be applied against this allowance. As an example, 1,000 ICI storefronts
would generate a monthly programming allowance of $24,000 (1,000 x $80 x
.30). Unused portions of the allowance will not cumulate from month to month.
All additional programming required by ICI beyond the monthly allowance will
be billed by Netgateway at $100 per hour.
- - MISCELLANEOUS. The parties have discussed and outlined responsibilities
and will execute their respective tasks in as timely a manner as possible.
Both parties will use their best efforts to launch the ICI Internet Commerce
Solution by February 26, 1999. The parties have discussed that Netgateway
intends to independently market the Internet Commerce Center and StoresOnline
service package through various other channels and reseller relationships for
which ICI shall have no participation.
- - TERM. The initial term of the Agreement shall be three years,
commencing upon the signing of the Term Sheet.
- - PAYMENT. All services shall be paid it advance. The initial development
fees for the ICI Internet Commerce Solution and, maintenance fees for the
first three months shall be due upon signing of this term sheet and
nonrefundable upon receipt. The total amount due at signing is $26,500
($25,000 development fee + 3 mos. maintenance fee). All future monthly
maintenance fees will be due and payable at the beginning of each calendar
quarter for the following quarter. ICI shall pay the fee for each ICI
StoresOnline account monthly, one month in advance. All other fees payable by
ICI or its customers shall become due and payable within five business days
of receipt of the monthly invoice from Netgateway.
While the parties intend to replace this Term Sheet with a more format set of
documents, this Term Sheet is nonetheless a binding agreement between the
parties when signed by both of the parties in the spaces provided below. This
Term Sheet will govern the relationship between the parties until a more
formal set of documents is executed and will not in any way be affected by
the failure to complete such formal set of documents.
<PAGE>
SCHEDULE A - ICI SCHEDULE AND PAYMENT FOR INITIATIVES
<TABLE>
<S> <C>
Development Phase I
Payment for Commencement, of Phase --
$15,000 ($30,000-$15,000 initial payment according to agreement) Due 4/28/99
- ---------------------------------------------------------------------------------------------------------------------
Affiliate System
Expected Completion June 1999
ICI StoresOnline Storebuilding Wizard
Expected Completion April 1999
Shopping Slide Show
Expected Completion June 1999
Development Phase II
Payment for Commencement of Phase -- $30,000 When Phase II begins
- ---------------------------------------------------------------------------------------------------------------------
Online Auction Site. (including support for Classifieds)
Expected Completion August 1999
Link to WINR/CMS
Expected Completion
Four weeks after WINR/CMS code is determined functional and bug free.
Foreign Language Translation.
3 English Foreign Malls
Expected Completion July 1999
Language 1
Expected Completion July 1999
Language 2
Expected Completion July 1999
Language 3
Expected Completion August 1999
Language 4
Expected Completion August 1999
Language 5
Expected Completion August 1999
</TABLE>
<PAGE>
ADDENDUM A
THIS ADDENDUM A ("ADDENDUM") is an addendum to the Term Sheet dated January
26, 1999 between Netgateway and iChargeit.com (the "Term Sheet") and is dated
March 5, 1999 for references purposes only. The Addendum modifies the terms
and conditions of the Term Sheet to the extent inconsistent therewith.
- - ADDITIONAL INITIATIVES. The parties have agreed to extend the scope of the
agreement set forth in the Term Sheet to encompass five (5) additional
initiatives, which will be embodied, by such agreements as appropriate. The
Additional Initiatives will include the following:
- ONLINE AUCTION SITE. Netgateway shall develop and provide to ICI as
part of the eCommerce Services provided by Netgateway to ICI, a basic
online auction site to electronically market, sell and purchase
various goods and services. Both parties shall mutually agree upon
functionality and target launch date.
- SHOPPING SLIDE SHOW. Netgateway shall develop and provide to ICI as
part of the eCommerce Services provided by Netgateway to ICI, a
Shopping Slide Show. The Shopping Slide Show functionality will allow
visitors electronically browsing ICI merchandise departments to view
each department's merchandise images in a slide show setting. Visitors
may view the Shopping Slide Show on a pre-determined or
self-determined pace, allowing click-throughs from the current image
to an electronic order form.
- ICI STORESONLINE STOREBUILDING WIZARD. Netgateway shall develop and
provide to ICI as part of the eCommerce Services provided by
Netgateway to ICI, a Store building Wizard. The Store building Wizard
will allow merchants to create a standard ICI StoresOnline storefront
by submitting data in a template format. The Store building Wizard
will accommodate the importing of standard electronic images.
- FOREIGN LANGUAGE TRANSLATION. Netgateway shall translate the ICI
Internet Commerce Solution into five foreign languages to be
identified by ICI and three (3) English language malls for the United
Kingdom, Canada and Australia. Launch of each Foreign Language ICI
Internet Commerce Solution ("FLICI") shall trigger the completion of
the scope of work performed by Netgateway. ICI will be charged at the
standard rates outlined in this term sheet for any additional
translation services. The fees for stores located in such malls shall
be governed by the terms set forth in the Term Sheet.
- LINKING TO WINR/CMS SYSTEMS. ICI retained the services of Winners
Internet Network ("WINR") and Cyberlink Monetary Trust of Austria
("CMS") as ICI's exclusive international credit card processor.
Netgateway will assist WINR and OMS representatives in linking the
WINR/CMS system to the ICI Internet Commerce Solution in order to
facilitate international credit card transactions for orders placed
via the ICI Internet Commerce Solution and to facilitate all credit
card transactions in all FLICI Malls.
- - MERCHANT ACCOUNT REFERRAL FEE. Netgateway shall pay ICI the lesser of 50%
of a finder's fee or $75 for any credit card merchant account opened by
Netgateway's U.S. merchant account provider generated from a merchant lead
provided to Netgateway by ICI.
<PAGE>
- - Netgateway shall receive 50% of all banner advertising revenue from banners
and links featured on the ICI Internet Commerce Solution sites, provided,
however, that Netgateway participates in the sale, creation or distribution
of the process that generates such revenue or provided that such
transaction runs through the ICC or Netgateway servers. This provision will
not apply to banner advertising or click through relationships solely
within the ICI Commerce Solution sites.
- - Netgateway will make its StoresOnline.com storefronts available for
placement on the ICI Internet Commerce Solution sites free of monthly fees
for sixty days. Thereafter Netgateway will charge ICI its standard monthly
storefront fee for each storefront.
- - ADDITIONAL PAYMENTS. ICI shall pay Netgateway for the Additional
Initiatives outlined in this Addendum A as follows:
- ICI shall pay Netgateway $60,000 for development costs as follows:
- $15,000 on the execution of this Addendum, which shall represent
a nonrefundable fee to be applied toward development;
- $45,000 prorated and due at the beginning of each new phase of
development as per payment schedule to be provided under separate
cover.
- In addition to the fixed development fee set forth above, ICI deliver
to Netgateway on or before March 31, 1999, 70,000 shares of the ICI
stock.
- Five thousand dollars ($5,000) for each additional FLICI translation.
- Four hundred dollars ($400) per month basic maintenance fee per active
FLICI, to include up to 8 hours of programming per mall on a monthly
basis. Unused time is not carried over from month to month.
- $64.00 per month for each ICI StoresOnline electronic storefront
translated and residing in a FLICI. Pricing applies to each of the
first three FLICI. Each additional FLICI is $40.00
- - Affiliate System. Netgateway will build an affiliate system for ICI
pursuant to mutually agreed upon specifications. In general the system is
to provide ICI with the ability to have outside affiliate Web sites drive
prospective customers to the iChargeit Mall. Key features are anticipated
to be:
- Ability to manage affiliate mall products, categories, and pricing
- Affiliate program description
- Affiliate membership form
- Display programs details including commission schedule
- Maintain commission schedule
- Automatic or manual approval of new affiliates, email notification
- Tracking of "click-throughs" and purchases
- Online account reporting for ICI and affiliates
- - RIGHTS TO ICI CUSTOMERS. It is anticipated that ICI may from time to time
introduce Netgateway to certain of its customers. The parties hereto agree
that such customers will remain the
<PAGE>
customers of ICI and Netgateway agrees not to take any actions with
regard to such customers which would impact on the relationship of such
customers with ICI, without the express written consent of ICI.
- - ACTION CALL. As part of the ICI's StoresOnline custom reseller
relationship with Netgateway, ICI's customers will receive Action Call
support services pursuant to Action Calls standard terms of agreement.
As part of this relationship, an 800 number will be set up for ICI,
which will have the ability to route technical support questions to
StoresOnline and sales inquiries to ICI.
- - RIGHT OF FIRST REFUSAL. ICI shall give Netgateway a right of first
refusal on any design and development aspects for any product or
services not currently within Netgateway's environment, which ICI
desires to add to the ICI mall.
The Addendum will be subject to the same terms and conditions as the Term Sheet
dated January 26, 1999 between Netgateway and ICI. By signing below both
Netgateway and ICI agree to attach an incorporate this Addendum A into the Term
Sheet.
ACCEPTED AND AGREED:
IChargeit.com NETGATEWAY, INC.
By: /s/ Jesse Cohen /s/ Donald M. Corliss, Jr.
- ---------------------------- -----------------------------
Jesse Cohen Donald M. Corliss, Jr.
CEO President
<PAGE>
The following agreement is made between Susannah Altman of
Booksinabasket.com, hereinafter referred to as SAOBIB and ichargeit.com,
hereinafter referred to as ICI, effective as of February 7, 1999. SAOBIB, a
proprietorship with the business address of 62 Holmes Road, Ridgefield,
Connecticut, sells gift baskets containing books, hereafter referred to as the
product. ICI, a Nevada corporation with a business address of 8162 Capehope
Circle, Huntington Beach, California, is an internet cyber mall and virtual
arcade.
This agreement serves as a legally binding contract between the above named
parties.
This agreement shall be effective for a period of three years from the date it
initially became effective. This agreement may be renewed thirty days prior to
its expiration if written approval is obtained from both parties. Either party
may cancel this agreement by giving 3 days written notice if the other party is
in default of the obligations set forth herein.
ICI may not cancel this agreement and use another supplier of the product
provided by SAOBIB for a period of one year after termination, provided SAOBIB
was not in violation of this agreement.
This agreement shall be construed in accordance with the laws of the State of
Connecticut.
This agreement may only be changed by an agreement in writing signed by both
parties.
This agreement may not be transferred without the written approval of both
parties.
This agreement does not constitute, and shall not be construed as constituting a
partnership or joint venture between SAOBIB and ICI, and neither party shall
have any right to obligate or bind the other in any manner whatsoever, except as
authorized in this agreement, and nothing herein contained shall give or is
intended to give any rights of any kind to any third persons.
1. SAOBIB will be the exclusive provider of the product for sale on the
web site run by ICI. No other merchant at ICI may sell gift baskets
containing more than two books. However, Susannah Altman retains the
right to sell the product to other markets including, but not limited
to, other internet sites. However, Susannah Altman shall not use the
name "Booksinabasket" for any sales made through any other markets
including other internet sites.
2. SAOBIB will process and fill all orders made to Booksinabasket through
ICI. ICI may not process and/or fill any orders for the product from
any source other than SAOBIB unless written approval is obtained from
Susannah Altman, or SAOBIB fails to deliver orders within the specified
time period (see #3 below). ICI will relay all orders to SAOBIB via fax
and/or email within 24 hours of receipt at ICI.
3. SAOBIB will ship all orders from ICI via UPS ground within 10 business
days of receipt at SAOBIB. The counting of business days commences on
the day the order is received at SAOBIB if received prior to 5:00pm
EST. For orders received after 5:00pm EST, the counting of business
days will commence the next business day. Shipping charges are not
included in the price of gift baskets. Shipping charges are additional
and will be charged when orders are placed at ICI.
<PAGE>
4. SAOBIB will fill orders with the items requested by the customer. In
the event that an item is unavailable or out of stock, SAOBIB will
replace the item with a similar item of equal or greater value, or give
the customer their exact order as soon as the original item becomes
available.
5. Customer returns on products from SAOBIB are subject to a $5.00 fee for
personalized items. No refund will be made for shipping charges.
6. Payment to SAOBOB from ICI for all orders for any given month will be
made on or before the 5th day of the following month for sales made
during the prior month. SAOBIB will receive the agreed upon prices
shown in attachment A.
/s/ Susannah Altman 2/6/99 /s/ Jesse Cohen
- ------------------------------------- --------------------------------
Susannah Altman Jesse Cohen
Booksinabasket.com ichargeit.com
2
<PAGE>
ATTACHEMENT A
$BRONZE BASKET
ICI will charge $60 for the basket and $12 for shipping
SAOBIB will receive $50 plus $12 for shipping
The Bronze basket includes the 6 gift items you select:
A - 2
B - 1
C - l
D - 1
Toy/puzzle book - 1
$SILVER BASKET
ICI will charge $90 for the basket and $13 for shipping
SAOBIB will receive $75 for the basket and $13 for shipping
The Silver Basket includes the 8 gift items you select:
A - 2
B - 2
C - l
D - 1
F - 1
Toy/puzzle book - 1
$GOLD BASKET
ICI will charge $120 for the basket and $15 for shipping
SAOBOB will receive $100 for the basket and $15 for shipping
Two options:
l. A gift basket with 9 more expensive books and gift items, or
2. A gift basket with 12 less expensive books and gift items
Option 1. Select from the following:
A - l
B - 2
C - l
D - 2
E - 1
F - 1
Toy/puzzle book - 1
3
<PAGE>
Options 2. Select from the following:
A - 4
B - 2
C - 2
D - 2
E - l
Toy/puzzle book - 1
$PLATINUM BASKET
ICI will charge $150 for the basket and $15 for shipping
SAOBOB will receive $125 for the basket and $15 for shipping
Two options:
1. A gift basket with 11 more expensive books and gift items, or
2. A gift basket with 14 less expensive books and gift items
Option 1, select from the following:
A - 1
B - 1
C - 2
D - 3
E - 2
F - 1
Toy/puzzle book - 1
Option 2, select from the following:
A - 4
B - 3
C - 2
D - 2
E - l
F - 1
Toy/puzzle book - 1
$DIAMOND BASKET
ICI will charge $180 for the basket and $17 for shipping
SAOBIB will receive $150 for the basket and $17 for shipping
Two options:
l. A gift basket with 11 more expensive books and gift items, or
2. A gift basket with more 16 less expensive books and gift items
4
<PAGE>
Option 1, select from the following:
A - l
C - 2
D - 2
E - 2
F - 3
Toy/Puzzle book - 1
Option 2, select from the following:
A - 3
B - 4
C - 4
D - 3
F - l
Toy/puzzle book - 1
5
<PAGE>
SOFTWARE LICENSING AGREEMENT
CYBERLINK MONETARY SYSTEM, EST.
WINNERS INTERNET NETWORK, INC.
License Agreement for iChargeit
PROGRAM PRODUCT
PARTICULARS
Program Product(s):
Invoice address:
CyberLink Monetary Systems, EST. Attn: WINNERS Administrative Offices
Software for Management and Landstrasse 161-163
Accounting of Internet Processing 9494 Schaan/Vaduz
Liechtenstein
This agreement dated the 11th day of FEBRUARY 1999 is between Winners Internet
Network, Inc. (herein referred to as WINNERS), CyberLink Monetary System, EST
(herein referred to as CyberLink) and Licensee (herein referred to as Licensee).
This agreement is hereby considered to be amended to concur with the revised
terms outlined in the documentation signed by Mr. Jesse Cohen of iChargeit of
February 11, 1999 which relate to these specific areas within this Software
Licensing Agreement and which is considered an attachment hereto.
Name of Company: iChargeit
Business Operation: / /Casino / /Sportsbook / /Bingo / /Lottery
/X/CyberMall Shopping
Contact: JESSE COHEN Title: CEO
Tel: 714 969 7135 Fax: 714 969 7035 E-mail: [email protected]
Financial Contact: JESSE COHEN Title: CEO
Tel: 714 969 7135 Fax: 714 969 7035 E-mail: [email protected]
Technical Contact: JESSE COHEN Title: CEO
Tel: 714 969 7135 Fax: 714 969 7035 E-mail: [email protected]
Registered Office Address: 8162 CAPEHOPE CIRCLE, SUITE 201 HUNTINGTON BEACH,
CA 92646
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1 Parties Initial Here
<PAGE>
<TABLE>
<S> <C> <C>
LICENSING FEES:
One Time License Fee:
Ten thousand..........................................................$10,000 Dollars
Payable as follows:
$ 5,000 Deposit upon signing of this agreement pending approval.
Funds will be applied toward License fee if approved.
Funds will be returned if approval is denied.
$ 5,000 Upon written notification of Licensee's approval.
</TABLE>
All payments totaling $10,000 shall be wired as instructed to the
benefit of CyberLink Monetary System, EST.
LICENSEE'S OPERATING SYSTEM
System Manufacturer: __________________________________________________________
License Expiry Date: __________________________________________________________
Operating System Type/Version:_________________________________________________
Serial Number(s) of Licensed Processor(s):
Processor 1____________________________________________________________________
Processor 2____________________________________________________________________
Processor Type: / / License Type: Single / / Processor/Multiple
/ / Processor/Site License / / Multiple Site License
/ / National License
The above Particulars and the grant and acceptance of the License, Special
Conditions (if any) and Conditions attached to this form are hereby agreed and
the Client hereby undertakes to pay the fees stated in the above Particulars.
For CyberLink Monetary Systems, EST.
Dr. R.J. Proksch Director
- --------------------------------------------------------------
Print Name Title
/s/ R. J. Proksch 12/3/99
- --------------------------------------------------------------
Signature Dated
For The Licensee:
Jesse Cohen iChargeit CEO
- --------------------------------------------------------------
Print Name Title
/s/ Jesse Cohen 3/12/99
- --------------------------------------------------------------
Signature Dated
For Winners Internet Network, Inc.
David K. Skinner Jr. CEO
- --------------------------------------------------------------
Print Name Title
/s/ David K. Skinner
- --------------------------------------------------------------
Signature Dated
SPECIAL CONDITIONS:
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--------------------
2 Parties Initial Here
<PAGE>
GRANT OF LICENSE FOR WINNERS SOFTWARE PRODUCT
WINNERS hereby grants to the Client named in the attached Particulars (the
"Client") a non-exclusive non-transferable License to process data by means of
the Program Product(s) named in the Particulars ("the Software"). WINNERS
warrants that they have the exclusive use of the proprietary software for all
Internet Shoppers, Players, Vendors and Casino Link Systems providing total and
complete management and accounting of all financial transactions representing
the Exclusive Shoppers/Player's Tracking System. It is understood that the term
"Player" shall also mean Internet Shopper. It also provides safe and reliable
currency conversions of worldwide currency for the accessibility of worldwide
transactions based upon currency exchange through its proprietary CyberLink
Monetary System. The "System" will also provide an online virtual Debit Card
System to be coupled with an actual Debit Card Linking and Trust Management
System. These instruments are to be used for the online Internet Shopping and
for the purpose of handling and processing the Internet flow of money providing
detailed audit trails of the flow of transactions and for the administration,
management, and processing of Internet Shopping Transactions.
The License hereby granted is subject to the following conditions, the attached
Special Conditions (if any) and (insofar as they are not inconsistent) WINNERS'
General Conditions which, with the attached Particulars and any documents to
which they or any of the foregoing refer, shall comprise the complete agreement
between WINNERS and the Client relating to the licensing of the Software for the
Client's use, shall replace and discharge all prior representations and
agreements (if any) relating to licensing of the Software, and may only be
varied on the written authority of WINNERS' contracts manager.
It is agreed that the portion of this License that deals with the processing
assumes that favorable and acceptable terms have been reached with CyberLink
Monetary System, EST. for participation and use of the Shopping Downtown
Internet Site. It is expected that the Licensee will develop said site in
accordance with any and all agreements between them and the offices of CyberLink
Monetary System. This is considered to be an integral part of this agreement.
Breach of these terms will result in immediate cancellation of this contract and
forfeiture of all deposits and monies paid by the Licensee.
CONDITIONS
1. EXTENT OF LICENSE
1.1 This license is effective upon receipt by the Client of a
machine-readable copy of the Software and permits loading, use, copying
and disclosure of the Software and of information relating to the
Software but only to the extent necessary for effective processing by
the Client of data in accordance with these conditions and by means of
the Software. The Client shall ensure that all copies of and extracts
from the Software and its associated documentation made or disclosed by
the Client carry WINNERS' copyright notice in the form shown on the
original, or such other copyright notices as WINNERS may specify front
time to time, and shall ensure that no such notice is deleted.
1.2 If this License is designated in the Particulars as a Single Professor
or Multiple Processor License, the Client shall restrict loading and
use of the Software to the Licensed Processor(s) designated in the
Particulars.
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3 Parties Initial Here
<PAGE>
1.3 If this License is designated in the Particulars as a Site or Multiple
Site License, the Client shall restrict loading and use of the Software
to processors located at the Site(s) specified in the Particulars.
1.4 If this License is designated in the Particulars as a National License
the Client may exercise this License on any number of processors within
the Licensed Domicile.
1.5 It is agreed that all Licenses submitted will require full and sole
approval by WINNERS and the CYBERLINK MONETARY SYSTEM, EST. If a
License is not approved, no fees will be due or payable under this
Agreement regarding the License submitted for approval. It is
understood that all License submissions will have to be approved. The
License will not be unreasonably withheld except for due cause such as
unacceptable background, prior criminal records, active investigations,
poor credit history, poor reputation in the community, false or
misleading information on the application, and other such reasons for
due cause. Winners will not be liable for the refusal to accept any
License application and will consider a priority based upon the full
service vs. partial processing services for pecking order approval. No
such approval shall be required for the renewal of this Agreement.
1.6 The Licensee asserts that they or any related party to the ownership of
said License do not have a criminal record.
2. CONFIDENCE AND CONTROL OF THE SOFTWARE
2.1 The Software, all associated documentation, and all copies are secret
and confidential to WINNERS and shall be retained under the effective
control of the Client during the period of this License. Disclosures
shall be limited to those members of the Client's staff (including
temporary staff) who need access to the Software to enable the Client
to exercise this License and who sign written confidence undertakings
addressed to WINNERS which undertakings the Client shall procure and
enforce for WINNERS' benefit. The Client shall take all measures
necessary to maintain confidence and secrecy in the Software during the
period of this License and after its termination, however such
termination may arise.
3. OWNERSHIP OF SOFTWARE
3.1 Subject to the rights granted to the Client by this License, the Client
acknowledges that all and any proprietary rights in the Software
(including but not limited to copyrights, patents, trade marks and
trade secrets) and in all associated documentation and other material
related to the Software in each case now existing or to be developed by
WINNERS or the Client shall remain the sole property of WINNERS.
4. SUBSTITUTED PROCESSORS
4.1 If any Licensed Processor malfunctions so as to render the Software
unusable on it, the Client may temporarily transfer the Software to
another processor provided it is under the Client's direct control. The
Client shall promptly notify WINNERS of the serial number and location,
and the owner and operator's names, of any substituted processor and of
the expected period of temporary use. The Client shall cease the
temporary use as soon as possible and shall promptly notify WINNERS of
such cessation.
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4 Parties Initial Here
<PAGE>
4.2 In the case of Single Processor and Multiple Processor Licenses the
Client may permanently transfer the Software to another processor or
processors equivalent in number to the number of Licensed Processors
stated in the Particulars but conditionally on the Client's first
seeking WINNERS' consent to the transfer, undertaking to observe such
conditions as WINNERS may attach to its consent for the protection of
WINNERS' interest in the Software, and notifying WINNERS of the serial
number(s) of the substituted processor(s) when the transfer has taken
effect.
5. PROHIBITION OF UNAUTHORIZED AND OF DISTRIBUTED PROCESSING
5.1 Except as permitted under a Site, Multiple Site or National License or
in accordance with Conditions 4 above (substituted processors), no part
of the Software shall be loaded into, transmitted to or used on any
processor connected to or communicating with the Licensed Processor(s)
or any processor other than the Licensed Processor(s).
6. INTEGRITY OF THE SOFTWARE
6.1 The Client shall not enhance or vary any part of the Software nor
procure or permit the whole or any part of the Software (whether in its
original or in any enhanced or varied form) to be incorporated into any
other software or computer system.
7. PERSONAL LICENSE
7.1 This License is personal to the Client and the Client shall not assign
or transfer any interest in it or grant any right under it to any third
party or seek to exercise this License for the benefit or on the data
of any third party.
8. INDEMNITIES
8.1 Subject to 9 below, WINNERS warrants to the Client that the Software as
supplied by WINNERS will not infringe any copyright, patent or other
intellectual property right of any third party. Conditionally upon the
Client's promptly giving notice to WINNERS of any claim of alleged
infringement and allowing WINNERS to have sole control of negotiations
on and any defense of the claim, WINNERS shall in its discretion and at
its own cost either compromise or defend the claim and shall hold the
Client harmless from any resulting final judgment, order or settlement.
WINNERS shall have the right to replace or change the Software so as to
avoid infringement and to require the Client to accept a License to use
such replaced or changed software in substitution for this License,
provided that the software as substituted is substantially suitable for
the Client's use.
8.2 WINNERS' maximum liability to the Client under 8.1 above shall not
exceed the Package License Fee paid by the Client and specified in the
Particulars. If WINNERS becomes aware of a potential claim under 8.1
above WINNERS shall be entitled then or at any time thereafter to
discharge its liabilities (including potential, accruing and accrued
liabilities) to the Client under 8.1 above by requiring the Client to
surrender this License and to cease use of the Software upon WINNERS'
paying to the Client a sum equivalent to the maximum amount of WINNERS'
liability as stated above.
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--------------------
5 Parties Initial Here
<PAGE>
9. PROGRAM FAULTS
9.1 WINNERS' liability for program faults in the Software is limited as set
out in the General Conditions. The Client shall give WINNERS adequate
opportunities to correct reported faults before using or continuing use
of known faulty software.
10. TERMINATION
10.1 The Client shall be entitled to return the Software to WINNERS on or
before the system goes live for processing. The Licensee will have the
opportunity to test and approve prior to Acceptance. Once acceptance is
made and the system is live for processing the fee is no longer
Refundable. No License fee or other charges shall be payable by the
Client in respect of the trial and WINNERS shall refund to the Client
any payment already made by the Client to WINNERS of or on account of
the Package License Fee if rejected during the test phase.
10.2 Subject to 10.1 above and 10.3 below, this License shall continue until
the expiry date, if any, specified then until terminated by surrender
on thirty days' prior written notice by or on behalf of the Client to
WINNERS or until the Client disposes of the Licensed Processor(s)
(whichever shall first occur).
10.3 Notwithstanding 10.2 above this License may be terminated at any time
by immediate notice and termination by WINNERS to the Client in any of
the following circumstances:
10.3.1 if the Client shall expressly or impliedly repudiate this
License by refusing or threatening to refuse to observe any of
the conditions to which this License is subject; or
10.3.2 if the Client shall fail to make payment of any amount due to
and invoiced by WINNERS or to observe any of the conditions to
which this License is subject and, after the Client's
attention has been drawn by notice to such failure, shall fail
to remedy the matter to WINNERS' reasonable satisfaction
within thirty days of the giving of such notice. Upon default
all monies due Winners will be accelerated and the full amount
of any amounts due will be accelerated for immediate payment;
or
10.3.3 if the Client shall have a receiver or administrative receiver
or administrator appointed or shall enter into liquidation
whether compulsory or voluntary or if the Client or any member
of the Client partnership shall be unable to pay its debts as
and when they fall due or any judgment or execution or other
process issued in respect of any judgment against the Client
is unsatisfied for fourteen days, or
10.3.4 if the client is in violation of any territorial law and
conducts business in such illegal territory ALL services
provided by this agreement will IMMEDIATELY terminate and The
Client WILL IMMEDIATELY forfeit all amounts paid for License
and or deposited.
10.4 On expiry, surrender or other termination of this License, however such
termination may arise, the Client shall cease to load, store, copy or
use the Software, shall delete the Software from the Licensed
Processor(s) and at WINNERS' option shall either surrender the Software
and all documentation and other related materials to WINNERS or shall
destroy the Software with all documentation and other related materials
and deliver to WINNERS a certificate of comprehensive destruction. The
Client shall continue after termination to observe and
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--------------------
6 Parties Initial Here
<PAGE>
enforce confidence and secrecy in respect of the Software and its
documentation and related materials for the benefit of WINNERS, and
however termination may occur it shall not prejudice any Right of
action or remedy which may have accrued prior to termination.
11. LIMITATION OF LIABILITY AND INDEMNITY
11.1 The Client's attention is drawn to the limitation of liability and
indemnity provisions contained in the attached General Conditions to
which this License is subject.
12. PRODUCT AND SERVICES
A. Full Program
These fees for processing also include the processing costs of the shoppers bank
card in addition to the complete management and accounting service for the
Vendor:
- Processing In: - Money from Players Debit Account to the Licensee's
site and Debit/Credit Card Processing:
Rate: 5.5%
- Withdrawals from the Licensee's site back to the Debit Account for
payment to Vendor or return to Customer Debit Account:
Rate: 2.5%
Additional programs as created by WINNERS and are accepted by the Licensee.
13. FEES FOR PRODUCT AND PROCESSING SERVICES:
License fees:
All Licensees are assessed an initial one-time licensing fee of USD
$10,000. Each year thereafter, Licensee will be assessed an annual fee of
$10,000 for maintenance of the License which will include all upgrades
and/or new versions of their software to meet industry technical and
graphic advances.
(illegible)
--------------------
7 Parties Initial Here
<PAGE>
WINNERS INTERNET NETWORK, INC.
MANAGEMENT;
David C. Skinner, Jr., President
David C. Skinner, Sr., Consultant
Charles K Scott, Vice. President Technical
Sandra K. Varney. Vice President Administration
February 11, 1999
To: Mr. Jesse Cohen
Fax: 800 572 7739 (Tele. 888 815 4390)
From: David C. Skinner
Re: Software Licensing Agreement
Dear Mr. Cohen:
In conjunction with your communication with David C. Skinner this day, February
11, 1999, we have revised some of the terms outlined in our fax communication to
you of February 5 and 8, 1999 and have incorporated these changes below. The
following terms will be considered an amendment to the terms and conditions of
your Software Licensing Agreement which relate to these specific areas and this
communication supersedes the previous fax communication to you of February 5 and
8, 1999 referred to above.
Winners Internet Network, Inc. (WINR) has agreed to accept a $ 5,000 U.S. dollar
payment with your application and a separate $5,000 U.S. dollar payment upon
acceptance for a total of $10,000 U.S. dollars. WINR has agreed to waive the
balance of the $50,000 U.S. dollar fee in exchange for which the following is
understood:
1. WINR will have an exclusive two-year contract with an additional one
year extension at WINR's option to process all of the charge card activity for
all iChargeit Internet Mall ventures except for the iChargeit.com Mall venture
in which the following term sheet involving iChargeit and another of iChargeit's
key partners is already in place. Partner X (iChargeit's key partner is referred
herein as Partner X per advice of iChargeit's legal council until iChargeit has
signed contracts with all parties) will be iChargeit's exclusive electronic
commerce provider. Partner X acknowledges that iChargeit has relationships with
credit card processors outside the United States. Transactions with such
non-United States processors will not conflict with this exclusivity clause.
2. When iChargeit was negotiating with Partner X they realized the
potential that the iChargeit/WINR/CMS joint ventures held and left open all
posibilities for this union to succeed. iChargeit proposes the following:
WINR/CMS shall also be the exclusive credit card processor within the
iChargeit.com Mall for all transactions Involving any currency conversion and
for all transactions in non-U.S. dollars, while the existing relationship
iChargeit has in place at this time will only handle transactions beginning and
ending within the United States made hi U.S. dollars and only
<PAGE>
within the iChargeit.com CyberMall. All other credit card transaction processing
except for the above shall be exclusively handled by WINR/CMS.
In return for iChargeit granting WINR/CMS exclusivity for all of
iChargeit's credit card processing (except for the stipulation in item #2)
iChargeit will be WINR's/lCMS's exclusive shopping/e-commerce vehicle. iChargeit
will exclusively use WINR's/CMS's software/credit card processing for the life
of the contract for all e-shopping ventures iChargeit undertakes and iChargeit
will be WINR/CMS's exclusive e-store, e-mall website builder and manger.
iChargeit currently has a division called iChargeit Global
StoresonLine. iChargeit, as a sign of good faith, will build a sign-up system
for CMS to sign up and open debit accounts for all of iChargeit's customers as
part of iChargeit's Global StoresonLine suite of services package. iChargeit
expects no compensation for this added service and is done to aid its key
partners WINR and CMS to gain market share with their products and services.
3. iChargeit's Partner X has agreed to work with iChargeit and WINR to
make sure that all aspects of iChargeit's shopping cart system interfaces
correctly with WINR's processing software. WINR agrees to work with iChargeit
and Partner X to insure the same result. iChargeit will pay all expenses
involved with their end of the shopping and processing system and WINR agrees to
do the same for their end of the shopping cart/processing system. WINE agrees to
handle the necessary expense to be able to link the card approval with the
information prodded by the shopping cart/processing system. It is expected that
this will include WINR being able to interface the data for the shopping card,
bankcard processing, link with the vendor and related information supplied by
information packets. Additionally, WINR agrees to include iChargeit as an equal
one-third partner in any joint ventures which may arise on relationship with
Partner X.
4. The fee paid is being used to create a separate database for iChargeit/
CMS Mall a/k/a Shopping Downtown. iChargeit will provide the necessary funds and
resources for said Mall. These deposits are not refundable upon a CMS as WINR
will immediately commence resources to coordinate processing.
5. The BankCard offered by CMS is not within the jurisdiction of WINR and
is not a part of this processing contract. However, if and when a card becomes
available it will be incorporated at the sole discretion of the CMS Group and
CyberLink Trust (CT).
6. It is expected there will he joint cooperation between WINR and
regarding press releases, banners, hyperlinks and so on.
7. For the first year, the processing will belong solely to WINR. At the
end of the first year, consideration will be given based upon the business
activity to allow participation of iChargeit in processing revenues. However, it
is agreed that iChargeit will add a flat transaction fee of $0.60 per
transaction. This fee will be paid by the customers/shoppers and will not be
paid by nor imposed against WINR.
8. It is expected that favorable terms and conditions for revenue
production for the CyberLink Group will be afforded with the operation of any
malt with terms at least comparable to those addressed in a preliminary Letter
of Intent to them.
9. It is expected that CT will approve this agreement based upon WINR's,
inquiry with CT.
<PAGE>
Mr. Cohen, if you are in full agreement with these amended term as stated above,
please make a copy of this document and sign both below where indicated,
initially all pages accordingly, sending me a faxed copy of one of the originals
via our fax # 904 824 4159 and sending both of the signed originals to me via
return mail. I will, in-turn, sign both originals upon my return to the U.S. and
send you an original for your files. In the interim I will have my office
forward a copy of your faxed signed document so I can sign same and send you a
fax for your files until the originals can be properly executed.
Also, please note that these amended terms as stated above are referred to
within the Software Licensing Agreement making this documentation a part
thereof. Said Software Licensing Agreement is attached hereto for your
signature. Please make a copy of this document and sign on page 2 where
indicated, initialing all pages accordingly, sending me a faxed copy of one of
the originals via our fax # 904 824 4159 and sending both of the signed original
Agreements to me via return mail. I will, in-turn, sign both originals upon my
return to the U.S. and send you an original for your files. In the interim I
will have my office forward a copy of your faxed signed document so I can sign
same and send you a fax for your files until the originals can be properly
executed.
Mr. Cohen, we welcome you to the WINR team and we are excited about the joint
opportunity we share!
Agreed to by; _________________________
Jesse Cohen, iChargeit
Agreed to by; /s/ David C. Skinner, Jr.
___________________________
David C. Skinner, Jr.
Winners Internet Network, Inc.
Date: February 11. 1999
<PAGE>
CONTRACT
iChargeit (hereinafter referred to as "client") hereby engages DeMonte
Associates as its investor relations advisor for a program of financial
communications and investor relations.
The fee for the 12 month period of the Agreement, commencing on February 16,
1999, will be 30,000 (thirty thousand) shares of the Company's free trading
stock.
DeMonte Associates shall act as investor relations counsel for CLIENT and
perform the services enumerated below:
1. Analysis of CLIENT's business and industry, following which a
comprehensive fact sheet that summarizes Client's corporate and
financial profile will be created, for distribution to investment
professionals and the media.
2. Work to develop a complete financial public relations program designed
to broaden recognition of CLIENT in the financial community in the U.S.
and abroad.
3. Advise Client in its overall relationship with the financial community
through consultation with its management.
4. Planning, writing and preparation of press releases and annual and
quarterly reports to shareholders, including the creative graphics and
printing, if required.
5. Preparation, together with management, of presentation material for
meetings with stockholders.
6. Develop interest in CLIENT and its products through placement of
articles, reviews and quotes in financial and trade publications.
7. Meet with financial community on behalf of CLIENT, surveying essential
analysts, brokers and institutional investors throughout the country,
maintaining an ongoing personal contact program and establishing a
schedule of activities.
8. Arrange meetings between management and members of the financial
community; including individual meetings, informal group meetings and
formal presentations.
9. Review CLIENT'S transfer sheets to identify holdings and identify
regional and institutional strengths.
10. Establish a mailing list for CLIENT, maintain and update the list. This
mailing list shall be utilized by CLIENT at any time during the length
of this contract and shall remain the sole property of CLIENT. Any
names provided to DeMonte Associates by CLIENT will be supplied with
status on an ongoing basis.
PAYMENT REQUIREMENT
Invoices will include all our-of-pocket expenses incurred by DeMonte Associates
on behalf of CLIENT for that month, plus the monthly fee payable and due one
month in advance, provided that DeMonte Associates shall not incur any expense
on behalf of CLIENT in any amount exceeding $200.00 unless approved in writing
by CLIENT in advance. Business Wire expenses will be direct billed CLIENT.
Termination of this agreement shall not relieve CLIENT to pay all amounts
accrued prior to such termination and shall not limit DeMonte Associates from
pursuing other remedies which may be available to it.
1
<PAGE>
In the event of any dispute, the parties must resort to the American Association
of Arbitration in New York City. Either party may make application. This
Association shall have power to decide who shall pay costs, fees and
disbursements, in addition to making an award.
TERM
This agreement shall commence upon execution of this document and shall continue
in force for a period of twelve months.
OUT-OF-POCKET EXPENSES
1. CLIENT shall reimburse DeMonte Associates as to any and all expenses
incurred and expenditures made on behalf of CLIENT. These expenses
include, but are not limited to, the following: travel and
miscellaneous expenses (postage, photocopy, fax, federal express and
messenger service).
2. If, as an agent, DeMonte Associates places paid media advertising (at
Client's discretion), media and production costs must be paid to
DeMonte Associates in advance.
CLIENT agrees to and hereby does indemnify DeMonte Associates against any
damages, costs and expenses, including reasonable attorney's fees, incurred in
defending against any legal action arising out of the release of materials
previously cleared and approved by CLIENT, and hereby expressly holds DeMonte
Associates harmless from any such damages, costs and expenses.
Client acknowledges that it has read this agreement between the parties, which
supersedes all proposals or prior agreements, oral or written, and all other
communications between the parties relating to the subject matter of this
agreement.
DeMonte Associates agrees to exercise due care to prevent disclosure of Client's
proprietary information to any third party, authorization for further, internal
dissemination within DeMonte Associates shall be limited to those whose duties
justify their need to know such information, and then only with a clear
understanding that these employees of their obligation to maintain the
proprietary status of such information.
This Agreement may be terminated by either party upon 60 days written notice.
By: /s/Jesse Cohen CEO IChargeit, Inc. Date: 2/16/99
------------------------------------------- ----------
iChargeit, Inc.
By: /s/ Cynthia Demonte Date: 2/16/99
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DeMonte Associates
2
<PAGE>
TERM SHEET
THIS TERM SHEET ("TERM SHEET") set forth the basic of the Agreement between E.C.
Net Manufacturing LLC ("EC") on the one hand, and iChargeit.com ("ICI") on the
other hand and is dated February 1_, 1999 for reference purposes.
- - INITIATIVES. The relationship will initially be comprised of one initiative
to be performed by EC for or in conjunction with ICI and will be embodied
by such agreements as appropriate. The Initiatives will include the
following:
- ICI/EC WILL JOINT VENTURE A FULFILLMENT AND DISTRIBUTION CENTER. EC
will provide warehousing and staffing through its associates for the
purposes of storing the product for the ICI/EC customers. This space
will be charged to the customers for a flat rate, to the ICI/EC
customer if the minimum number of shipment doesn't occur. EC/ICI will
jointly set the pricing for the shipments that will be sent to ICI/EC
customers.
- PRICING AND REVENUE. EC will base price the shipment using the weight
and dimension of each item. This base price will cover EC shipping and
package and labor cost. All revenues that are received above this base
price will be split 50/50 between ICI/EC.
- ICI will provide EC with 20,000 shares of stock in the name of the
owners divided 50/50 to be broken down as follows: 5,000 will be free
trading shares and the other 15,000 shares will be 144 shares with a
12-month restriction. All shares will be issued within 60 days of this
agreement. This stock will cover the cost if any for ICI privately
label stores that use the ICI/EC center, and is a one-time payment.
Additionally, ICI will pay EC the Base-shipping on each item that is
shipped through ICI privately label Malls from the center. If ICI is
not fully SEC reporting by December 1, 1999, ICI will issue EC another
10,000 ____ 144 shares by Dec. 15, 1999.
While the parties may replace this Term Sheet with a more formal set of
documents, this Term Sheet is nonetheless a binding agreement between the
parties when signed by both of the parties in the space provided below. This
Term Sheet will govern the relationship between the parties until. If a more
formal agreement is signed, ICI can put out releases and marketing material; all
releases and material must be approved by EC before they are sent to the public.
ICI may use the address of the center in all print material with the approval of
EC before it is printed.
ACCEPTED AND AGREED:
IChargeit.com, Inc.
E.C. Net Manufacturing LCC
By:
----------------------------
Jesse Cohen, CEO
By: /s/ Darrell Griffith
---------------------------------------
Darrell Griffith, Senior Vice President
<PAGE>
This sales agreement is entered into effective as of the 10th day of March 1999,
by and between DOMAIN GIANT, INC., a Delaware corporation and iChargeit Inc., a
Nevada corporation.
Domain Giant, Inc. will sell to iChargeit Inc. its rights to the domain
www.yohoo.com, the pending trademark application for Yohoo and the domain
www.vaahoo.com for the following from iChargeit Inc.
1. iChargeit Inc. will pay four thousand (4,000) shares of iChargeit Inc. common
stock restriced for one (1) year and four thousand (4,000) shares of iChargeit
Inc. common stock free trading to Domain Giant, Inc. on or before April 15,
1999.
2. iChargeit Inc. will build and maintain at no charge for Domain Giant, Inc. a
store in the front of the iChargeit.com mall called Yohoo Classified Ads.
3. iChargeit Inc. will build and maintain at no charge a storefront (name to be
determined) in the iChargeit.com Cyberswapmeet store for Phil Vespucci and
Daniel C. Leary. Contents of the storefront also to be determined but must abide
to the iChargeit.com rules.
4. iChargeit Inc. will pay Domain Giant, Inc. 25% of the gross revenue generated
from the sale of classified ads in the Yohoo Classified Ads Store monthly.
IChargeit Inc. will provide a "download feature" that will permit daily, weekly
or monthly reports of sales activity providing an accounting basis and audit
trail.
5. iChargeit Inc. and Domain Giant, Inc. will share evenly (50% - 50%) the
banner advertising revenue generated from the Yohoo Classified Ads Store pages
payable monthly. Ichargeit Inc. will provide a "download feature" that will
permit daily, weekly or monthly reports of sales activity providing an
accounting basis and audit trail.
6. iChargeit, Inc. will transfer to Domain Giant, Inc. six thousand 6,000 shares
of tradable and seven thousand 7,000 shares of restricted (for one year)
iChargeit Inc. stock on or before March 15, 1999.
7. iChargeit Inc. will gather the advertising accounts for placing banner ads on
the Yohoo Classified Ads Store pages.
8. Guaranteed stock prices:
If the price of iChareit, Inc. stock is below three dollars $3.00 per share on
April 15, 1999, iChargeit Inc. will issue a check to Domain Giant, Inc. for the
difference between the selling price on April 15,1999 and three dollars $3.00
per share for the 6,000 shares of tradable stock transferred. Surrendering or
selling the stock on April 15, 1999 is the option of Domain Giant, Inc.
If the iChargeit, Inc. stock price is below five dollars $5.00 on March 15,
2000, iChargeit Inc. will issue a check to Domain Giant, Inc. for the difference
between the selling price on March 15, 2000 and five dollars $5.00 per share for
the seven thousand 7,000 shares of restricted stock transferred. Surrendering or
selling the stock on March 15, 2000, (on which date all restrictions on the
share are released) is the option of Domain Giant, Inc.
<PAGE>
9. Guaranteed revenue streams from the classified ads and the banner
advertising.
In the second quarter 1999 April through June, if the total revenue paid to
Domain Giant, Inc. is below Five Thousand Dollars ($5,000) iChargeit Inc. will
issue a check to Domain Giant, Inc. for the difference between the actual
revenue paid and Five Thousand Dollars $5,000.00.
In the third quarter 1999 July through September, if the total revenue paid to
Domain Giant, Inc. is below Seven Thousand Dollars ($7,500) iChargeit Inc. will
issue a check to Domain Giant, Inc. for the difference between the actual
revenue paid and Seven Thousand Dollars $7,500.00.
In the fourth quarter 1999 October through December, if the total revenue paid
to Domain Giant, Inc. is below Ten Thousand Dollars $10,000 iChargeit Inc. will
issue a check to Domain Giant, Inc. for the difference between the actual
revenue paid and Ten Thousand Dollars $10,000.00.
Beginning in January 2000, if the total monthly revenue paid to Domain Giant,
Inc. is below Five Hundred Dollars ($500.00) per month, iChargeit Inc. will
issue a check to Domain Giant, Inc. for the difference between the actual
revenue paid and Five Hundred Dollars $500.00.
9a. If the www.yohoo.com and w.w.w.yaahoo.com domain sites generate less than
two hundred thousand (200,000) site visits per quarter the through each quarter
(2nd, 3rd and 4th) of 1999, the above guaranteed revenue from the classified ads
and banner advertising will be adjusted by the percentage of the actual site
visits per quarter divided by 200,000. If the site visits exceed 200,000 visits
in each quarter the full guarantees will apply.
10. If iChargeit Inc. is forced to surrender the www.Yohoo.com and
www.Yaahoo.com domain names, on that day all remaining, if any, stock price and
revenue stream guarantees and free store site maintenance are void, and Domain
Giant Inc. shall have no further obligation to iChargeit, Inc. The 25% of
classified ad revenue and 50% of banner advertising shall remain in perpetuity.
11. Indemnification: iChargeit Inc. agrees to indemnify Domain Giant, Inc.
against, and hold him harmless against any and all claims arising from the use
of the domain names www.Yohoo.com and www.Yaahoo.com.
12. Domain Giant, Inc. cannot sell or assign its interest in the Yohoo
Classified Ads storefront in the iChargeit.com Internet mall without prior
written consent from iChargeit Inc.
13. In the event, the iChargeit.com Internet mall and or iChargeit, Inc. is
acquired by or merged into another company this agreement will survive in
perpetuity.
14. This Agreement constitutes the entire understanding between the parties, and
there are no representations, promises or warranties other than as expressly set
forth herein. This Agreement may only be modified by written agreement executed
by the parties hereto.
15. This Agreement shall be construed in accordance with and governed by the
laws of the State of Nevada.
<PAGE>
The parties hereto have caused this agreement to be executed effective under
proper authority as of the date and year first above written.
/s/ Fletcher B. Leary 3/10/99
- -------------------------------------------- ---------------------------
Domain Giant, Inc. Fletcher B. Leary Date:
/s/ Jesse Cohen 3/11/99
- -------------------------------------------- ---------------------------
Jesse Cohen Date:
Ichargeit Inc.
<PAGE>
ICHARGEIT, INC.
SALES AGENCY AGREEMENT
THIS SALES AGENCY AGREEMENT (Agreement) is entered into effect as of the
11th day of March, 1999, by and between Massiano de Milano, a Delaware
corporation (Principal) and iChargeit, Inc., a Nevada corporation (Agent).
In consideration of the mutual terms, conditions and covenants hereinafter set
forth, Principal and Agent agree as follows:
1. A) Principal appoints Agent as an authorized Internet sales
representative to sell the products of the Principal as listed in
the attached Schedule A.
B) Principal agrees to pay Agent $140 per month for site maintenance.
C) Principal agrees to afford the Agent the right to purchase 500,000
shares of Principal's publicly traded stock for .001 cents per
share if the stock is trading at $1.00 or more per share and if the
publicly traded stock is trading for less than $1.00 per share than
Agent may purchase the stock for .0001 cents per share, in exchange
for provision by the Agent of e-commerce enabled storefront to be a
featured store in the iChargeit.com cybermall. Principal will also
be included in the homepage rotation of featured products. Said
rotation is to be determined exclusively by Agent.
D) Principal agrees to allow Agent to publicly disseminate information
regarding Principal's presence in the cybermall.
2. Agent accepts the appointment and agrees to promote, market and
sell the products or services of the Principal at the prices set
forth in Schedule A. Said prices have been set by Principal and
marked up by Agent.
3. The parties agree that the list of products, services and/or prices
may be amended from time to time. Principal or Agent may
unilaterally remove products from the list or change prices.
Additions to the product list shall be by mutual Agreement.
4. Principal shall furnish to Agent, in advance, sales materials for
the products listed on Schedule A and shall keep material up to
date. Principal agrees to provide a minimum of products on hand or
else the shopping cart will cease to function so that sale will
cease.
5. Agent shall use it's best efforts to promote, market and sell the
products of Schedule A, devote such time and attention as may be
reasonably necessary. Agent shall design end maintain a web page
for the Principal, which shall be utilized for the Internet sales.
Ownership and control of the web page is solely that of the Agent.
<PAGE>
6. Agent shall obtain, at its own expense, all necessary licenses and
permits to allow Agent to conduct business as contemplated herein.
Agent represents and warrants that Agent shall conduct business in
strict conformity with all local, state and federal laws, rule and
regulations.
7. Principal agrees that Agent may employ representatives in
furtherance of this Agreement. Agent agrees that Agent shall be
solely responsible for the payment of wages or commissions to those
representatives and that under no circumstances shall Agent's
representatives be deemed employees of the Principal for any purpose
whatsoever.
8. This Agreement shall be for a period of two years unless sooner
terminated by either party upon sixty (60) days written notice,
without cause. Agent is not responsible for refunding any fees or
costs if Principal terminates the Agreement.
9. Agent is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Agent as
a partner or employee of the Principal. Nor shall either party
have any authority to bind the other party in any respect. It
being understood and agreed that all orders submitted by Agent are
subject to acceptance by Principal in its sole discretion.
10. Principal is solely responsible for merchantability and safety of
the product(s) or services being sold. Principal is solely
responsible for all representations and warrantees concerning the
products or services. If the product or service is defective, or
causes injuries, losses or harm, Principal agrees to indemnify and
defend Agent, its officers, its principals and its employees for
all claims related to the products or services. Principal agrees to
maintain a contract of insurance to protect against such claims and
agrees to name Agent as an insured on the policy.
11. There is potential that the Year 2000 (A.K.A. Y2K) problems may
cause malfunctions with the Internet. Agent is not responsible for
any Y2K problems or down time. Agent is not responsible for any
business related losses caused by Y2K problems.
12. Principal is responsible for all representations made on the web
site regarding Principal's products or services. Principal is
responsible for confirming the accuracy of all representations on
the web site including prices or price changes.
13. The amount of text and artwork devoted to the web page is not
infinite, nor are changes to the web page. Schedule B sets forth
the amount of space given to Principal and the number of changes
allowable.
14. It is agreed between the parties that there are no other Agreements
or understandings between them relating to the subject matter of
this Agreement. This Agreement supersedes all prior Agreements,
oral or written, between the parties and is intended as a complete
and exclusive statement of the Agreement between the parties. No
change or modification of this Agreement shall be valid unless the
same is in writing and signed by the parties.
15. This Agreement shall not be assigned by Agent or Principal without
the prior written consent of the other.
2
<PAGE>
16. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail Return
Receipt Requested, postage prepaid, addressed to the party's last
known address.
17. This Agreement shall be construed in accordance with and governed
by the laws of the State of Nevada.
18. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns where
permitted in this Agreement.
19. If any one or more of the provisions contained in this Agreement
for any reason are held invalid, illegal, or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not
affect any provisions thereof and this Agreement will be construed
as if such invalid, illegal or unenforceable provisions had never
been contained herein.
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed
effective under proper authority as of the date and year first above written.
/s/ (illegible) 3/11/99
- ----------------------------------- -----------
Principal/ Massiano de Milano Date
/s/ Jesse Cohen 3/11/99
- ----------------------------------- -----------
iChargeit, Inc. Date
3
<PAGE>
THIS TERM SHEET ("TERM SHEET") sets forth the basic terms of the Agreement
between
iChargeit Inc., on the one hand and Info Touch Technologies Corp. on the other
hand and
is dated March 31, 1999 for reference purposes.
Initiatives - The relationship will initially be comprised of several
initiatives to be performed by
both parties. The initiatives will include the following:
Info Touch Technologies Corp. will:
1) Provide iChargeit Inc. with a sample model of the Elantranet for $3200.
2) Develop a special modified "Elantranet" branded under the iChargeit name.
3) Allow iChargeit to market and private label the entire Info Touch line of
products
4) Use its best efforts to provide the software functionality desired by
iChargeit in its Netlock Software which will allow free access or pay access
depending upon URL.
5) Allow iChargeit to market the line of Kiosks on the iChargeit.com websites
and include any images or information currently available on the infotouch.net
website.
6) Accept a signed credit approval from iChargeit's Leasing Provider in Lieu of
payment for each Kiosk order, this signed credit approval will be replaced with
full payment for each Kiosk within 24 hours of successful installation of the
Kiosk.
7) Allow iChargeit access to the Info Touch Technical programmers so that
iChargeit can develop a pay-at-kiosk software interface.
8) Upgrade at no charge all ICI Kiosks sold prior to the Netlock software
upgrade, with the new Netlock software due to be released during the second
quarter of 1999.
9)Allow iChargeit to call Info Touch an iChargeit Fulfillment partner and to say
they have a strategic alliance with Info Touch in their press releases, the same
allowance will be granted to Info Touch if they desire to mention their
relationship with iChargeit.
IChargeit Inc. will:
1) Make an initial purchase of 6 Kiosks in order to receive private labeling
from Info Touch.
2) Agree not to disclose any of Info Touchs technologies or software.
3) Issue to Info Touch 5000 restricted shares of ICHG stock within 30 days of
delivery of the initial 6 Kiosks.
4) Include the Surfnet logo on the iChargeit homepage provided it does not
contain the surfingthenet url.
5) Pay any additional costs required to place the logos iChargeit desires on the
shell of the kiosk.
<PAGE>
6) Co-brand the ICI Kiosks and graphics user interface with a "Powered by
Surfnet" phrase and logo (provided the surfingthenet url is not displayed.)
While the parties intend to replace this term sheet with a more formal set of
documents, this term sheet is nonetheless a binding agreement between the
parties when signed by both parties in the spaces provided below. This term
sheet will govern the relationship between the parties until a more formal set
of documents is executed and will not in any way be affected by the failure to
such formal set of documents.
Date: 3/31/99 Date: April 6th, 1999
------------------------------- --------------------------------
Signed /s/ Jesse Cohe Signed /s/ (illegible)
------------------------------ --------------------------------
CEO iChargeit Inc. CEO Info Touch Technologies Corp.
2
<PAGE>
ATTORNEY/CLIENT RETAINER AGREEMENT
The undersigned (hereinafter collectively referred to as "CLIENT') does hereby
employ the Law Offices of MADIGAN & BOYER (hereinafter referred to as
"ATTORNEY") to represent CLIENTin the following matters:
To answer questions from Jessie Cohen regarding legal matters to the best of our
ability. To create an employment agreement. To make proposed changes to the
contract ICHARGEIT Inc. uses with its vendors.
1. CONDITIONS: This Agreement will not take effect and this office will have no
obligation to provide legal services, until CLIENT returns a signed copy of this
Agreement and pay(s) the initial deposit called for under Paragraph 4, if any.
2. SCOPE OF SERVICE: CLIENT is hiring ATTORNEY as his attorney to represent
CLIENT in the above-described matter. It is understood that ATTORNEY is not
representing ICHARGEIT Inc and any advice given to CLIENT should be approved by
attorneys who are retained.by ICHATGEIT Inc.
3. CLIENT'S DUTIES: CLIENT agrees to be truthful with this office, to cooperate
by providing ATTORNEY with information and documents we may ask for, to keep
together in a safe place all papers ATTORNEY sends to CLIENT, to communicate
with ATTORNEY as necessary, to return telephone calls and respond to letters,,
to keep ATTORNEY informed of developments, to abide by this Agreement, to pay
bills submitted by ATTORNEY, and to keep us advised of CLIENTS address,
telephone number, and whereabouts at all times.
CLIENT agrees to do all of these things as promptly as reasonably possible.
CLIENT also agrees to make your expectations and goals as clear to us as
possible, and to be reasonably available to attend meetings, court appearances,
depositions and other proceedings.
4. PAYMENT: CLIENT agrees to pay 10,000 shares of stock in ICHARGEIT, Inc to
ATTORNEY. It is understood that stock cannot be sold until one year after it is
recieved.
5. DISCHARGE AND WITHDRAWAL: CLIENT may discharge ATTORNEY at any time. ATTORNEY
may withdraw with CLIENTs consent or without CLIENTs consent, for good cause.
Good cause includes a breach of this agreement, refusal to cooperate with
ATTORNEY or to follow ATTORNEY's advice on material matters or any fact or
circumstance that would render AITORNEY's continuing representation unlawful or
unethical. After ATTORNEYs services conclude, this office will deliver CLIENTs
file to CLIENT upon CLIENTs request
6. FEE DISPUTE: In the event a fee dispute occurs between the parties to this
agreement, the parties agree that all sides will attempt to resolve the matter
informally. If the parties are unable to resolve the matter informally, either
CLIENT or ATTORNEY has the right to request a binding
1
<PAGE>
arbitration to address the issue of a fee dispute before the Orange County Bar
Association. The law applied at the arbitration shall be California law. The
parties will attempt to select an arbitrator. If this does not occur, the Bar
Association will select an arbitrator. The prevailing party at the arbitration
is entitled to recover attorney's fees for time and effort expended to recover
the disputed fees, expenses, costs and collection costs incurred to recover any
and all sums due. All parties agree that attorney fees are only to be awarded
for: 1) ATTORNEY's efforts as outlined in this agreement that have already been
performed and are in dispute; and/or 2) ATTORNEY time devoted to recovering the
disputed fees. Attorney fees are not to be awarded for any other reason.
7. DISCLAIMER OF GUARANTEE: Nothing in this Agreement and nothing in ATTORNEYs
statements to CLIENT will be construed as a promise or guarantee as to the
outcome of CLIENTs matter. ATTORNEY makes no such promises or guarantees.
ATTORNEY's comments about the outcome of CLIENTs matter are expressions of
opinion only. It is difficult to predict the precise nature and extent of legal
services which will be required on your behalf, therefore, no prediction or
conunitment has been made as to the maximum fee.
8. EFFECTIVE DATE: This Agreement will take effect when CLIENT has performed the
conditions stated in Paragraph 1, but its effective date will be retroactive to
the date ATTORNEY first performed services. The date of this Agreement is for
reference only.
CLIENT acknowledges receipt of a copy of this Agreement consisting of Two (2)
pages plus the Rate Schedule.
DATED this 2nd day of April, 1999, at Costa Mesa, California.
DATED: 4/2/1999 /s/ Jeff Boyer
-----------------------------------
MADIGAN & BOYER
DATED: 3/1/1999 By /s/ Jesse Cohen
-----------------------------------
Client
--------------------------------------------------------
THIS FEE AGREEMENT IS A PRIVILEGED COMMUNICATION
See California Business and Professions Code, Section 6149
---------------------------------------------------------
2
<PAGE>
LEASING SERVICES AGREEMENT
This Leasing Services Agreement ("Agreement") is entered into by and between
IChargeIt, Inc. ("IChargeIt") with its principal office in Huntington Beach, CA
and Leasing Group, Inc. ("Leasing Group") of Austin, TX. This Agreement and the
terms and conditions set forth herein shall be binding upon both IChargeIt and
Leasing Group.
WHEREAS, ICHARGEIT is a distributor of personal computers and peripheral
components;
WHEREAS, Leasing Group manages leasing programs whereby distributors' customers
can obtain leases through Leasing Group's affiliated third party lessors;
WHEREAS, ICHARGEIT and Leasing Group agree to the following terms and conditions
under which Leasing Group shall provide leasing program services to SOUTHWEST.
1. LEASING SERVICES: Leasing Group agrees to provide management, administration,
and leasing services to establish and maintain a leasing program whereby
customers of ICHARGEIT may enter into reasonable leases for equipment provided
by IChargeIt. This program is referred to herein as the "Leasing Program".
Leasing Group agrees to use its best efforts in establishing and administering
the Leasing Program and in providing the services required thereunder in a
prompt and timely manner in compliance with the terms and conditions of the
Agreement, including the following:
ICHARGEIT will communicate to Leasing Group the names of customers who are
prospects for participation in the Leasing Programs. Leasing Group will then
assist in obtaining the customer's application for a lease agreement, perform
any necessary research concerning the application, and communicate the
application to the appropriate third party lessor. Leasing Group and the third
party lessor's decision to accept or reject the customer's application will be
communicated to ICHARGEIT and, if necessary, the customer as soon as possible.
Upon approval of a lease application, Leasing Group will supervise and
administer the process of preparing the necessary lease documents, transmitting
the documents to the customers for signatures, ensuring the receipt from the
customer of the signed documents and any required initial payments or deposits,
and forwarding the documents and payments or deposits to the third party lessor.
The transmission of documents to and from customers shall be accomplished by an
overnight delivery service or facsimile.
Upon shipment of the equipment subject to a lease, ICHARGEIT shall deliver to
the chosen third party lessor an invoice detailing the products shipped or
delivered to the customer. Delivery of an invoice by ICHARGEIT to the third
party lessor shall constitute warranties and representations by ICHARGEIT that:
a.) the invoice represents a transaction made in the usual course of IChargeIt's
business; in the invoice.
b.) ICHARGEIT has the full and complete title to any products that are the
subject of the lease.
<PAGE>
c. The products and/or services that are the subject of the lease are clearly
and accurately described in the invoice.
d.) The invoice correctly states the proper amount for the products and/or
services and any other applicable fees, charges or taxes charged by ICHARGEIT in
connection with the sale of the products to the third-party lessor.
e.) The products have been or will be received by the customer.
f.) ICHARGEIT has disclosed to Leasing Group all material information known to
ICHARGEIT relevant to the sale of the products to the third party lessor and the
lease of the products to the customer.
g.) ICHARGEIT has made no material misrepresentation to the customer concerning
the products or services subject to the lease.
h.) ICHARGEIT has made no warranties or representations to the customer
concerning the products other than those that are contained in IChargeIt's
limited warranty documentation delivered with the products acquired by the
customer.
Leasing Group may assign the warranties and representations set forth in this
subsection to the third-party lessor to whom the invoice is submitted to allow
enforcement of the warranties and representations by the third-party lessor.
If ICHARGEIT has made any incorrect or untrue representations or warranties to
Leasing Group related to a lease, a customer, the equipment, or any other
material factor affecting our decision to conduct our leasing services, or
breach any such representation or warranty, ICHARGEIT agrees to buy back the
lease from the third-party funding source. The buy-back amount shall be an
amount equal to the original lease funding amount, plus any fees that were paid
to Leasing Group by the third-party funding source, and any other fees, costs or
expenses which were paid in connection with funding of the transaction, less the
principal portion of payments which were received from the customer (determined
by using the annual percentage rate which was offered when the purchase took
place), plus any out-of-pocket expenses incurred by us in connection with
collection of such lease. Upon occurrence of any misrepresentation or breach by
ICHARGEIT under this agreement, Leasing Group may elect to rescind any pending
lease approvals (whether given to you or to a Customer, and whether given orally
or in writing).
2. EXCLUSIVITY: During the term of this agreement, Leasing Group shall have the
right of first refusal to provide leasing services through IChargelt. Should
Leasing Group and its third party lessors reject or fail to respond to a lease
application within a reasonable time period, then ICHARGEIT shall be free to
arrange alternative lease arrangements for the customer. Notwithstanding the
foregoing, Leasing Group shall have no right of first refusal in situations
where a customer elects to arrange its own financing.
3. TRADEMARKS, TRADE NAMES AND COPYRIGHTS: Nothing in this agreement shall give
either ICHARGEIT or Leasing Group any ownership interest in any trademarks,
tradenames or copyrights or other intellectual property held by the other party,
nor is any implied or express license
<PAGE>
to any ICHARGEIT intellectual property granted by ICHARGEIT herein. Each
party agrees to conduct its business solely in its own name; provided,
however, that ICHARGEIT may use the trademarks and trade names of leasing
Group as necessary in the advertising and promotion of the Leasing Programs.
4. TERMINATION AND RENEWAL: This agreement is to be effective as of the date by
which all parties have signed it and is to remain in effect for a period of 12
months from its effective dates. This Agreement automatically renewed from year
to year until terminated by the parties as provided herein. Either party may
cancel a renewal of this Agreement (including the first such renewal) for cause
or convenience by providing at least ninety (90) days written notice before such
automatic renewal date.
5. ASSIGNMENT. This agreement shall be binding upon and inure to the benefit of
the parties hereto and to their respective successors and assigns, provided,
however, that neither party may assign, delegate, or transfer its performance
obligations hereunder without the written consent of the other party to this
agreement,
6. RELATIONSHIP OF THE PARTIES: This Agreement shall not be constructed as an
agreement of employment, partnership, or joint venture. SOUTHWEST, Leasing Group
and Leasing Group's third-party lessors shall be contractors independent of each
other, and neither party to this Agreement shall have the authority, right or
power to assume, create or incur any obligation, responsibility, or liability,
express or implied, on behalf of any other participant in the Leasing Programs.
7. CONFIDENTIALITY. All confidential documentation and information identified as
such by either party in writing and provided to the other party under this
Agreement.
(Confidential Information) will remain the property of its respective owners.
The parties grant to each other a nontransferable and nonexclusive right to use
Confidential Information, solely in the performance of this Agreement and,
unless prior consent in writing is obtained or disclosure is required by law (in
which case the disclosing party will provide the other party advance notice and
an opportunity to prevent disclosure of such Confidential Information), such
Confidential Information will not be disclose or used for any purpose outside
the scope of this Agreement, except for any part thereof that is known to be
free of any obligation to keep it in confidence or that becomes generally known
to the public through acts not attributable to the party under an obligation to
keep the Confidential Information confidential. All customer lists and account
information of ICHARGEIT shall constitute Confidential Information for purposes
of this Agreement. Each party will keep this Agreement and its terms
confidential, and will make no press release or public disclosure, either
written or oral, regarding the transactions contemplated by this Agreement
without the prior consent of the other party hereto, which consent will not be
unreasonably withheld.
ICHARGEIT understands that Leasing Group will disclose and utilize third party
funding sources for processing IChargeIt's business and ICHARGEIT agrees not to
negotiate or otherwise attempt to establish a direct relationship with these
funding sources unless express written consent by Leasing Group is granted. Such
consent shall not be unreasonably withheld.
8. INDEMNIFICATION. Each party agrees to indemnify and hold harmless the other
for any and all claims and losses, damages, injuries or expenses that are shown
to have been the result of the acts or omissions of the other party or its
agents or employees.
<PAGE>
9. FORCE MAJEURE: Neither party shall be responsible for any delay or
failure in performance that results from any cause beyond its reasonable
control.
10. ENTIRETY: This agreement supersedes any and all prior understandings,
agreements, contracts, whether written or oral between the parties or their
predecessors in interest concerning the subject matters set forth herein.
11. SEVERABILITY. If any provision of this Agreement is declared invalid by any
tribunal of competent jurisdiction, then such provision shall be deemed
automatically adjusted to conform to the requirements for validity as declared
at such time, and as so adjusted, shall be deemed a provision of this Agreement
as though originally included herein. In the event that the provision
invalidated is of such nature that it cannot be so adjusted, the provision shall
be deemed deleted from this Agreement as though the provision had never been
included in the Agreement. In either case, the remaining provisions of the
Agreement shall remain in effect.
ICHARGEIT, INC. LEASING GROUP, INC.
8162 Cape Hope, Ste. 201 11000 N. Mopac Expwy. Ste. 300
Huntington Beach, CA 92646 Austin, TX 78759
By: /s/ Jesse Cohen By: /s/ Pete W. Connor
-------------------------------- --------------------------------
Name: Jessen Cohen Name: Pete W. Connor
------------------------------ ------------------------------
Title: CEO Title: Director of Strategic Sales
----------------------------- -----------------------------
Date: 4/5/99 Date: 4/5/99
------------------------------ ------------------------------
<PAGE>
AGREEMENT
THIS AGREEMENT (this "Agreement"), made and effective this 7th day of April,
1999, by and among First Institutional Marketing, Inc., a Texas corporation with
its principal place of business located at 5555 San Felipe, Suite 575, Houston,
Texas 77056 ("FIMI"), and iChargeit, Inc. a Texas corporation with its principal
place of business located at www.ichargeit.com, 8162 Capehope Circle #201,
Huntington Beach, CA 92646 ("website").
RECITALS
WHEREAS, FIMI is a national insurance distributor and operates, among other
things, an Internet-based insurance and annuity comparison, insurance delivery
and case management system (the "InsureRate Network").
WHEREAS, Financial Institution desires to enter into this Agreement with FIMI to
establish a program employing the InsureRate Network for use in Financial
Institution's website (the "Website Integration Program") and by FIMI's brokers
and agents located at the branches of the Financial Institution in the marketing
of certain insurance, annuity, and related products (the "Electronic Commerce
Integration Program").
AGREEMENT
NOW THEREFORE, for and in consideration of the mutual covenants and agreements
herein set forth, the receipt and sufficiency of which are hereby acknowledged,
FIMI and Financial Institution agree as follows:
The Website Integration Program
1. (a) FIMI shall provide a hypertext link from the Financial Institution
Website to the InsureRate Network. Individuals accessing the InsureRate Network
through the Financial Institution's website will be able to estimate their life
insurance needs, obtain price comparisons of selected insurance products and
submit preliminary applications to purchase insurance products.
(b) FIMI shall: (i) develop and implement a co-labeled version of the InsureRate
Network incorporating Financial Institution's graphical design elements in the
following InsureRate Network web pages (and other pages that may be mutually
agreed upon by the parties): (A) comparison questionnaire and quote pages, (B)
company product and profile pages, and (C) life insurance and annuity glossary
pages; (ii) receive and process insurance and annuity applications in accordance
with the rules and regulations of the Selected Carriers, including, without
limitation, the coordination of paramed examinations; (iii) service policies
issued in connection therewith; (iv) receive premiums from Financial
Institution's customers with respect to such policies; (v) provide licensed
insurance agents to follow up with Financial Institution's customers that have
submitted preliminary product applications through the InsureRate Network under
the Website Integration Program; and (vi) use its reasonable best efforts to
maintain all licenses and Selected Carrier appointments and contracts necessary
for the selected products to be offered through the InsureRate Network.
(c) Financial Institution shall be responsible for prominently including and
displaying the InsureRate Network on its website and in promotions that
Financial Institution undertakes to promote its website.
<PAGE>
(d) In return for the provision by Financial Institution of space within its web
site on the world wide web and as Financial Institution's sole payment under the
Website Integration Program, Financial Institution shall receive compensation as
set forth in Exhibit B, attached hereto and made a part hereof.
2. Financial Institution shall pay an installation fee in the amount of five
thousand dollars ($5,000.00) to FIMI for the set up and customization of the
Electronic Commerce and Website Integration Programs for the Financial
Institution. Financial Institution shall pay to FIMI a monthly maintenance fee
of $300.00, provided however, that all revenues generated by FIMI from the sale
of the products of the Selected Carriers pursuant to the Electronic Commerce and
Website Integration Programs shall offset the maintenance fee and no such fee
shall be payable if FIMI's monthly revenue exceeds or is equal to $300.00 per
month. Products and services other than term life insurance and annuities may be
offered under this Agreement, any setup or licensing fees and compensation for
the sale of any such products or services shall be determined by the mutual
consent of the parties hereto.
General Provisions
3. Each party to this Agreement hereby covenants and agrees that it will comply
with all applicable laws and regulations in performing its duties and
obligations under this Agreement.
4. FIMI shall be responsible for selecting the carriers described in Exhibit A,
attached hereto and incorporated herein by reference (as the same may be
modified from time to time with the mutual consent of each party hereto), which
shall be the carriers whose products are offered by FIMI under this Agreement
(the "Selected Carriers"). FIMI shall be responsible for selecting the
insurance, annuity and related products to be offered for sale and sold through
the Electronic Commerce and Web Site Integration Programs.
5. Financial Institution shall facilitate the collection of premiums generated
from the sale of products under this Agreement by maintaining access to VISA
and/or MasterCard Intercharge Network and/or the Federal Reserve Automated
Clearing House.
6. Premium payments for products purchased through the Electronic Commerce and
Website Integration Programs will be collected in a manner acceptable to FIMI
and Financial Institution, including without limitation pre-authorized debits to
Financial Institution's customer's checking accounts when authorized by the
customer and direct billings.
7. (a) The term of this Agreement shall commence as of the date hereof and shall
extend for a period of three (3) years. This Agreement shall automatically renew
for successive periods of one (1) year, unless earlier terminated in accordance
with this Section 11 or by the mutual consent of the parties hereto.
(b) During the term of this Agreement, any party shall have the right to
terminate this Agreement for cause if any other party breaches or is in default
of any material obligation under this Agreement if the breach or default is
incapable of cure or, if being capable of cure, has not been cured within thirty
(30) days after receipt of written notice of such breach or default or such
additional time as the non-defaulting party or parties may authorize in writing
in its or their sole discretion.
2
<PAGE>
(c) Any party to this Agreement shall have the right to terminate this Agreement
upon the expiration of the initial three (3) year period or any one (1) year
renewal period by providing notice to the other parties hereto within sixty (60)
days of the anniversary date of this Agreement.
8. During the term of this Agreement, and extending for a period of five (5)
years commencing on the date of policy coverage effectiveness or product
effectiveness, as the case may be, Financial Institution will not sell and will
not attempt to sell replacement policies or products, directly or indirectly, to
Financial Institution's customers who have purchased policies or products under
this Agreement. The provisions of this Section 8 shall survive the termination
of this Agreement.
9. (a) In performing its obligations under this Agreement, each party may have
access to and receive disclosure of certain information about the other parties,
including without limitation, marketing strategies, plans and objectives;
competitive advantages and disadvantages; financial results; technological
developments; product and services strategies, plans and objectives; software
source code and object code; names, addresses, telephone numbers and account
numbers of Financial Institution's customers; computer magnetic tapes and a
variety of other information and materials that such other party considers
confidential and/or proprietary (herein referred to together as "Confidential
Information"). All Confidential Information of one party obtained pursuant to
this Agreement by any other party is and shall be considered to be confidential
and proprietary to the disclosing party. Each of the parties hereto shall (1)
protect and preserve the confidential and proprietary nature of all Confidential
Information; (2) not disclose, give, sell or otherwise transfer or make
available, directly or indirectly, and Confidential Information to any third
party; (3) not use the Confidential Information, except in furtherance of this
Agreement and as provided herein; (4) return all Confidential Information, any
copies thereof (in whatever form) and any reports, summaries, memoranda or
descriptions that describe any Confidential Information immediately upon
request; (5) limit the dissemination of the Confidential Information within its
own organization to such individuals whose duties justify the need to know the
Confidential Information and restrict its use solely to the purposes set forth
herein.
(b) Financial Institution may not use, copy, modify or distribute the InsureRate
Network (electronically or otherwise), or any derivative, copy, adaptation,
transcription or merged portion thereof, except as expressly authorized in
writing by FIMI. Financial Institution may not reverse, assemble, reverse
compile or otherwise translate the InsureRate Network. No service bureau work,
multiple-use license or time-sharing arrangement is permitted, except as
expressly authorized in writing by FIMI. If Financial Institution uses, copies
or modifies the InsureRate Network of if Financial Institution transfers
possession of any copy, adaptation, transcription or merged portion of the
InsureRate Network to any other party in any way not expressly authorized in
writing by FIMI, the rights granted herein to Financial Institution shall
automatically terminate.
(c) The provisions of this Section 9 shall survive the termination of this
Agreement.
10. (a) FIMI makes no warranty hereunder to Financial Institution that the
InsureRate Network will operate error-free or uninterrupted.
(b) FIMI shall not be responsible for obsolescence of the InsureRate Network
that may result from changes in Financial Institution's requirements.
(c) As Financial Institution's exclusive remedy for any material non-performance
in the InsureRate Network for which FIMI is responsible, FIMI shall attempt
through reasonable effort to correct or cure any reproducible non-performance.
In the event FIMI does not correct or cure such
3
<PAGE>
non-performance after it has had a reasonable opportunity to do so and, with
respect to any and all claims by Financial Institution relating to the
InsureRate Network and this Agreement, including any cause of action sounding
in contract, tort or strict liability, Financial Institution's exclusive
remedy shall be the termination of this Agreement. In no event shall FIMI be
liable for any loss of profits; any incidental, special, exemplary or
consequential damages; or any claims or demands brought against Financial
Institution, even if FIMI has been advised of the possibility of such claims
or demands. This limitation upon damages and claims is intended to apply
without regard to whether other provisions of this Agreement have been
breached or have proven ineffective.
(d) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, FIMI DISCLAIMS ANY AND ALL
PROMISES, REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE INSURERATE NETWORK,
INCLUDING ITS CONDITION, ITS CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION,
THE EXISTENCE OF ANY LATENT OR PATENT DEFECTS, ANY NEGLIGENCE AND ITS
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE.
(e) Notwithstanding anything contained herein to the contrary, FIMI shall have
the right, in its sole discretion, at any time during the Term hereof, to
replace or modify the InsureRate Network as long as the functionality of the
InsureRate Network shall remain materially unchanged.
11. During the term of this Agreement, Financial Institution shall not, and
shall not permit any of its employees or agents, nor shall Financial Institution
enter into any agreement with any third party, to use any other electronic
insurance delivery service, insurance comparison service or case management
system.
12. Neither FIMI nor Financial Institution shall have the right to assign this
Agreement or any financial interest in this Agreement without the express prior
written consent of the other parties, provided however that this agreement shall
inure to the benefit of and be obligations of any successors of the parties.
13. There can be no waiver of any term, provision or condition of this Agreement
except in writing signed by the party against whom the waiver is to be asserted.
No change, modification or amendment to or of any provision of this Agreement
will be deemed to be made or will be effective unless expressed in writing and
signed by FIMI and Financial Institution.
14. This Agreement represents the entire agreement of the parties and shall be
the complete and exclusive statement of the obligations and responsibilities of
each of the parties hereto. This Agreement shall supersede any other proposal,
representation, communication or other agreement by or on behalf of the parties
hereto relating to the subject matter hereof, and shall hereinafter govern the
relationship of the parties hereto.
15. FIMI shall not be liable to Financial Institution or any other person, firm
or company, for failure to fulfill its obligations hereunder resulting from
malfunction or failure of the Internet or the World Wide Web, the acts or
omissions of the Selected Carriers, any acts of God, public disaster, fire,
flood, riot, war, labor strikes or disputes, judicial orders or decrees,
government laws or regulations, or interruptions of communications,
transportation or electricity.
16. FIMI and Financial Institution hereby represent and warrant to the other
that it has the requisite authority to execute and perform this Agreement. Each
party hereby represents and warrants to the other that this Agreement and the
transactions provided for herein have been duly
4
<PAGE>
authorized and approved by all necessary corporate action, and that this
Agreement represents and constitutes its binding obligation. No party's
compliance with the terms, provisions and conditions of this Agreement will
constitute a default or prohibited activity by it under the terms of any
other Agreement to which it is bound.
17. Except as otherwise provided herein, if any action be instituted to compel
compliance with the provisions of this Agreement and/or to recover damages for
the breach thereof, the prevailing party or that party which substantially
prevails shall be entitled, in addition to any other remedies, to reimbursement
of all reasonable litigation expenses, including reasonable attorneys' fees and
disbursements.
18. If any dispute shall arise among the parties to this Agreement, the parties
shall first use their best efforts to resolve such dispute among themselves,
and, in conjunction therewith, the agent(s) or employee(s) of each party
involved in a particular dispute shall be obligated to refer such dispute to the
person or persons to whom he or she reports or to the board of directors of such
party, if such person is the President of such party. After such referral has
occurred, the parties will diligently pursue a resolution of any dispute for a
period of not less than fifteen (15) days. If such dispute is not resolved in
the manner set forth above, then each such dispute shall be submitted to binding
arbitration under the rules then prevailing of the American Arbitration
Association.
18. All notices provided for herein will be in writing and will be deemed given
when (a) personally delivered; (b) sent by facsimile transmission with delivery
confirmed, such confirmation not to be withheld or unreasonably delayed; (c)
delivered by overnight receipted courier service; or (d) deposited in the United
States mail, registered or certified, postage prepaid, addressed as follows:
To FIMI: First Institutional Marketing, Inc.
5555 San Felipe, Suite 575
Houston, Texas 77056
Attention: Mr. James Wm. Ellsworth
With a copy to: Sheela Kosaraju, Esq.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, GA 30305
To Financial Institution:
19. Nothing contained herein shall constitute or be construed to create an
agency, joint venture, partnership, joint enterprise or any other similar
relationship among the parties.
20. The rights and obligations of the parties hereunder shall be governed by the
laws of the State of Texas.
21. In the event that any portion of this Agreement is determined to be invalid,
illegal or otherwise unenforceable, such invalidity, illegality or
unenforceability shall not impair the operation or effect of any remaining
portion of this Agreement.
5
<PAGE>
IN WITNESS WHEREOF, FIMI and Financial Institution have caused this Agreement to
be executed as of the date set forth above.
iChargeit Inc
--------------------------------------------------------------
Corporation Name
By: /s/ Jesse Cohen
-----------------------------------------------------
Name: Jesse Cohen
-----------------------------------------------------
Title: CEO
-----------------------------------------------------
FIRST INSTITUTIONAL MARKETING, INC.
By: /s/ James Ellsworth
-----------------------------------------------------
Name: James Ellsworth
-----------------------------------------------------
Title: CFO
-----------------------------------------------------
6
<PAGE>
EXHIBIT A
TERM LIFE CARRIERS
<TABLE>
<CAPTION>
------------------------- --------------------------------
CARRIER PRODUCT
------------------------- --------------------------------
<S> <C>
AIG
------------------------- --------------------------------
AI-NY
------------------------- --------------------------------
Midland
------------------------- --------------------------------
Protective Life
------------------------- --------------------------------
Security -Connecticut
------------------------- --------------------------------
Transamerica
------------------------- --------------------------------
United of Omaha
------------------------- --------------------------------
</TABLE>
ANNUITY CARRIERS
<TABLE>
<CAPTION>
------------------------- --------------------------------
CARRIER PRODUCT
------------------------- --------------------------------
<S> <C>
American National
------------------------- --------------------------------
CAN
------------------------- --------------------------------
The Midland
------------------------- --------------------------------
Paul Revere
------------------------- --------------------------------
Jefferson Pilot
------------------------- --------------------------------
Allianz
------------------------- --------------------------------
United of Omaha
------------------------- --------------------------------
United Life and Annuity
------------------------- --------------------------------
</TABLE>
7
<PAGE>
EXHIBIT B
RENTAL FEES
All rentals connected with this Agreement are due and payable the month
subsequent to the month during which Financial Institution provides the
previously outlined services. Rental payments hereunder are based upon the
number of completed applications that FIMI generates from the Website
Integration Program each month as outlined. For purposes of this Agreement, a
"Completed Application" shall mean a fully filled out and executed life
insurance or annuity application, solicited by FIMI and returned by a
prospective client to FIMI. FIMI will pay Financial Institution monthly rent for
website space in the ichargeit website as provided in that certain InsureRate
Network License Agreement, attached hereto and made a part hereof; at an amount
equal to the total number of Completed Applications for life insurance and
annuities received by the InsureRate Network link to the ichargeit.com website
in the prior month times thirty dollars ($30.00) for each life insurance
Completed Application and sixty dollars ($60.00) for each annuity Completed
Application .
Effective this 7th day of April 1999.
FIRST INSTITUTIONAL MARKETING, INC.
By: /s/ James Ellsworth
-----------------------------
Name: James Ellsworth
-----------------------------
Title: CFO
-----------------------------
iChargeit Inc
--------------------------------------
Corporation Name
By: /s/ Jesse Cohen
-----------------------------
Name: Jesse Cohen
-----------------------------
Title: CEO
-----------------------------
8
<PAGE>
[TEN LOGO]
Total Entertainment Network (TEN)
Game Site Production Licensing Term Sheet
Client: Ichargeit, Inc.
8162 Cape Hope Circle
Huntington Beach, CA 92646
Tel: 714-969-7135
Attn: Jesse Cohen
Ichargeit.com Game Site Production:
- A java game site tailored to integrate with Ichargeit Inc.
Online Mall site. The Game Site will be customized in
accordance with the attached design specification (Exhibit A)
in a similar fashion as the TEN games portal distribution
sites have been set up for Netscape, Excite, etc.
- TEN will host the Game Site and will handle all server
maintenance.
- All of the games currently available on TEN's java platform
are available to Ichargeit Inc.
- TEN will manage all aspects of developing and maintaining the
site, including page creation, software upgrades, monitoring
the behavior of the game players, and managing the server
side.
- The players coming from the Ichargeit Game Site will be
intermingled with the players from all of TEN's distribution
partner network, providing a large user base of people to
play with.
- Ichargeit, Inc. may refer to TEN publicly, in press releases
and on its Website, as its "game provider partner" with
Ichargeit Inc. being TEN's "distribution partner."
- Ichargeit will not name TEN's other distribution partners in
its PR, but Ichargeit is free to say that TEN supplies games
to 5 of the top 10 sites on the Internet.
<PAGE>
- The term of this Agreement will begin on the Effective Date
and will end one (1) year thereafter. This Agreement will
automatically renew for additional terms of one (1) year
each, unless either party notifies the other in writing at
least thirty (30) days prior to automatic renewal that it
does not wish to renew this Agreement.
- Neither party will make any public statement, press release or
other announcement relating to the terms of or existence of
this Agreement without the prior written approval of the
other.
Development and Operations Details
- TEN will create a customized Classic Game Site to be
integrated with the Ichargeit site and will support this Site
for the term of the agreement.
- TEN will provide Ichargeit with design guidelines and graphics
to use for the creation of html pages on which the java game
applets reside. The Game Site will adhere to the Portal
Specifications document attached as Exhibit A to this term
sheet.
- The following games are available to Ichargit:
Card Games: Hearts, Spades, Euchre, Solitaire
Word Games: Crossword, Sports Crossword, Word Search,
Jumble
Board Games: Chess, Checkers, Backgammon
Arcade Games: Void, Overflow
Game Show: Bingo
- TEN will host the Game Site and TEN will handle all server
maintenance. TEN will have the sole responsibility for
providing and maintaining the Co-Branded Games, the
Launching Pages and any updates thereto. TEN will in its
sole discretion determine the timing and frequency of such
updates.
- TEN Gaming Guides will from time to time monitor the Game
Site. They will assist users in their gaming experiences,
provide feedback to questions and problems, ensure and
control quality of the games and gaming experience, as well
as penalize users that abuse the service and or chat elements
of the games.
- Ichargeit may sell advertising on the Ichargeit Game Site
provided by TEN and retain all revenues generated thereby. If
Ichargeit chooses to sell advertising on the Game Site,
Ichargeit will provide TEN with ad fragments to support
Ichargeit's ad server before development begins. Ichargeit
will handle all aspects of managing the advertising inventory
and ad trafficking for the Game Site and use its own ad
server.
- Supported advertising elements with the Ichargit site will
include: banners, buttons, and interstitials.
- The Online Games supplied by TEN will be co-branded
("Ichargeit Classic Games by TEN" or another name agreed to
by both parties) with Ichargeit's and TEN's brands.
2
<PAGE>
Each co-branded Game will display the name and/or brands of
TEN and Ichargeit as set for in the Design Guidelines in
Exhibit A.
- Each Co-Branded Game will include one or more links to
Ichargeit and to TEN. Ichargeit will supply TEN with the URLs
for the links to Ichargeit.
User Data and Usage Reports
- TEN will retain all rights to any User Data of the TEN sites
obtained through this Agreement. Upon request from Ichargeit,
TEN will provide to Ichargeit all User Data in connection with
this Agreement within thirty (30) days after the end of each
calendar quarter. "User Data" means all information submitted
by the user of the ichargeit gaming site, excluding credit
card or checking account numbers.
- The User Data shall be deemed to be the joint property of the
parties. All user information submitted via the Agreement
shall be deemed to be the property of Ichargeit and TEN
jointly. Upon expiration or termination of the Agreement, TEN
will immediately provide to Ichargeit a complete copy of all
User Data information records in a standard electronic format
to be mutually determined.
- Both parties agree that they will not sell, disclose,
transfer or rent the User Data to any third party nor will
either party use the User Data on behalf of any third party
without the express permission of the User.
- Both TEN and iChargeit agree to abide by [illegible] privacy
policy and guidelines during the term of this agreement.
Costs
$25,000 One time setup and development fee;
the full amount is payable in May or
June prior to development beginning
at TEN's sole discretion.
$2,500 per month x 12 months Monthly maintenance fee; payments
begin upon Site Launch (est. launch
date: June or July, 1999)
Total Cost: $55,000 for first year
After one year, monthly payments continue for the duration of the relationship.
Said monthly payments will not be raised more than 20% (twenty per cent) per
year.
Legal Language
- TEN expressly grants permission to Ichargeit Inc. to use "TEN
Internet Game Solution Partner" phrase as well as the name,
logo, and trademark of TEN in connection with Ichargeit
promotion, advertising and marketing purposes from April 19,
1999 to June 30, 2000. Ichargeit agrees that all such uses of
TEN's name, logo
3
<PAGE>
and trademark are subject to the approval of TEN. TEN agrees
that any material submitted by Ichargeit will not be
unreasonably disapproved. If it is disapproved, that
Ichargeit will be advised of the specific grounds of the
disapproval.
- Ichargeit expressly grants permission to TEN to use the name,
logo, and trademark of Ichargeit as well as Ichargeit brand
and product trademarks in connection with TEN promotion,
advertising and marketing purposes from April 19, 1999 to
June 30, 2000. TEN agrees that all such uses of the Ichargeit
name(s), logo(s) and trademark(s) are subject to the approval
of Ichargeit. Ichargeit agrees that any material submitted by
TEN will not be unreasonably disapproved and if it is
disapproved, that TEN will be advised of the specific grounds
of the disapproval.
- All "TEN Materials" shall be the sole and exclusive property
of TEN. "TEN Materials" means all intellectual property rights
associated with TEN, and all elements thereof, including but
not limited to, the TEN concept, trademark, logo and brand,
editorial content, artwork, film, photos, graphics, audio,
video, game highlights and demos, rankings, standings, Web
pages, codes and files. The preceding two sentences shall
survive the expiration or termination of this Agreement.
- All "Ichargeit Materials" shall be the sole and exclusive
property of Ichargeit. "Ichargeit Materials" means all
intellectual property rights associated with the Ichargeit
brand, and all elements thereof, including but not limited
to, the Ichargeit trademarks, logos and brands, editorial
content, artwork, film, photos, graphics, audio, video,
technology, Web pages, codes and files. The preceding two
sentences shall survive the expiration or termination of
this Agreement.
- This contract constitutes an agreement between the parties. It
supersedes all prior proposals, agreements, or other
communications between the parties regarding such subject
matter. The return of this agreement signed by Ichargeit
constitutes acceptance of all terms and conditions of this
agreement.
- All references to TEN in graphics, text and otherwise are
subject to TEN's approval. TEN reserves the right to reject
all uses of graphics, text and otherwise that are not in
keeping with TEN's standards.
- Ichargeit assumes the liability for all content of all
Ichargeit advertisements, product marketing messages, logos,
text, Ichargeit user-created content, sites, etc. supplied by
Ichargeit and/or any claims arising therefrom made against
TEN. Ichargeit agrees to indemnify TEN against any such claims
and all related costs and expenses (including attorney's
fees).
- TEN assumes the liability for all content of all TEN
advertisements, marketing messages, logos, text, and
TEN-created content etc. supplied by TEN and/or any claims
arising therefrom made against Ichargeit. TEN agrees to
indemnify Ichargeit from any such claims and all related
costs and expenses (including attorney's fees).
Ichargeit Authorization: TEN Authorization:
4
<PAGE>
<TABLE>
<S> <C>
Authorized Signature: /s/ Jesse Cohen Authorized Signature: /s/ Erik Lundberg
------------------- -------------------
Printed Name: Jesse Cohen Printed Name: Erik J. Lundberg
--------------------------- ---------------------------
Date: 4/23/99 Date: 4/27/99
------------------------------------ ------------------------------------
</TABLE>
5
<PAGE>
EXHIBIT A: Portal Customization Options
6
<PAGE>
[LETTERHEAD]
April 28, 1999
Jesse Cohen
President and CEO
iChargeit, Inc.
8162 Capehope Circle, #201
Huntington Beach, CA 92646
Re: Fee Arrangement
Dear Jesse:
Thank you for affording Stradling Yocca Carlson & Rauth, a professional
corporation (the "Firm") the opportunity of representing iChargeit, Inc. (the
"Company"), as its corporate counsel. This letter agreement memorializes and
summarizes our discussions concerning the terms of the fee arrangement between
the Company and the Firm.
1. NATURE OF ENGAGEMENT. We will provide general corporate legal
services on behalf of the Company. I will be personally involved in providing
service to the Company with other attorneys and paraprofessionals of the Firm,
as appropriate. We understand that this relationship will include such matters
as the analysis, research, review and revisions of documents relating to the
reverse merger and the preparation, review and revision of standard and custom
form contracts and agreements, general human resource matters including employee
hiring and termination issues, preparation and review of employment agreements
and arrangements, documentation concerning employee benefits, compliance with
applicable employment and other regulations effecting employers, equity and
other benefit and welfare plans for employees, review of engagement letters and
fee arrangements with other professionals, preparation and review of corporate
records and general corporate law matters including duties and obligations of
the board of directors and officers and other matters arising under California
law and applicable common law. In addition, we understand that the Company may,
from time-to-time, engage the Firm to provide legal services for other matters
which may include litigation, acquisitions or dispositions of significant
amounts of assets or entities, material equity or debt financings and other
transactions.
2. RETAINER. The Company shall pay the Firm an initial retainer in the
amount of $50,000. This retainer will be held by us in our general accounts as
payment for future services and costs. We will provide the Company with monthly
invoices for services rendered and costs incurred which the Company agrees to
pay within thirty days of presentation in order to maintain, at all times,
<PAGE>
Jesse Cohen
April 27, 1999
Page Two
a retainer of $50,000 on deposit with us. At the end of our engagement, and
after the payment of all of our invoices, any remaining retainer balance will
be refunded to you.
3. FEES. Generally, our invoices are for costs incurred and work
performed by attorneys and paraprofessionals on an hourly basis at the
then-current hourly rates. Currently, our rates run from $100 to $125 for
paraprofessionals, $145 to $245 for associates and $275 to $425 for shareholders
(partners) of the Firm. Our rates are traditionally reviewed at the beginning of
each year and are usually increased without prior notification to reflect
experience and other factors. Our rates are charged in 1/10th hour increments.
This means that you are charged in increments of six (6) minutes even though the
time spent may be less than that.
4. COSTS. The Company agrees to pay all out-of-pocket costs incurred
with respect to the matters for which we are engaged. Such costs will include
local telephone and telecommunications charges, computer charges, internal
copying charges, fees paid to third parties such as messenger fees, Federal
Express or other courier fees, travel expenses, parking, out of town travel
expenses, printing, filing or recording fees advanced on the Company's behalf
and other out-of-pocket costs incurred in connection with our engagement. All
significant third party fees or expenses will be subject to your prior approval.
5. BILLING PROCEDURES. We prepare invoices for services and costs on a
monthly basis. Our invoices to you will reflect the date and a description of
the services performed and a summary of the costs which we have incurred on your
behalf. Costs which are incurred but not posted may appear on the following
month's statement. Our invoices are payable within thirty (30) days of
presentation. Our Firm has adopted a policy of reserving the right to charge
interest at the rate of 1.5% per month on overdue balances. We reserve the right
to withdraw as your counsel of record in this or any related matter if you fail
to pay bills properly or if other valid reasons arise as determined in our sole
discretion. In the unlikely event an action or other proceeding is commenced
with respect to the collection of our invoices, the prevailing party shall be
entitled to reasonable attorney's fees.
6. OUTSIDE SERVICE PROVIDERS. Occasionally, with your prior consent, we
may contract with outside parties for services in connection with our
representation of the Company. If we do, we may forward the invoice directly to
the Company and ask that the Company pay the invoice directly.
7. ESTIMATE. You have requested us to estimate the fees and costs of
the work which we will perform for you in connection with (i) completing the
reorganization of the Company, including the disposition of HerbRx; (ii)
completing the Form 10 and/or the S-4, including preparation of a proxy
statement for reincorporating in Delaware; and (iii) drafting and finalizing the
incentive stock option, nonqualified stock option and restricted stock purchase
plan, non-disclosure agreements and other matters associated with the review and
"clean-up" of the reverse merger. We have made a preliminary review of the
documentation you have provided to us and based on our review, we estimate that
our fees, exclusive of costs, will be approximately $100,000 for the above work.
Our estimate is just that, an estimate. We cannot guarantee that the actual fees
and costs will not be higher than estimated amounts, because complicated
business transactions often involve unexpected
<PAGE>
Jesse Cohen
April 27, 1999
Page Three
difficulties which take time and effort to resolve. As we begin to perform
services, we will have a clearer understanding of the amount and the scope of
the work that needs to be performed and if, at any time, we believe that the
charges for the above work will exceed $100,000, we will so advise you.
8. TERMINATION OF SERVICES. Subject to the limitations imposed by law,
our engagement may be terminated at any time by either you or us. Upon
termination of our engagement, a final statement will be prepared for fees and
costs incurred through the date of termination. Upon your written request, a
copy of the file (other than any portions covered by the attorney work product
doctrine) made at your expense will be delivered to you or your authorized
representative at your expense.
9. CLIENT OBLIGATIONS. It is your responsibility to be truthful with
us, to provide us with information in your possession helpful to completion of
legal services, and to cooperate in completion of the matters for which we have
been engaged.
10. ESTIMATED FEES. Whenever our representation involves litigation or
another extraordinary matter, we prefer to avoid fee estimates. The outcome of
any litigation matter can never be assured. Likewise, the amount of fees and
costs involved in a litigation or other extraordinary matter can often be
difficult to gauge, as the legal tactics employed by the opposition can
dramatically affect the time and effort involved in the matter. We cannot
estimate with any accuracy the number, length or complexity of the motions,
depositions, interrogatories or other discovery made by the opposition in a
litigation matter. In addition, the conduct of witnesses, opposing counsel and
opposition can escalate the amount of legal fees. We may, however, at your
request, provide you with estimates of fees and costs to be incurred in
connection with an extraordinary matter which, unless we otherwise specifically
agree, shall be estimates only and should not be considered as guarantees that
the actual costs and expenses will not exceed such estimates.
11. ADDITIONAL CLIENT MATTERS. This Firm maintains errors and omissions
insurance coverage applicable to the services to be rendered to you pursuant to
the terms of this letter. Such coverage does not include fraud or intentional
wrongdoing.
If we become aware of any conflict of interest, we will notify you
immediately and will only proceed as permitted by the rules of the California
State Bar.
If at any time you believe our fees and expenses, or the nature of our
services do not meet your expectations, we would expect you to contact us so
that we may discuss the matter with the objective of reaching a satisfactory
arrangement.
12. ARBITRATION. ANY DISPUTE BASED UPON OR ARISING OUT OF OUR
ENGAGEMENT, THIS LETTER AGREEMENT AND/OR THE PERFORMANCE OR FAILURE TO PERFORM
SERVICES (INCLUDING, WITHOUT LIMIT, CLAIMS OF PROFESSIONAL
<PAGE>
Jesse Cohen
April 27, 1999
Page Four
NEGLIGENCE) SHALL BE SUBJECT TO BINDING ARBITRATION TO BE HELD IN ORANGE
COUNTY, CALIFORNIA BEFORE THE JUDICIAL ARBITRATION AND MEDIATION SERVICE
("JAMS"). JUDGMENT ON THE ARBITRATOR'S AWARD SHALL BE BINDING. THE PREVAILING
PARTY IN ANY ARBITRATION OR LITIGATION ARISING OUT OF OR RELATING TO OUR
ENGAGEMENT OR THIS LETTER AGREEMENT AND/OR THE PERFORMANCE OR FAILURE TO
PERFORM SERVICES SHALL BE ENTITLED TO RECOVER REASONABLE ATTORNEY'S FEES
(INCLUDING THE VALUE OF THE TIME OF THE ATTORNEYS IN THE FIRM AT THEIR NORMAL
BILLING RATES) AND OTHER EXPERT FEES, EXPENSES AND COSTS INCURRED IN
CONNECTION WITH EITHER OBTAINING OR COLLECTING ANY RELIEF TO WHICH THAT PARTY
MAY BE ENTITLED.
If you have any questions or would like to discuss the nature of this
proposal pertaining to our engagement, please do not hesitate to call. As I
indicated to you, we are flexible concerning this arrangement and would be happy
to discuss any item. If the terms of the proposed engagement of Stradling Yocca
Carlson & Rauth, a professional corporation, are acceptable, please sign the
enclosed copy of this letter, and return it to me.
If at any time you have any questions pertaining to any of your monthly
invoices, or otherwise, we would be happy to discuss them with you.
We look forward to working with you in the future.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
/s/ R.C. Shepard
R.C. Shepard
AGREED AND ACCEPTED:
"COMPANY"
By: /s/ Jesse Cohen
-------------------------------------
Name: Jesse Cohen
-------------------------------------
Title: CEO/President
-------------------------------------
RCS:jlm
<PAGE>
ICHARGEit INC.
SALES AGENCY AGREEMENT
THIS SALES AGENCY AGREEMENT (Agreement) is entered into effect as of the____ 1st
day of ________May, 1999, by and between Future Care Fabrics, Inc. ,
a_________________ Nevada_________________________ corporation (Principal) and
iChargeit Inc., a Texas corporation (Agent),
In consideration of the mutual terms, conditions and covenants hereinafter set
forth, Principal and Agent agree as follows:
1. Principal appoints Agent as an authorized Internet sales representative
to sell the products of the Principal as listed in the attached
Schedule A.
2. Agent accepts the appointment and agrees to promote, market and sell
the products or services of the Principal at the prices set forth in
Schedule A. Said prices have been set by Principal and marked up by
Agent.
3. The parties agree that the list of products, services and/or prices may
be amended from time to time. Principal or Agent may unilaterally
remove products from the list or change prices. Additions to the
product list shall be by mutual Agreement.
4. Principal shall furnish to Agent, in advance, sales materials for the
products listed on Schedule A and shall keep material up to date.
Principal agrees to provide a minimum of products on hand or else the
shopping cart will cease to function so that sale will cease.
5. Agent shall use it's best efforts to promote, market and sell the
products of Schedule A, devote such time and attention as may be
reasonably necessary. Agent shall design and maintain a web page for
the Principal , which shall be utilized for the Internet sales.
Ownership and control of the web page is solely that of the Agent.
6. Agent shall obtain, at its own expense, all necessary licenses and
permits to allow Agent to conduct business as contemplated herein.
Agent represents and warrants that Agent shall conduct business in
strict conformity with all local, state and federal laws, rule and
regulations.
7. Principal agrees that Agent may employ representatives in furtherance
of this Agreement. Agent agrees that Agent shall be solely responsible
for the payment of wages or commissions to those representatives and
that under no circumstances shall Agent's representatives be deemed
employees of the Principal for any purpose whatsoever.
8. This Agreement shall last in perpetuity as long as the iChargeit.coin
cyber mall, or its surviving entity, exists. This Agreement cannot be
terminated by the Agent, or its surviving entity.
9. Agent is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Agent as a
partner or employee of the Principal. Nor shall either party have any
authority to bind the other party in any respect. It being understood
and
<PAGE>
agreed that all orders submitted by Agent are subject to acceptance by
Principal in its sole discretion.
10. Principal is solely responsible for merchantability and safety of the
product being sold. Principal is solely responsible for all
representations and warrantees concerning the products or services. If
the product or service is defective, or causes injuries, losses or
harm, Principal agrees to indemnify and defend Agent and its employees
for all claims related to the products or services. Principal agrees to
maintain a contract of insurance to protect against such claims and
agrees to name Agent as an insured on the policy.
11. There is potential that the Year 2000 (AKA Y2K) problems may cause
malfunctions with the Internet. Agent is not responsible for any Y2K
problems or down time. Agent is not responsible for any business
related losses caused by Y2K problems.
12. Principal is responsible for all representations made on the web site
regarding Principal's products or services. Principal is responsible
for confirming the accuracy of all representations on the web site
including prices or price changes.
13. The amount of text and artwork devoted to the web page is not infinite,
nor are changes to the web page. Schedule B sets forth the amount of
space given to Principal and the number of changes allowable.
14. It is agreed between the parties that there are no other Agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior Agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the Agreement between the parties. No change or
modification of this Agreement shall be valid unless the same is in
writing and signed by the parties.
15. This Agreement shall not be assigned by Agent or Principal without the
prior written consent of the other.
16. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail -- Return
Receipt Requested, postage prepaid. addressed to the party's last known
address.
17. This Agreement shall be construed in accordance with and governed by
the laws of the State of Nevada.
18. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
legal representatives, successors and assigns where permitted in this
Agreement.
19. If any one or more of the provisions contained in this Agreement for
any reason are held invalid, illegal, or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any
provisions thereof and this Agreement will be construed as if such
invalid, illegal or unenforceable provisions had never been contained
herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed
effective under proper authority as of the date and year first above written,
/s/ James F. Carroll 5/1/99
- ------------------------------------ -----------------
Principal Date
/s/ Jesse Cohen 5/1/99
- ------------------------------------ -----------------
iCHARGEit INC Date
<PAGE>
MegaPOP Wholesale Service Agreement
050199
This Agreement, made and entered into this 8th day of May, 1999 (hereinafter
referred to as "date of this Agreement") by and between StarNet, Inc., a
corporation having it's principal place of business at 579 First Bank Drive,
Suite 100, Palatine, IL 60067 (hereinafter "SNI") and
iChargeit, Inc.
a corporation having its principal place of business at
300 Pacific Coast Highway
Suite 308
Huntington Beach, CA 92648 (hereinafter "ISP").
WITNESSETH
Whereas, ISP is in the business of providing various services on the worldwide
computer network known as the Internet and of providing support for various
advertising and telemarketing sales forces;
Whereas, SNI is in the business of providing various services to third parties
on the Internet, including but not limited to providing access to the Internet,
including but not limited to providing access to the Internet for individuals
and business entities;
Whereas, ISP desires a provider of access to the Internet for its customers and
clients;
Whereas, SNI desires to provide access to the Internet for customers and clients
of ISP;
Whereas, the parties hereto are desirous of setting forth, in writing, terms and
conditions, under which ISP shall direct their customers to SNI for service and
SNI shall provide such customers with access to the Internet;
Now therefore, in consideration of the premises set forth in the foregoing
recitals, which are hereby made a part thereof and incorporated herein by
reference, and further, of the mutual promises, covenants, agreements,
conditions, terms and acknowledgments contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ISP and SNI hereby agree as follows:
ARTICLE ONE - DURATION
1.1 TERM.
Except as otherwise provided herein and subject to earlier termination
hereof in accordance with the terms of this Agreement, the "initial
term" of this Agreement shall be one (1) year from the date hereof.
<PAGE>
1.2 EXTENSION.
This Agreement shall be automatically extended beyond the initial term
unless earlier terminated as otherwise provided in this Agreement or
unless either party provides written notice of termination to the other
as set forth immediately hereinbelow. A written notice of termination
must be provided by one party to the other no later than sixty (60)
days prior to the expiration of the initial term, and hereafter on no
less than sixty (60) days prior written notice. Hereinafter, the
initial term and any extension thereof shall sometimes collectively be
referred to as the "term of this Agreement."
ARTICLE TWO - DUTIES AND RESPONSIBILITIES OF ISP
2.1 CUSTOMERS.
ISP shall not be limited to directing all of it's customers to SNI for
purposes of providing access to the Internet under the terms and
conditions of this Agreement.
2.2 ADVERTISING AND PROMOTION.
ISP shall solely be responsible for and shall incur reasonable expense
in connection with advertising and promotional activities designed
specifically to generate customers who are interested in access to the
Internet.
2.3 SIGN UP.
ISP shall document and maintain information pertaining to each customer
who has committed to the Internet services to be provided by SNI under
the terms of this Agreement. The pertinent information, specifically
the following: 1. ISP assigned (12) alpha/digit PPP logon name, 2. ISP
assigned PPP password, 3. PPP account activation/deactivation symbol,
and 4. the preferred MegaPOP dial-up location for the specific
customer, shall be forwarded to SNI by ISP, via electronic file
transfer to a pre-determined SNI authentication server, in a
pre-determined format, to SNI for activation on the SNI system for
eventual service. Additional information ISP shall be responsible for
is the name, address, age, and other necessary contact information for
each ISP customer who will be using the SNI's services described within
this agreement.
2.4 TERMS AND CONDITIONS.
ISP shall make such warranties, and representations and may limit its
liability to any customer, in such terms, conditions and limitations
substantially identical to those set forth in existing ISP customer
liabilities. ISP shall be held responsible for the terms and conditions
set forth in the document titled "StarNet, Inc. Terms of Service
Agreement."
2.5 CUSTOMER CONTACT.
SNI shall not contact an ISP customer without prior written permission
of ISP whose permission shall not be unreasonably withheld.
2 ISP Initials JC
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<PAGE>
2.6 ISP PPP ACCOUNT NAMES.
ISP shall assign and be responsible for the assignment of ISP PPP
account names. Account names shall be defined within the twelve (12)
alpha/digit account name definition whereas the preceding four (4)
digits of the ISP PPP account name will be defined as the four (4)
digit code assigned exclusively to ISP. The succeeding eight (8)
alpha/digits in the ISP PPP account name will be assigned and managed
by ISP. ISP agrees to limit the assignment of ISP PPP account names to
one ISP PPP account name per PPP account assigned.
In the event the ISP uses their own Radius Authentication server to
provide access via the SNI MegaPOP network, ISP shall be responsible
for managing usernames in accordance with their own policies. SNI does
not maintain any standards or the ISP in this case.
2.7 PPP ACCOUNT PASSWORDS.
ISP shall be responsible for the assignment and maintenance of all ISP
PPP account passwords.
ARTICLE THREE - DUTIES AND RESPONSIBILITIES OF SNI
3.1 TO ISP.
Within (1) business day after the execution of this agreement by the
parties hereto, SNI shall provide to ISP the following:
(a) complete PPP access to the Internet for all ISP
customers described within this Agreement.
(b) complete 2 B Channel ISDN access to the Internet for
all ISP customers described within this Agreement.
3.2 TO THE CUSTOMERS.
Within one (1) business day of receipt of notice from ISP of an
electronic delivery of customer access information, SNI shall perform,
cause to be performed, or provide, as the case may be, the following:
(a) SNI shall establish a new PPP account for each
customer delivered to SNI, via electronic file
transfer, with access to all SNI MegaPOP PPP dial-up
servers;
(b) For each customer, SNI shall provide unlimited
dial-up access to the Internet through SNI PPP
dial-up servers. ISP understands that their customers
will be subject to a minimum of 10 minute idle time
cutoff, whereas each connected customer will lose
their connection in the event they do not make use of
their connection for a minimum period of 10 minutes.
(c) For each customer, SNI shall provide unlimited
dial-up access to the Internet through SNI PPP
dial-up servers. ISP understands that their customers
will
3 ISP Initials JC
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<PAGE>
be subject to an 8 hour consecutive use cutoff,
whereas each connected customer will lose their
connection in the event they exceed 8 consecutive
hours of session time.
3.3 BUSY SIGNAL CONDITION(S).
SNI will make every reasonable effort to maintain a user to modem
ratio, on a city to city basis, equal to or less than 10:1. In the
event the user to modem ratio exceeds 10:1, SNI must take immediate
action to remedy this situation within 30 days. In the event the user
to modem ratio does not reduce to less than 10:1 in the allotted 30 day
period, ISP may make claims for the reduction of their monthly MegaPOP
invoices for the affected service month, following the 30 day period,
for up to 25% of their total service invoice. ISP must itemize the
total number of affected customers using the MegaPOP services in the
affected city.
ARTICLE FOUR - TECHNICAL SUPPORT AND CUSTOMER INQUIRIES
4.1 SERVICES OF SNI.
SNI shall perform technical support services, to ISP, solely relevant
to connection of a customer to access to the internet, including but
not limited to the customer's modem, but excluding any services
relevant to the ISP provided customer software. All of said services
shall be performed by SNI during its normal and regular business hours.
4.2 SERVICES OF ISP.
ISP shall address any and all customer inquiries of any nature
whatsoever and shall perform any and all technical support services
relevant to the ISP software provided to its customers.
ARTICLE FIVE - PAYMENT
5.1 AMOUNT.
ISP shall make payment to SNI in the amount, described in Addendum A
"MegaPOP Price Schedule," per customer per month for each ISP customer
that SNI provides PPP access to the Internet under the terms of this
Agreement. Payment shall be made to SNI on or before the 10th day of
each succeeding calendar month. Payment in full shall be made to SNI,
as provided hereinabove, notwithstanding customer connection to or
termination from the Internet at any time during the preceding calendar
month.
SNI shall provide written notice to ISP, for any changes in the
Addendum A "MegaPOP Price Schedule," with a minimum sixty (60) day
notice prior to the effectivity of such changes, for all existing
recurring fee services.
The undersigned agrees to be held personally liable for all unpaid
monies due under the terms of this Agreement.
4 ISP Initials JC
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<PAGE>
5.2 BILLING AND COLLECTION.
ISP shall provide all services of billing and collection and shall be
responsible for all costs and expenses incurred in connection with
services rendered by SNI under the terms of this Agreement.
5.3 FAILURE TO BILL OR COLLECT.
ISP shall make a payment to SNI, as described under the terms of this
Agreement, notwithstanding ISP's failure to bill or collect from an ISP
customer for services provided by SNI, under the terms of this
Agreement.
5.4 REFUND.
ISP may utilize its reasonable discretion in making a determination
whether monies should be refunded to an ISP customer as a result of
"ineffective services" provided by SNI to a customer under the terms of
this Agreement. "Ineffective services" of SNI shall be defined as the
failure by SNI to provide customers with uninterrupted access to
Internet the for a cumulative time period of less than ninety-seven
percent (97%) of the total available time for connection to the
internet during a given calendar month. "Total time available for
connection to the Internet" shall be determined by multiplying the
number of days in the calendar month by twenty four (24) hours. The
log-in history of SNI's user access logs which shall be recorded by SNI
on one of their servers shall be used to determine service
interruptions. Any such refund provided to an ISP customer, due to the
described ineffective service shall be taken front the payment owed to
SNI by ISP for the successive calendar month.
5.5 AMOUNT CALCULATION FOR CUSTOMERS ADDED.
ISP may provide internet access for their customers via any MegaPOP
access location. Access Authentication, enabling a customer's
connection to the MegaPOP system, may be achieved through the MegaPOP
Account Manager Interface or the ISP's own Authentication Server. ISP
reserves the right to activate and manage their accounts via their own
Authentication Server instead of the MegaPOP Account Manager Interface
Authentication Server.
(A) ISP agrees to pay SNI the full amount for each customer
account successfully added to the SNI system through the
MegaPOP Account Manager Interface, within each preceding
month, for each customer account activated from the first
(1st) day of the calendar month through the last day of the
calendar month.
(B) ISP agrees to pay SNI the full amount for each of their
customers who have signed onto the MegaPOP system for any
period of time between 12:00 AM on the first (1st) day of the
calendar month through the 11:59:59 PM on the last day of the
calendar month, and who are not activated within the MegaPOP
Account Manager Interface Authentication Server. These ISP
accounts may gain access to the MegaPOP system via the
Authentication Server under the direct control and ownership
of the ISP.
5 ISP Initials JC
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<PAGE>
5.6 AMOUNT OF CALCULATION FOR CUSTOMERS DELETED.
(Item 5.6. applies only to those accounts activated and managed within
the MegaPOP Account Manager Interface Authentication Server.)
ISP agrees to pay SNI the full amount for each customer deleted from
the MegaPOP Account Manager Interface
Authentication Server during a calendar month for customers deleted on
or after the first (1st) day of the calendar month.
5.7 AMOUNT CALCULATION FOR ISDN ONLINE TIME
N/A
ARTICLE SIX - NON-EXCLUSIVITY
6.1 ISP and SNI agree to the terms of this Agreement with the understanding
that both ISP and SNI can and may offer similar services to the market
as competitors. ISP and SNI agree to the terms of this Agreement with
the understanding that the right to offer PPP accounts to the market is
non-exclusive and mutually competitive.
ARTICLE SEVEN - NON-SOLICITATION
7.1 ISP and SNI, each to the other, hereby agree that during the term of
this Agreement and for a period of sixty (60) days after termination of
this Agreement, neither party shall solicit any business from any
customer(s) of the other party.
ARTICLE EIGHT - COVENANT NOT TO COMPETE
8.1 STARNET PERSONNEL.
Unless otherwise agreed to by the parties in writing, SNI shall not
hire, employ or engage in any manner the services of any employee,
servant, director, or shareholder of ISP during the term of this
Agreement.
ARTICLE NINE - LIMITATION OF LIABILITY
9.1 CONTRACT.
Neither SNI, nor any of its agents, contractors, technicians, or any
tier shall be liable to ISP or any other person or organization in
contract for any general, special, indirect, incidental, or
consequential damage whatsoever, including but not limited to, any lost
data, lost time or other system related damages, damage or loss of
property or equipment, loss of profits or revenues, cost of capital,
etc., which arises out of or is in connection with the services of SNI
covered or furnished within the terms of this Agreement.
6 ISP Initials JC
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<PAGE>
9.2 TORT.
Neither SNI nor any of its agents, contractors, technicians or any tier
shall be liable to ISP or any other person or organization for any
damage whatsoever in tort (whether based in negligence, willful conduct
or strict liability) for any act or omission by ISP or any of its
servants, employees, or agents or any use (other than its own intended
purpose), tampering, or illegal use of the by the customers which
arises out of or is in connection with the services of SNI covered by
the terms of this Agreement.
9.3 The remedies of ISP set forth herein are exclusive and the total
cumulative liability of SNI and any of its agents, contractors,
technicians, and any tier with respect to this Agreement, or any thing
done in connection herewith such as performance or breach hereof, or
from installation, configuration, startup/initialization, programming,
or any other services of SNI covered by or furnished under the terms of
this Agreement, in tort (including negligence or strict liability), or
otherwise, shall not exceed the monthly service fee payable to SNI on
which such1iability is based.
ARTICLE TEN - INDEMNIFICATION
10.1 Notwithstanding anything to the contrary herein contained, each party
agrees to indemnify and hold the other harmless against any and all
liability, loss, claim, judgment, damage and expense (including without
limitation attorney's fees and costs of litigation) incurred or
suffered by the indemnified party as the result of negligence, willful
misconduct, or breach of any terms of this Agreement by the
indemnifying party, including but not limited to claims, liabilities,
losses, damage, judgment and expense which arise out of alleged injury
or death or any person or damage to property of every kind and
description. The indemnifying party will not be responsible for any
compromise or settlement made without its written consent, which
consent will not be unreasonably withheld. Each party shall promptly
notify the other in writing of any claim for which its obligated under
this indemnity and for which it may seek indemnification from the
other. The indemnifying party shall have the right to sue the defense
of any such claim. Both parties shall confer as to and agree on the
legal counsel(s) to be selected in such defense.
ARTICLE ELEVEN - NONDISCLOSURE
11.1 GENERAL.
Both parties agree not to disclose to any third party any proprietary
or confidential information obtained from the other during the
negotiation or performance of this Agreement while the Agreement is in
force and for five years thereafter, including any and all technology
and trade secrets now existing or arising in the future, price,
schedules and customer lists.
ARTICLE TWELVE - REMEDIES FOR BREACH
12.1 Except as otherwise limited by Article Nine, if either party breaches
any of the terms and provisions of this Agreement on its part to be
performed, whether such breach pertains to a default in payment or
otherwise, the non-breaching party shall have the right, if it so
elects, to
7 ISP Initials JC
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<PAGE>
serve upon the breaching party a written notice of its intention
to terminate this agreement this Agreement and the nature of
the breach.
(a) The breaching party shall thereupon have a period of thirty
(30) days, after written notice as such has been served,
within which to remedy the breach.
(b) If the breaching party fails to duly remedy the breach, then
upon the expiration of the thirty (30) days this Agreement and
any rights herein granted shall in all respects cease and
terminate, and the breaching party shall have no further
rights hereunder.
(c) Notwithstanding such termination, each party's rights arising
out of this Agreement or in connection therewith or existing
prior thereto shall nevertheless continue in full force and
effect, including in such party's right to sue for damages
caused to them by the other party's breach and failure to cure
the same within the aforementioned time period.
12.2 Nothing in this Agreement shall bar either party's right to seek
specific performance of the provisions of this Agreement and injunctive
relief against threatened conduct that will cause it loss or damages
under customary equity rules, including applicable rules for obtaining
restraining orders and preliminary injunctions. Both parties agree that
the non-breaching party may seek such injunctive relief in addition to
such further or relief as may be available at equity by law.
12.3 If a claim for amounts owed by either party is asserted in any judicial
proceeding, or if either party is required to enforce this Agreement in
a judicial or arbitration proceeding, the party prevailing in such
proceeding shall be entitled to reimbursement of its costs and
expenses, including but not limited to, reasonable accounting,
attorney's and attorney assistant fees.
ARTICLE THIRTEEN - TERMINATION
13.1 GENERAL.
Unless otherwise agreed to in writing by ISP and SNI and except as may
be otherwise provided herein, this Agreement shall automatically
terminate upon the occurrence of any of the following events:
(a) a party files for bankruptcy, or is or becomes insolvent or is
declared insolvent or bankrupt, or makes an assignment or
another arrangement for the benefit of its creditors or is
involuntarily the subject of a bankruptcy filing;
(b) a party has all or any substantial portion of its equity or
assets expropriated by any governmental authorities;
(c) a party is dissolved or liquidated; or
(d) a party disposes of substantially all of its assets.
8 ISP Initials JC
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<PAGE>
13.2 DEACTIVATION OF CUSTOMERS.
Upon termination of this Agreement and by no later than the end of the
month succeeding the calendar month in which this Agreement has been
terminated, SNI shall deactivate all ISP PPP accounts, thereby
terminating an ISP customer's access to the Internet, and SNI shall be
entitled to all payments from ISP in accordance with the terms of this
Agreement up to and including the date of deactivation.
13.3 TERMINATION PENALTY
ISP's Termination of this Agreement, prior to the agreed upon
termination date as described in article 1.1. of this Agreement, will
result in a penalty payment calculated according to the following
formula:
Number of Remaining Months of Agreement X Average Monthly Usage Fees
for Prior Months of Agreement
ISP agrees to pay this amount in the event of ISP's Termination of this
Agreement prior to the agreed termination date described in article
1.1. of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed in duplicate as of the date set forth hereinbelow.
STARNET, INC.
An Illinois Corporation
By: /ss/ (illegible) date: 5/12/99
-------------------------------------- ---------------------
Signature and Title
ISP
By: /ss/ Jesse Cohen Date: 5/8/99
-------------------------------------- ---------------------
Signature and Title
9 ISP Initials JC
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<PAGE>
UPI
Worldwide News, Inc.
United Press International
H Street, NW
Washington, DC 20005
(202) 808-8200
DISTRIBUTOR AGREEMENT
DISTRIBUTOR INFORMATION
NAME OF ORGANIZATION (DISTRIBUTOR): iChargeit Inc.
ADDRESS: 8162 Capehope Circle, Suite 201
CITY: Huntington Beach STATE: CA ZIP: 92646
CONTACT NAME & TITLE: Jesse Cohen - President TELEPHONE: (714) 969-7135
USER LOCATION: Above
DEPARTMENT:
ADDRESS:
CITY: STATE: ZIP:
CONTACT NAME: Jesse Cohen TELEPHONE: (714) 9654135
CORPORATE PARENT NAME:
UPI INFORMATION UPI PRODUCTS TO BE PROVIDED:
1) Static Via ftp or UPI email, suggested features:
- Horoscope - M-Sun
- Business Roundup - M-Fri
- Sports Roundup - M-Sun
- Entertainment Today - M-Fri
- HealthTips - M-Fri
- The Almanao - M-Sun
All of these are transmitted overnight, between Midnight and 3am,
Pacific
2) Streaming - Delivered continuously via email or ftp, around
the clock as the news happens
- UPI US/International News (Text stories, some, features)
- UPI Financial News (Text stories, market updates, most actives, etc.)
- UPI Sports News (Text stories)
SET-UP FEE: NA
MONTHLY RATE AND ROYALTIES.: $950 MONTHLY MINIMUM FEE AGAINST A 35% SHARE OF
ADVERTISING BANNER/ SPONSORSHIP REVENUE GENERATED FROM UPI NEWS, WHICHEVER IS
THE GREATER MONTHLY.
PRODUCT INSTALLATION TARGET DATE: 6/15/99
TERM OF AGREEMENT: 12 months
I hereby certify that I have read and agree to be bound by all terms and
conditions on the front and reverse sides of this agreement Upon the signing or
upon the first receipt of the Product(s), whichever occurs first, this agreement
goes into effect and binds both parties and/or their successors and assigns.
Made this 23rd day of April, 1999 In Washington, DC.
iChargeit Inc. - Date 5/15/99 Worldwide News Inc. T/A UPI Date 5/25/99
- ------------------------------------ -----------------------------------------
By: Jesse Cohen /s/ Jesse Cohen By: /s/ (illegible)
--------------------------------- -------------------------------------
Title: CEO Title: CFO
------------------------------ ----------------------------------
<PAGE>
Communities.com
Commercial Server License Agreement
Communities.com ("Communities.com") is in the business of developing,
marketing and distributing visual chat software, including the visual chat
software known as The Palace*. iChargeit.com ("iChargeit") is in the business
of providing online ecommerce websites. iChargeit desires to receive, and
Communities.com desires to grant, a license for iChargeit to use
Communities.com's proprietary The Palace* software. The parties therefore
agree as follows:
Section 1. Definitions
1.1 The Palace means: The Palace*, Communities.com's proprietary trademark.
1.2 The Palace Client means: The Palace* Client Software, in object code
form, as described in Exhibit A to this Agreement.
1.3 The Palace Commercial Server means: The version of The Palace server
software, in object code form, that is designed for and contains special
elements for commercial customers, as identified in Exhibit A to this
Agreement.
1.4 The Palace Software Products means: The Palace Client and The Commercial
Server, collectively.
1.5 User means: an individual using The Palace Client to gain access to The
Palace Commercial Server.
Section 2. Licenses
2.1 License. Subject to the terms and conditions of this Agreement,
Communities.com hereby grants to iChargeit a nonexclusive, royalty bearing,
non-assignable, nontransferable license to use The Palace Commercial Server.
2.2 Delivery of Copies. The method of delivery of copies of The Palace
Commercial Server from Communities.com to iChargeit shall be by download of
copies from The Palace web site. The iChargeit will obtain a registration
number for The Palace Commercial Server directly from Communities.com.
2.3 Upgrades. Communities.com may, in its sole discretion, provide iChargeit
with updated, enhanced or revised versions of The Palace Commercial Server
from time to time. Within thirty (30) days of receipt of any such updated,
enhanced or revised version from Communities.com, iChargeit will cease using
all previous versions of The Palace Commercial Server and use instead the
upgraded version.
2.4 Trademark License. Communities.com grants to iChargeit a nonexclusive,
non-assignable, and nontransferable right to use The Palace-TM- on and in
the promotion and advertising of the iChargeit. Further, this license is
conditional upon iChargeit's compliance with the requirements of
<PAGE>
section 3.3 below. iChargeit agrees to ensure that its use of The Palace will
meet the highest levels of quality and integrity, will not be unlawful, and
will not interfere with Communities.com's rights in The Palace.
2.5 No Reverse Engineering. iChargeit agrees not to reverse engineer,
reverse compile, or otherwise disassemble The Palace Software Products.
iChargeit may not use, reproduce, sublicense, distribute or dispose of any of
The Palace Software Products, in whole or in part, other than as permitted
under this Agreement.
2.6 Exclusive Use of The Palace Client. iChargeit agrees to use only The
Palace Client software to access The Palace Commercial Server. No other
client software may be created or used to access The Palace Commercial Server.
Section 3. Intellectual Property Ownership/Labeling
3.1 Communities.com Ownership. iChargeit agrees that this license does not
grant any title or other right of ownership to The Palace Software Products,
or title, license or other right of ownership to The Palace or any
Communities.com trademark or work. iChargeit acknowledges that The Palace
Software Products and The Palace-TM-, and the intellectual property
contained therein, are proprietary to Communities.com.
3.2 Copyright Notice. iChargeit shall not remove any copyright notices or
proprietary or other legends or notices contained on or within The Palace
Software Products, and iChargeit shall conspicuously display the copyright
notice, "-C- [insert date] Communities.com" on iChargeit's The Palace web
sites, and on any copy of The Palace Commercial Server used by iChargeit.
3.3 Trademark Notice. Where iChargeit makes reference to The Palace,
iChargeit shall state: "The Palace is a registered trademark of
Communities.com and is being used with express permission of its owner."
iChargeit agrees to comply with trademark guidelines that Communities.com
may, from time to time, issue concerning the reproduction, use and placement
of The Palace or other Communities.com marks by Communities.com's licensees.
Section 4. Proper Use of Software
Licensee will not use The Palace Commercial Server or The Palace Client to
transmit or receive illegal or pornographic material, to commit tortious
acts, or to violate the legal rights of any person. Licensee will comply with
the provisions and requirements of The Digital Millennium Copyright Act, 17
U.S.C.Section.512et seq., and all other laws which govern and limit the legal
liability of Internet service providers and publishers. Licensee will not
unlawfully use any copyrighted work, trade secret, trademark, logo, or
likeness of any person in connection with The Palace Commercial Server or The
Palace Client, or in the Licensee Site.
Section 5. Joint Promotion; Revenue Sharing
The parties have discussed and agreed to execute the joint promotional,
marketing and/or revenue sharing activities set forth in Exhibit B to this
Agreement.
Section 6. Payments
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<PAGE>
6.1 License Fee and Royalties. In consideration of the licenses granted
under this Agreement, and the other obligations herein, iChargeit will pay to
Communities.com the payments set forth on Exhibit C.
6.2 Records. iChargeit shall keep accurate records of all operations
affecting payments hereunder, and shall permit Communities.com or its duly
authorized agent to inspect all such records and to make copies of or
extracts from such recoreds during regular business hours throughout the term
of this Agreement and for a reasonable period of not less than 3 months
thereafter.
6.3 Payments. Not later than the last day of each January and July,
iChargeit shall furnish to Communities.com a written statement of all amounts
due pursuant to Sec. 5 and Exhibit B.
Section 7. Support
7.1 Subject to Section 7.3, Communities.com will, at no additional charge,
provide first level support (i.e., direct support) for The Palace Commercial
Server to the iChargeit. This support will be provided to iChargeit for a
period of one (1) year from the effective date (the "initial term"). The
parties agree that, in order for Communities.com to continue providing
support after the initial term, the parties must enter into a separate
support or revenue sharing agreement.
7.2 Communities.com will, at no additional charge, provide first level
support (i.e., direct support) via email for end Users, except that support
for User issues relating uniquely to the iChargeit will be provided by
iChargeit.
7.3 The parties agree that, for support requiring Communities.com to
actually develop site content or code for integration, a separate consulting
agreement for one or more of our customer consultants to work with iChargeit
to plan, design, and integrate iChargeit's site must be negotiated and
entered into by the parties. Communities.com charges $ 150.00/hr for
consulting time plus regular expenses.
Section 8. Right to Independent Development, Advertising
Nothing in this Agreement is intended to limit in any way the right of either
party to develop products independently, and to do business with other
parties. iChargeit understands that advertising is a method of generating
revenue for Communities.com, and that Communities.com will be conducting
advertising on The Palace Client which will be viewed by the Users.
Section 9. Disclaimers of Warranty and Indemnity
9.1 Communities.com licenses The Palace Commercial Server to iChargeit
hereunder solely on an "As Is" basis. Communities.com MAKES NO WARRANTIES
WHATSOEVER, EITHER EXPRESS OR IMPLIED, REGARDING THE PALACE SOFTWARE
PRODUCTS, INCLUDING WARRANTIES WITH RESPECT TO THEIR MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE.
9.2 Subject to the limitations set forth in Section 10, Communities.com
hereby indemnifies iChargeit, its officers, directors, agents and
representatives for third party claims that The Palace Software Products are
not owned by Communities.com, provided that: (i) iChargeit must promptly give
Communities.com notice in writing of any such claim or action and permit
Communities.com,
3
<PAGE>
through counsel of its choice, to answer and defend such claim or action;
(ii) iChargeit must provide Communities.com information, assistance and
authority, at Communities.com's expense, to enable Communities.com to defend
such claim or action; and (iii) Communities.com will not be responsible for
any settlement made by iChargeit without Communities.com's written
permission. If Communities.com receives notice of an alleged copyright or
trade secret infringement, or if iChargeit's use of one or more of The Palace
Software Products shall be prevented by permanent injunction for reasons of
copyright or trade secret infringement, Communities.com may, at its sole
option and expense, procure for Licensee the right to continued use of The
Palace Software Products as provided hereunder, or modify The Palace Software
Products such that it is no longer infringing, or replace The Palace Software
Products with software of comparable functional capability.
9.3 Communities.com shall have no liability under this Section 9 for any
claim or suit to the extent that any alleged infringement is based upon: (i)
the combination, operation, or use of The Palace Software Products with
devices, parts, or software not supplied by Communities.com, (ii)
modifications made to The Palace Software Products other than those made by
Communities.com or in accordance with Communities.com's written instructions,
or (iii) use of The Palace Software Products other than as permitted under
this Agreement or in a manner for which they were not intended.
9.4 Communities.com is not responsible for statements and/or content that
are published by iChargeit or Users utilizing The Palace Software Products.
Accordingly, Communities.com shall have no liability under this Section 9 or
otherwise for any claim or suit, including costs, damages, and attorney fees,
to the extent that iChargeit is held liable to a third party for copyright
infringement, tort, defamation, unfair business practice, or criminal or
other wrongful act by virtue of publication by Users of any material
utilizing The Palace Software Products.
9.5 Indemnity for Improper Use. iChargeit shall indemnify Communities.com
against any claim or liability arising out of any improper use The Palace
Server or The Palace Client as described in Section 4 above. iChargeit shall
reimburse Communities.com for the costs and reasonable expenses (including
attorney's fees) incurred by Communities.com in connection with any claim of
improper use of The Palace Commercial Server by iChargeit and/or its
employees, agents, representatives and users.
Section 10. Limitation of Liability
Except for indemnification for infringement as and only to the extent
provided in Section 9 of this Agreement, in no event will Communities.com be
liable to iChargeit for incidental, indirect, special, or consequential
damages resulting from the use, sale or distribution of The Palace Software
Products and/or any other products, whether under a theory of contract,
warranty, tort, products liability or otherwise. In no event will the parties
be liable to each other, on any theory of tort, indemnity, infringement,
breach of contract, warranty, or equity, for damages in excess of the amounts
paid to Communities.com hereunder during the initial term of this Agreement.
Section 11. Effective Date; Term
The effective date of this Agreement is the date on which the latter
signature was made to this document in the space indicated for signature
below. This Agreement will continue in force for one (1) year from the
effective date (the "initial term"). Following the initial term, this
Agreement will be automatically renewed each year, unless notice of
non-renewal is provided by one party to the
4
<PAGE>
other within ninety (90) days prior to the date of the expiration of the
one-year term (the "anniversary date"). If one party or both parties provide
notice of non-renewal, this Agreement will terminate on the anniversary date.
Either party may terminate this Agreement without cause at any time with a
written notice of termination provided with sixty (60) days notice.
Section 12. Breach and Termination
If any breach of this Agreement by either party continues after thirty (30)
days from the date of first written notice of such breach, the other party
may terminate this Agreement immediately by second written notice. The rights
of the parties under this clause are in addition to any other rights and
remedies provided by law or under this Agreement.
Section 13. Effect of Termination; Return of Communities.com Programs
Upon expiration or termination of this Agreement, iChargeit shall promptly
return to Communities.com all originals and copies of The Palace Commercial
Server which are in its possession in hard copy or CD or in any other media
or form, and iChargeit will stop any further use of The Palace Commercial
Server. iChargeit is not obligated however, to recall copies of The Palace
Client used by its employees, customers, or other Users. The terms and
conditions of sections 2.5, 3.1, 9, 10, and 14 will survive any expiration or
termination of this Agreement.
Section 14. General
14.1 Complete Understanding. This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof. Any amendment of
any provision of this Agreement will be effective only if in writing and
signed by both the parties.
14.2 Assignment. iChargeit may not assign this Agreement, nor may iChargeit
transfer the rights granted hereunder without the prior written consent of a
duly authorized representative of Communities.com except to successor entity
as the result of sale, merger, or consolidation. Communities.com may assign
this Agreement, in whole or in part.
14.3 Disclaimer of Agency. This Agreement will not be construed as creating
an agency, partnership, joint venture or any other form of legal association
between the parties, and iChargeit will not represent to the contrary,
whether expressly, by implication, by appearance or otherwise. The parties
are solely responsible for all of their own expenses incurred in exercising
their respective rights and complying with the terms and conditions of this
Agreement.
14.4 Waiver. Any delay by Communities.com hereunder and/or any failure by
Communities.com to exercise any right hereunder will not be effective as a
waiver unless expressly made in writing, signed by Communities.com. Any
express waiver by Communities.com of any right hereunder shall not be deemed
to be a waiver of any other or subsequent right.
14.5 Notices. All notices, demands or other communications with legal effect
under this Agreement shall be in writing. Any notices required under or
permitted under this Agreement shall be provided by First Class, Express
Mail, or Certified Mail, with the effective date the date of postmark or
express mail marked mailing, and shall be delivered to the following persons
at the addresses indicated:
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<PAGE>
For Communities.com:
Communities.com
c/o Matthew Burgess
Manager, Business Development
10101 N. De Anza Blvd, Suite 100
Cupertino, CA 95014
For iChargeit:
14.6 Governing Law. This Agreement will be governed by the laws of the State
of California. Disputes arising out of this Agreement will be resolved by
binding confidential arbitration under the Commercial Arbitration Rules of
the American Arbitration Association, with the venue of the arbitration in
the County of Santa Clara, California, excepting disputes involving copyright
infringement, including any third party infringement liability, in order to
preserve Communities.com's ability to obtain immediate injunctive relief.
COMMUNITIES.COM ICHARGEIT.COM
/s/ Matthew T. Burgess /s/ Jesse Cohen 5/15/99
- ---------------------------------- ----------------------------------
(SIGNATURE) (DATE) (SIGNATURE) (DATE)
Matthew T. Burgess Jesse Cohen
- ---------------------------------- ----------------------------------
(PRINTED NAME) (PRINTED NAME)
Director of Business Development CEO
- ---------------------------------- ----------------------------------
(TITLE) (TITLE)
6
<PAGE>
EXHIBIT A
THE PALACE SOFTWARE PRODUCTS
I) The Palace Commercial Servers.
These models are The Palace server software for commercial applications.
Included with these models of server software are the following special
elements: Instant Palace* (Communities.com's Java client) and Palace
Presents* (Communities.com's event management module).
There are four user capacity levels of this server:
a) The Palace Commercial Server, 100 simultaneous users
b) The Palace Commercial Server, 250 simultaneous users
c) The Palace Commercial Server, 500 simultaneous users
d) The Palace Commercial Server, 1000 simultaneous users
These servers are available for the following operating systems:
a.) Unix Sun Solaris 2.5+
b.) Unix DEC Alpha OSF/1 3.2+
c.) Unix Redhat Linux 4.0+ (x86)
d.) Windows NT Service Pack 3+
II) The Palace Client.
The Palace client software, which is either installed on client systems as a
standalone application or an Instant Palace Java applet downloaded to the end
users' Java-enabled web browser to interoperate with any of The Palace
Commercial Servers or The Palace Personal Servers.
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EXHIBIT B
JOINT MARKETING AND REVENUE SHARING ACTIVITIES
Communities.com agrees to:
a.) Pay iChargeit an amount equal to 30% of net revenue generated through
advertisement sales to Palace server site traffic, payable quarterly.
Advertisments are served by Communities.com to users of The Palace Client
software. Electric Comunities will track the advertisments being served to
Palace Client users who are visiting the iChargeit Palace Server. Net revenue
is determined by reducing the gross revenue to Communities.com (which already
reflects any ad rep firm fees, if applicable) by the cost of serving ads,
which this agreement sets as $2 CPM. (For example, if Communities.com sells
ads, at $20 CPM, which are delivered to users as they visit the iChargeit
Palace Server, $2 goes to the cost of the serving the ad. Of the remaining
$18 CPM, 30% of this will be paid to iChargeit.)
b.) Grant iChargeit the right to sell advertisment banner impressions from
any unsold inventory of advertisements being served by Communities.com to The
Palace users.
c.) Grant iChargeit the right to refuse any advertisers from being served to
The Palace users visiting the iChargeit Palace server. iChargeit acknowledges
that Communities.com's business is based on advertisement sales and agrees to
exercise this right within reasonable limits. iChargeit will provide
Communities.com with a list of specific disallowed advertisers to faciliate
this clause. Communities.com will remove any already-running ads within 5
business days of a written request to do so from iChargeit.
d.) Provide a listing of iChargeit's The Palace Server on The Palace
Directory Page of The Palace website.
iChargeit agrees to:
a.) Pay Communities.com an amount equal to $2 CPM plus 30% of net revenue
generated through advertisement sales to Palace server site traffic, payable
quarterly. (For example, if iChargeit sells ads, at $20 CPM, which
Communities.com serves to Users of The Palace Client software as they visit
the iChargeit Palace Server or to any other Palace, $2 is paid to
Communities.com to cover the cost of the serving the ad. Of the remaining $18
CPM, 30% of this will be paid to Communities.com.)
b.) Promote the download of The Palace Standalone Client software on each of
its websites that has a reference to The Palace Server operated by iChargeit.
c.) Use the following URL whenever linking to the download or registration
site for The Palace Standalone Client software:
http://www.thepalace.com/reg/ichargeit/
d.) Use The Palace as its sole chat technology.
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EXHIBIT C
PAYMENT SCHEDULE
The cost of this server license is:
100 User The Palace Commercial Server $ 5,000.00
This license gives iChargeit the right to purchase a license upgrade within
90 (ninety) days of the effective date of this license, as defined in Section
11, at the following upgrade licensing fees:
250 User The Palace Commercial Server $ 4,000
500 User The Palace Commercial Server $ 6,500
1000 User The Palace Commercial Server $ 12,000
2500 User Configuration $ 24,000
5000 User Configuration $ 35,000
After 90 days, the cost of upgrades will follow Communities.com's standard
upgrade licensing policy:
250 User The Palace Commercial Server $ 5,000
500 User The Palace Commercial Server $ 10,000
1000 User The Palace Commercial Server $ 15,000
2500 User Configuration $ 35,000
5000 User Configuration $ 40,000
Communities.com will create a customized version of The Palace Client
software, in PC, Mac 68k, and Mac PowerPC formats. There is no additional
cost to iChargeit for this service. This customization, the details of which
are to be determined and agreed upon by the both parties, may include:
- - Custom Default Entry Palace
- - Custom Bookmarks
- - Custom Graphics and Sounds
- - Custom Registration URL Link for tracking of The Palace client user
registrations
- - Custom Palace prop file
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iChargeit
SALES AGENCY AGREEMENT
THIS SALES AGENCY AGREEMENT (Agreement) is entered into effect as of the 26 day
of May, 1999, by and between Shopping Planet, a California corporation
(Principal) and iChargeit Inc., a Texas corporation (Agent).
In consideration of the mutual terms, conditions and covenants hereinafter set
forth, Principal and Agent agree as follows:
1. Principal appoints Agent as an authorized Internet sales representative
to sell the products of the Principal as listed in the attached
Schedule A.
2. Agent accepts the appointment and agrees to promote, market and sell
the products or services of the Principal at the prices set forth in
Schedule A. Said prices have been set by Principal and marked up by
Agent.
3. The parties agree that the list of products, services and/or prices may
be amended from time to time. Principal or Agent may unilaterally
remove products from the list or change prices. Additions to the
product list shall be by mutual Agreement.
4. Principal shall furnish to Agent, in advance, sales materials for the
products listed on Schedule A and shall keep material up to date.
Principal agrees to provide a minimum of products on hand or else the
shopping cart will cease to function so that sale will cease.
5. Agent shall use it's best efforts to promote, market and sell the
products of Schedule A, devote such time and attention as may be
reasonably necessary. Agent shall design and maintain a web page for
the Principal, which shall be utilized for the Internet sales.
Ownership and control of the web page is solely that of the Agent.
6. Agent shall obtain, at its own expense, all necessary licenses and
permits to allow Agent to conduct business as contemplated herein.
Agent represents and warrants that Agent shall conduct business in
strict conformity with all local, state and federal laws, rule and
regulations.
7. Principal agrees that Agent may employ representatives in furtherance
of this Agreement. Agent agrees that Agent shall be solely responsible
for the payment of wages or commissions to those representatives and
that under no circumstances shall Agent's representatives be deemed
employees of the Principal for any purpose whatsoever.
8. This Agreement shall be for a period of two years unless sooner
terminated by either party upon sixty (60) days written notice, without
cause. Agent is not responsible for refunding any fees or costs if
Principal terminates the Agreement.
<PAGE>
9. Agent is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Agent as a
partner or employee of the Principal. Nor shall either party have any
authority to bind the other party in any respect. It being understood
and agreed that all orders submitted by Agent are subject to acceptance
by Principal in its sole discretion.
10. Principal is solely responsible for merchantability and safety of the
product being sold. Principal is solely responsible for all
representations and warrantees concerning the products or services. If
the product or service is defective, or causes injuries, losses or
harm, Principal agrees to indemnify and defend Agent and its employees
for all claims related to the products or services. Principal agrees to
maintain a contract of insurance to protect against such claims and
agrees to name Agent as an insured on the policy.
11. There is potential that the Year 2000 (AKA Y2K) problems may cause
malfunctions with the Internet. Agent is not responsible for any Y2K
problems or down time. Agent is not responsible for any business
related losses caused by Y2K problems.
12. Principal is responsible for all representations made on the web site
regarding Principal's products or services. Principal is responsible
for confirming the accuracy of all representations on the web site
including prices or price changes.
13. The amount of text and artwork devoted to the web page is not infinite,
nor are changes to the web page. Schedule B sets forth the amount of
space given to Principal and the number of changes allowable.
14. It is agreed between the parties that there are no other Agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior Agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the Agreement between the parties. No change or
modification of this Agreement shall be valid unless the same is in
writing and signed by the parties.
15. This Agreement shall not be assigned by Agent or Principal without the
prior written consent of the other.
16. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Nail -- Return
Receipt Requested, postage prepaid, addressed to the party's last known
address.
17. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
18. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators,
legal representatives, successors and assigns where permitted in this
Agreement.
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19. If any one or more of the provisions contained in this Agreement for
any reason are held invalid, illegal, or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any
provisions thereof and this Agreement will be construed as if such
invalid, illegal or unenforceable provisions had never been contained
herein.
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed
effective under proper authority as of the date and year first above written.
Fred Povolo /s/ Fred Povolo 05/26/99
- --------------------------------------------- --------------
Principal Date
Jesse Cohen /s/ Jesse Cohen 5/26/99
- --------------------------------------------- --------------
iChargeit Inc. Date
3
<PAGE>
Shopping Planet will provide iChargeIt Inc, with the following services:
Web Site preparation:
- - Shopping Planet is responsible for providing product lists and detail
pages on the website. Shopping Planet will update the products and
maintain the current pricing.
- - iChargeIt is responsible for publishing and maintaining the shopping
cart and the order processing system.
- - iChargeIt will make a link to a special section of Shopping Planet site
to access the product information.
Order Processing:
- - iChargeIt is responsible to approve and collect the monies from the
customers.
- - iChargeIt is responsible to provide Shopping Planet all the customer's
information (shipping and billing address, merchandize sold, shipping
service selected, and any other information related and needed to
fulfill the order).
- - Shopping Planet will deliver the merchandize in less than 2 working
days. In case that some parts are backordered, Shopping Planet will
contact the customer and arrange changes or cancellations.
- - Shopping Planet will provide on-line and by phone technical support and
customer assistance.
- - Shopping Planet will calculate shipping cost and pass it to iChargeIt
for processing.
- - Shopping Planet will provide tracking number information to iChargeIt.
Price Structure:
- - Shopping Planet retail price minus 4% for all the products and
services. Shopping Planet advertises in its internet web site
(www.shoppingplanet.com)
- - Shopping Planet will markup 4.32% its retail price to allow 8% margin
on the final price.
- - Shopping Planet will markup 4.32 % its shipping cost.
- - iChargeIt will be responsible of collecting and paying the
corresponding sales tax.
Fulfillment:
- - Shopping Planet will assemble, build, test and install all the
components necessary to fulfill the order.
- - Shopping Planet will fulfill the order and ship the order to the
customer
- - Shopping Planet will handle returns using its current return policy.
- - Shopping Planet will not include an invoice in the shipments.
Billing:
- - Shopping Planet will bill iChargeIt for the merchandize, shipping
charges and labor (is applicable) on a weekly basis. The invoice will
have an 8% discount over the final price to the customer (before sales
tax).
- - IChargeIt will be responsible of paying the bill in 48 hours
independently of the way iChargeIt is collecting from the customers.
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IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed
effective under proper authority as of the date and year first above written.
Fred Povolo /s/ Fred Povolo 05/26/99
- --------------------------------------------- --------------
Principal Date
Jesse Cohen /s/ Jesse Cohen 5/26/99
- --------------------------------------------- --------------
iChargeit Inc. Date
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<PAGE>
24/7 MEDIA INC.
NETWORK AFFILIATION
AGREEMENT
WHEREAS, the undersigned (hereinafter the "Network Affiliate") is the
operator and owner of the Internet Web site(s) (the "Web Site") specified on the
signature pages hereto;
WHEREAS, 24/7 Media, Inc. ("24/7"), a Delaware corporation with an
address at 1250 Broadway, 27th floor, New York, NY 10001, operates a network of
Internet Web sites (the "24/7 Network") for which it solicits advertisers,
advertising agencies, buying services or others ("Advertisers") regarding the
placement of advertising banners and similar devices and sponsorships
("Advertising") for display on pages, screens, and other segments or spaces on
Web site reasonably suitable for the display of advertising and to which the
Tags (as defined in Section 2(A) below) can be affixed as provided herein (the
"Pages");
WHEREAS, Network Affiliate and 24/7 wish to include the Web Site in the
24/7 Network;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is agreed as
follows:
1. AFFILIATION.
The Network Affiliate hereby grants to 24/7 the worldwide exclusive
right to sell all Advertising on the Web Site.
2. OBLIGATIONS OF 24/7.
In furtherance of the foregoing, 24/7 covenants and agrees:
A. to provide the Network Affiliate, during the term of this
Agreement (the "Term") and only for use in the performance of this Agreement,
with unique tags in HTML/Java or other appropriate languages (the "Tags")
which shall be affixed appropriately by Network Affiliate to the Web Site's
Pages to enable 24/7 to serve Advertising to those Pages;
B. to utilize its best efforts to sell to Advertisers Advertising
on the Web Site's Pages, (including sales of the Web Site as a single site,
through multi-site packages and through the 24/7 Network package, at such
prices as 24/7 shall deem appropriate);
C. to serve Advertising to the Web Site's Pages;
D. to provide the Network Affiliate with notice, via on-line
posting, of new Advertising that has been solicited by 24/7 to be displayed
on the Web Site's Pages, and to use its best efforts to honor any decision by
Network Affiliate to decline any Advertising, in accordance with the
provisions in 3(D) below;
E. to provide the Network Affiliate with real-time access to
records that will allow it to monitor the volume of paid Advertising
delivered to the Web Site's Pages and the revenue produced
<PAGE>
(subject to billing corrections and adjustments) thereby; all such records,
including data, statistical information or other traffic analysis, produced
or provided by 24/7 shall be the joint property of 24/7 and Network Affiliate;
F. to deliver to the Network Affiliate a monthly statement showing
revenues earned by Network Affiliate during the calendar month and any sum(s)
due the Network Affiliate on account thereof pursuant to Section 4 hereof; and
G. to maintain suitable and qualified personnel in administrative,
sales and technical positions necessary for 24/7 to perform effectively the
terms of this Agreement.
3. OBLIGATIONS OF NETWORK AFFILIATE.
The Network Affiliate covenants and agrees:
A. to use its best efforts to continue and maintain the Web Site
and the Web Site's Pages in a manner consistent with the intent and purpose
of the Web Site;
B. to insert the Tags on each of the Web Site's Pages and only on
such Pages in such a manner as to assure that the Advertising to be affixed
to said Tag is fully and clearly visible on the first Web Site Page viewed
when that Page is viewed at a 640 x 480 pixel resolution;
C. to insert a button with the 24/7 logo on the Web Site's Home
Page directing potential advertisers to the 24/7 web site.
D. to notify 24/7 within one business day from the time of notice
of any new Advertising is given of the Network Affiliate's rejection of any
new Advertising. Failure to provide timely notice of rejection of the new
Advertising shall be deemed acceptance thereof, until such time as Network
Affiliate notifies 24/7 of Network Affiliate's rejection thereof at which
time 24/7 will use its best efforts to remove the Advertising;
E. to furnish 24/7 with all subscribership, viewership, inventory,
and usage reports, reviews and audience studies, deliveries, census
requirements, and any other information regarding the Web Site and the Web
Site's Pages as is reasonably available to the Network Affiliate and
appropriate for use by 24/7 for the sale of Advertising; and
F. not to engage, contract with, license or permit any person, firm
or entity (including the Network Affiliate and its employees) other than 24/7
and its employees to sell, or represent the Network Affiliate for the sale
of, Advertising on the Web Site and to refer all advertising inquiries to
24/7.
4. PAYMENTS.
A. Advertisers shall be directed to pay all cash and other
consideration generated from the sale of Advertising by 24/7 during the term
of this Agreement and for a period of six months following the termination of
this Agreement (except for sponsorships, with respect to which payments shall
be made to 24/7 and a percentage shall be retained by 24/7 for the duration
of the sponsorship regardless of the date of termination of this Agreement).
Within 45 days after the end of each calendar month, 24/7 shall pay to the
Network Affiliate the Network Affiliate's entire share of
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all revenue generated during that month, reduced only by any advertising
agency commissions retained by the agency or paid by 24/7, and by 24/7's
commission for the sale of Advertising which shall be determined in
accordance with the following chart:
<TABLE>
<CAPTION>
---------------------------------------- --------------------------------------
Number of Impressions Delivered in Percentage Retained by 24/7 for
Preceding Month Current Month
---------------------------------------- --------------------------------------
<S> <C>
999,999 to 1,999,999 55%
---------------------------------------- --------------------------------------
2,000,000 to 2,999,999 50%
---------------------------------------- --------------------------------------
3,000,000 to 4,999,999 45%
---------------------------------------- --------------------------------------
5,000,000 to 14,999,999 40%
---------------------------------------- --------------------------------------
15,000,000+ 35%
---------------------------------------- --------------------------------------
</TABLE>
Network Affiliate represents and warrants that the number of impressions
served in the month preceding the Effective Date was ______________, and
thus, subject to verification of monthly ad impressions, the initial
percentage to be retained by 24/7 is _____%. The percentage retained by 24/7
shall be lowered effective upon Network Affiliate's notifying 24/7 that the
number of impressions delivered in the preceding month requires the
percentage retain to be adjusted.
B. The Network Affiliate may elect to have 24/7 serve promotional
or barter advertisements not sold by 24/7, for which Network Affiliate will
pay 24/7 a serving fee of $2.50 cost per thousand ("CPM"); such promotional
and barter advertisements shall not exceed thirty percent (30%) of the Pages.
C. In the event any Advertiser remits any payment for Advertising
sold by 24/7 directly to the Network Affiliate rather than to 24/7, the
Network Affiliate agrees to make prompt payment to 24/7 of any and all such
payments.
D. Network Affiliate will be obligated to compensate 24/7 on any
business contracted by 24/7 Media prior to termination date.
E. Network Affiliate acknowledges that 24/7 has an ownership
interest in the "clicktobuy.com" e-commerce service (the "Service") and that
the Service includes the placement of banners on the 24/7 Network, generally
on a "cost per transaction" basis and on terms no more favorable to
clicktobuy.com than would be made available to a party not affiliated with
24/7.
F. Network Affiliate also acknowledges that 24/7 owns and operates
the Profilz database of demographic profiles (the "Database "). Network
Affiliates understands and agrees that the Payment in respect of Advertising
sold that employs the Database shall be calculated by subtracting from gross
revenue a fee for use of the Database, which fee shall be disclosed to
Network Affiliate prior to implementation and shall reasonably reflect 24/7's
cost of developing and operating the Database. Network Affiliate shall have
the option not to accept Advertising that employs the Database.
5. INTELLECTUAL PROPERTY. All hardware, software, programs, codes, trade
names, technology, intellectual property, licenses, patents, trademarks,
copyrights, trade secrets, know-how, and processes (collectively, the "24/7
Technology") used by 24/7 under this Agreement shall remain the sole property
of 24/7. Network Affiliate shall have no rights, title or interest in the
24/7 Technology. All hardware, software, programs, codes, trade names,
technology, intellectual property, licenses,
3
<PAGE>
patents, trademarks, copyrights, trade secrets, know-how, and processes
(collectively, the "Network Affiliate Technology") used by Network Affiliate
under this Agreement shall remain the sole property of Network Affiliate.
24/7 shall have no rights, title or interest in the Network Affiliate
Technology. Upon the expiration or termination of this Agreement, each party
shall promptly return all information, documents, manuals and other materials
belonging to the other party except as otherwise provided in this Agreement.
6. CONFIDENTIALITY. 24/7 and Network Affiliate covenant to each other that
neither party shall disclose to any third party (other than its employees and
directors, in their capacity as such, and the employees and directors of any
affiliate on a need to know basis so long as they are bound by the terms of
this Agreement) any information regarding the terms and provisions of this
Agreement or any non-public confidential information which has been
identified as such by the other Party hereto except (i) to the extent
necessary to comply with any law or valid order of a court of competent
jurisdiction (or any regulatory or administrative tribunal), in which event
the party so complying shall so notify the others as promptly as practicable
(and, if possible, prior to making any disclosure) and shall seek
confidential treatment of such information, if available; (ii) as part of its
normal reporting or review procedure to its auditors or its attorneys, as the
case may be, so long as they are notified of the provisions of this
Agreement; (iii) in order to enforce its rights pursuant to this Agreement;
(iv) in connection with any filing with any governmental body or as otherwise
required by law, including the federal securities laws and any applicable
rules and regulations of any stock exchange or quotation system; and (v) in a
confidential disclosure made in connection with a contemplated financing,
merger, consolidation or sale of capital stock of 24/7 or the Network
Affiliate. Information which is or should be reasonably understood to be
confidential or proprietary includes, but is not limited to, information
about the 24/7 Network, sales, cost and other unpublished financial
information, product and business plans, projections, marketing data, and
sponsors but shall not include information (a) already lawfully known to or
independently developed by a party, (b) disclosed in published materials, (c)
generally known to the public, (d) lawfully obtained from any third party or
(e) required to be disclosed by law.
7. TERM.
A. The term of this Agreement (the "Term") shall commence on the
Effective Date and shall continue for at least one year from the Effective
Date. Either party may terminate the Agreement by giving notice no earlier
than eight months after the Effective Date. Termination will be effective
four (4) months after the date on which written notice is given, as
determined under the provisions of Section 13 below, to the other party.
B. Notwithstanding Section A. above, this Agreement may be
terminated by either party on 60 days' prior written notice to the other
party upon the occurrence of a material breach by the other party of any
covenant, duty or undertaking herein, which material breach continues without
cure for a period of 30 days after written notice of such breach from the
non-breaching party to the breaching party.
C. Notwithstanding Section A. or B. above, this Agreement may be
terminated by 24/7 on written notice to the Network Affiliate upon the
occurrence of a material breach by Network Affiliate of its covenants under
Section 8 of this Agreement, which material breach continues without cure for
a period of more than 48 hours after written notice of such breach from 24/7
to Network Affiliate of such breach, or which material breach occurs on more
than two occasions.
4
<PAGE>
D. Notwithstanding Section A. or B. above, this Agreement may be
terminated by 24/7 on 30 days' prior written notice to the Network Affiliate
if the number of Pages in any three consecutive months is less than one
million or if the average click through rate for any three-month period is
less than 0.25%.
8. CONTENT OF WEB SITE. Network Affiliate covenants and agrees not to include
or provide via the Web Site or the Web Site's Pages any material that is or
may be considered: (i) libelous, pornographic, obscene, or defamatory under
any federal or state law; (ii) an infringement of any third party's
intellectual property rights (including copyright, patent, trademark, trade
secret or other proprietary rights); or (iii) an infringement on any third
party's rights of publicity or privacy. Network Affiliate further covenants
and agrees, with respect to the operation of its Web Site and its Pages, to
comply with all laws, statutes, ordinances, and regulations.
9. INDEMNIFICATION. Network Affiliate shall indemnify and hold harmless 24/7,
its advertisers and other suppliers and any related third parties, against
and in respect of any and all third party claims, suits, actions, proceedings
(formal and informal), investigations, judgments, deficiencies, damages,
settlements, liabilities, and legal and other expenses (including reasonable
legal fees and expenses of attorneys chosen by 24/7) as and when incurred,
arising out of or based upon any act or omission or alleged act or alleged
omission by Network Affiliate in connection with the acceptance of, or the
performance or non-performance by Network Affiliate of, any of its duties
under this Agreement or arising from the breach by Network Affiliate of its
warranties, representations or covenants contained in this Agreement. 24/7
shall indemnify and hold harmless the Network Affiliate, against and in
respect of any and all third party claims, suits, actions, proceedings
(formal and informal), investigations, judgments, deficiencies, damages,
settlements, liabilities, and legal and other expenses (including reasonable
legal fees and expenses of attorneys chosen by Network Affiliate) as and when
incurred, arising out of or based upon any act or omission or alleged act or
alleged omission by 24/7 in connection with the acceptance of, or the
performance or non-performance by 24/7 of, any of its duties under this
Agreement or arising from the breach by 24/7 of its warranties,
representations or covenants contained in this Agreement.
10. NO POACHING. Network Affiliate agrees that, during the Term and for a
period of one year from the end of the Term, neither it nor its affiliates
will solicit or recruit the services of any 24/7 employees, or hire any such
employees.
11. NO WAIVER. This Agreement shall not be waived, modified, assigned or
transferred except by a written consent to that effect signed by Network
Affiliate and 24/7. Network Affiliate agrees that if it assigns or transfers
this Agreement, it shall cause such successor, assignee, or transferee to
assume all of the Network Affiliate's obligations hereunder. Any assignment,
transfer, or assumption shall not relieve the Network Affiliate of liability
hereunder.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
made and performed therein, without regard to principles of conflicts of laws.
13. NOTICES. All notices required or permitted to be given hereunder shall be
in writing and either hand-delivered, telecopied, mailed by certified first
class mail, postage prepaid, or sent via electronic mail to the other party
or parties hereto at the address(es) set forth below. A notice shall be
deemed given when delivered personally, when the telecopied notice is
transmitted by the sender,
5
<PAGE>
three business days after mailing by certified first class mail, or on the
delivery date if delivered by electronic mail.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
supersedes all prior agreements of the Parties with respect to the
transactions set forth herein and, except as otherwise expressly provided
herein, is not intended to confer upon any other person any rights or
remedies hereunder.
15. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute
one and the same document.
16. FORCE MAJEURE. Neither party shall be held liable or responsible to the
other party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement
when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party, including but not limited to fire,
floods, failure of communications systems or networks, embargoes, war, acts
of war (whether war is declared or not), insurrections, riots, civil
commotion, strikes, lockouts or other labor disturbances, acts of God or
acts, omissions or delays in acting by any governmental authority or the
other party; provided, however, that the party so affected shall use
reasonable commercial efforts to avoid or remove such causes of
nonperformance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed. Either party shall provide the
other party with prompt written notice of any delay or failure to perform
that occurs by reason of force majeure. The parties shall mutually seek a
resolution of the delay or the failure to perform as noted above.
17. SEVERABILITY. Should one or more provisions of this Agreement be or
become invalid, the parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their
economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement
shall not affect the validity of this Agreement as a whole, unless the
invalid provisions are of such essential importance to this Agreement that it
is to be reasonably assumed that the parties would not have entered into this
Agreement without the invalid provisions.
18. DISPUTE RESOLUTION. Any controversy or claim arising out of or relating
to the Agreement, or the breach thereof, shall be settled exclusively by
arbitration. Such arbitration shall be conducted before a single arbitrator
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. If arbitration is commenced by 24/7,
it shall take place in the city in the continental United States in which the
principal U.S.A. corporate offices of Network Affiliate are located. If
Network Affiliate has no corporate offices in the U.S.A. or if arbitration is
commenced by Network Affiliate, then arbitration shall take place in New
York, New York. Judgment may be entered on the arbitrator's award in any
court having jurisdiction, and the parties irrevocably consent to the
jurisdiction of such courts for that purpose. The parties waive personal
service in connection with any such arbitration; any process or other papers
under this provision may be served outside the home state of Network
Affiliate or New York by registered mail, return receipt requested, or by
personal service, provided a reasonable time for appearance or response is
allowed. All decisions of the arbitrator shall be final and binding on the
parties. The parties shall equally divide all costs of the American
Arbitration Association and the arbitrator. Each party shall bear its own
legal fees in any dispute. The arbitrator may grant injunctive or other
relief.
6
<PAGE>
19. INDEPENDENT CONTRACTORS. 24/7 Media and Network Affiliate shall each act
as independent contractors. Neither party shall exercise control over the
activities and operations of the other party. 24/7 Media and Network
Affiliate shall each conduct all of its business in its own name and as it
deems fit, provided it is not in derogation of the other's interests. Neither
party shall engage in any conduct inconsistent with its status as an
independent contractor, have authority to bind the other with respect to any
agreement or other commitment with any third party, nor enter into any
commitment on behalf of the other, except as expressly provided for by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement this
28th day of May, 1999 (the "Effective Date").
27/4 MEDIA, INC.
By: (illegible)
------------------------------------------------
Name:
Title: VP Bus Dev
E-mail address: [email protected]
------------------------------------
NETWORK AFFILIATE:
Name of Web Site: iChargeit
-----------------------------------
Web Site URL: www.iChargeit.com
---------------------------------------
Corporate Name of Web Site owner: iChargeit Inc.
-------------------
Address: 300 Pacific Coast Highway
--------------------------------------------
Address: Huntington Beach, CA 92648
--------------------------------------------
By: /s/ Jesse Cohen
-------------------------------------------------
Name: Jesse Cohen
Title: CEO
E-mail address: [email protected]
-------------------------------------
7
<PAGE>
One Matthews Court, Suite F
P.O. Box 22509
Hilton Head Island, SC 29926
843-681-4246
843-681-4349
CONTRACT
This Contract is made and entered into this 1st day of January, 2000, by and
between Stockcom, Inc., at 1 Matthews Court, Suite F, Hilton Head Island, South
Carolina 29926, and ichargeit, Inc. at 2184 West 190th Street, Torrance,
California 90504.
WHEREAS, ichargeit, Inc. desires to retain Stockcom, Inc. and Stockcom, Inc.
agrees to provide its specialized service to ichargeit, Inc. on behalf of
ichargeit, Inc. listed herein.
NOW THEREFORE, in consideration of the premises, mutual covenants, and
agreements herein, the parties agree as follows:
1. ichargeit, Inc., Inc. appoints Stockcom, Inc. to provide its services for
a three-month period to begin the date of this Contract.
2. During the three-month Contract, Stockcom, Inc. agrees to:
a) Create, print and mail announcement cards to entire broker and
investor database of designated company.
b) Create, print and mail 250 updated Corporate Profiles monthly to
database.
c) Provide and print the envelopes, and provide postage to mail all
Situation Profiles created by Stockcom.
d) Establish a real time "Wall Street Marketing Team" of active
participants in ichargeit, Inc's. stock.
e) E-mail blast all brokers/investors interested in updates via
Internet.
f) Follow-up with telephone calls to all brokers who receive
Situation Profiles.
g) Create an active regional and industry oriented database of
potential brokers/investors while continually following up
established database.
h) Discuss and mail out all News Releases to interested
brokers/investors.
i) Follow up all "exclusive" investment leads provided by ichargeit,
Inc. and report to ichargeit, Inc. results of investor leads.
STOCKCOM, INC.
<PAGE>
January 3, 2000
Page 2
j) Provide daily list of brokers requesting IR packages to be mailed
by ichargeit, Inc.
k) Provide 200 Situation Profiles for internal needs or trade shows.
l) Provide weekly and monthly reports of activities and progress by
Stockcom, Inc.
m) Second level reporting for real-time market maker activities.
3. ichargeit, Inc. agrees to pay the full compensation to Stockcom, Inc. in
the following increments: $4,000 upon signature of contract; $4,000 due
on the fifteenth day of each month for February and March.
4. This contract contains the entire understanding of the parties and may
not be changed except in writing by all parties. The provisions hereof
are severable, and if any one or more provisions shall be determined to
be unenforceable, the remaining provisions shall remain as binding
between the parties. This Contract is entered into Beaufort County, South
Carolina, and if breached, may be enforced in a Beaufort County court.
All Parties waive a trial by jury.
5. Stockcom, Inc. shall be entitled to an additional 20 percent of the dept
owed by ichargeit, Inc., Inc. as attorney fees, plus 15 percent per annum
interest from the date the dept was originally due to be paid if:
ichargeit, Inc., Inc. breaches this Contract; and this matter is referred
to an attorney for collection.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as of the day
and year first above written.
For Stockcom, Inc:
By: Title:
------------------------------ ------------------------
For ichargeit, Inc., Inc:
By: Title:
------------------------------ ------------------------
<PAGE>
NETGATEWAY, INC.
ELECTRONIC COMMERCE SERVICES AGREEMENT
THIS ELECTRONIC COMMERCE SERVICES AGREEMENT (the "Agreement") is made
effective as of the Acceptance Date set forth in the initial eCommerce Series
Order Form (October 1, 1999) accepted by Netgateway, a Nevada corporation
("Netgateway"), and the subscribed identified below ("Subscriber").
PARTIES:
Subscriber Name: iChargeit.com, Inc.
Address: 300 Pacific Coast Highway, Suite 308
Huntington Beach, California 92648
Phone: 714/594-0441
Fax: 714/374-0220
Netgateway, Inc.
300 Oceangate, Suite 300
Long Beach, California 90802
Phone: 562/308-00_0
Fax: 562/308-00_1
1. ELECTRONIC COMMERCE SERVICES.
1.1 ECOMMERCE SERVICES. Subject to the terms and conditions of this
Agreement, during the term of this Agreement, Netgateway internet Commerce
Center(TM) ("Netgateway ICC") provide to Subscriber the services described in
the eCommerce Services Order Form(s) (the "eCommerce Services Order Form(s)")
accepted by Netgateway, or substantially similar services if such substantially
similar services would provide Subscriber with substantially similar benefits,
all on a non-exclusive basis (the "eCommerce Services"). All such eCommerce
Services Order Forms will be incorporated herein by this reference as of the
Acceptance Date set forth in each such form. megate3way and Subscriber have
mutually agreed or will mutually agree upon the detailed final specifications
(the "Specifications") for the eCommerce Services and the development timeline
therefor, all of which are or will be set forth on the attached initial
eCommerce Services Order Form, marked Exhibit "A", and by this reference made a
part hereof. This Agreement shall replace and supercede in all respects the Term
Sheets between the parties, dated January 26, 1999 and March 5, 1999,
respectively (collectively, the "Term Sheets").
1.2 AVAILABILITY. ECommerce Services will be available to Subscriber
for inquiry and order entry functions twenty-four (24) hours a day, seven (7)
days a week. Netgateway reserves the right upon reasonable notice to Subscriber
to limit or curtail holiday or weekend availability, when necessary for system
upgrades, adjustments, maintenance, or other operational considerations.
1.3 ENHANCEMENT. General enhancements to existing eCommerce Services
provided hereunder, as well as new features that Netgateway incorporates into
its standard commerce processing system, regardless of whether they are
initialed by Netgateway or Subscriber at no additional cost. Any new features or
services that may be developed by Netgateway during the term
1
<PAGE>
of this Agreement that Netgateway intends to offer to subscribers on a
limited or optional basis may, at Netgateway's option and subject to
Subscribers' acceptance, be made available to Subscriber at Netgateway's
then-current prices for such new features or services. Enhancements to
existing eCommerce Services requested by Subscriber that benefit only
subscriber at the time such enhancements are put into service shall be billed
to Subscriber at Netgateway's standard rates for programming. All
enhancements in the eCommerce Services, and any new features or services
introduced by Netgateway, shall remain the exclusive proprietary property of
Netgateway.
1.4 TRAINING. At no cost to Subscriber, Netgateway shall provide such
onsite training and other assistance as Netgateway deems necessary to assure
that Subscriber's personnel are able to make effective use of the eCommerce
Services. On-site training shall take place at such times and places as are
mutually agreeable to the parties hereto.
1.5 SUBSCRIBER DATA.
(a) SUBSCRIBER DATA. Subscriber will timely supply Netgateway,
in a form acceptable to Netgateway, with all data necessary for Netgateway to
perform the ongoing services to be provided hereunder. It is the sole
responsibility of Subscriber to insure the completeness and accuracy of such
data.
(b) CONFIDENTIALITY. Netgateway acknowledges that all records,
data, files and other input material relating to Subscriber are confidential and
shall take reasonable steps to protect the confidentiality of such records,
data, files and other materials. Netgateway will provide reasonable security
safeguards to limit access to Subscriber's files and records to Subscriber and
other authorized parties.
(c) PROTECTION OF SUBSCRIBER FILES. Netgateway will take
reasonable steps to protect against the loss or alteration of Subscriber's
files, records and data retained by Netgateway, but Subscriber recognizes that
events beyond the control of Netgateway may cause such loss or alteration.
Netgateway will maintain backup file(s) containing all the data, files and
records related to Subscriber. Subscriber's file(s), records and data shall, at
no cost to Subscriber, be released to Subscriber on an occurrence that renders
Netgateway unable to perform hereunder, or upon the termination of this
Agreement as provided herein.
(d) OWNERSHIP OF DATA. Netgateway acknowledges that all records,
data, files and other input material relating to Subscriber and its customers
are the exclusive property of the Subscriber.
2. FEES AND BILLING.
2.1 FEES. The eCommerce Services Order Forms shall set forth the
financial obligations of the parties under this Agreement. Subscriber will pay
all fees and amounts in accordance with the eCommerce Services Order Forms.
2.2 BILLING COMMENCEMENT. Billing for eCommerce Services indicated in
the eCommerce Services Order Forms (including the eCommerce Rate, Fee Per Hit,
Banner Advertising and Click Through Revenue), other than any initial
Development Fee, shall commence on the "Operational Date" indicated in the
eCommerce Services Order Forms, unless otherwise provided in the eCommerce
Services Order Form.
2
<PAGE>
2.3 BILLING AND PAYMENT TERMS. Netgateway shall invoice Subscriber
monthly in advance of the provision of Internet commerce Services, and payment
of such fees will be due within thirty (30) days of the date of each Netgateway
invoice. All payments will be made in U.S. dollars, late payments hereunder will
accrue interest at a rate of one and one-half percent (1-1/2%) per month, or the
highest rate allowed by applicable law, whichever is lower. If in its reasonable
judgment Netgateway determines that Subscriber is not creditworthy or is
otherwise not financially secure, Netgateway may, upon prior written notice to
Subscriber, modify the payment terms to require full payment before the
provision of eCommerce Services or other assurances to secure Subscriber's
payment obligations hereunder.
2.4 TAXES, UTILITIES AND EXCLUSIONS. All charges shall be
exclusive of any federal, state or local sales, use, excise, AD VALOREM or
personal property taxes levied, or any fines, forfeitures or penalties
assessed in connection therewith, as a result of this Agreement or the
installation or use of eCommerce Services hereunder. Any such taxes, which
may be applicable will be paid by Subscriber or by Netgateway for
Subscriber's account, in which case Subscriber shall reimburse Netgateway for
amounts so paid. Netgateway shall provide burstible at 1 megabit per second
capacity bandwidth for Subscriber's website at no additional charge. Should
Subscriber need additional bandwidth and invoice Subscriber for such excess
bandwidth and/or use beyond a 1 megabit per second burstible line. Netgateway
will provide traffic reports to Subscriber with respect to burstible
capacity. Netgateway is not responsible for providing connectivity to
Subscriber's offices.
3. SUBSCRIBER'S OBLIGATIONS.
3.1 COMPLIANCE WITH LAW AND RULES AND REGULATIONS. Subscriber agrees
that Subscriber will comply at all times with all applicable laws and
regulations and Netgateway's general rules and regulations relating to its
provision of eCommerce Services, currently included herein as Section 10, which
may be updated and provided by Netgateway to Subscriber from time to time
("Rules and Regulations"). Subscriber acknowledges that Netgateway exercises no
control whatsoever over the content contained in or passing through the
Subscriber's web site or mall ("ECommerce Centers"), and that it is the sole
responsibility of Subscriber to ensure that the information it transmits and
receives complies with all applicable laws and regulations.
3.2 ACCESS AND SECURITY. Subscriber will be fully responsible for
any charges, costs, expenses (other than those included in the eCommerce
Services), and third party claims that may result from its use of, or access
to, the Netgateway Internet Commerce Center(TM), including, but not limited
to, any unauthorized use or any access devices provided by Netgateway
hereunder.
3.3 NO COMPETITIVE SERVICES. Subscriber may not at any time permit
any eCommerce Services to be utilized for the provision of any services that
compete with any Netgateway services, without Netgateway's prior written
consent.
3.4 INSURANCE.
(a) MINIMUM LEVELS. Subscriber will keep in full force and
effect during the term of this Agreement: (i) comprehensive general liability
insurance in an amount not less than 4% million per occurrence for bodily
injury and property damage; (ii) employer's liability insurance in an amount
not less than $1 million per occurrence; and (iii) workers;' compensation
insurance in an amount not less than that required by applicable law.
Subscriber also agrees that it will be solely
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<PAGE>
responsible for ensuring that its agents (including contractors and
subcontractors) maintain, other insurance at levels no less than those
required by applicable law and customary in Subscriber's industries.
(b) CERTIFICATES OF INSURANCE. Prior to the Operational Date,
Subscriber will furnish Netgateway with certificates of insurance which evidence
the minimum levels of insurance set forth above, and will notify Netgateway in
writing in the event that any such insurance policies are cancelled.
(c) NAMING NETGATEWAY AS AN ADDITIONAL INSURED. Subscriber
agrees that prior to the Operational Date, Subscriber will cause its
insurance provider(s) to name Netgateway as an additional insured and notify
Netgateway in writing of the effective date thereof.
4. CONFIDENTIAL INFORMATION.
4.1 CONFIDENTIAL INFORMATION. Each party acknowledges that it will
have access to certain confidential information of the other party concerning
the other party's business, plans, customers, technology, and products,
including the terms and conditions of this Agreement ("Confidential
Information"). Confidential Information will include, but not be limited to,
each party's proprietary software and customer information. Each party agrees
that it will not use in any way, for its own account or the account of any
third party, except as expressly permitted by this Agreement, nor disclose to
any third party (except as required by law or to that party's attorneys,
accountants, and other advisers as reasonably necessary) any of the other
party's Confidential Information and will take reasonable precautions to
protect the confidentiality of such information.
4.2 EXCEPTIONS. Information will not be deemed Confidential
Information hereunder if such information: (it is known to the receiving
party prior to receipt from the disclosing party directly or indirectly from
a source other than one having an obligation of confidentiality to the
disclosing party) to the receiving party directly or indirectly from a source
other than one having an obligation of confidentiality to the disclosing
party; (iii) becomes publicly known or otherwise ceases to be secret or
confidential, except through a breach of this Agreement by the receiving
party; or (iv) is independently developed by the receiving party.
5. REPRESENTATIONS AND WARRANTIES.
5.1 WARRANTIES BY SUBSCRIBER.
(a) SUBSCRIBER'S BUSINESS. Subscriber represents and warrants
that:
(i) Subscriber's services, products, materials, data, and
information used by Subscriber in connection with this Agreement as well as
Subscriber's and its permitted customers' and users' use of the eCommerce
Services (collectively, "Subscriber's Business") does not, as of the
Operational Date, and will not during the term of this Agreement, operate in
any manner what would violate any applicable law or regulation.
(ii) Subscriber owns or has the right to use all material
contained in the Subscriber's web site including all text, graphics, sound,
video, programming, scripts, and applets; and
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(iii) The use, reproduction, distribution and transmission of
the web site, or any information or material contained in it, does not (A)
infringe or misappropriate any copyright, patent, trademark, trade secret or any
other proprietary rights of a third party; or (B) constitute false advertising,
unfair competition, defamation, an invasion of privacy or violate a right or
publicity.
(b) RULES AND REGULATIONS. Subscriber has read the Rules and
Regulations (Section 10 below) an represents and warrants that Subscriber and
Subscriber's Business are currently in full compliance with the Rules and
Regulations, and will remain so at all times during the term of this Agreement.
(c) BREACH OF WARRANTIES. In the event of any breach, or
reasonably anticipated breach, of any of the foregoing warranties, in addition
to any other remedies available at law or in equity, Netgateway will have the
right immediately in Netgateway's reasonable discretion, to suspend any related
eCommerce Services if deemed reasonably necessary by Netgateway to prevent any
harm to Netgateway or its business.
5.2 WARRANTIES AND DISCLAIMERS BY NETGATEWAY.
(a) NO OTHER WARRANTY. THE eCOMMERCE SERVICES ARE PROVIDED ON AN
"AS IS" BASIS, AND SUBSCRIBER'S USE OF THE eCOMMERCE SERVICES IS AT ITS OWN
RISK. NETGATEWAY DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY AND ALL OTHER EXPRESS
AND/OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, WITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT AND TITLE,
AND ANY WARRANTIES ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICE,
NETGATEWAY DOES NOT WARRANT THAT THE eCOMMERCE SERVICES WILL BE UNINTERRUPTED,
ERROR0-FREE, OR COMPLETELY SECURE.
(b) DISCLAIMER OF ACTIONS CAUSED BY AND/OR UNDER THE CONTROL OF
THIRD PARTIES. NETGATEWAY DOES NOT AND CANNOT CONTROL THE PLOW OF DATA TO OR
FROM NETGATEWAY'S INTERNET COMMERCE CENTER AND OTHER PORTIONS OF THE INTERNET.
SUCH FLOW DEPENDS IN LARGE PART ON THE PERFORMANCE OR INTERNET SERVICES PROVIDED
OR CONTROLLED BY THIRD PARTIES. AT TIMES, ACTIONS OR INACTIONS CAUSED BY THESE
THIRD PARTIES CAN PRODUCE SITUATIONS IN WHICH NETGATEWAY'S SUBSCRIBERS'
CONNECTIONS TO THE INTERNET (R PORTIONS THEREOF) MAY BE IMPAIRED OR DISRUPTED.
ALTHOUGH NETGATEWAY WILL USE COMMERCIALLY REASONABLE REPORTS TO TAKE ACTIONS IT
DEEMS APPROPRIATE TO REMEDY AND AVOID SUCH EVENTS, NETGATEWAY CANNOT GUARANTEE
THAT THEY WILL NOT OCCUR. ACCORDINGLY, NETGATEWAY DISCLAIMS ANY AND ALL
LIABILITY RESULTING FROM OR RELATED TO SUCH EVENTS.
6. LIMITATIONS OF LIABILITY.
6.1 EXCLUSIONS. IN NO EVENT WILL NETGATEWAY BE LIABLE TO ANY THIRD
PARTY FOR ANY CLAIMS ARISING OUT OF OR RELATED TO THIS AGREEMENT, SUBSCRIBER'S
BUSINESS OR OTHERWISE, AND ANY LOST REVENUE, LOST PROFITS, REPLACEMENT GOODS,
LOSS OF TECHNOLOGY, RIGHTS OR SERVICES, INCIDENTAL, PUNITIVE, INDIRECT OR
CONSEQUENTIAL DAMAGES, LOSS OF DATA, OR
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INTERRUPTION OR LOSS OF USE OF SERVICE OR SUBSCRIBER'S BUSINESS, EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER UNDER THEORY OF CONTRACT,
TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
6.2 LIMITATIONS. NETGATEWAY, ITS AFFILIATES, EMPLOYEES, OFFICERS AND
AGENTS SHALL NOTE BE LIABLE TO SUBSCRIBER OR TO ANY THIRD PARTY FOR ANY LOSS OR
DAMAGE, WHETHER DIRECT OR INDIRECT, RESULTING FROM DELAYS OR INTERRUPTIONS OF
SERVICE DUE TO MECHANICAL, ELECTRICAL OR WIRE DEFECTS OR DIFFICULTIES, STORMS,
STRIKES, WALK-OUTS, EQUIPMENT OR SYSTEMS FAILURES, OR OTHER CAUSES OVER WHICH
NETGATEWAY, ITS AFFILIATES, EMPLOYEES, OFFICERS, OR AGENTS AGAINST WHOM
LIABILITY IS SOUGHT, HAVE NO REASONABLE CONTROL, OR FOR LOSS OR DAMAGE, DIRECT
OR INDIRECT, RESULTING FROM INACCURACIES, ERRONEOUS STATEMENTS, ERRORS OF FACTS,
MISSIONS, OR ERRORS IN THE TRANSMISSION OR DELIVERY OF eCOMMERCE SERVICES, OR
ANY DATA PROVIDED AS A PART OF THE eCOMMERCE SERVICES PURSUANT TO THIS
AGREEMENT, EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF NETGATEWAY. IN ADDITION, IN NO EVENT SHALL NETGATEWAY BE LIABLE TO
SUBSCRIBER OR TO ANY THIRD PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL LOSSES OR DAMAGES WHICH SUBSCRIBER OR SUCH THIRD PARTY MAY INCUR
OR EXPERIENCE ON ACCOUNT OF ENTERING INTO OR RELYING ON THIS AGREEMENT OR
UTILIZING THE NETGATEWAY eCOMMERCE SERVICES, REGARDLESS OF WHETHER NETGATEWAY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR WHETHER SUCH DAMAGES ARE
CAUSED, IN WHOLE OR IN PART, BY THE NEGLIGENCE OF NETGATEWAY.
6.3 MAXIMUM LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, NETGATEWAY'S MAXIMUM AGGREGATE LIABILITY TO SUBSCRIBER
RELATED TO OR IN CONNECTION WITH THIS AGREEMENT WILL BE LIMITED TO THE TOTAL
AMOUNT PAID BY SUBSCRIBER TO NETGATEWAY HEREUNDER FOR THE PERIOD CONSISTING
OF THE PRIOR THREE (3) FULL CALENDAR MONTHS.
6.4 TIME FOR MAKING CLAIMS. ANY SUIT OR ACTION BY SUBSCRIBER AGAINST
NETGATEWAY, ITS AFFILIATES, OFFICERS, DIRECTORS, AGENTS EMPLOYEES, SUCCESSORS OR
ASSIGNS, BASED UPON ANY ACT OR OMISSION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR SERVICES PERFORMED HEREUNDER, OR ANY ALLEGED BREACH THEREOF, SHALL
BE COMMENCED WITHIN TWO (2) YEARS OF THE FIRST OCCURRENCE GIVING RISE TO SUCH
CLAIM OR BE FOREVER BARRED. THIS PROVISION DOES NOT MODIFY OR OTHERWISE AFFECT
THE LIMITATION OF NETGATEWAY'S LIABILITY SET FORTH IN SECTION 6 OR ELSEWHERE IN
THIS AGREEMENT.
6.5 SUBSCRIBER'S INSURANCE. Subscriber agrees that it will not
pursue any claims against Netgateway for any liability Netgateway may have
under or relating to this Agreement until Subscriber first makes claims
against Subscriber's insurance provider(s) and such insurance provider(s)
finally resolves(s) such claims.
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<PAGE>
6.6 BASIS OF THE BARGAIN; FAILURE OF ESSENTIAL PURPOSE. Subscriber
acknowledges that Netgateway has set its prices and entered into this Agreement
in reliance upon the limitations of liability and the disclaimers of warranties
and damages set forth herein, and that the same form an essential basis of the
bargain between the parties. The parties agree that the limitations and
exclusions of liability and disclaimers specified in this Agreement will survive
and apply even if found to have failed of their essential purpose.
7. INDEMNIFICATION.
7.1 NETGATEWAY'S INDEMNIFICATION OF SUBSCRIBER. Netgateway will
indemnify, defend and hold Subscriber harmless from and against any and all
costs, liabilities, losses, and expenses (including, but not limited to,
reasonable attorneys; fees) collectively, "Losses") resulting from any claim,
suit, action, or proceeding (each, an "Action") brought against Subscriber
alleging the infringement of any third party registered U.S. copyright or issued
U.S. patent resulting from the provision of eCommerce Services pursuant to this
Agreement (but excluding any infringement contributorily caused by Subscriber's
Business).
7.2 SUBSCRIBER'S INDEMNIFICATION OF NETGATEWAY. Subscriber will
indemnify, defend and hold Netgateway, its affiliates and customers harmless
from and against any and all Losses resulting from or arising out of Subscriber"
breach of any provision of this Agreement or any Action brought against
Netgateway, its directors, employees, affiliates or Subscribers alleging with
respect to the Subscriber's Business: (a) infringement or misappropriation of
any intellectual property rights; (b) defamation, libel, slander, obscenity,
pornography, or violation of the rights of privacy or publicity; (c) spamming or
any other offensive, harassing or illegal conduct or violation of the Rules and
Regulations; or, (d) any violation of any other applicable law or regulation.
7.3 NOTICE. Each party will provide the other party, prompt
written notice of the existence of any such event of which it becomes aware,
and an opportunity to participate in the defense thereof.
8. DISPUTE RESOLUTION.
8.1 PROCEDURES. It is the intent of the parties that all disputes
arising under this Agreement be resolved expeditiously, amicably, and at the
level within each party's organization that is most knowledgeable about the
disputed issue. The parties understand and agree that the procedures outlined in
this Paragraph 8 are not intended to supplant the routine handling of inquiries
and complaints through informal contact with customer service representatives or
other designated personnel of the parties. Accordingly, for purposes of this
procedures set forth in this paragraph, a "dispute" is a disagreement that the
parties have been unable to resolve by the normal and routine channels
ordinarily used for such matters. Before any dispute arising under this
Agreement, other than as provided in paragraph 8.5 below, may be submitted to
arbitration, the parties shall first follow the informal and escalating
procedures set forth below.
(a) The complaining party's representative will notify the other
party's representative in writing of the dispute, and the non-complaining party
will exercise good faith efforts to resolve the matter as expeditiously as
possible.
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(b) In the event that such matter remains unresolved thirty
(30) days after the delivery of the complainant party's written notice, a
senior representative of each party shall meet or confer within ten (10)
business days of a request for such a meeting or conference by either party
to resolve such matter.
(c) In the event that the meeting or conference specified in
(b) above does not resolve such matter, the senior officer of each party
shall meet of confer within ten (10) business days of the request for such a
meeting or conference by either party to discuss and agree upon a mutually
satisfactory resolution of such matter.
(d) If the parties are unable to reach a resolution of the
dispute after following the above procedures, or if either party fails to
participate when requested, the parties may proceed in accordance with
paragraph 8.2 below.
8.2 BINDING ARBITRATION. Except as provided in paragraph 8,5
below, any dispute arising under this Agreement shall, after utilizing the
procedures in paragraph 8.1, be resolved by final and binding arbitration in
Los Angeles, California, before a single arbitrator selected by, and in
accordance with the rules of commercial arbitration of, the American
Arbitration Association or as otherwise provided in Paragraph 11.6. Each
party shall bear its own costs in the arbitration, including attorneys; fees,
and each party shall bear one-half of the cost of the arbitrator.
8.3 ARBITRATOR'S AUTHORITY. The arbitrator shall have the
authority to award such damages as are not prohibited by this Agreement and
may, in addition and in a proper case, declare rights and order specific
performance, but only in accordance with the terms of this Agreement.
8.4 ENFORCEMENT OF ARBITRATOR'S AWARD. Any Party may apply to a
court of general jurisdiction to enforce an arbitrator's award, and if
enforcement is ordered, the party against which the other is issued shall pay
the costs and expenses of the other party in obtaining such order, including
responsible attorneys; fees.
8.5 ACCESS TO COURTS. Notwithstanding the provisions of paragraphs
8.1 and 8.2 above, any action by Netgateway to enforce its rights under
Paragraphs 0.3 of this Agreement or to enjoin any infringement of the same by
Subscriber may, at Netgateway election, be commenced in the state of federal
courts of Los Angeles, California, and Subscriber consents to personal
jurisdiction and venue in such courts for such actions.
9. TERM AND TERMINATION.
9.1 TERM. This Agreement will be effective on the date first above
written and will terminate three (3) years ("Initial Terms") from the date
Subscriber begins processing live data through Netgateway ICC(TM), unless
earlier terminated according to the provisions of this Section 9. This
Agreement will automatically renew for an additional term of three (3) years
unless a party hereto elects not to so renew and notifies the other party I
writing of such election by a date, which is six (6) months prior to the
lapse of the Initial Term.
9.2 TERMINATION. Either party will have the right to terminate
this Agreement if: (i) the other party breaches any material term or
condition of this Agreement and fails to cure such breach within thirty (30)
days after receipt of written notice of the same, except in the case of
failure to pay fees, which must be cured within five (5) days after receipt
of written notice from Netgateway; (ii)
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the other party becomes the subject of a voluntary petition in bankruptcy or
any voluntary proceeding relating to insolvency, receivership, liquidation,
or composition for the benefit of creditors; or (iii) the other party becomes
the subject of an involuntary petition in bankruptcy or any involuntary
proceeding relating to insolvency, receivership, liquidation, or composition
for the benefit of creditors, if such petition or proceeding is not dismissed
within sixty (60) days of filing.
9.3 NO LIABILITY FOR TERMINATION. Neither party will be liable to
the other for any termination or expiration of this Agreement in accordance
with its terms.
9.4 EFFECT OF TERMINATION. Upon this effective date of expiration
or termination of this Agreement: (a) Netgateway will immediately cease
providing the eCommerce Services; (b) any and all payment obligations of
Subscriber under this Agreement will become due immediately; and (c) within
thirty (30) days after such expiration or termination, each party will return
all Confidential Information of the other party in its possession at the time
of expiration or termination and will not make or retain any copies of such
Confidential Information except as required to comply with any applicable
legal or accounting record keeping requirement.
9.5 SURVIVAL. The following provisions will survive any expiration
or termination of the Agreement: Sections 2, 3, 4, 5, 6, 7, 8, 9 and 10.
10. USE OF ECOMMERCE SERVICES - RULES AND REGULATIONS.
10.1 PROPRIETARY SYSTEMS. Subscriber acknowledges that the
software systems utilized by Netgateway in the provision of eCommerce
Services hereunder, including all enhancements thereto and all screens and
formats used in connection therewith where the exclusive proprietary property
of Netgateway and Subscriber shall not publish, disclose, display, provide
access to or otherwise make available any Netgateway eCommerce software or
products thereof, or any screens, formats, reports or printouts used,
provided, produced or supplied from or in connection therewith, to any person
or entity other than an employee of Subscriber without the prior written
consent of, and on terms acceptable to Netgateway, which consent shall not be
unreasonably withheld; provided, however, that Subscriber may disclose to a
governmental or regulatory agency or to customers of Subscriber any
information expressly prepared and acknowledged in writing by Netgateway as
having been prepared for disclosure to such governmental or regulatory agency
or to such customers. Neither party shall disclose Subscriber's use of
eCommerce Services in any advertising or promotional materials without the
prior written consent to such use, and approval of such materials, by the
other.
10.2 USE OF SERVICES PERSONAL TO SUBSCRIBER. Subscriber agrees
that it will use the services provided hereunder only in connection with its
eCommerce business, and it will not, without the express written permission
of Netgateway, sell, lease, or otherwise provide or make available eCommerce
Services to any third party.
10.3 SURVIVAL OF OBLIGATIONS. The obligations of this paragraph 10
shall survive termination for this Agreement. Subscriber understands that the
unauthorized publication or disclosure of any of Netgateway software or
copies thereof, or the unauthorized use of eCommerce Service would cause
irreparable harm to Netgateway for which there is no adequate remedy at law.
Subscriber therefore agrees that in the event of such unauthorized disclosure
or use, Netgateway may, at its discretion or use, Netgateway may, at its
discretion and at Subscriber's expense, terminate this Agreement, obtain
immediate injunctive relief in a court of competent jurisdiction, or take
such
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other steps as it deems necessary to protect its rights. If Netgateway, in
its reasonable, good faith judgment, determines that there is a material risk
of such unauthorized disclosure or use, it may demand immediate assurances,
satisfactory to Netgateway, that there will be no such unauthorized
disclosure or use. In the absence of such assurance, Netgateway may
immediately terminate this Agreement and take such other steps as it deems
necessary. The rights of Netgateway hereunder are in addition to any other
remedies provided by law.
11. MISCELLANEOUS PROVISIONS.
11.1 FORCE MAJEURE. Except for the obligation to pay money,
neither party will be liable for any failure or delay in its performance
under this Agreement due to any cause beyond its reasonable control,
including act of war, acts of God, earthquake, flood, embargo, riot,
sabotage, labor shortage or dispute, governmental set or failure of the
Internet, provided that the delayed party: (a) gives the other party prompt
notice of such cause, and (b) uses its reasonable commercial efforts to
correct promptly such failure or delay in performance.
11.2 NO LEASE. This Agreement is a service agreement and is not
intended to and will not constitute a lease of any real or personal property.
Subscribed acknowledges and agrees that (i) it has been granted only a
license to use Netgateway's ICC and any equipment provided by Netgateway in
accordance with this Agreement, (ii) Subscriber has not been granted any
real property interest in the Netgateway's ICC, and (iii) Subscriber has no
rights as a tenant or otherwise under any real property of landlord/tenant
laws, regulations, or ordinances.
11.3 MARKETING. Subscriber agrees that Netgateway may refer to
Subscriber by trade name and trademark, and may briefly describe Subscriber's
Business, in Netgateway's marketing materials and web site. Subscriber hereby
grants Netgateway a license to use any Subscriber trade names and trademarks
solely in connection with the rights granted to Netgateway pursuant to this
Section 11.3.
11.4 GOVERNMENT REGULATIONS. Subscriber will not export,
re-export, transfer, or make available, whether directly or indirectly, any
regulated item or information to anyone outside the U.S. in connection with
this Agreement without first complying with all export control laws and
regulations which may be imposed by the U.S. Government and any country or
organization or nations within whose jurisdiction Subscriber operates or does
business.
11.5 NON-SOLICITATION. During the period beginning on the
Operational Data and ending on the first anniversary of the termination or
expiration of this Agreement in accordance with its terms, Subscriber agrees
that it will not, and will ensure that its affiliates do not, directly or
indirectly, solicit or attempt to solicit for employment any persons employed
by Netgateway during such period.
11.6 GOVERNING LAW; DISPUTE RESOLUTION, SEVERABILITY; WAIVER. This
Agreement is made under and will be governed by and construed in accordance
with the laws of the State of California (without regard to that body of law
controlling conflicts of law) and specifically excluding from application to
this Agreement that law known as the United Nations Convention of the
International Sale of Goods. Any dispute relating to the terms,
interpretation or performance of this Agreement (other than claims for
preliminary injunctive relief or other pre-judgment remedies) will be
resolved at the request of either party through binding arbitration.
Arbitration will be conducted in Los Angeles county, California, under the
rules and procedures of the Judicial Arbitration and
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Mediation Society ("JAMS"). The parties will request that JAMS appoint a
single arbitrator possessing knowledge of online services agreements; however
the arbitration will proceed even if such a person is unavailable. In the
event any provision of this Agreement is held by a tribunal or competent
jurisdiction to be contrary to the law, the remaining provisions of this
Agreement will remain in full force and effect. The waiver of any breach or
default of this Agreement will not constitute a waiver of any subsequent
breach or default, and will not act to amend or negate the rights of the
waiving party.
11.7 ASSIGNMENT; NOTICES. Subscriber may not assign its rights or
delegate its duties under this Agreement either in whole or in part without the
prior written consent of Netgateway, except that Subscriber may assign this
Agreement in whole as part of a corporate reorganization, consolidation, merger,
or sale or substantially all of its assets. Any attempted assignment of
delegation without such consent will be void. Netgateway may assign this
Agreement in whole or part. This Agreement will bin and inure to the benefit of
each party's successors and permitted assigns. Any notice or communication
required or permitted to be given hereunder may be delivered by hand, deposited
with an overnight courier, sent by confirmed facsimile, or mailed by registered
or certified mail, return receipt requested, postage prepaid, in each case to
the address of the receiving party indicated on the signature page hereof, or at
such other address as may hereafter be furnished in writing by either party
hereto to the other. Such notice will; be deemed to have been given as of the
date it is delivered, mailed or sent, whichever is earlier.
11.8 RELATIONSHIP OF PARTIES. Netgateway and Subscriber are
independent contractors and this Agreement will not establish any
relationship of partnership, joint venture, employment, franchise or agency
between Netgateway and Subscriber. Neither Netgateway nor Subscriber will
have the power to bind the other or incur obligations on the other's behalf
without the other's prior written consent, except as otherwise expressly
provided herein.
11.9 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement, including all
documents incorporated herein by reference, constitutes the complete and
exclusive agreement between the parties with respect to the subject matter
hereof, and supersedes and replaces any and all prior or contemporaneous
discussions, negotiations, understandings and agreements, written and oral,
regarding such subject matter. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
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Subscriber's and Netgateway's authorized representatives have read
the foregoing and all documents incorporated therein and agree and accept
such terms effective as of the date first above written.
SUBSCRIBER:
Signature: /s/ Jesse Cohen Signature:
--------------------------- --------------------------
Print Name: Jesse Cohen Print Name:
--------------------------- --------------------------
Title: CEO
--------------------------------
NETGATEWAY:
Signature: /s/ Donald M. Corliss Signature:
--------------------------- --------------------------
Print Name: Donald M. Corliss Jr. Print Name:
--------------------------- --------------------------
Title: President
--------------------------------
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EXHIBIT "A"
ECOMMERCE SERVICES ORDER FORMS
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NETGATEWAY
ECOMMERCE SERVICES ORDER FORM
CUSTOMER NAME: ICHARGEIT.COM, INC.
FORM DATE: OCTOBER 1, 1999
FORM NO.: 001
GENERAL INFORMATION:
1. By submitting this eCommerce Services Order Form ("Form") to
Netgateway, Subscriber hereby places an order for the eCommerce
Services described herein pursuant to the terms and conditions of the
Electronic Commerce Services Agreement between Subscriber and
Netgateway (the "ECS Agreement").
2. Billing will commence on the Operational Date set forth below or the
date that Subscriber first begins to process transactions through the
Netgateway Internet commerce Center, whichever occurs first, or as
otherwise provided herein.
3. Netgateway will provide the eCommerce Services pursuant to the terms
and conditions of the ECS Agreement, which incorporates this Form. The
terms of this Form supersede, and by accepting this Form Netgateway
hereby rejects, any conflicting or additional terms provided by
Subscriber in connection with Netgateway's provision of the eCommerce
Services. If there is a conflict between this Form and any other Form
provided by Subscriber and accepted by Netgateway, the Form with the
latest date will control.
4. Netgateway will not be bound by or required to provide eCommerce
Services pursuant to this form or the ECS Agreement until each is
signed by an authorized representative of Netgateway.
SUBSCRIBER HAS READ, UNDERSTANDS AND HEREBY SUBMITS THIS ORDER.
Submitted By: /s/ Jesse Cohen Operational Date: 10/31/99
----------------------- ----------------
(AUTHORIZED SIGNATURE)
Print Name: Jesse Cohen
--------------------------
Title: CEO
-------------------------------
NETGATEWAY ACCEPTANCE
(illegible) Date: 10/8/99
- -------------------------------------- ----------------------------
(AUTHORIZED SIGNATURE)
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NETGATEWAY
ECOMMERCE SERVICES ORDER FORM
CUSTOMER NAME: ICHARGEIT.COM, INC.
FORM DATE: OCTOBER 1, 1999
FORM NO.: 001
TERMS:
1. TERM SHEETS. Except as provided herein, the Term Sheets shall be
superceded by the ECS Agreement and this eCommerce Services Order Form in all
respects. In connection with their respective obligations under the Term Sheets,
the parties hereby agree as follows:
(a) Netgateway agrees to complete all of the development work and
enhancements set forth on Schedule A annexed hereto on or
prior to October 31, 1999. Upon completion of the development
work and enhancements set forth on Schedule A, iChargeit.com
acknowledges and agrees that Netgateway shall not be obligated
to provide any other development work or enhancements under
the Term Sheets or the ECS Agreement, except as may be
hereafter mutually agreed by the parties.
(b) Chargeit.com agrees to waive development of completion of the
following projects which had initially been set forth as
requirements in the Term Sheets: (i) iChargeit.com branded 800
technical call support for iChargeit.com's customers; (ii) an
affiliate engine; (iii) a shopping cart interface with Winner
Internet Network and Cyberlink Monetary Trust of Austria; and
(iv) foreign language translation capability in connection
with the eCommerce Services.
(c) Netgateway shall waive any and all unpaid development fees due
under the Term Sheets.
(d) Netgateway shall return to iChargeit.com for cancellation
70,000 shares of iChargeit.com restricted stock previously
issued to Netgateway in connection with the Term Sheets.
(e) Upon submission of his eCommerce Services Order Form, except
as otherwise provided herein, the parties agree that their
respective obligations under the Term Sheets including any and
all service or payment obligations, shall have been satisfied
in all respects.
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2. HOSTING FEE; ICC COMMERCE RATE. Netgateway shall charge iChargeit a
monthly hosting fee of $750.00 with respect to the iChargeit.com and
iSwapit.com websites for the first year of this Agreement, a monthly
hosting fee of $825.00 during the second year of the Agreement and a
monthly hosting fee of $907.50 during the third year of the Agreement.
Netgateway shall be entitled to transaction fees based upon the
following schedule:
<TABLE>
<CAPTION>
MONTHLY GROSS SALES REVENUE TRANSACTION FEE RATE
- --------------------------- --------------------
<S> <C>
$0 to $100,000 0.50%
100,000 to 200,000 1.00%
200,000 and over 2.00%
</TABLE>
For purposes hereof, sales revenue shall mean all revenues generated
from transactions processed through the Netgateway Internet Commerce
Center which are related to Subscriber.
Except as provided herein, iChargeit.com shall not be liable to
Netgateway for any additional charges under this Agreement.
3. DEVELOPMENT TIMELINE. Development of the services set forth on Schedule A
annexed hereto shall be completed on or before October 31, 1999.
4. MISCELLANEOUS. Subscriber's employee, Marcelo Povolo, shall be
authorized to work with Netgateway on certain enhancements to the
eCommerce Services provided under this Agreement, all on terms and
conditions acceptable to Netgateway. Prior to performing any work
hereunder, Povolo shall be required to execute a confidentiality
agreement in form and substance satisfactory to Netgateway.
16
<PAGE>
SCHEDULE A
STATEMENT OF WORK
17
<PAGE>
AFFILIATE AGREEMENT
Agreement made this 27th day of October, 1999, by and between
FindWhat.Com, a Nevada corporation, 121 West 27th Street, Suite 903, New
York, New York 10001 and iChargeit Inc., a Texas corporation, 300 Pacific
Coast Highway, Suite 308, Huntington Beach, California 92648.
WHEREAS, iChargeit, hereinafter known as iChargeit, operates an internet
web site at www.ichargeit.net (the "Website"); and
WHEREAS, FindWhat.com operates an internet web site at www.Findwhat.com
and provides search services to visitors of its site; and
WHEREAS, iChargeit desires to affiliate with FindWhat.com and allow
visitors of its web site to link to the search results displayed by
FindWhat.com;
NOW, THEREFORE, in consideration of and in reliance upon the covenants,
conditions, representations and warranties contained herein, the parties
hereto agree as follows:
1. FindWhat.com shall allow iChargeit to link to its web site search
results for display of FindWhat.com search results in response to searches
entered by iChargeit Website visitors. The search results will be displayed
on the iChargeit.net Website. iChargeit will receive an initial payment of
three cents per search request for all requests submitted to FindWhat.com
from the ichargeit.net website. This 3 cents per search commission iChargeit
receives will be replaced by 15% of all click through commissions
FindWhat.com receives through searches generated by the ichargeit.net website
paid to iChargeit. This 15% commission structure will take effect whenever
and if FindWhat.com chooses to deploy this functionality.
2. iChargeit may not alter the display of FindWhat.com search results
in any manner. The look and feel of the search results will be co-branded
ichargeit.net and FindWhat.com. iChargeit will be able to display their own
banners and navigation links at the top of each page of search results.
iChargeit will have it's own look and feel branding at the top of each page
of search results. FindWhat.com will have the right to approve the look and
feel co-branding created and displayed by iChargeit.
3. iChargeit shall not save or cache any search results provided by
FindWhat.com but shall merely display to its Website visitors the search
results provided by the link to FindWhat.com.
4. Wherever iChargeit offers to provide search results on its Website
it will display next to the search query box the FindWhat.com logo, in the
form to be supplied by FindWhat.com, and state that the search results are
provided or "powered" by FindWhat.com. The FindWhat.com logo shall also be
visible on the search result pages.
5. iChargeit represents and warrants that its Website does not and
shall not: (a) promote sexually obscene materials; (b) promote violence; (c)
promote discrimination based on race, sex, religion, nationality, disability,
sexual orientation, or age; (d) engage in hate activity whether racial or
otherwise; (e) promote or engage in illegal activities; or (f) violate the
rights of third parties, including intellectual property rights.
<PAGE>
6. iChargeit represents and warrants that it has the right to publish
the contents of its Website and that the contents, material and activities of
its Website do not violate any national, international or local laws or any
rights of third parties, including, but not limited to, infringement or
misappropriation of any copyright, patent, trademark, trade secret, music,
image or other proprietary right, false advertising, unfair competition,
defamation, invasion of privacy or rights of celebrity, or any other right of
any person or entity.
7. iChargeit agrees to indemnify and hold FindWhat.com harmless from
and against any losses, costs, damages or expense (including reasonable
attorneys' fees) resulting from claims or actions arising out of or in
connection with its Website content or iChargeit's breach of any agreement,
representation or warranty hereunder, including, without limitation, claims
for infringement of copyright or other intellectual property rights and
violation of rights of privacy and publicity.
8. FINDWHAT.COM MAKES NO WARRANTY OF ANY KIND, WHETHER EXPRESSED OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS OF THE
SERVICE FOR A PARTICULAR PURPOSE. FINDWHAT.COM SHALL NOT BE LIABLE FOR ANY
LOSS, COSTS, DAMAGE OR EXPENSE (INCLUDING REASONABLE ATTORNEY'S FEES)
INCURRED BY iCHARGEIT INCLUDING, WITHOUT LIMITATION, FOR ANY TECHNICAL
MALFUNCTION, COMPUTER ERROR OR LOSS OF DATA OR OTHER INJURY DAMAGE OR
DISRUPTION TO iCHARGEIT. ICHARGEIT'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH
UNDER THIS AGREEMENT SHALL BE THE TERMINATION OF THIS AGREEMENT. IN NO EVENT
SHALL FINDWHAT.COM BE LIABLE FOR ANY COMPENSATORY, INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THIS
AGREEMENT EVEN IF SUCH DAMAGES ARE FORESEEABLE AND WHETHER OR NOT
FINDWHAT.COM HAS BEEN ADVISED OF THE POSSIBILITY THEREOF. FINDWHAT.COM WILL
NOT BE LIABLE FOR, OR CONSIDERED TO BE IN BREACH OF OR IN DEFAULT, ON ACCOUNT
OF ANY DELAY OR FAILURE TO PERFORM AS ANTICIPATED BY THE PARTIES OR IF IT IS
NOT ABLE TO SUPPLY SEARCH RESULTS OR BECOMES INCAPABLE OF PERFORMING AS
INTENDED. FINDWHAT.COM MAKES NO REPRESENTATIONS THAT ITS SERVICES WILL BE
UNINTERRUPTED OR ERROR-FREE, AND WILL NOT BE LIABLE FOR THE CONSEQUENCES OF
ANY INTERRUPTIONS OR ERRORS. FINDWHAT.COM DOES NOT WARRANT THAT THE GENERAL
LINKS OR SEARCH BOX LINKS PROVIDED WILL PERFORM AS INTENDED OR MEET ALL OF
iCHARGEIT'S REQUIREMENTS. iCHARGEIT IS SOLELY RESPONSIBLE FOR THE
DEVELOPMENT, OPERATION AND MAINTENANCE OF ITS SITE AND FOR ALL MATERIALS THAT
APPEAR ON ITS SITE AND FINDWHAT.COM DISCLAIMS ALL LIABILITY FOR THESE MATTERS.
9. FindWhat.com grants to iChargeit a limited, non-exclusive,
non-assignable license during the term of this Agreement to use the graphic
images and text contained in the links and search boxes supplied to
iChargeit. iChargeit acknowledges and agrees that FindWhat.com's logos,
tradenames, trademarks and servicemarks are and shall remain the sole
property of FindWhat.com and nothing in this Agreement shall confer to
iChargeit any right of ownership in such intellectual property, and that it
does not now and shall not in the future contest the validity of
FindWhat.com's trademarks and servicemarks. iChargeit agrees to comply with
all requirements and guidelines provided to it by FindWhat.com in connection
with its use of any links and search boxes provided to it under this
Agreement and shall not alter in any manner such search boxes or links or use
them in
2
<PAGE>
any manner which may in any way negatively reflect upon FindWhat.com or
dilute, diminish or otherwise damage FindWhat.com's rights and goodwill in
any of its intellectual property. iChargeit agrees not to use such links or
search boxes in a manner which may imply sponsorship or endorsement by
FindWhat.com of its site, services or products, or the sites, services and
products of others.
10. This agreement shall be governed by and construed in accordance
with the substantive laws of the State of New York and jurisdiction and venue
of all matters relating to this agreement shall be vested exclusively in the
Southern District of New York or New York Supreme Court, County of New York,
and the parties agree to the jurisdiction of such Courts. No waiver,
modification or addition to this agreement shall be valid. This agreement
constitutes the entire agreement between the parties relating to the subject
matter of this agreement. This agreement supersedes all prior and
contemporaneous agreements and the parties have not relied upon any
representations, oral or otherwise, not contained within this agreement.
11. This Agreement may be terminated by either party with or without
cause, by giving the other party written notice of termination.
12. This Agreement may not be assigned by either party. iChargeit shall
not provide, distribute, resell or transfer FindWhat.com's search results or
the ability to obtain search results provided by its link to FindWhat.com
hereunder to any third party.
FINDWHAT.COM CORPORATION
By: /s/ Craig A. Pisaris-Henderson
---------------------------------
Craig A. Pisaris-Henderson
President/CTO
iCHARGEIT
By: /s/ Jesse Cohen
---------------------------------
Name: Jesse Cohen
Title: CEO and President
3
<PAGE>
SUBSCRIPTION BOOKLET
FOR THE PURCHASE OF
UNITS CONSISTING OF
COMMON STOCK
AND COMMON STOCK WARRANTS
OF
iCHARGEIT, INC.,
a Texas corporation
CAREFULLY REVIEW AND FOLLOW THE INSTRUCTIONS
TO SUBSCRIBERS IMMEDIATELY FOLLOWING THIS COVER PAGE
iCHARGEIT, INC.
300 Pacific Coast Highway
Suite 308
Huntington Beach, California 92658
Telephone: (714) 594-0441
Facsimile: (714) 374-0220
<PAGE>
INSTRUCTIONS TO SUBSCRIBERS
In order to subscribe for Units to purchase shares of Common Stock and
Common Stock Warrants of iChargeit, Inc., a Texas corporation (the "Company"),
the following should be done:
1. COMPLETE AND RETURN TWO (2) COPIES OF THE ATTACHED
SUBSCRIPTION AGREEMENT TO iCHARGEIT, INC., 300 PACIFIC COAST HIGHWAY, SUITE 308,
HUNTINGTON BEACH, CALIFORNIA 92658 (ATTENTION: JESSE COHEN). PLEASE NOTE THAT
INCOMPLETE DOCUMENTS WILL BE RETURNED TO SUBSCRIBERS FOR COMPLETION. If you have
any questions about completion of the documents, please contact Jesse Cohen of
iChargeit, Inc. at (714) 594-0441.
2. Please print the name of the prospective investor, contact
person, telephone number and facsimile number in the upper right-hand corner of
the cover page and fill in the amount of your aggregate investment.
3. Write your initials next to each investor category to which
you belong in paragraph 4(a) and complete the other information called for by
Section 4. ONLY INVESTORS WHO QUALIFY AS "ACCREDITED INVESTORS" WILL BE ELIGIBLE
TO PURCHASE UNITS FROM THE COMPANY.
4. Note your obligations to update your representations and
warranties, as set forth in the final paragraph of Section 5.
5. If you are an individual, you should complete all required
information on the "Individuals" signature page and sign the Subscription
Agreement.
6. If you are a corporation, partnership, trust or other type
of entity, you should complete all required information on the "Corporations,
Partnerships, Trusts and Other Entities" signature page and sign the
Subscription Agreement.
7. NOTE THAT THE MINIMUM SUBSCRIPTION THAT WILL BE ACCEPTED IS
$50,000.
8. When you return your documents, please enclose a check
payable to the order of "iChargeit, Inc." for an amount equal to the aggregate
amount of your investment.
TWO (2) COPIES OF EACH OF THE SUBSCRIPTION AGREEMENT SHOULD BE RETURNED OR
DELIVERED AS SOON AS POSSIBLE TO:
iCHARGEIT, INC.
300 Pacific Coast Highway,
Suite 308
Huntington Beach, CA 92658
Attn: Jesse Cohen
2
<PAGE>
Name of Prospective Investor: ________________
Contact Person: ______________________________
Telephone Number:_____________________________
Fax Number:___________________________________
Amount:_______________________________________
iCHARGEIT, INC.,
a Texas corporation
SUBSCRIPTION AGREEMENT
TO: iCHARGEIT, INC.
300 Pacific Coast Highway, Suite 308
Huntington Beach, CA 92658
Attn: Jesse Cohen
The undersigned ("SUBSCRIBER"), on the terms and conditions herein set
forth, tenders this subscription to iChargeit, Inc., a Texas corporation (the
"COMPANY"), and hereby offers to purchase units (the "UNITS"), each Unit for
five shares (the "Shares") of the Company's Common Stock and a Warrant to
purchase one share of Common Stock at an exercise price of $2.50 per share (the
"WARRANT"), as provided herein.
1. SUBSCRIPTION.
(a) Subject to the terms and conditions hereof, the
undersigned hereby tenders this Subscription (herein so called) to purchase a
number of Units of the Company set forth opposite Subscriber's name on the
signature page hereto for a purchase price of $3.25 per Unit. Each Unit shall
include: (i) five shares of the Company's Common Stock; and (ii) a warrant, a
form of which is attached hereto as EXHIBIT A, to purchase one share of Common
Stock at an exercise price of $2.50 per share, exercisable until September 1,
2002.
(b) The undersigned hereby tenders payment of the total
purchase price of the Units subscribed for with this Subscription Agreement (the
"Subscription Agreement"). Subscription for the Units is irrevocable and shall
be made by delivery of this Subscription Agreement to the Company.
2. ACCEPTANCE OF AGREEMENT. The Company shall have the right to accept or reject
this Subscription, in whole or in part, in its sole and absolute discretion. In
addition, the Company shall have the right to reject this Subscription Agreement
if it believes for any reason that the Subscriber is not an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission or does not have sufficient knowledge and
experience in financial and business matters so as to be able to evaluate the
risks and merits of the investment in the Company. This Subscription Agreement
shall be deemed to be accepted by the Company only when the Company executes the
Subscription Agreement in the space provided. Upon execution of this
Subscription Agreement by the Company, the Company will forward a fully executed
copy of same to Subscriber's address as set forth on the signature page hereof.
3. CLOSING DATE. The closing (the "CLOSING") of the purchase and sale of the
Units shall be held at the offices of the Company at a time and on the date
selected by the Company.
<PAGE>
4. REPRESENTATION AS TO INVESTOR STATUS.
(a) In order for the Company to offer and sell the Units in
compliance with state and federal securities laws, the following information
must be obtained regarding your investor status. PLEASE INITIAL EACH CATEGORY
APPLICABLE TO YOU as an investor in the Company.
______ (1) A natural person whose net worth, either
individually or jointly with such person's spouse, at the time of the
undersigned's purchase, exceeds $1,000,000;
______ (2) A natural person who had an individual income in
excess of $200,000, or joint income with that person's spouse in excess of
$300,000, in calendar year 1997 and calendar year 1998 and reasonably expects to
have individual income reaching the same level in calendar year 1999;
______ (3) A bank as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended (the "Securities Act"), or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or fiduciary capacity;
______ (4) A broker or dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934, as amended;
______ (5) An insurance company as defined in Section 2(13) of
the Securities Act;
______ (6) An investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act;
______ (7) A Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
______ (8) A plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000;
______ (9) An employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
______ (10) A private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;
______ (11) A corporation, business trust, or partnership, or
organization described in Section 501(c)(3) of the Internal Revenue Code, not
formed for the specific purpose of acquiring the Shares, with total assets in
excess of $5,000,000;
______ (12) A director or executive officer of the Company;
______ (13) A trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Shares, whose
purchase is directed by a sophisticated person who has
2
<PAGE>
such knowledge and experience in financial and business matters that such
person is capable of evaluating the merits and risks of investing in the
Company;
______ (14) An entity in which ALL of the equity owners
qualify under one or more of the above subparagraphs;
______ (15) The undersigned does not qualify under any of the
investor categories set forth in (1) through (14) above.
(b) Indicate the form of entity of the undersigned:
___ Individual
___ Limited Partnership
___ General Partnership
___ Corporation
___ Limited Liability Company
___ Revocable Trust
___ Other Type of Trust (indicate type of
trust:______________________)
___ Other form of organization (indicate form
of organization:)
5. OTHER REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. The undersigned
hereby represents and warrants to the Company as follows:
(a) The Units and the underlying Shares and Warrant are being
acquired for the undersigned's own account for investment, with no intention of
distributing or selling any portion thereof within the meaning of the Securities
Act, and will not be transferred by the undersigned in violation of the
Securities Act or the then applicable rules or regulations thereunder. No one
other than the undersigned has any interest in or any right to acquire the Units
and the underlying Shares and Warrant. The undersigned understands and
acknowledges that the Company will have no obligation to recognize the
ownership, beneficial or otherwise, of such Units, Shares or Warrant by anyone
but the undersigned.
(b) The undersigned's financial condition is such that the
undersigned is able to bear the risk of holding the Units and the underlying
Shares and Warrant for an indefinite period of time and the risk of loss of the
undersigned's entire investment in the Company.
(c) The Company has made available all additional information
which the undersigned has requested in connection with the Company and its
representatives, and the undersigned has been afforded an opportunity to make
further inquiries of the Company and its representatives and the opportunity to
obtain any additional information (to the extent the Company has such
information or could acquire it without unreasonable effort or expense).
(d) No representations or warranties have been made to the
undersigned by the Company, or any representative of the Company. The
undersigned expressly acknowledges that it has
3
<PAGE>
made its own investigation regarding the Company and is not relying on any
other information regarding the Company.
(e) The undersigned has investigated the acquisition of the
Units and the underlying Shares and Warrant to the extent the undersigned deemed
necessary or desirable and the Company has provided the undersigned with any
assistance the undersigned has requested in connection therewith.
(f) The undersigned has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of an investment in the Units and the underlying Shares and
Warrant and of making an informed investment decision with respect thereto.
(g) The undersigned is aware that the undersigned's rights to
transfer the Units and the underlying Shares and Warrant are restricted by the
Securities Act, applicable state securities laws and the absence of a market for
the Units and Warrants, and the undersigned will not offer for sale, sell or
otherwise transfer the Units or the underlying Shares or Warrant, without
registration under the Securities Act and qualification under the securities
laws of all applicable states, unless such sale would be exempt therefrom.
(h) If the undersigned is an individual, the address set forth
below is the undersigned's true and correct residence; if the undersigned is
other than an individual, the entity has its principal office at the location
indicated.
(i) The undersigned understands that the Units and the
underlying Shares and Warrant have not been registered under the Securities Act
or any state securities act in reliance on an exemption for private offerings,
and the undersigned acknowledges that the undersigned is purchasing the Units
and the underlying Shares and Warrant without being furnished any offering
literature or prospectus.
(j) The undersigned has full power and authority to make the
representations referred to herein, to purchase the Units and the underlying
Shares and Warrant and to execute and deliver this Subscription Agreement.
(k) The undersigned acknowledges and is aware of the
following:
(i) The investment in the Units and the underlying
Shares and Warrant is speculative and involves a high degree of risk of loss of
the entire investment in the Company.
(ii) The Shares and the Warrant are "free trading"
and without restriction of any kind pursuant to an exemption from registration
under Regulation D, Rule 504.
(iii) No state or federal agency has made any finding
or determination as to the fairness of the terms of the sale of the Shares or
Warrant or any recommendation or endorsement thereof.
(iv) It never has been represented, guaranteed or
warranted to the undersigned by the Company, its agents or employees or any
other person, expressly or impliedly, any of the following:
(A) The approximate or exact length of time
that the undersigned will be required to remain as owner of the Units or the
underlying Shares and Warrant; or
4
<PAGE>
(B) The profit or return, if any, to be
realized by making an investment in the Company.
(l) The undersigned understands that the foregoing
representations and warranties are to be relied upon by the Company as a basis
for exemption of the sale of the Units or the underlying Shares and Warrant
under the Securities Act, under the securities laws of all applicable states and
for other purposes.
The foregoing representations and warranties are true and accurate as of the
date hereof and shall survive such date. If in any respect such representations
and warranties shall not be true and accurate prior to the acceptance of the
Subscription by the Company, the undersigned shall give notice of such fact to
the Company by telex, telegram, or facsimile with written confirmation of
receipt, specifying which representations and warranties are not true and
accurate and the reasons therefor.
6. INDEMNIFICATION. The undersigned acknowledges that the undersigned
understands the meaning and legal consequences of the representations and
warranties made by the undersigned herein, and that the Company is relying on
such representations and warranties in making the determination to accept or
reject this Subscription. The undersigned hereby agrees to indemnify and hold
harmless the Company and each employee and agent thereof from and against any
and all loss, damage or liability due to or arising out of a breach of any
representation or warranty of the undersigned contained in this Subscription
Agreement.
7. TRANSFERABILITY. The undersigned agrees not to transfer or assign this
Subscription Agreement, or any interest herein, and further agrees that the
assignment and transferability of the Units and the underlying Shares and
Warrant acquired pursuant hereto shall be made only in accordance with
applicable federal and state securities laws.
8. NO REVOCATION. The undersigned agrees that this Subscription Agreement and
any agreement of the undersigned made hereunder is irrevocable, and that this
Subscription Agreement shall survive the death or disability of the undersigned,
except as provided below in Section 9.
9. TERMINATION OF AGREEMENT. If this Subscription is rejected by the Company,
then and in any such event this Subscription Agreement shall be null and void
and of no further force and effect, and no party shall have any rights against
any other party hereunder, and the Company promptly shall return or cause to be
returned to the undersigned this Subscription Agreement and the money tendered
hereunder.
10. NOTICES. All notices or other communications given or made hereunder shall
be in writing and shall be delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, or delivered by facsimile with
written confirmation of receipt to the undersigned at the address set forth
below and to the Company at the address set forth on the cover hereof, or at
such other place as the Company or the undersigned may designate by written
notice to the other party.
11. EXPENSES. The undersigned will pay the undersigned's own expenses relating
to this Subscription Agreement, the ancillary documents attached hereto and the
purchase of the Units and the underlying Shares and Warrant.
12. AMENDMENTS. Unless otherwise expressly provided herein or any document
attached hereto, neither this Subscription Agreement nor any term hereof may be
changed, waived, discharged or terminated orally but only with the written
consent of the undersigned and the Company.
13. COUNTERPARTS; FACSIMILE. This Subscription Agreement may be executed in any
number of counterparts and may be delivered by telecopy or facsimile, each of
which shall be an original but all of which taken together shall constitute one
Subscription Agreement.
14. GOVERNING LAW. This Subscription Agreement and all amendments hereto shall
be governed by and construed in accordance with the laws of the State of
California.
5
<PAGE>
15. HEADINGS. The headings in this Subscription Agreement are for convenience of
reference, and shall not by themselves determine the meaning of this
Subscription Agreement or of any part hereof.
16. SEVERABILITY. In case any provision of this Subscription Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Subscription Agreement shall not in any way be
affected or impaired thereby.
[Signature on following page.]
6
<PAGE>
<TABLE>
<S><C>
INDIVIDUALS
Dated: , 1999 Co-owner (if any)
-------------------
- -------------------------------------- --------------------------------------------
Signature Signature
- -------------------------------------- --------------------------------------------
Name (Please Print) Name (Please Print)
Desired number of Units: PLEASE INDICATE TYPE OF OWNERSHIP
---------------
Subscription Price per Unit: X 3.25 / / Individual
--------------- / / Joint tenants, with rights of survivorship
/ / Tenants by the entirety
Total Subscription Amount / / Community property
(Minimum $50,000) =============== / / As Custodian for __________________
under Uniform Transfers to Minors Act
/ / Other (Specify)
Residence Address:
- --------------------------------------
Number and Street
- --------------------------------------
City/State/Zip Code
- --------------------------------------
Telephone No.
- --------------------------------------
Social Security Number
Accepted this day of , 1999
--------- -------------------
iCHARGEIT, INC., a Texas corporation
By: / / Accepted in full
----------------------------------
Its: / / Accepted only as to $______
----------------------------------
[Signature Page to Subscription Agreement]
</TABLE>
7
<PAGE>
<TABLE>
<S><C>
CORPORATIONS, PARTNERSHIPS, TRUSTS OR OTHER ENTITIES
Dated: , 1999
------------------ -----------------------------------------------------
Purchaser Name (Please Print)
Date of formation: , 19 By:
--------------- ----- -----------------------------------------------------
Title:
-----------------------------------------------
Address of Principal Place of Business:
Desired number of Units: -----------------------------------------------------
--------------- Number and Street
Subscription Price per Unit X 3.25
---------------
Total Subscription Amount City/State/Zip Code
(Minimum $50,000) ===============
Taxpayer Identification Number
Mailing Address (if different):
Number and Street
City/State/Zip Code
Accepted this day of , 1999
---------- -------------------
iCHARGEIT, INC., a Texas corporation
By: / / Accepted in full
-----------------------------------
Its: / / Accepted only as to $_________
-----------------------------------
[Signature Page to Subscription Agreement]
</TABLE>
8
<PAGE>
Exhibit 6.26
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
iCHARGEIT, INC.
WARRANT
-------
Dated: August __, 1999
iChargeit, Inc., a Texas corporation (the "Company"), hereby certifies
that, for value received, ________________________, or its registered assigns
("Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company up to a total of ________ shares of Common Stock, $____ par value
per share (the "Common Stock"), of the Company (each such share, a "Warrant
Share" and all such shares, the "Warrant Shares") at an exercise price equal to
$2.50 per share (as adjusted from time to time as provided in Section 8, the
"Exercise Price"), at any time and from time to time from and after the date
hereof and through and including the earlier of (i) September 1, 2002 or (ii)
the business day preceding a Redemption Date, as defined in Section 4 hereof (as
applicable, the "Expiration Date"), and subject to the following terms and
conditions:
1. REGISTRATION OF WARRANT. The Company shall register this Warrant
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) This Warrant or the Warrant Shares issued upon any exercise
hereof may only be transferred pursuant to an effective registration statement
under the Securities Act, to the Company or pursuant to an available exemption
from or in a transaction not subject to the registration requirements of the
Securities Act. In connection with any transfer of this Warrant or any Warrant
Shares other than pursuant to an effective registration statement or to the
Company, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred securities
under the Securities Act. Holder agrees to the imprinting, so long as is
required by this Section 2(a), of a legend substantially similar to that first
above written on any New Warrant (as defined in Section 2(b) below) or a legend
of similar import on any Warrant Shares issued upon an
<PAGE>
exercise hereof. Any such transferee shall agree in writing to be bound by the
terms of this Warrant and shall have the rights of Holder under this Warrant.
(b) The Company shall register the transfer of any portion of this
Warrant in conformance with Section 2(a) in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Company at the office specified in or pursuant to Section 11.
Upon any such registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
(c) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company specified in or pursuant to Section 3(b) for
one or more New Warrants, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder.
3. DURATION AND EXERCISE OF WARRANT.
(a) This Warrant shall be exercisable by the then registered Holder
on any business day before 5:00 P.M., California time, at any time and from time
to time on or after the date hereof to and including the Expiration Date. At
5:00 P.M., California time on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value.
(b) Subject to Sections 2(c), and 5, upon surrender of this Warrant,
with the Form of Election to Purchase attached hereto duly completed and signed,
to the Company at its address for notice set forth in Section 11 and upon
payment of the Exercise Price multiplied by the number of Warrant Shares that
the Holder intends to purchase hereunder, in the manner provided hereunder, all
as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall have
received (i) this Warrant (or any New Warrant, as applicable), with the Form of
Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
2
<PAGE>
(c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
(d) Prior to the exercise of this Warrant, the Holder shall not be
entitled to any rights as a stockholder of the Company with respect to the
Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder
meetings (except as otherwise set forth in Section 8(f) herein).
4. REDEMPTION.
(a) The remaining unexercised portion of this Warrant may be
completely redeemed at the option of the Company at any time prior to exercise
if, at the time notice of such redemption is given by the Company as provided in
Section 4(b) below, the Daily Price has exceeded 200% of the Exercise Price then
in effect for any 20 out of the 30 consecutive trading days immediately
preceding the date of such notice, at a price equal to $0.05 per Warrant Share
then subject to the unexercised portion of this Warrant (the "Redemption
Price"). For the purpose of the foregoing sentence, the term "Daily Price" shall
mean, for any relevant day, the closing bid price or closing price, as the case
may be, on that day as reported by the principal exchange, national market or
quotation system on which prices for the Common Stock are reported. On the date
set for redemption in the redemption notice (the "Redemption Date") the Holder
of record of this Warrant shall be entitled to payment of the Redemption Price
upon surrender of such redeemed Warrant to the Company at the principal office
of the Company.
(b) Notice of redemption of Warrant shall be given at least 30 days
prior to the Redemption Date by mailing, by registered or certified mail, return
receipt requested, a copy of such notice to the Holder of this Warrant at the
address appearing on the Warrant Register or such other address designated in
writing by the holder of record to the Company not less than 40 days prior to
the Redemption Date.
(c) From and after the Redemption Date, all rights of the Holder
(except the right to receive the Redemption Price) with respect to this Warrant
shall terminate.
(d) The Company shall pay to the Holder of this Warrant all monies
to which the Holder of this Warrant is entitled, provided such Holder shall have
surrendered this Warrant to the Company. The Holder shall have no right to
interest following the Redemption Date unless the Company shall have defaulted
in its obligation to deliver the Redemption Price.
5. PAYMENT OF TAXES. The Company will pay any documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation
3
<PAGE>
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and indemnity, if requested, satisfactory to it. Applicants
for a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
7. RESERVATION OF WARRANT SHARES. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. CERTAIN ADJUSTMENTS. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 8. Upon each such adjustment of the Exercise
Price pursuant to this Section 8, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is outstanding,
(i) shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated dividend rate) or
otherwise make a distribution or distributions on shares of its Common Stock or
on any other class of capital stock and not the Common Stock) payable in shares
of Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and the denominator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such consolidation, merger,
4
<PAGE>
sale, transfer or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 8(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in Sections
8(a), and (b)), then in each such case the Exercise Price shall be determined by
multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Exercise Price determined as of
the record date mentioned above, and of which the numerator shall be such
Exercise Price on such record date less the then fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) For the purposes of this Section 8, the following clauses shall
also be applicable:
(i) RECORD DATE. In case the Company shall take a record of
the holders of its Common Stock for the purpose of
entitling them (A) to receive a dividend or other
distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock,
or (B) to subscribe for or purchase Common Stock or
securities convertible or exchangeable into shares of
Common Stock, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(ii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an
issue or sale of Common Stock.
(e) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(f) If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
5
<PAGE>
(iii) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of
any rights; or
(iv) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 10 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
9. PAYMENT OF EXERCISE PRICE. The Holder shall pay the Exercise Price
in immediately available funds by certified check or bank draft payable to the
order of the Company or by wire transfer to an account designated by the
Company.
10. FRACTIONAL SHARES. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
11. NOTICES. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (California time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (California time) on any date and earlier than
11:59 p.m. (California time) on such date, (iii) the business day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
300 Pacific Coast Highway, Suite 308, Huntington Beach, CA 92648, Attention:
Chief Executive Officer, or to facsimile no. (800) 572-7739, or (ii) if to the
Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 11.
12. WARRANT AGENT. The Company shall serve as warrant agent under this
Warrant. The Company may appoint a new warrant agent upon notice to the Holder
in accordance with Section 11.
6
<PAGE>
Any corporation into which the Company may be merged or any corporation
resulting from any consolidation to which the Company shall be a party or any
corporation to which the Company transfers substantially all of its corporate
assets shall be a successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail, postage prepaid)
to the Holder at the Holder's last address as shown on the Warrant Register.
13. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant shall
be construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.
(c) This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of California without regard to
the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in Orange County, California, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
(d) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
7
<PAGE>
ICHARGEIT, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
8
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To iChargeit, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock ("Common Stock"), $___ par value per share, of iChargeit,
Inc. encloses herewith $__________ in cash, certified or official bank check or
checks, which sum represents the aggregate Exercise Price (as defined in the
Warrant) for the number of shares of Common Stock to which this Form of Election
to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
(Please print name and address)
Dated: __________, ____ Name of Holder:
(Print) ______________________________________
(By:) ________________________________________
(Name:)
(Title:)
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant)
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<PAGE>
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the right represented by the Warrant enclosed with
this Form of Assignment to purchase __________ shares of Common Stock of
iChargeit, Inc. to which the Warrant relates and appoints ____________________
attorney to transfer said right on the books of iChargeit, Inc. with full power
of substitution in the premises.
Dated: __________, ____
_______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
_______________________________________
Address of Transferee
_______________________________________
_______________________________________
In the presence of:
___________________________
<PAGE>
iCHARGEIT, INC.
1999 STOCK INCENTIVE PLAN
This 1999 STOCK INCENTIVE PLAN (the "Plan") is hereby established by
iChargeit, Inc., a Texas corporation (the "Company"), and adopted by its Board
of Directors as of August 17, 1999 (the "Effective Date").
ARTICLE 1.
PURPOSES OF THE PLAN
1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company's business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the Company.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 ADMINISTRATOR. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.
2.2 AFFILIATED COMPANY. "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.
2.3 BOARD. "Board" means the Board of Directors of the Company.
2.4 CHANGE IN CONTROL. "Change in Control" shall mean (i) the
acquisition, directly or indirectly, by any person or group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of securities of the Company possessing more than fifty
percent (50%) of the total combined voting power of all outstanding securities
of the Company; (ii) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated; (iii) a reverse merger in
which the Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to or acquired by a person or
persons different from the persons holding those securities immediately prior to
such merger; (iv) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or (v) a complete liquidation or
dissolution of the Company.
2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.6 COMMITTEE. "Committee" means a committee of two or more members of
the Board appointed to administer the Plan, as set forth in Section 7.1 hereof.
<PAGE>
2.7 COMMON STOCK. "Common Stock" means the Common Stock, no par value
of the Company, subject to adjustment pursuant to Section 4.2 hereof.
2.8 DISABILITY. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.
2.9 EFFECTIVE DATE. "Effective Date" means the date on which the Plan
is adopted by the Board, as set forth on the first page hereof.
2.10 EXERCISE PRICE. "Exercise Price" means the purchase price per
share of Common Stock payable upon exercise of an Option.
2.11 FAIR MARKET VALUE. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading
on a NASDAQ market system or a stock exchange which reports closing sale prices,
the Fair Market Value shall be the closing sale price on the date of valuation
on such NASDAQ market system or principal stock exchange on which the Common
Stock is then listed or admitted to trading, or, if no closing sale price is
quoted on such day, then the Fair Market Value shall be the closing sale price
of the Common Stock on such NASDAQ market system or such exchange on the next
preceding day for which a closing sale price is reported.
(b) If the Common Stock is not then listed or admitted to
trading on a NASDAQ market system or a stock exchange which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market on the date of
valuation.
(c) If neither (a) nor (b) is applicable as of the date of
valuation, then the Fair Market Value shall be determined by the Administrator
in good faith using any reasonable method of evaluation, which determination
shall be conclusive and binding on all interested parties.
2.12 INCENTIVE OPTION. "Incentive Option" means any Option designated
and qualified as an "incentive stock option" as defined in Section 422 of the
Code.
2.13 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.
2.14 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member
of the National Association of Securities Dealers, Inc.
2.15 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that
is not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Shareholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.
2.16 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement"
means an Option Agreement with respect to a Nonqualified Option.
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<PAGE>
2.17 OFFEREE. "Offeree" means a Participant to whom a Right to Purchase
has been offered or who has acquired Restricted Stock under the Plan.
2.18 OPTION. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.
2.19 OPTION AGREEMENT. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.
2.20 OPTIONEE. "Optionee" means a Participant who holds an Option.
2.21 PARTICIPANT. "Participant" means an individual or entity who holds
an Option, a Right to Purchase or Restricted Stock under the Plan.
2.22 PURCHASE PRICE. "Purchase Price" means the purchase price per
share of Restricted Stock payable upon acceptance of a Right to Purchase.
2.23 RESTRICTED STOCK. "Restricted Stock" means shares of Common Stock
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.
2.24 RIGHT TO PURCHASE. "Right to Purchase" means a right to purchase
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.
2.25 SERVICE PROVIDER. "Service Provider" means a consultant or other
person or entity who provides services to the Company or an Affiliated Company
and who the Administrator authorizes to become a Participant in the Plan.
2.26 STOCK PURCHASE AGREEMENT. "Stock Purchase Agreement" means the
written agreement entered into between the Company and the Offeree with respect
to a Right to Purchase offered under the Plan.
2.27 10% SHAREHOLDER. "10% Shareholder" means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.
ARTICLE 3.
ELIGIBILITY
3.1 INCENTIVE OPTIONS. Officers and other key employees of the Company
or of an Affiliated Company (including members of the Board if they are
employees of the Company or of an Affiliated Company) are eligible to receive
Incentive Options under the Plan.
3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Officers and other key
employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan.
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<PAGE>
3.3 LIMITATION ON SHARES. In no event shall any Participant be granted
Options or Rights to Purchase in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds 500,000 shares.
ARTICLE 4.
PLAN SHARES
4.1 SHARES SUBJECT TO THE PLAN. A total of 4,000,000 shares of Common
Stock may be issued under the Plan, subject to adjustment as to the number and
kind of shares pursuant to Section 4.2 hereof. For purposes of this limitation,
in the event that (a) all or any portion of any Option or Right to Purchase
granted or offered under the Plan can no longer under any circumstances be
exercised, or (b) any shares of Common Stock are reacquired by the Company
pursuant to an Incentive Option Agreement, Nonqualified Option Agreement or
Stock Purchase Agreement, the shares of Common Stock allocable to the
unexercised portion of such Option or such Right to Purchase, or the shares so
reacquired, shall again be available for grant or issuance under the Plan.
4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding
shares of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other similar change in the capital
structure of the Company, then appropriate adjustments shall be made by the
Administrator to the aggregate number and kind of shares subject to this Plan,
and the number and kind of shares and the price per share subject to outstanding
Option Agreements, Rights to Purchase and Stock Purchase Agreements in order to
preserve, as nearly as practical, but not to increase, the benefits to
Participants.
ARTICLE 5.
OPTIONS
5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall
be evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.
5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock
covered by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, (b) the
Exercise Price of a Nonqualified Option shall not be less than 85% of Fair
Market Value on the date the Nonqualified Option is granted, and (c) if the
person to whom an Incentive Option is granted is a 10% Shareholder on the date
of grant, the Exercise Price shall not be less than 110% of Fair Market Value on
the date the Option is granted.
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<PAGE>
5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be
made upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (i) any combination of
the foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.
5.4 TERM AND TERMINATION OF OPTIONS. The term and provisions for
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted. An
Incentive Option granted to a person who is a 10% Shareholder on the date of
grant shall not be exercisable more than five (5) years after the date it is
granted.
5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.
5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted under this Plan and any
other plan of the Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year, exceed $100,000.
5.7 NONTRANSFERABILITY OF OPTIONS. No Option shall be assignable or
transferable except by will or the laws of descent and distribution, and during
the life of the Optionee shall be exercisable only by such Optionee; provided,
however, that, in the discretion of the Administrator, any Option may be
assigned or transferred in any manner which an "incentive stock option" is
permitted to be assigned or transferred under the Code.
5.8 RIGHTS AS SHAREHOLDER. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a shareholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such person.
5.9 COMPANY'S REPURCHASE RIGHT. In the event of termination of a
Participant's employment or service as a director of the Company for any reason
whatsoever (including death or
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<PAGE>
disability), the Option Agreement may provide, in the discretion of the
Administrator, that the Company, or its assignee, shall have the right,
exercisable at the discretion of the Administrator, to repurchase shares of
Common Stock acquired pursuant to the exercise of an Option at any time prior
to the consummation of the Company's initial public offering of securities in
an offering registered under the Securities Act of 1933, as amended, and at
the price equal to the Fair Market Value per share of Common Stock
(determined in accordance with Section 2.11 hereof) as of the date of
termination of Optionee's employment. The repurchase right provided in this
Section 5.9 shall terminate and be of no further force or effect following
the consummation of an underwritten public offering of the Company's Common
Stock.
In any event, the right to repurchase must be exercised within
one-hundred twenty (120) days of the termination of Participant's employment and
may be paid by the Company, or its assignee, by cash, check, or cancellation of
indebtedness.
5.10 RESTRICTIONS ON UNDERLYING SHARES OF COMMON STOCK. Shares of
Common Stock issued pursuant to the exercise of an Option may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Option Agreement.
ARTICLE 6.
RIGHTS TO PURCHASE
6.1 NATURE OF RIGHT TO PURCHASE. A Right to Purchase granted to an
Offeree entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.
6.2 ACCEPTANCE OF RIGHT TO PURCHASE. An Offeree shall have no rights
with respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within ten (10) days (or such
longer or shorter period as the Administrator may specify) following the grant
of the Right to Purchase by making payment of the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.
6.3 PAYMENT OF PURCHASE PRICE. Subject to any legal restrictions,
payment of the Purchase Price upon acceptance of a Right to Purchase Restricted
Stock may be made, in the discretion of the Administrator, by: (a) cash; (b)
check; (c) the surrender of shares of Common Stock owned by the Offeree that
have been held by the Offeree for at least six (6) months, which surrendered
shares shall be valued at Fair Market Value as of the date of such exercise; (d)
the Offeree's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Offeree; (f) the waiver of compensation due or accrued to the Offeree for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.
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<PAGE>
6.4 RIGHTS AS A SHAREHOLDER. Upon complying with the provisions of
Section 6.2 hereof, an Offeree shall have the rights of a shareholder with
respect to the Restricted Stock purchased pursuant to the Right to Purchase,
including voting and dividend rights, subject to the terms, restrictions and
conditions as are set forth in the Stock Purchase Agreement. Unless the
Administrator shall determine otherwise, certificates evidencing shares of
Restricted Stock shall remain in the possession of the Company until such shares
have vested in accordance with the terms of the Stock Purchase Agreement.
6.5 RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement. In the event of
termination of a Participant's employment, service as a director of the Company
or Service Provider status for any reason whatsoever (including death or
disability), the Stock Purchase Agreement may provide, in the discretion of the
Administrator, that the Company shall have the right, exercisable at the
discretion of the Administrator, to repurchase (i) at the original Purchase
Price, any shares of Restricted Stock which have not vested as of the date of
termination, and (ii) at Fair Market Value, any shares of Restricted Stock which
have vested as of such date, on such terms as may be provided in the Stock
Purchase Agreement.
6.6 VESTING OF RESTRICTED STOCK. The Stock Purchase Agreement shall
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.
6.7 DIVIDENDS. If payment for shares of Restricted Stock is made by
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.
6.8 NONASSIGNABILITY OF RIGHTS. No Right to Purchase shall be
assignable or transferable except by will or the laws of descent and
distribution or as otherwise provided by the Administrator.
ARTICLE 7.
ADMINISTRATION OF THE PLAN
7.1 ADMINISTRATOR. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.
7.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options shall be granted and Rights to Purchase shall be offered, the number of
shares to be represented by each Option and Right to Purchase and the
consideration to be received by the Company upon the exercise thereof; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Option Agreements and Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be entitled to
exercise a Participant's
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<PAGE>
rights under any Option or Right to Purchase under the Plan; (f) to correct
any defect or supply any omission or reconcile any inconsistency in the Plan
or in any Option Agreement or Stock Purchase Agreement; (g) to accelerate the
vesting of any Option or release or waive any repurchase rights of the
Company with respect to Restricted Stock; (h) to extend the exercise date of
any Option or acceptance date of any Right to Purchase; (i) to provide for
rights of first refusal and/or repurchase rights; (j) to amend outstanding
Option Agreements and Stock Purchase Agreements to provide for, among other
things, any change or modification which the Administrator could have
provided for upon the grant of an Option or Right to Purchase or in
furtherance of the powers provided for herein; and (k) to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the
Plan shall be final and binding on the Company and all Participants.
7.3 LIMITATION ON LIABILITY. No employee of the Company or member of
the Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.
ARTICLE 8.
CHANGE IN CONTROL
8.1 CHANGE IN CONTROL. In order to preserve a Participant's rights in
the event of a Change in Control of the Company, (i) the time period relating to
the exercise or realization of all outstanding Options, Rights to Purchase and
Restricted Stock shall automatically accelerate immediately prior to the
consummation of such Change in Control, and (ii) with respect to Options and
Rights to Purchase, the Administrator in its discretion may, at any time an
Option or Right to Purchase is granted, or at any time thereafter, take one or
more of the following actions: (A) provide for the purchase or exchange of each
Option or Right to Purchase for an amount of cash or other property having a
value equal to the difference, or spread, between (x) the value of the cash or
other property that the Participant would have received pursuant to such Change
in Control transaction in exchange for the shares issuable upon exercise of the
Option or Right to Purchase had the Option or Right to Purchase been exercised
immediately prior to such Change in Control transaction and (y) the Exercise
Price of such Option or the Purchase Price under such Right to Purchase, (B)
adjust the terms of the Options and Rights to Purchase in a manner determined by
the Administrator to reflect the Change in Control, (C) cause the Options and
Rights to Purchase to be assumed, or new rights substituted therefor, by another
entity, through the continuance of the Plan and the assumption of outstanding
Options and Rights to Purchase, or the substitution for such Options and Rights
to Purchase of new options and new rights to purchase of comparable value
covering shares of a successor corporation, with appropriate adjustments as to
the number and kind of shares and Exercise Prices, in which event the Plan and
such Options and Rights to Purchase, or the new options and rights to purchase
substituted therefor, shall continue in the manner and under the terms so
provided, or (D) make such other provision as the Administrator may consider
equitable. If the Administrator does not take any of the forgoing actions, all
Options and Rights to Purchase shall terminate upon the consummation of the
Change in Control and the Administrator shall cause written notice of the
proposed transaction to be given to all Participants not less than fifteen (15)
days prior to the
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<PAGE>
anticipated effective date of the proposed transaction.
ARTICLE 9.
AMENDMENT AND TERMINATION OF THE PLAN
9.1 AMENDMENTS. The Board may from time to time alter, amend, suspend
or terminate the Plan in such respects as the Board may deem advisable. No such
alteration, amendment, suspension or termination shall be made which shall
substantially affect or impair the rights of any Participant under an
outstanding Option Agreement or Stock Purchase Agreement without such
Participant's consent. The Board may alter or amend the Plan to comply with
requirements under the Code relating to Incentive Options or other types of
options which give Optionees more favorable tax treatment than that applicable
to Options granted under this Plan as of the date of its adoption. Upon any such
alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such terms
and conditions.
9.2 PLAN TERMINATION. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to Purchase may be granted under the
Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights to
Purchase then outstanding shall continue in effect in accordance with their
respective terms.
ARTICLE 10.
TAX WITHHOLDING
10.1 WITHHOLDING. The Company shall have the power to withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
any applicable Federal, state, and local tax withholding requirements with
respect to any Options exercised or Restricted Stock issued under the Plan. To
the extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her obligation
to pay any such tax, in whole or in part, up to an amount determined on the
basis of the highest marginal tax rate applicable to such Participant, by (a)
directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or as a result of the
purchase of or lapse of restrictions on Restricted Stock or (b) delivering to
the Company shares of Common Stock owned by the Participant. The shares of
Common Stock so applied or delivered in satisfaction of the Participant's tax
withholding obligation shall be valued at their Fair Market Value as of the date
of measurement of the amount of income subject to withholding.
ARTICLE 11.
MISCELLANEOUS
11.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits
under the Plan may not be assigned or alienated, whether voluntarily or
involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other
disposition shall be without effect.
11.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a
voluntary undertaking on the part of the Company and shall not be deemed to
constitute a contract between the Company and any Participant to be
consideration for, or an inducement to, or a condition of, the employment of
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<PAGE>
any Participant. Nothing contained in the Plan shall be deemed to give the
right to any Participant to be retained as an employee of the Company or any
Affiliated Company or to limit the right of the Company or any Affiliated
Company to discharge any Participant at any time.
11.3 APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.
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<PAGE>
iCHARGEIT, INC.
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): / / Incentive / / Nonqualified
This Stock Option Agreement (the "Agreement") is entered into as of
___________, 19__, by and between iCHARGEIT, INC., a Texas corporation (the
"Company"), and _______________ (the "Optionee") pursuant to the Company's
1999 Stock Incentive Plan (the "Plan").
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase all or any portion of a total of __________
(_______) shares (the "Shares") of the Common Stock of the Company at a
purchase price of _________($_______) per share (the "Exercise Price"),
subject to the terms and conditions set forth herein and the provisions of
the Plan. If the box marked "Incentive" above is checked, then this Option is
intended to qualify as an "incentive stock option" as defined in Section 422
of the Internal Revenue Code of l986, as amended (the "Code"). If this Option
fails in whole or in part to qualify as an incentive stock option, or if the
box marked "Nonqualified" is checked, then this Option shall to that extent
constitute a nonqualified stock option.
2. VESTING OF OPTION. The right to exercise this Option shall vest
in installments, and this Option shall be exercisable from time to time in
whole or in part as to any vested installment, as follows:
<TABLE>
<CAPTION>
This Option shall be
On or After: Exercisable as to:
------------ ------------------
<S> <C>
(i) the first anniversary of this Agreement: % of the Shares
----
(ii) the second anniversary of this Agreement: an additional % of the Shares
----
(iii) the third anniversary of this Agreement: an additional % of the Shares
----
(iv) the fourth anniversary of this Agreement: an additional % of the Shares
----
(v) the fifth anniversary of this Agreement: an additional % of the Shares
----
</TABLE>
No additional shares shall vest after the date of termination of Optionee's
"Continuous Service" (as defined in Section 3 below), but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect to
that number of shares that have vested as of the date of termination of
Optionee's Continuous Service.
3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate immediately upon the first to occur of the following:
(a) the expiration of ten (10) years from the date of this
Agreement;
(b) termination of Optionee's Continuous Service if such
termination occurs for any reason other than permanent disability, death or
voluntary resignation;
(c) the expiration of one (1) month from the date of
termination of Optionee's Continuous Service if such termination occurs due to
voluntary resignation; provided, however, that if Optionee dies during such
one-month period the provisions of Section 3(e) below shall apply;
<PAGE>
(d) the expiration of one (1) year from the date of
termination of Optionee's Continuous Service if such termination is due to
permanent disability of the Optionee (as defined in Section 22(e)(3) of the
Code);
(e) the expiration of one (1) year from the date of
termination of Optionee's Continuous Service if such termination is due to
Optionee's death or if death occurs during the one-month period following
termination of Optionee's Continuous Service pursuant to Section 3(c) above; or
(f) upon the consummation of a "Change in Control" (as defined
in Section 2.4 of the Plan), unless otherwise provided pursuant to Section 11
below.
As used herein, the term "Continuous Service" means (i) employment by
either the Company or any parent or subsidiary corporation of the Company, or by
a corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code), or leaves of absence which are
approved in writing by the Company or any of such other employer corporations,
if applicable, (ii) service as a member of the Board of Directors of the Company
until Optionee resigns, is removed from office, or Optionee's term of office
expires and he or she is not reelected, or (iii) so long as Optionee is engaged
as a consultant or service provider to the Company or other corporation referred
to in clause (i) above.
4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Sections 2 or 11 hereof, and until termination of the
right to exercise this Option in accordance with Section 3 above, the portion of
this Option which has vested may be exercised in whole or in part by the
Optionee (or, after his or her death, by the person designated in Section 5
below) upon delivery of the following to the Company at its principal executive
offices:
(a) a written notice of exercise which identifies this
Agreement and states the number of Shares then being purchased (but no
fractional Shares may be purchased);
(b) a check or cash in the amount of the Exercise Price (or
payment of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section 5.3
of the Plan);
(c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal, state or
other applicable tax laws with respect to the taxable income, if any, recognized
by the Optionee in connection with the exercise of this Option (unless the
Company and Optionee shall have made other arrangements for deductions or
withholding from Optionee's wages, bonus or other compensation payable to
Optionee, or by the withholding of Shares issuable upon exercise of this Option
or the delivery of Shares owned by the Optionee in accordance with Section 10.1
of the Plan, provided such arrangements satisfy the requirements of applicable
tax laws); and
(d) a letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent of the
Optionee, or person designated in Section 5 below, as the case may be.
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<PAGE>
5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee under
this Agreement may not be assigned or transferred except by will or by the laws
of descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of his or her death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement. After the death of the Optionee, only a
Successor may exercise this Option.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
(a) Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.
(b) Optionee acknowledges that the Company may issue Shares
upon the exercise of the Option without registering such Shares under the
Securities Act of l933, as amended (the "Securities Act"), on the basis of
certain exemptions from such registration requirement. Accordingly, Optionee
agrees that his or her exercise of the Option may be expressly conditioned upon
his or her delivery to the Company of an investment certificate including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including a representation that
Optionee is acquiring the Shares for investment and not with a present intention
of selling or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Securities Act and the resulting restrictions on
transfer. Optionee acknowledges that, because Shares received upon exercise of
an Option may be unregistered, Optionee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the
Securities Act or an exemption from such registration is available.
(c) Optionee acknowledges receipt of a copy of the Plan and
understands that all rights and obligations connected with this Option are set
forth in this Agreement and in the Plan.
7. RIGHT OF FIRST REFUSAL.
(a) The Shares acquired pursuant to the exercise of this
Option may be sold by the Optionee only in compliance with the provisions of
this Section 7, and subject in all cases to compliance with the provisions of
Section 6(b) hereof. Prior to any intended sale, Optionee shall first give
written notice (the "Offer Notice") to the Company specifying (i) his or her
bona fide intention to sell or otherwise transfer such Shares, (ii) the name and
address of the proposed purchaser(s), (iii) the number of Shares the Optionee
proposes to sell (the "Offered Shares"), (iv) the price for which he or she
proposes to sell the Offered Shares, and (v) all other material terms and
conditions of the proposed sale.
(b) Within thirty (30) days after receipt of the Offer Notice,
the Company or its nominee(s) may elect to purchase all or any portion of the
Offered Shares at the price and on
3
<PAGE>
the terms and conditions set forth in the Offer Notice by delivery of written
notice (the "Acceptance Notice") to the Optionee specifying the number of
Offered Shares that the Company or its nominees elect to purchase. Within
fifteen (15) days after delivery of the Acceptance Notice to the Optionee,
the Company and/or its nominee(s) shall deliver to the Optionee payment of
the amount of the purchase price of the Offered Shares to be purchased
pursuant to this Section 7, against delivery by the Optionee of a certificate
or certificates representing the Offered Shares to be purchased, duly
endorsed for transfer to the Company or such nominee(s), as the case may be.
Payment shall be made on the same terms as set forth in the Offer Notice or,
at the election of the Company or its nominees(s), by check or wire transfer
of funds. If the Company and/or its nominee(s) do not elect to purchase all
of the Offered Shares, the Optionee shall be entitled to sell the balance of
the Offered Shares to the purchaser(s) named in the Offer Notice at the price
specified in the Offer Notice or at a higher price and on the terms and
conditions set forth in the Offer Notice; provided, however, that such sale
or other transfer must be consummated within 60 days from the date of the
Offer Notice and any proposed sale after such 60-day period may be made only
by again complying with the procedures set forth in this Section 7.
(c) The Optionee may transfer all or any portion of the Shares
to a trust established for the sole benefit of the Optionee and/or his or her
spouse or children without such transfer being subject to the right of first
refusal set forth in this Section 7, provided that the Shares so transferred
shall remain subject to the terms and conditions of this Agreement and no
further transfer of such Shares may be made without complying with the
provisions of this Section 7.
(d) Any Successor of Optionee pursuant to Section 5 hereof,
and any transferee of the Shares pursuant to this Section 7, shall hold the
Shares subject to the terms and conditions of this Agreement and no further
transfer of the Shares may be made without complying with the provisions of this
Section 7.
(e) The provisions of this Section 7 shall not apply to a sale
of the Shares to the Company pursuant to Section 8 below.
(f) The rights provided the Company and its nominee(s) under
this Section 7 shall terminate upon the closing of the initial public offering
of shares of the Company's Common Stock pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act.
8. COMPANY'S REPURCHASE RIGHT.
(a) The Company shall have the right (but not the obligation)
to repurchase (the "Repurchase Right") any or all of the Shares acquired
pursuant to the exercise of this Option in the event that the Optionee's
Continuous Service (as defined in Section 3 above) should terminate for any
reason whatsoever, including without limitation Optionee's death, disability,
voluntary resignation or termination by the Company with or without cause. Upon
exercise of the Repurchase Right, the Optionee shall be obligated to sell his or
her Shares to the Company, as provided in this Section 8. The Repurchase Right
may be exercised by the Company at any time during the period commencing on the
date of termination of Optionee's Continuous Service and ending one-hundred
twenty (120) days after the last to occur of the following:
(i) the termination of Optionee's Continuous Service;
4
<PAGE>
(ii) the expiration of Optionee's right to exercise
this Option pursuant to Section 3 hereof; or
(iii) in the event of Optionee's death, receipt by
the Company of notice of the identity and address of Optionee's Successor (as
defined in Section 5 hereof).
(b) The purchase price for Shares repurchased hereunder (the
"Repurchase Price") shall be the Fair Market Value per share of Common Stock
(determined in accordance with Section 2.11 of the Plan) as of the date of
termination of Optionee's Continuous Service.
(c) Written notice of exercise of the Repurchase Right,
stating the number of Shares to be repurchased and the Repurchase Price per
Share, shall be given by the Company to the Optionee or his or her Successor, as
the case may be, during the period specified in Section 8(a) above.
(d) The Repurchase Price shall be payable, at the option of
the Company, by check or by cancellation of all or a portion of any outstanding
indebtedness of Optionee to the Company, or by any combination thereof. The
Repurchase Price shall be paid without interest within sixty (60) days after
delivery of the notice of exercise of the Repurchase Right, against delivery by
the Optionee or his or her Successor of a certificate or certificates
representing the Shares to be repurchased, duly endorsed for transfer to the
Company.
(e) The rights provided the Company under this Section 8 shall
terminate upon the closing of the initial public offering of shares of the
Company's Common Stock pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission under the
Securities Act.
9. RESTRICTIVE LEGENDS.
(a) Optionee hereby acknowledges that federal securities laws
and the securities laws of the state in which he or she resides may require the
placement of certain restrictive legends upon the Shares issued upon exercise of
this Option, and Optionee hereby consents to the placing of any such legends
upon certificates evidencing the Shares as the Company, or its counsel, may deem
necessary or advisable.
(b) In addition, all stock certificates evidencing the Shares
shall be imprinted with a legend substantially as follows:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS AND A RIGHT OF
FIRST REFUSAL IN FAVOR OF THE CORPORATION AND/OR ITS NOMINEE(S), AS SET
FORTH IN A STOCK OPTION AGREEMENT DATED __________, 19__. TRANSFER OF
THESE SHARES MAY BE MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF SAID
CORPORATION. SUCH TRANSFER RESTRICTIONS, REPURCHASE
5
<PAGE>
RIGHTS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES."
10. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that
the outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other similar change
in the capital structure of the Company, then appropriate adjustment shall be
made by the Administrator to the number of Shares subject to the unexercised
portion of this Option and to the Exercise Price per share, in order to
preserve, as nearly as practical, but not to increase, the benefits of the
Optionee under this Option, in accordance with the provisions of Section 4.2 of
the Plan.
11. CHANGE IN CONTROL. In the event of a Change in Control (as defined
in Section 2.4 of the Plan) of the Company, (i) the vesting of this Option
pursuant to Section 2 above shall automatically accelerate immediately prior to
the consummation of such Change in Control, and (ii) the Administrator in its
discretion may take one or more of the following actions: (A) provide for the
purchase or exchange of this Option for an amount of cash or other property
having a value equal to the difference, or spread, between (x) the value of the
cash or other property that the Optionee would have received pursuant to such
Change in Control transaction in exchange for the shares issuable upon exercise
of this Option had this Option been exercised immediately prior to such Change
in Control transaction and (y) the Exercise Price, (B) adjust the terms of this
Option in a manner determined by the Administrator to reflect the Change in
Control, (C) cause this Option to be assumed, or new rights substituted
therefor, by another entity, through the continuance of the Plan and the
assumption of this Option, or the substitution for this Option of a new option
of comparable value covering shares of a successor corporation, with appropriate
adjustments as to the number and kind of shares and Exercise Price, in which
event the Plan and this Option, or the new option substituted therefor, shall
continue in the manner and under the terms so provided, or (D) make such other
provision as the Administrator may consider equitable. If the Administrator does
not take any of the forgoing actions, this Option shall terminate upon the
consummation of the Change in Control and the Administrator shall cause written
notice of the proposed transaction to be given to the Optionee not less than
fifteen (15) days prior to the anticipated effective date of the proposed
transaction.
12. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option
nor the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved.
13. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this option
by will or by the laws of descent and distribution) shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.
14. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested by
the Company or the managing underwriter of any proposed public offering of the
Company's securities, Optionee will not sell or otherwise transfer or dispose of
any Shares held by Optionee without the
6
<PAGE>
prior written consent of the Company or such underwriter, as the case may be,
during such period of time, not to exceed 180 days following the effective
date of the registration statement filed by the Company with respect to such
offering, as the Company or the underwriter may specify.
15. INTERPRETATION. This Option is granted pursuant to the terms of the
Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Option and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee of
the Board of Directors of the Company appointed to administer the Plan, and if
no such committee has been appointed, the term Administrator shall mean the
Board of Directors.
16. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.
17. ANNUAL AND OTHER PERIODIC REPORTS. During the term of this
Agreement, the Company will furnish to the Optionee copies of all annual and
other periodic financial and informational reports that the Company distributes
generally to its shareholders.
18. GOVERNING LAW. The validity, construction, interpretation, and
effect of this Option shall be governed by and determined in accordance with the
laws of the State of California.
19. SEVERABILITY. Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
21. CALIFORNIA CORPORATE SECURITIES LAW. The sale of the shares that
are the subject of this Agreement has not been qualified with the Commissioner
of Corporations of the State of California and the issuance of such shares or
the payment or receipt of any part of the consideration therefor prior to such
qualification is unlawful, unless the sale of such shares is exempt from such
qualification by Section 25100, 25102 or 25105 of the California Corporate
Securities Law of l968, as amended. The rights of all parties to this Agreement
are expressly conditioned upon such qualification being obtained, unless the
sale is so exempt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
iCHARGEIT, INC. "OPTIONEE"
By:
---------------------------------- ------------------------------------
(Signature)
Its:
---------------------------------- ------------------------------------
(Type or print name)
7
<PAGE>
8
<PAGE>
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made between C. Jones &
Company, Inc., a Nevada corporation ("CJC") and, Para-Link, Inc. ("Corporation"
or "Client"), with respect to the following:
RECITALS
WHEREAS, CJC is in the business of providing public relations and
general business consulting services to privately held and publicly held
corporations; and
WHEREAS, the Client is a public company trading on the OTC Bulletin
Board, symbol ("PLNK"), and wishes to retain the services of CJC.
AGREEMENT
CONSIDERATION of the mutual promises made by CJC and the Client, and
the terms and conditions hereafter set forth, the receipt and adequacy of such
consideration being mutually acknowledged, CJC and the Client therefore agree to
the following:
1. TERMS OR THIS CONSULTING AGREEMENT:
A. TERM: The initial turn shall be for one year commencing upon
execution of this Agreement.
B. CONSULTING SERVICES: As a public relations company, which
incorporates a variety of programs, techniques and tools, CJC
will provide general assistance to Client in the area of
public relations, such as: preparing and disseminating
financial press releases to various news wire organizations;
disseminating relevant corporate information to the general
public and brokerage houses; assisting Client in the promotion
of the Corporation's day to day market activities; acting as a
liaison on behalf of the Corporation with the general public
and equity brokers, and any other public relations activities
that the parties herein agree upon in writing.
C. CONSIDERATION: For services rendered by CJC on behalf of
Client pursuant to this Agreement, upon execution of this
Agreement. Client shall compensate CJC as follows:
1. CJC shall have an option to exercise the purchase,
directly or through an affiliate, of 800,000 warrants
of PLNK, which shall be converted to PLNK
free-trading stock at $0.50 a share. Though it does
not guarantee that it will do so, CJC, it its sole
discretion, will attempt to exercise said option to
purchase a minimum of 25,000 of said warrants
commencing within 7 days after the formal execution
of this agreement. Further, and again, at its sole
discretion, CJC will consider exercising said option
to purchase additiona1 25,000 warrants of PLNK each
and every week thereafter, until its option to
increase 800,000 PLNK warrants have been exhausted.
D. EXPENSES. Unless otherwise agreed to in writing, each parry
shall be responsible for its own costs with regard to the
terms and conditions set forth in this Agreement.
<PAGE>
E. EXTENSIONS AND RENEWALS: This Agreement may be extended
("Extension Period") on a quarterly basis by mutual agreement
of the parties, following a mutual1y negotiated, written
amendment to this Agreement specifying the new time period,
terms of the Amendment and CJC's compensation for the
Extension Period. Notice of mutually agreed extension
amendment must comply with Section 1-F.
F. OFFICIAL NOTICE. All official communications or legal notices
shall be given in writing by registered or certified mail,
addressed to the respective party at the postal address or
other address(es) as each party may hereafter designate in
writing, or when sent by facsimile transmission, charges
prepaid. The present addresses of the parties are as follows:
C. JONES & COMPANY, INC.
6977 East Chestnut Hill Street
Highlands Ranch, Colorado 80126
303-470-4783 (phone)
303-470-3312 (fax)
Attn: C. Allen Jones
AND,
PARA-LINK. INC
2619 Gravel Rd.
Fort Worth, TX 76118
81 7-589.0707
Attn Bob Roberts
2. CONFIDENTIALITY OF PROPRIETARY INFORMATION:
A. CONFIDENTIAL INFORMATION
1. "Confidential Information" means any proprietary
information, technical data or know-how disclosed to
CJC, either directly or indirectly in writing,
orally, by drawing, or by inspection or other
tangible items. Confidential information shall
include, without limitation, all business, product,
research and financial plans of Client disclosed to
or discussed with CJC.
2. Client agrees not to use any of CJC's or any of its
part or sibling companies ("CJC and Companies")
confidential information for its own uses or for any
purpose except to carry out discussions or a business
understanding between Client and CJC.
3. Client agrees not to disclose any of CJC and
Companies' confidential information to any third
party and, and that they will take all reasonable
measures to protect the secrecy of and avoid
disclosure or use of CJC and Companies' confidential
information.
4. Client and CJC acknowledge that nothing contained in
this Agreement will be construed as granting any
rights, by license or otherwise, to either party's or
2
<PAGE>
any of its parent or sibling companies' confidential
information, except as specified in this Agreement.
5. CJC agrees to be bound by all of the above terms
contained in this Section concerning Client's
confidential and proprietary information that may be
obtained in the course of this Agreement.
B. LIMITATION OF LIABILITY FOR NON PARTY DISCLOSURES: CJC shall
have no liability to the Client with respect to the use or
disclosure to others not party to this Agreement, of such
information as CJC can establish to:
1. Have been publicly known;
2. Have become known, without fault on the part of CJC,
subsequent to disclosure by Client of such
information to CJC;
3. Have been otherwise known by CJC prior to
communication by the Client to CJC of such
information; or
4. Have been received by CJC at any time from a source
other than Client lawfully having possession of such
information.
C. UNAUTHORIZED USE: Both parties agree that any unauthorized use
of any proprietary information whether accidental or otherwise
shall be construed as intentional and shall be considered a
breach of this Agreement.
3. ARBITRATION:
A. All disputes that cannot be settled between the parties
together under this Agreement, shall be settled by arbitration
in accordance with the rules of the American Arbitration
Association then controlling.
B. DISPUTES SHALL NOT AFFECT AGREEMENT. Disputes, differences or
controversies between the parties during the term of this
Agreement shall not interrupt performance of this Agreement.
1. In the event of any such dispute, difference or
controversy this agreement shall continue to be in
full force, and settlements and payments shall be
made in the same manner as prior to such dispute,
difference or controversy, until the matter in
dispute has been finally determined between the
parties.
4. TERMINATION OF AGREEMENT:
A. BREACH: Unilateral termination of this Agreement prior to
conclusion of the 1 year term shall be considered breach of
this Agreement.
B. FAILURE TO REMIT EXPENSES: The continued lack of payment by
Client to CJC for a period of 14 continuous days pursuant to
Section 1(C) shall be considered a breach of this Agreement
and shall, at CJC's option, be valid grounds to terminate this
Agreement.
3
<PAGE>
C. COSTS DUE UPON BREACH: Notwithstanding the breach of this
Agreement by Client, CJC shall be entitled to receipt of all
fees, hard costs, compensation and expenses incurred for
actual work performed at its normal consulting rates, and
shall retain or continue to be entitled to any stock either
issues or authorized to be issued to CJC or its designees.
5. CONTROLLING LAWS OF AGREEMENT:
A. BEST EFFORTS BASIS: CJC agrees that it will at all times
faithfully, to the best of its experience, ability and
talents, perform all the duties that may be requried of and
from CJC pursuant to the terms of this Agreement. CJC does not
guarantee that its efforts will have any impact on Client's
business or that any subsequent financial improvement will
result from CJC's efforts. Client understands and acknowledges
that the success or failure of CJC's efforts will be
predicated on Client's assets, operating results and
management decisions.
B. BINDING LAW: This Agreement shall be subject to all valid
applicable laws, rules and regulations of the State of
Colorado and of the United States. In the event that this
Agreement, any of its provisions, or its outlined operations
are found to be inconsistent with or contrary to any such
laws, rules or regulations, the latter shall control.
Furthermore, if commercially practicable, this Agreement shall
be considered modified accordingly and shall continue in full
force and effect as so modified.
1. Both parties reserve the right to meet within a
reasonable time and discuss any necessary amendments
or modifications should the modified Agreement not be
commercially practicable in the opinion of either
party's legal counsel.
2. In the event of litigation or other dispute
resolution, this Agreement shall be controlled by the
laws of the State of Colorado.
3. In the event of dispute resolution, disputes,
differences, or controversies shall be heard in the
venue of the State of Colorado, in Douglas County,
Colorado.
C. ENTIRE AGREEMENT: This Agreement shall constitute the entire
Agreement between the parties unless modified by a written
amendment signed by all of the parties or their successors in
interest. There are no other agreements, undertakings,
restrictions, representations or warranties among the parties
other than those described and provided for in this Agreement
and expressly signed by the parties therein.
D. WAIVER: Client agrees that CJC's failure to enforce any
provision or provisions of this Agreement shall not in any way
be construed as a waiver of that provision or provisions, nor
shall such failure prevent CJC from thereafter enforcing each
and every provision of this Agreement.
4
<PAGE>
6. DUE DILIGENCE: The parties herein agree to mutually cooperate with each
other concerning any reasonable requests with respect to pursing proper
and necessary due diligence.
7. PARTIES' REPRESENTATIONS: Client represents to CJC and CJC represents
to Client that each of the following are true and complete as of the
date of this Agreement:
A. Client and CJC are corporations organized, validly existing,
and in good standing under the laws of the state(s) of their
incorporations, with full corporate power and authority and
all necessary governmental authorization to own, lease and
operate property and carry on their businesses as they are now
being conducted. Client and CJC are qualified to do business
in and are in good standing in every jurisdiction in which the
nature of their businesses or the property(ies) owned and
leased by them makes such qualifications necessary.
8. CJC IS NOT AN AGENT OR EMPLOYEE OF CLIENT: CJC's obligations under this
Agreement consist solely of the services previously described. In no
event shall CJC be considered to act as an employee or agent of Client
or otherwise represent or bind Client. For the purposes of this
Agreement, CJC is an independent contractor. All final decisions with
respect to acts of Client, whether or not made pursuant to or in
reliance on information or advice furnished by CJC in this Agreement,
shall be those of Client. CJC's employees or agents shall under no
circumstances be liable for any expense incurred or loss suffered by
Client as a consequence of such action or decisions.
9. ATTORNEY FEES: In the event that any court proceeding or dispute
resolution procedure is brought under or in connection with this
Agreement, the prevailing party in such proceeding (whether on trial or
on appeal) shall be entitled to recover from the other party all costs,
expenses and reasonable attorneys' fees incidental to such legal
action. The term "prevailing party" as defined in this Agreement shall
mean the party in whose favor a final judgment or award on the defined
Agreement shall mean the merits is entered. The prevailing party of the
______________________________________.
5
<PAGE>
10. FACSIMILE COUNTERPARTS: If a party is facsimile of the signature page
to the other ________________ the electronic facsimile as a signed
Agreement may be executed in counterpart. [MISSING TEXT]
AGREED TO this 27th day of April, 1998
C. JONES & COMPANY, INC.
/s/ C. Allen Jones
----------------------------------------
C. Allen Jones, President
PARA-LINK, INC.
/s/ Joseph Meredith
----------------------------------------
Joseph Meredith, Chairman and CEO
6
<PAGE>
CONSULTING AGREEMENT
Agreement made this 4th day of March_____, 1999 by and between
Para-Link, Inc., a Texas corporation ("Company") and _______Joe
Meredith_____________, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 4, 1999, and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 79,000 shares of restricted Para-Link Inc. common stock.
4. Consultant shall provide the following services:
a. Assist in the coordination and preparation of Para-Link,
Inc.'s merger with HerbRx Inc.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail -- Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
<PAGE>
Para-Link Inc.
/s/ Jesse Cohen
- -------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Joe Meredith
- -------------------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 4th day of March_______, 1999, by and between
Para-Link, Inc., a Texas corporation ("Company") and ________Bob
Roberts____________, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 4, 1999, and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 55,000 shares of restricted Para-Link Inc. common stock.
4. Consultant shall provide the following services:
a. Assist in the coordination and preparation of Para-Link,
Inc.'s merger with HerbRx, Inc.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail -- Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
<PAGE>
Para-Link Inc.
/s/ Jesse Cohen
- -------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ (illegible)
- -------------------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 4th day of March______, 1999, by and between
Para-Link, Inc., a Texas corporation ("Company") and _________Renoir
Trust_____________, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 4, 1999, and shall
terminate upon substantial completion of the items enumerated in paragraph 4
below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, _____50,000_______shares of restricted Para-Link Inc. common
stock.
4. Consultant shall provide the following services:
a. Assist in the coordination and preparation of Para-Link,
Inc.'s merger with HerbRx, Inc.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
<PAGE>
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
Para-Link Inc.
/s/ Jesse Cohen
- -------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Leon (illegible) Trustee Renoir Trust
- ------------------------------------- ----------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999, by and between iChargeit Inc.
(formerly known as Para-Link, Inc.), a Texas corporation ("Company") and Janice
Nichols ("Consultant").
Consultant is an independent contractor willing to provide certain skills
and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants hereinafter
set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor, and
the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall terminate
upon substantial completion of the items enumerated in paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 25,000 shares of restricted iChargeit Inc. common stock at .001
par value.
4. Consultant shall provide the following services:
(a) Clerical services and documentation preparation regarding the
Para-Link Inc.'s merger with iChargeit Inc.
5. Consultant is an independent contractor and may engage in other business
activities.
6. Neither party may assign this Agreement without the express written consent
of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant as a
partner, agent or employee of the Company, nor shall either party have any
authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and exclusive
statement of the agreement between the parties. No change or modification
of this Agreement shall be valid unless the same be in writing and signed
by the parties.
9. All notices required or permitted to be given hereunder shall be in writing
and may be delivered personally or by Certified Mail--Return Receipt
Requested, postage prepaid, addressed to the parties' last known address.
10. This Agreement shall be construed in accordance with and governed by the
laws of the State of Texas.
<PAGE>
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
By: /s/ Jesse Cohen
------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Janice Nichols
-----------------------------------------
Consultant
2
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999, by and between iChargeit Inc.
(formerly known as Para-Link, Inc.), a Texas corporation ("Company") and Future
Holding Corp. ("Consultant").
Consultant is an independent contractor willing to provide certain skills
and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants hereinafter
set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor, and
the Consultant hereby accepts employment.
2. The term of this Agreement commenced on January 6, 1999 and shall terminate
upon substantial completion of the items enumerated in paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 210,000 shares of restricted iChargeit Inc. common stock at .001
par value.
4. Consultant shall provide the following services:
(a) Assist in the coordination and preparation of Para-Link Inc.'s merger
with iChargeit Inc.
5. Consultant is an independent contractor and may engage in other business
activities.
6. Neither party may assign this Agreement without the express written consent
of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant as a
partner, agent or employee of the Company, nor shall either party have any
authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and exclusive
statement of the agreement between the parties. No change or modification
of this Agreement shall be valid unless the same be in writing and signed
by the parties.
9. All notices required or permitted to be given hereunder shall be in writing
and may be delivered personally or by Certified Mail--Return Receipt
Requested, postage prepaid, addressed to the parties' last known address.
10. This Agreement shall be construed in accordance with and governed by the
laws of the State of Texas.
<PAGE>
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
By: /s/ Jesse Cohen
------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ (illegible)
-----------------------------------------
Consultant
2
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Randall Waldman ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 25,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consult with the Company regarding mergers and the start up of
the Company.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ------------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ (illegible)
- ------------------------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Patricia M. Carroll, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 15,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Provide legal consultation on an as needed basis to the Company.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Patricia M. Carroll
- ---------------------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Lewis Cohen & Company ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 140,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Assist in the design of the Company logo and assist in
building the cybermall.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
-1-
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Lewis Cohen
- ---------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
James Wrobel, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 25,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consulting advice with establishing the Toner Town web site,
provide sales price guidance and help develop supplier
relationships.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
-1-
<PAGE>
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ James Wrobel
- ---------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Jon Crandell ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 2,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consulting and initial design services on Shoppers and
Merchants newsletters.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
-1-
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- --------------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Jon Crandell 8-11-99
- --------------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Jeff Crandell, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 2,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consulting and initial design services on Shoppers and
Merchants newsletters.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
-1-
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ----------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Jeff Crandell
- ----------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Vic McCall ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 15,000 shares of iChargeit Inc. common stock at .001 par
value.
4. Consultant shall provide the following services:
a. Prepare legal documents for Para-Link, Inc. and iChargeit,
Inc. merger.
b. Prepare the necessary documentation for the iChargeit, Inc.
Reg D private placement.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- -------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Vic McCall
- -------------------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Sherrie Carter ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 25,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Clerical services and documentation preparation regarding the
Para-Link Inc.'s merger with iChargeit, Inc.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- -------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Sherrie Carter
- -------------------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Twitchell Corp. ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on January 6, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 210,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Assist in the coordination and preparation of Para-Link's
merger with iChargeit, Inc.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall iether party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- -------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ (illegible)
- -------------------------------------
Consultant
<PAGE>
CONSULTING AGREEMENT
Agreement made this 16th day of February, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Dean S. Dumont, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 12, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 10,000 shares of restricted Ichargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consulting & advisory services as needed.
b. Funding process as needed on a best effort basis with a fee of
10% finders fee.
c. Any other tasks as needed within the professional experience
of consultant.
-----------------------------------------------------------------------
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
-1-
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Dean S. Dumont
- ---------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 16th day of February, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Dean S. Dumont, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 12, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 5,000 shares of free trading Ichargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consulting & advisory services as needed.
b. Funding process as needed on a best effort basis with a fee of
10% finders fee.
c. Any other tasks as needed within the professional experience
of consultant.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
-1-
<PAGE>
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Dean S. Dumont
- ---------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 26th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Eagle Holding Investments, Ltd., ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on January 6, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 25,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Assist in the preparation and coordination of the Company's
financial statements for the Reg D offering.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
-1-
<PAGE>
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Eagle Holding Investments Ltd. by (illegible)
- --------------------------------------- -------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 26th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Mac-Group, Inc., ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on January 6, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 110,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Assist in the coordination and preparation of Para-Link,
Inc.'s merger with iChargeit, Inc.
b. Assist in the preparation of the Form 10 for iChargeit, Inc.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
-1-
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- -------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ (illegible), Pres.
- -------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 10th day of June, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Brian Wharton ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on June 10, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 5,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consulting service on Kiosks, News sites, and ISP CD Rom
dialers.
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
-1-
<PAGE>
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
- ---------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Arash Aziz-Golshani ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on March 11, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 5,000 shares of restricted iChargeit, Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Consulting advice for iLeathershop.com, meta tags, and search
engines registration for iChargeit Inc.'s web sites
5. Consultant is an independent contractor and may engage in other
business activities.
6. Neither party may assign this Agreement without the express written
consent of the other party.
7. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
8. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
9. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
10. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
-1-
<PAGE>
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Arash Aziz-Golshani
- ---------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
Agreement made this 11th day of March, 1999 by and between iChargeit
Inc. (formerly known as Para-Link, Inc.), a Texas corporation ("Company") and
Dean S. Dumont, ("Consultant").
Consultant is an independent contractor willing to provide certain
skills and abilities to the Company that the Company has need.
In consideration of the mutual terms, conditions and covenants
hereinafter set forth, Company and Consultant agree as follows:
1. The Company hereby employs the Consultant as an independent contractor,
and the Consultant hereby accepts employment.
2. The term of this Agreement commenced on June 10, 1999 and shall
terminate upon substantial completion of the items enumerated in
paragraph 4 below.
3. Company shall pay as consideration to Consultant pursuant to this
Agreement, 350,000 shares of restricted iChargeit Inc. common stock at
.001 par value.
4. Consultant shall provide the following services:
a. Assist in the dissemination of information concerning
iChargeit, Inc.
b. Interviewing and sourcing qualified investment opportunities
to be presented to the Board of Directors.
c. Assistance in the presentation of due diligence material
included in investment memorandums and other similar matters
as may be required by industry partners, bankers, financial
institutions, NASD broker/dealers, securities analysts and
equity investors.
d. Such other general assistance and advise may be mutually
agreed upon.
Consultant is an independent contractor and may engage in other
business activities.
5. Neither party may assign this Agreement without the express written
consent of the other party.
6. Consultant is an independent contractor and nothing contained in this
Agreement shall be deemed or interpreted to constitute the Consultant
as a partner, agent or employee of the Company, nor shall either party
have any authority to bind the other.
7. It is agreed between the parties that there are no other agreements or
understandings between them relating to the subject matter of this
Agreement. This Agreement supersedes all prior agreements, oral or
written, between the parties and is intended as a complete and
exclusive statement of the agreement between the parties. No change or
modification of this Agreement shall be valid unless the same be in
writing and signed by the parties.
-1-
<PAGE>
8. All notices required or permitted to be given hereunder shall be in
writing and may be delivered personally or by Certified Mail - Return
Receipt Requested, postage prepaid, addressed to the parties' last
known address.
9. This Agreement shall be construed in accordance with and governed by
the laws of the State of Texas.
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this
Agreement to be executed as of the date first above written.
iChargeit Inc.
/s/ Jesse Cohen
- ---------------------------------------
Jesse Cohen, Chief Executive Officer
/s/ Dean S. Dumont
- ---------------------------------------
Consultant
-2-
<PAGE>
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into as of
August 1, 1999 by and between iChargeit, a Texas corporation (the "Company"),
and James Carroll, an individual ("Carroll").
WHEREAS, Carroll's term of employment with the Company expires on October
31, 1999 pursuant to Carroll's Employment Agreement with the Company.
WHEREAS, the parties desire to enter into a consulting agreement whereby
Carroll will provide financial consulting services as an independent contractor
to the Company following the termination of his employment with the Company on
October 31, 1999.
NOW THEREFORE, in consideration of the promises and representations set
forth below, the parties agree as follows:
1. SERVICES. Carroll will render such financial consulting services
as the Company may request from time to time in the areas within his expertise,
including advising and assisting the Company in preparing various financial
documents, including but not limited to financial statements and SEC filings.
2. COMMITMENT. The Company anticipates needing Carroll's services
for approximately fifteen (15) hours per week, though the Company cannot
guarantee any particular amount. The Company expects Carroll to make every
reasonable effort to be available as needed. Carroll is free to render services
elsewhere during this Agreement, provided this does not conflict with Carroll's
duties or loyalty to the Company.
3. TERM AND TERMINATION. This Agreement will not be for any specific
term, but will commence on November 1, 1999, and continue indefinitely, with
either party having the right to terminate upon written notice either
immediately in the event of a breach, or upon thirty days written notice if
terminated without cause.
4. FEES. In consideration for Carroll's services, the Company will
pay Carroll a fee of $25.00 per hour. All compensation will be reported on Form
1099 and Carroll agrees that he will be solely responsible for all taxes,
penalties, and interest on Carroll's compensation.
5. INDEPENDENT CONTRACTOR. Carroll acknowledges and agrees that he
is working strictly as an independent contractor and not as an employee or agent
of the Company. Carroll will not be authorized to enter into contracts or make
any commitment on behalf of the Company.
6. CONFIDENTIAL INFORMATION. Carroll agrees that he will safeguard
and, upon termination of this Agreement, will return all Company property
entrusted to him, including any files, records, or other documents. Carroll
further agrees not to use or disclose any confidential information to which he
is given access concerning the business of the Company.
<PAGE>
7. EXPENSE REIMBURSEMENT. The Company shall reimburse Employee for
all reasonable and properly documented business expenses incurred in connection
with Employee's performance of his duties under this Agreement.
8. NO OTHER BENEFITS. The Company shall not be responsible for
payment of any other costs or expenses of Carroll, nor shall Carroll be entitled
to any benefits normally provided to employees of the Company, either by law or
company policy, including but not limited to, workers compensation, disability,
unemployment, medical, life, or other insurance, retirement, vacation, sick
leave, holiday, overtime, or for any other fringe benefits that the Company may
provide to its employees from time to time.
9. NOTICES. All notices required by this Agreement may be delivered
by first class mail at the following addresses:
To the Company: iChargeit, Inc.
300 Pacific Coast Highway
Suite 308
Huntington Beach, CA 92648
Attention: Chief Executive Officer
To Employee: Jim Carroll
1825 Maplehill Street
Yorktown, N.Y. 10598
10. ARBITRATION. Any dispute whatsoever relating to or arising out of
this Agreement or its construction, validity or enforcement shall be submitted
to final and binding arbitration in Orange County, California, by and pursuant
to the Rules of the American Arbitration Association. The arbitrator shall be
entitled to award any relief which might be available at law or in equity,
including that of a provisional, permanent or injunctive nature.
11. AMENDMENT. This Agreement may be modified only by written
agreement signed by the party against whom any amendment is to be enforced.
12. CHOICE OF LAW. This Agreement shall be governed by the laws of
the State of California.
13. PARTIAL INVALIDITY. In the event any provision of this Agreement
is void or unenforceable, the remaining provisions shall continue in full force
and effect.
14. WAIVER. No waiver of any breach of this Agreement shall
constitute a waiver of any subsequent breach. Any of the following acts or
omissions shall constitute grounds for the Company to terminate the Employee's
employment pursuant to this Agreement for "cause":
(a) Willful misconduct by Employee causing material harm
to the Company but only if Employee shall not have discontinued such misconduct
within 30 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of such
misconduct as cause for termination of this Agreement.
<PAGE>
(b) Any material act or omission by the Employee
involving gross negligence in the performance of the Employee's duties to, or
material deviation from any of the policies or directives of, the Company, other
than a deviation taken in good faith by the Employee for the benefit of the
Company;
(c) Any illegal act by the Employee which materially and
adversely affects the business of the Company or any felony committed by
Employee, as evidenced by conviction thereof, provided that the Company may
suspend the Employee with pay while any allegation of such illegal or felonious
act is investigated.
Termination by the Company for cause shall be accomplished
by written notice to the Employee and shall be preceded by a written notice
providing a reasonable opportunity for the Employee to correct his conduct.
15. COMPLETE AGREEMENT. With the exceptions of the parties'
Employment Agreement and the Exhibits attached thereto, this Agreement contains
the entire agreement between the parties, and supersedes any and all prior and
contemporaneous oral and written agreements.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
"COMPANY"
iCHARGEIT, INC.,
a Texas corporation
By: /s/ Jesse Cohen
---------------------------
Its: PRESIDENT
--------------------------
"CONSULTANT"
/s/ James F. Caroll
------------------------------
James Carroll
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
March 11, 1999 by and between iChargeit, Inc., a Texas corporation (the
"Company"), and Jesse Cohen, an individual (the "Employee").
1. EMPLOYMENT. The Company hereby agrees to employ the Employee as the
Chief Executive Officer of the Company, and the Employee accepts such
employment, and agrees to perform faithfully and diligently all duties and
responsibilities required of such position or assigned by the Company from time
to time.
2. TERM. This Agreement and Employee's employment shall be for a term
of two years commencing on March 11, 1999 (the "Effective Date"), and expiring
on March 11, 2001, but may be terminated earlier at any time in accordance with
Section 4 of this Agreement. This Agreement shall be renewed automatically for
successive one year periods thereafter unless either party gives written notice
to the other party of non-renewal at least 60 days in advance of any successive
anniversary of the Effective Date.
3. COMPENSATION. In consideration for all services to be performed
under this Agreement, Employee shall receive the following compensation:
3.1 SALARY. Employee shall be paid base salary at the rate of
Seventy Thousand Dollars ($70,000) per year (the "Base Salary"). Employee's Base
Salary shall be reviewed annually and may be increased based upon and evaluation
by the Board of Directors of the Company (the "Board of Directors") of
Employee's performance and the Company's financial condition.
3.2 SALARY IN ARREARS. The Company shall pay Employee Thirty
Five Thousand Dollars ($35,000) as compensation for work performed prior to the
commencement of his employment with the Company.
3.3 BONUS. In addition to the Base Salary, Employee shall be
eligible for bonus compensation at each anniversary of the Effective Date. The
amount of any such bonus and the determination of whether any bonus is paid
shall be in the complete discretion of the Board of Directors.
3.4 VACATION. Employee shall accrue vacation at the rate of
13.32 hours per month of active employment so that at the end of each year of
employment he will have earned four weeks vacation.
3.5 EMPLOYEE BENEFIT PLAN. Employee shall be entitled to
participate in group medical and dental, and such other benefit plans as
Employer may offer from time to time for employees at comparable levels of
responsibility.
3.6 STOCK OPTION PROGRAM. Employee shall be granted options
under the Company's 1999 Stock Incentive Plan (the "Plan") to purchase nine
hundred thousand (900,000) shares of common stock of the Company, as set forth
in the Incentive Stock Option Agreement
<PAGE>
attached hereto as EXHIBIT A, which options shall vest in equal quarterly
increments over a two year period.
3.7 GRANT OF COMMON STOCK. Employee shall be granted three
hundred fifteen thousand (315,000) shares of common stock of the Company as of
March 11, 1999. In connection with such grant, Employee shall execute a Stock
Issuance Agreement in substantially the form of EXHIBIT B attached hereto, which
shall contain, without limitation, legend requirements for the stock certificate
representing such shares, and provisions restricting transfer of the granted
shares and subjecting such shares to forfeiture to the Company upon termination
of employment, all as set forth in such agreement.
3.8 EXPENSE REIMBURSEMENT. The Company shall reimburse
Employee for all reasonable and properly documented business expenses incurred
in connection with Employee's performance of his duties under this Agreement.
4. TERMINATION. This Agreement and Employee's employment are subject to
immediate termination at any time as follows:
4.1 DEATH OR DISABILITY. This Agreement shall terminate
immediately upon Employee's death or total disability, in which event the
Company's only obligation shall be to pay all compensation owing for services
rendered by Employee prior to the date of his death. For purposes of this
Agreement, the term "total disability" means an inability of Employee, due to a
physical or mental illness, injury or impairment, to perform a substantial
portion of his duties for a period of one hundred eighty (180) or more
consecutive days, as determined by a competent physician selected by the Board
of Directors and reasonably agreed to by the Employee, following such one
hundred eighty (180) day period.
4.2 TERMINATION BY THE COMPANY FOR CAUSE. Any of the following
acts or omissions shall constitute grounds for the Company to terminate the
Employee's employment pursuant to this Agreement for "cause":
(a) Willful misconduct by Employee causing material harm to
the Company but only if Employee shall not have discontinued such misconduct
within 30 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of such
misconduct as cause for termination of this Agreement.
(b) Any material act or omission by the Employee involving
gross negligence in the performance of the Employee's duties to, or material
deviation from any of the policies or directives of, the Company, other than a
deviation taken in good faith by the Employee for the benefit of the Company;
(c) Any illegal act by the Employee which materially and
adversely affects the business of the Company or any felony committed by
Employee, as evidenced by conviction thereof, provided that the Company may
suspend the Employee with pay while any allegation of such illegal or felonious
act is investigated.
2
<PAGE>
Termination by the Company for cause shall be accomplished by
written notice to the Employee and shall be preceded by a written notice
providing a reasonable opportunity for the Employee to correct his conduct.
4.3 TERMINATION FOR GOOD REASON. Employee's employment
pursuant to this Agreement may be terminated by the Employee for "good reason"
if the Employee voluntarily terminates his employment as a result of any of the
following:
(a) Without the Employee's prior written consent, a
reduction in his then current Base Salary;
(b) Without Employee's prior written consent, a
relocation of the Employee's place of employment outside of Orange County,
California;
(c) Resignation as a result of unlawful
discrimination, as evidenced by a final court order;
(d) A reduction in duties and responsibilities which
results in the Employee no longer having duties customary for the Chief
Executive Officer; or
(e) The Company materially breaches any provision of
this Agreement.
4.4 TERMINATION WITHOUT CAUSE. The Company may terminate this
Agreement, and the employment of the Employee under this Agreement, without
cause at any time upon at least thirty (30) days prior written notice to the
Employee.
4.5 PAYMENTS UPON REMOVAL OR TERMINATION. If during the term
of this Agreement, the Employee resigns for one of the reasons stated in Section
4.3, or the Company terminates the Employee's service, except as provided in
Sections 4.1 or 4.2 hereof, the Employee shall be entitled to the following
compensation: (i) the portion of his then current Base Salary which has accrued
through his date of termination, (ii) any payments for unused vacation and
reimbursement expenses, which are due, accrued or payable at the date of
Employee's termination, (iii) severance payment in an amount (the "Severance
Amount") equal to Employee's then-current Base Salary, payable for the remainder
of the Term; and (iv) all of Employee's options to purchase shares of the
Company's common stock and restricted stock shall accelerate and automatically
vest by one additional year, and such options shall otherwise be exercisable in
accordance with their terms.
All payments required to be made by the Company to
the Employee pursuant to this Section 4.5 shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies, including,
without limitation, the Severance Amount which shall be paid at such times and
in such amounts consistent with the Company's normal payroll procedures and
policies over the number of months immediately succeeding the date of
termination that is equal to the number of months of Base Salary payable as the
Severance Amount. If the Company terminates the Employee's employment pursuant
to Sections 4.1 or 4.2, or if the Employee voluntarily resigns (except as
provided in Section 4.3), then the Employee shall be entitled to only the
compensation set forth in items (i) and (ii) or the first paragraph of this
Section 4.5.
3
<PAGE>
4.6 RETURN OF COMPANY PROPERTY. Upon termination of employment
for any reason, Employee immediately shall return to the Company without
condition all files, records, keys, and other property of the Company.
5. CONFIDENTIALITY. Employee acknowledges and agrees that Employee will
be entrusted with trade secrets and proprietary information regarding products,
processes, technical data, formulas, know-how, methods, designs, work in
progress, business plans, videos, electronic mail, inventions, vendor lists and
information, contacts and information, prices, costs, personnel and payroll
information and records, mailing lists, financial and accounting records,
contracts, leases, research and development, computer software and data bases,
copyrights, trademarks, patents, marketing techniques, and future business
plans, as well as customer lists and information concerning the identity, needs,
and desires of actual and potential customers of the Company and its
subsidiaries, joint ventures, partners, and other affiliated persons and
entities ("Confidential Information"), all of which derive significant economic
value from not being generally known to others outside the Company.
5.1 NON-DISCLOSURE. During the entire term of Employee's
employment with the Company, and at all times thereafter, Employee shall not
disclose or exploit any Confidential Information except as necessary in the
performance of Employee's duties under this Agreement or with the Company's
express written consent.
5.2 SOLICITATION. During the term of this Agreement and for
one year thereafter, Employee shall not (i) induce or solicit any employee,
agent, consultant, or independent contractor of the Company to quit his/her
employment or other business relationship with the Company or to work for any
person or entity other than the Company; or (ii) call on, solicit, or take away,
or attempt to call on, solicit or take away, any past or present customer of the
Company with respect to the same or similar business services now or in the
future provided by the Company.
5.3 VIOLATION OF CONFIDENTIALITY. Employee acknowledges and
agrees that any violation of this Section 5 would cause immediate irreparable
damage to the Company, and that it would be extremely difficult or impossible to
determine the amount of damage caused to the Company. Employee therefore
consents to the issuance of a temporary restraining order, preliminary and
permanent injunction, and other appropriate relief to restrain any actual or
threatened violation of this Section, without limiting any other remedies the
Company may have.
5.4 OTHER AGREEMENTS. Employee represents that he is not
subject to any confidentiality, non-competition, or other agreement with any
other party that would conflict with this Agreement or prevent Employee from
performing all of his assigned duties as an employee of the Company.
6. CONFLICT OF INTERESTS. During the term of this Agreement, Employee
shall devote Employee's full working time, ability, and attention to the
business of the Company, and shall not accept other employment or engage in any
other outside business activity which interferes with the performance of
Employee's duties and responsibilities under this Agreement or which involves
actual or potential competition with the business of the Company, except with
the express written consent of the Board of Directors.
4
<PAGE>
7. ARBITRATION. Any dispute whatsoever relating to or arising out of
this Agreement or its construction, validity or enforcement shall be submitted
to final and binding arbitration in Orange County, California, by and pursuant
to the Employment Dispute Resolution Rules of the American Arbitration
Association. The arbitrator shall be entitled to award any relief which might be
available at law or in equity, including that of a provisional, permanent or
injunctive nature.
8. ASSIGNMENT. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of the Employee, assign its rights and
obligations under this Agreement to an Affiliate or to any corporation, firm or
other business entity (i) with or into which the Company may merge or
consolidate, or (ii) to which the Company may sell or transfer all or
substantially all of its assets.
7. SUCCESSORS. This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Employee's devisee, legatee, or other
designee or, if there be no such designee, to the Employee's estate.
9. NOTICES. All notices required by this Agreement
may be delivered by first class mail at the following addresses:
To the Company: iChargeit, Inc.
300 Pacific Coast Highway
Suite 308
Huntington Beach, CA 92648
To Employee: Jesse Cohen
8162 Capehope Circle, #201
Huntington Beach, CA 92646
10. AMENDMENT. This Agreement may be modified only by written agreement
signed by the party against whom any amendment is to be enforced.
11. CHOICE OF LAW. This Agreement shall be governed by the laws of the
State of California.
12. PARTIAL INVALIDITY. In the event any provision of this Agreement is
void or unenforceable, the remaining provisions shall continue in full force and
effect.
13. COMPLETE AGREEMENT. This Agreement, including the Incentive Stock
Option Agreement and Stock Issuance Agreement attached as EXHIBIT A and EXHIBIT
B, respectively, contains the entire agreement between the parties, and
supersedes any and all prior and contemporaneous oral and written agreements,
including Employee's previous employment contracts, which shall have no further
force and effect.
5
<PAGE>
14. WITHHOLDING TAXES. The Company may withhold from any salary and
benefits payable under this Agreement all federal, state, city or other taxes or
amounts as shall be required to be withheld pursuant to any law or governmental
regulation or ruling.
15. NO WAIVER. No term or condition of this Agreement shall be deemed
to have been waived nor shall there be any estoppel to enforce any provisions of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
16. SEVERABILITY. To the extent any provision of this Agreement shall
be invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
17. COUNTERPART EXECUTION. This Agreement may be executed by facsimile
and in counterparts, each of which shall be deemed an original and all of which
when taken together shall constitute but one and the same instrument.
18. ATTORNEYS FEES. Should any legal action or arbitration be required
to resolve any dispute over the meaning or enforceability of this Agreement or
to enforce the terms of this Agreement, the prevailing party shall be entitled
to recover its or his reasonable attorneys fees and costs incurred in such
action, in addition to any other relief to which that party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
"COMPANY"
iCHARGEIT, INC.,
a Texas corporation
By: /s/ Jesse Cohen
------------------------------
Its: President
------------------------------
"EMPLOYEE"
/s/ Jesse Cohen
---------------------------------
Jesse Cohen
6
<PAGE>
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT B
STOCK ISSUANCE AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of May 1,
1999 by and between iChargeit, Inc., a Texas corporation (the "Company"), and
James Carroll, an individual (the "Employee").
1. EMPLOYMENT. The Company hereby agrees to employ the Employee as the
Chief Financial Officer of the Company reporting to the Chief Executive
Officer, and the Employee accepts such employment, and agrees to perform
faithfully and diligently all duties and responsibilities required of such
position or assigned by the Company from time to time, in such locations in
and around the greater New York City, New York area as determined by the
Company in its sole discretion.
2. TERM. This Agreement and Employee's employment shall be for a term of
six months commencing on May 1, 1999 (the "Effective Date"), and expiring on
October 31, 1999, but may be terminated earlier at any time in accordance
with Section 4 of this Agreement. Following the expiration of Employee's
employment on October 31, 1999, and commencing on November 1, 1999, the
parties agree that the Company will retain Employee as an independent
consultant according to the terms and conditions contained in the parties'
Consulting Agreement attached hereto as EXHIBIT A.
3. COMPENSATION. In consideration for all services to be performed under
this Agreement, Employee shall receive the following compensation:
3.1 SALARY. Employee shall be paid base salary at the rate
of Twenty Five Thousand Dollars ($25,000) for the six month term of this
Agreement ("Base Salary").
3.2 SALARY IN ARREARS. The Company shall pay Employee Ten
Thousand Dollars ($10,000) as compensation for work performed prior to the
commencement of his employment with the Company.
3.3 STOCK OPTION PROGRAM. Employee shall be granted options
under the Company's 1999 Stock Incentive Plan (the "Plan") to purchase one
hundred thousand (100,000) shares of common stock of the Company, as set
forth in the Incentive Stock Option Agreement attached hereto as EXHIBIT B,
which options shall vest in full six months from the date of grant.
3.4 GRANT OF COMMON STOCK. Employee shall be granted two
hundred fifty thousand (250,000) shares of common stock of the Company as of
March 11, 1999. In connection with such grant, Employee shall execute a Stock
Issuance Agreement in substantially the form of EXHIBIT C attached hereto,
which shall contain, without limitation, legend requirements for the stock
certificate representing such shares, and provisions restricting transfer of
the granted shares and subjecting such shares to forfeiture to the Company
upon termination of employment, all as set forth in such agreement.
3.5 EXPENSE REIMBURSEMENT. The Company shall reimburse
Employee for all reasonable and properly documented business expenses
incurred in connection with Employee's performance of his duties under this
Agreement.
<PAGE>
3.7 STOREFRONT. The Company shall provide Employee with a
storefront on the Company's internet site located at www.ichargeit for
purposes of engaging in electronic commerce for the sale of fabrics. The
Company shall receive a percentage of all sales generated through such
storefront, according to the terms and provisions set forth in a sales agency
agreement to be entered into between the Company and Employee.
4. TERMINATION. This Agreement and Employee's employment are subject to
immediate termination at any time as follows:
4.1 DEATH OR DISABILITY. This Agreement shall terminate
immediately upon Employee's death or total disability, in which event the
Company's only obligation shall be to pay all compensation owing for services
rendered by Employee prior to the date of his death. For purposes of this
Agreement, the term "total disability" means an inability of Employee, due to
a physical or mental illness, injury or impairment, to perform a substantial
portion of his duties for a period of sixty (60) or more consecutive days, as
determined by a competent physician selected by the Board of Directors and
reasonably agreed to by the Employee, following such sixty (60) day period.
4.2 TERMINATION BY THE COMPANY FOR CAUSE. Any of the
following acts or omissions shall constitute grounds for the Company to
terminate the Employee's employment pursuant to this Agreement for "cause":
(a) Willful misconduct by Employee causing material harm to
the Company but only if Employee shall not have discontinued such misconduct
within 30 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of
such misconduct as cause for termination of this Agreement.
(b) Any material act or omission by the Employee involving
gross negligence in the performance of the Employee's duties to, or material
deviation from any of the policies or directives of, the Company, other than
a deviation taken in good faith by the Employee for the benefit of the
Company;
(c) Any illegal act by the Employee which materially and
adversely affects the business of the Company or any felony committed by
Employee, as evidenced by conviction thereof, provided that the Company may
suspend the Employee with pay while any allegation of such illegal or
felonious act is investigated.
Termination by the Company for cause shall be accomplished
by written notice to the Employee and shall be preceded by a written notice
providing a reasonable opportunity for the Employee to correct his conduct.
4.3 TERMINATION FOR GOOD REASON. Employee's employment
pursuant to this Agreement may be terminated by the Employee for "good
reason" if the Employee voluntarily terminates his employment as a result of
any of the following:
(a) Without the Employee's prior written consent,
a reduction in his then current Base Salary;
2
<PAGE>
(b) Without Employee's prior written consent, a
relocation of the Employee's place of employment outside of the New York area;
(c) Resignation as a result of unlawful
discrimination, as evidenced by a final court order;
(d) A reduction in duties and responsibilities
which results in the Employee no longer having duties customary for the Chief
Financial Officer; or
(e) The Company materially breaches any provision
of this Agreement.
4.4 TERMINATION WITHOUT CAUSE. The Company may terminate
this Agreement, and the employment of the Employee under this Agreement,
without cause at any time upon at least thirty (30) days prior written notice
to the Employee.
4.5 PAYMENTS UPON REMOVAL OR TERMINATION. If during the
term of this Agreement, the Employee resigns for one of the reasons stated in
Section 4.3, or the Company terminates the Employee's service, except as
provided in Sections 4.1 or 4.2 hereof, the Employee shall be entitled to the
following compensation: (i) the portion of his then current Base Salary which
has accrued through his date of termination, (ii) any payments for unused
vacation and reimbursement expenses, which are due, accrued or payable at the
date of Employee's termination, (iii) severance payment in an amount (the
"Severance Amount") equal to Employee's then-current Base Salary, payable for
the remainder of the Term; and (iv) all of Employee's options to purchase
shares of the Company's common stock and restricted stock shall accelerate
and automatically vest by one additional year, and such options shall
otherwise be exercisable in accordance with their terms.
All payments required to be made by the Company to
the Employee pursuant to this Section 4.5 shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies,
including, without limitation, the Severance Amount which shall be paid at
such times and in such amounts consistent with the Company's normal payroll
procedures and policies over the number of months immediately succeeding the
date of termination that is equal to the number of months of Base Salary
payable as the Severance Amount. If the Company terminates the Employee's
employment pursuant to Sections 4.1 or 4.2, or if the Employee voluntarily
resigns (except as provided in Section 4.3), then the Employee shall be
entitled to only the compensation set forth in items (i) and (ii) or the
first paragraph of this Section 4.5.
4.6 RETURN OF COMPANY PROPERTY. Upon termination of
employment for any reason, Employee immediately shall return to the Company
without condition all files, records, keys, and other property of the Company.
5. CONFIDENTIALITY. Employee acknowledges and agrees that Employee will be
entrusted with trade secrets and proprietary information regarding products,
processes, technical data, formulas, know-how, methods, designs, work in
progress, business plans, videos, electronic mail, inventions, vendor lists
and information, contacts and information, prices, costs, personnel and
payroll information and records, mailing lists, financial and accounting
records, contracts, leases, research and development, computer software and
data bases, copyrights, trademarks, patents, marketing techniques, and future
business plans, as well as customer lists and information concerning the
3
<PAGE>
identity, needs, and desires of actual and potential customers of the Company
and its subsidiaries, joint ventures, partners, and other affiliated persons
and entities ("Confidential Information"), all of which derive significant
economic value from not being generally known to others outside the Company.
5.1 NON-DISCLOSURE. During the entire term of Employee's
employment with the Company, and at all times thereafter, Employee shall not
disclose or exploit any Confidential Information except as necessary in the
performance of Employee's duties under this Agreement or with the Company's
express written consent.
5.2 SOLICITATION. During the term of this Agreement and for
one year thereafter, Employee shall not (i) induce or solicit any employee,
agent, consultant, or independent contractor of the Company to quit his/her
employment or other business relationship with the Company or to work for any
person or entity other than the Company; or (ii) call on, solicit, or take
away, or attempt to call on, solicit or take away, any past or present
customer of the Company with respect to the same or similar business services
now or in the future provided by the Company.
5.3 VIOLATION OF CONFIDENTIALITY. Employee acknowledges and
agrees that any violation of this Section 5 would cause immediate irreparable
damage to the Company, and that it would be extremely difficult or impossible
to determine the amount of damage caused to the Company. Employee therefore
consents to the issuance of a temporary restraining order, preliminary and
permanent injunction, and other appropriate relief to restrain any actual or
threatened violation of this Section, without limiting any other remedies the
Company may have.
5.4 OTHER AGREEMENTS. Employee represents that he is not
subject to any confidentiality, non-competition, or other agreement with any
other party that would conflict with this Agreement or prevent Employee from
performing all of his assigned duties as an employee of the Company.
6. CONFLICT OF INTERESTS. During the term of this Agreement, Employee shall
devote Employee's full working time, ability, and attention to the business
of the Company, and shall not accept other employment or engage in any other
outside business activity which interferes with the performance of Employee's
duties and responsibilities under this Agreement or which involves actual or
potential competition with the business of the Company, except with the
express written consent of the Chief Executive Officer.
7. ARBITRATION. Any dispute whatsoever relating to or arising out of this
Agreement or its construction, validity or enforcement shall be submitted to
final and binding arbitration in Orange County, California, by and pursuant
to the Employment Dispute Resolution Rules of the American Arbitration
Association. The arbitrator shall be entitled to award any relief which might
be available at law or in equity, including that of a provisional, permanent
or injunctive nature.
8. ASSIGNMENT. This Agreement shall not be assignable, in whole or in part,
by either party without the written consent of the other party, except that
the Company may, without the consent of the Employee, assign its rights and
obligations under this Agreement to an Affiliate or to any corporation, firm
or other business entity (i) with or into which the Company may merge or
consolidate, or (ii) to which the Company may sell or transfer all or
substantially all of its assets.
4
<PAGE>
9. SUCCESSORS. This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Employee should die while any amounts are still payable to him hereunder,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Employee's devisee,
legatee, or other designee or, if there be no such designee, to the
Employee's estate.
10. NOTICES. All notices required by this Agreement may be delivered by
first class mail at the following addresses:
To the Company: iChargeit, Inc.
300 Pacific Coast Highway
Suite 308
Huntington Beach, CA 92648
ATTN: Chief Executive Officer
To Employee: James Carroll
1825 Maplehill Street
Yorktown, N.Y. 10598
11. AMENDMENT. This Agreement may be modified only by written agreement
signed by the party against whom any amendment is to be enforced.
12. CHOICE OF LAW. This Agreement shall be governed by the laws of the
State of California.
13. PARTIAL INVALIDITY. In the event any provision of this Agreement is void or
unenforceable, the remaining provisions shall continue in full force and effect.
14. COMPLETE AGREEMENT. This Agreement, including the Consulting Agreement
attached hereto as EXHIBIT A, the Incentive Stock Option Agreement attached
hereto as EXHIBIT B, and the Stock Issuance Agreement attached as EXHIBIT C
hereto, as well as a sales agency agreement to be entered into between the
Company and Employee with respect to the matter set forth in Section 3.5 of
this Agreement, contains the entire agreement between the parties, and
supersedes any and all prior and contemporaneous oral and written agreements,
including Employee's previous employment contracts, which shall have no
further force and effect.
15. WITHHOLDING TAXES. The Company may withhold from any salary and benefits
payable under this Agreement all federal, state, city or other taxes or
amounts as shall be required to be withheld pursuant to any law or
governmental regulation or ruling.
16. NO WAIVER. No term or condition of this Agreement shall be deemed to
have been waived nor shall there be any estoppel to enforce any provisions of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver
shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
5
<PAGE>
17. SEVERABILITY. To the extent any provision of this Agreement shall be
invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
18. COUNTERPART EXECUTION. This Agreement may be executed by facsimile and
in counterparts, each of which shall be deemed an original and all of which
when taken together shall constitute but one and the same instrument.
19. ATTORNEYS FEES. Should any legal action or arbitration be required to
resolve any dispute over the meaning or enforceability of this Agreement or
to enforce the terms of this Agreement, the prevailing party shall be
entitled to recover its or his reasonable attorneys fees and costs incurred
in such action, in addition to any other relief to which that party may be
entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year set forth above.
"COMPANY"
iCHARGEIT, INC.,
a Texas corporation
By: /s/ Jesse Cohen
-----------------------------
Its: President
----------------------------
"EMPLOYEE"
/s/ James F. Carroll
--------------------------------
James Carroll
6
<PAGE>
EXHIBIT A
CONSULTING AGREEMENT
<PAGE>
EXHIBIT B
INCENTIVE STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT C
STOCK ISSUANCE AGREEMENT
9
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of June 1,
1999 by and between iChargeit, Inc., a Texas corporation (the "Company"), and
Randall Waldman, an individual (the "Employee").
1. EMPLOYMENT. The Company hereby agrees to employ the Employee as the
Chief Operations Officer of the Company reporting to the Chief Executive
Officer, and the Employee accepts such employment, and agrees to perform
faithfully and diligently all duties and responsibilities required of such
position or assigned by the Company from time to time.
2. TERM. This Agreement and Employee's employment shall be for a term of
two years commencing on June 1, 1999 (the "Effective Date"), and expiring on
June 1, 2001, but may be terminated earlier at any time in accordance with
Section 4 of this Agreement. This Agreement shall be renewed automatically
for successive one year periods thereafter unless either party gives written
notice to the other party of non-renewal at least 60 days in advance of any
successive anniversary of the Effective Date.
3. COMPENSATION. In consideration for all services to be performed under
this Agreement, Employee shall receive the following compensation:
3.1 SALARY. Employee shall be paid base salary at the rate
of Fifty Thousand Dollars ($50,000) per year (the "Base Salary"). Employee's
Base Salary shall be reviewed annually and may be increased based upon and
evaluation by the Board of Directors of the Company (the "Board of
Directors") of Employee's performance and the Company's financial condition.
3.2 SIGNING BONUS. Employee acknowledges that he already
received a one-time Signing Bonus from the Company in the amount of $11,700
paid to him in consideration of the commencement of his employment with the
Company.
3.3 BONUS. In addition to the Base Salary, Employee shall
be eligible for bonus compensation at each anniversary of the Effective Date.
The amount of any such bonus and the determination of whether any bonus is
paid shall be in the complete discretion of the Board of Directors.
3.4 VACATION. Employee shall accrue vacation at the rate of
13.32 hours per month of active employment so that at the end of each year of
employment he will have earned four weeks vacation.
3.5 EMPLOYEE BENEFIT PLAN. Employee shall be entitled to
participate in group medical and dental, and such other benefit plans as
Employer may offer from time to time for employees at comparable levels of
responsibility
3.6 STOCK OPTION PROGRAM. Employee shall be granted options
under the Company's 1999 Stock Incentive Plan (the "Plan") to purchase six
hundred forty thousand (640,000) shares of common stock of the Company, as
set forth in the Incentive Stock Option Agreement attached hereto as EXHIBIT
A, which options shall vest in equal quarterly increments over a two year
period.
<PAGE>
3.7 GRANT OF COMMON STOCK. Employee shall be granted two
hundred fifty thousand (250,000) shares of common stock of the Company as of
March 11, 1999. In connection with such grant, Employee shall execute a Stock
Issuance Agreement in substantially the form of EXHIBIT B attached hereto,
which shall contain, without limitation, legend requirements for the stock
certificate representing such shares, and provisions restricting transfer of
the granted shares and subjecting such shares to forfeiture to the Company
upon termination of employment, all as set forth in such agreement.
3.8 EXPENSE REIMBURSEMENT. The Company shall reimburse
Employee for all reasonable and properly documented business expenses
incurred in connection with Employee's performance of his duties under this
Agreement.
4. TERMINATION. This Agreement and Employee's employment are subject to
immediate termination at any time as follows:
4.1 DEATH OR DISABILITY. This Agreement shall terminate
immediately upon Employee's death or total disability, in which event the
Company's only obligation shall be to pay all compensation owing for services
rendered by Employee prior to the date of his death. For purposes of this
Agreement, the term "total disability" means an inability of Employee, due to
a physical or mental illness, injury or impairment, to perform a substantial
portion of his duties for a period of one hundred eighty (180) or more
consecutive days, as determined by a competent physician selected by the
Board of Directors and reasonably agreed to by the Employee, following such
one hundred eighty (180) day period.
4.2 TERMINATION FOR GOOD REASON. Employee's employment
pursuant to this Agreement may be terminated by the Employee for "good
reason" if the Employee voluntarily terminates his employment as a result of
any of the following:
(a) Without the Employee's prior written consent,
a reduction in his then current Base Salary;
(b) Without Employee's prior written consent, a
relocation of the Employee's place of employment outside of Orange County,
California;
(c) Resignation as a result of unlawful
discrimination, as evidenced by a final court order;
(d) A reduction in duties and responsibilities
which results in the Employee no longer having duties customary for the Chief
Operations Officer; or
(e) The Company materially breaches any provision
of this Agreement.
4.3 TERMINATION BY THE COMPANY FOR CAUSE. Any of the
following acts or omissions shall constitute grounds for the Company to
terminate the Employee's employment pursuant to this Agreement for "cause":
(a) Willful misconduct by Employee causing material harm to
the Company but only if Employee shall not have discontinued such misconduct
within 30 days after receiving written
2
<PAGE>
notice from the Company describing the misconduct and stating that the
Company will consider the continuation of such misconduct as cause for
termination of this Agreement.
(b) Any material act or omission by the Employee involving
gross negligence in the performance of the Employee's duties to, or material
deviation from any of the policies or directives of, the Company, other than
a deviation taken in good faith by the Employee for the benefit of the
Company;
(c) Any illegal act by the Employee which materially and
adversely affects the business of the Company or any felony committed by
Employee, as evidenced by conviction thereof, provided that the Company may
suspend the Employee with pay while any allegation of such illegal or
felonious act is investigated.
Termination by the Company for cause shall be accomplished
by written notice to the Employee and shall be preceded by a written notice
providing a reasonable opportunity for the Employee to correct his conduct.
4.4 TERMINATION WITHOUT CAUSE. The Company may terminate
this Agreement, and the employment of the Employee under this Agreement,
without cause at any time upon at least thirty (30) days prior written notice
to the Employee.
4.5 PAYMENTS UPON REMOVAL OR TERMINATION. If during the
term of this Agreement, the Employee resigns for one of the reasons stated in
Section 4.3, or the Company terminates the Employee's service, except as
provided in Sections 4.1 or 4.2 hereof, the Employee shall be entitled to the
following compensation: (i) the portion of his then current Base Salary which
has accrued through his date of termination, (ii) any payments for unused
vacation and reimbursement expenses, which are due, accrued or payable at the
date of Employee's termination, (iii) severance payment in an amount (the
"Severance Amount") equal to Employee's then-current Base Salary, payable for
the remainder of the Term; and (iv) all of Employee's options to purchase
shares of the Company's common stock and restricted stock shall accelerate
and automatically vest by one additional year, and such options shall
otherwise be exercisable in accordance with their terms.
All payments required to be made by the Company to
the Employee pursuant to this Section 4.5 shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies,
including, without limitation, the Severance Amount which shall be paid at
such times and in such amounts consistent with the Company's normal payroll
procedures and policies over the number of months immediately succeeding the
date of termination that is equal to the number of months of Base Salary
payable as the Severance Amount. If the Company terminates the Employee's
employment pursuant to Sections 4.1 or 4.2, or if the Employee voluntarily
resigns (except as provided in Section 4.3), then the Employee shall be
entitled to only the compensation set forth in items (i) and (ii) or the
first paragraph of this Section 4.5.
4.6 RETURN OF COMPANY PROPERTY. Upon termination of
employment for any reason, Employee immediately shall return to the Company
without condition all files, records, keys, and other property of the Company.
3
<PAGE>
5. CONFIDENTIALITY. Employee acknowledges and agrees that Employee will be
entrusted with trade secrets and proprietary information regarding products,
processes, technical data, formulas, know-how, methods, designs, work in
progress, business plans, videos, electronic mail, inventions, vendor lists
and information, contacts and information, prices, costs, personnel and
payroll information and records, mailing lists, financial and accounting
records, contracts, leases, research and development, computer software and
data bases, copyrights, trademarks, patents, marketing techniques, and future
business plans, as well as customer lists and information concerning the
identity, needs, and desires of actual and potential customers of the Company
and its subsidiaries, joint ventures, partners, and other affiliated persons
and entities ("Confidential Information"), all of which derive significant
economic value from not being generally known to others outside the Company.
5.1 NON-DISCLOSURE. During the entire term of Employee's
employment with the Company, and at all times thereafter, Employee shall not
disclose or exploit any Confidential Information except as necessary in the
performance of Employee's duties under this Agreement or with the Company's
express written consent.
5.2 SOLICITATION. During the term of this Agreement and for
one year thereafter, Employee shall not (i) induce or solicit any employee,
agent, consultant, or independent contractor of the Company to quit his/her
employment or other business relationship with the Company or to work for any
person or entity other than the Company; or (ii) call on, solicit, or take
away, or attempt to call on, solicit or take away, any past or present
customer of the Company with respect to the same or similar business services
now or in the future provided by the Company.
5.3 VIOLATION OF CONFIDENTIALITY. Employee acknowledges and
agrees that any violation of this Section 5 would cause immediate irreparable
damage to the Company, and that it would be extremely difficult or impossible
to determine the amount of damage caused to the Company. Employee therefore
consents to the issuance of a temporary restraining order, preliminary and
permanent injunction, and other appropriate relief to restrain any actual or
threatened violation of this Section, without limiting any other remedies the
Company may have.
5.4 OTHER AGREEMENTS. Employee represents that he is not
subject to any confidentiality, non-competition, or other agreement with any
other party that would conflict with this Agreement or prevent Employee from
performing all of his assigned duties as an employee of the Company.
6. CONFLICT OF INTERESTS. During the term of this Agreement, Employee shall
devote Employee's full working time, ability, and attention to the business
of the Company, and shall not accept other employment or engage in any other
outside business activity which interferes with the performance of Employee's
duties and responsibilities under this Agreement or which involves actual or
potential competition with the business of the Company, except with the
express written consent of the Chief Executive Officer.
7. ARBITRATION. Any dispute whatsoever relating to or arising out of this
Agreement or its construction, validity or enforcement shall be submitted to
final and binding arbitration in Orange County, California, by and pursuant
to the Employment Dispute Resolution Rules of the American Arbitration
Association. The arbitrator shall be entitled to award any relief which might
be available at law or in equity, including that of a provisional, permanent
or injunctive nature.
4
<PAGE>
8. ASSIGNMENT. This Agreement shall not be assignable, in whole or in part,
by either party without the written consent of the other party, except that
the Company may, without the consent of the Employee, assign its rights and
obligations under this Agreement to an Affiliate or to any corporation, firm
or other business entity (i) with or into which the Company may merge or
consolidate, or (ii) to which the Company may sell or transfer all or
substantially all of its assets.
7. SUCCESSORS. This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Employee should die while any amounts are still payable to him hereunder,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Employee's devisee,
legatee, or other designee or, if there be no such designee, to the
Employee's estate.
9. NOTICES. All notices required by this Agreement may be delivered by
first class mail at the following addresses:
To the Company: iChargeit, Inc.
300 Pacific Coast Highway
Suite 308
Huntington Beach, CA 92648
ATTN: Chief Executive Officer
To Employee: Randall Waldman
17200 Mallet Hill Drive
Louisville, Kentucky 40245
10. AMENDMENT. This Agreement may be modified only by written agreement
signed by the party against whom any amendment is to be enforced.
11. CHOICE OF LAW. This Agreement shall be governed by the laws of the State
of California.
12. PARTIAL INVALIDITY. In the event any provision of this Agreement is void
or unenforceable, the remaining provisions shall continue in full force and
effect.
13. COMPLETE AGREEMENT. This Agreement, including the Incentive Stock Option
Agreement and Stock Issuance Agreement attached as EXHIBIT A and EXHIBIT B,
respectively, contains the entire agreement between the parties, and
supersedes any and all prior and contemporaneous oral and written agreements,
including Employee's previous employment contracts, which shall have no
further force and effect.
14. WITHHOLDING TAXES. The Company may withhold from any salary and benefits
payable under this Agreement all federal, state, city or other taxes or
amounts as shall be required to be withheld pursuant to any law or
governmental regulation or ruling.
15. NO WAIVER. No term or condition of this Agreement shall be deemed to
have been waived nor shall there be any estoppel to enforce any provisions of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver
shall not be deemed a continuing waiver unless specifically stated, shall
operate only
5
<PAGE>
as to the specific term or condition waived and shall not constitute a waiver
of such term or condition for the future or as to any act other than that
specifically waived.
16. SEVERABILITY. To the extent any provision of this Agreement shall be
invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
17. COUNTERPART EXECUTION. This Agreement may be executed by facsimile and
in counterparts, each of which shall be deemed an original and all of which
when taken together shall constitute but one and the same instrument.
18. ATTORNEYS FEES. Should any legal action or arbitration be required to
resolve any dispute over the meaning or enforceability of this Agreement or
to enforce the terms of this Agreement, the prevailing party shall be
entitled to recover its or his reasonable attorneys fees and costs incurred
in such action, in addition to any other relief to which that party may be
entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year set forth above.
"COMPANY"
iCHARGEIT, INC.,
a Texas corporation
By: /s/ Jesse Cohen
---------------------------
Its: President
--------------------------
"EMPLOYEE"
(illegible)
------------------------------
Randall Waldman
6
<PAGE>
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT B
STOCK ISSUANCE AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of September
__, 1999 by and between iChargeit, Inc., a Texas corporation (the "Company"),
and Saied R. Akavan, an individual (the "Employee").
1. EMPLOYMENT. The Company hereby agrees to employ the Employee as the President
of the Company, and the Employee accepts such employment, and agrees to perform
faithfully and diligently all duties and responsibilities required of such
position or assigned by the Company from time to time.
2. TERM. This Agreement and Employee's employment shall be for a term of _____
years commencing on __________, 1999 (the "Effective Date"), and expiring on
_________, 20__, but may be terminated earlier at any time in accordance with
Section 4 of this Agreement. This Agreement shall be renewed automatically for
successive one year periods thereafter unless either party gives written notice
to the other party of non-renewal at least 60 days in advance of any successive
anniversary of the Effective Date.
3. COMPENSATION. In consideration for all services to be performed under this
Agreement, Employee shall receive the following compensation:
3.1 SALARY. Employee shall be paid base salary at the rate of
___________ Dollars ($________) per year (the "Base Salary"). Employee's Base
Salary shall be reviewed annually and may be increased based upon and evaluation
by the Board of Directors of the Company (the "Board of Directors") of
Employee's performance and the Company's financial condition.
3.2 BONUS. In addition to the Base Salary, Employee shall be
eligible for bonus compensation at each anniversary of the Effective Date. The
amount of any such bonus and the determination of whether any bonus is paid
shall be in the complete discretion of the Board of Directors.
3.3 VACATION. Employee shall accrue vacation at the rate of
[13.32] hours per month of active employment so that at the end of each year of
employment he will have earned [___] weeks vacation.
3.4 EMPLOYEE BENEFIT PLAN. Employee shall be entitled to
participate in group medical and dental, and such other benefit plans as
Employer may offer from time to time for employees at comparable levels of
responsibility.
3.5 STOCK OPTION PROGRAM. Employee shall be granted options
under the Company's 1999 Stock Incentive Plan (the "Plan") to purchase
____________ (________) shares of common stock of the Company, as set forth in
the Incentive Stock Option Agreement attached hereto as EXHIBIT A, which options
shall vest in equal quarterly increments over a two year period.
3.6 [GRANT OF COMMON STOCK. Employee shall be granted
_____________ (_________) shares of common stock of the Company as of ________,
1999. In connection with such grant, Employee shall execute a Stock Issuance
Agreement in substantially the form of EXHIBIT B attached hereto, which shall
contain, without limitation, legend requirements for the stock
<PAGE>
certificate representing such shares, and provisions restricting transfer of
the granted shares and subjecting such shares to forfeiture to the Company
upon termination of employment, all as set forth in such agreement.]
3.7 EXPENSE REIMBURSEMENT. The Company shall reimburse
Employee for all reasonable and properly documented business expenses incurred
in connection with Employee's performance of his duties under this Agreement.
4. TERMINATION. This Agreement and Employee's employment are subject to
immediate termination at any time as follows:
4.1 DEATH OR DISABILITY. This Agreement shall terminate
immediately upon Employee's death or total disability, in which event the
Company's only obligation shall be to pay all compensation owing for services
rendered by Employee prior to the date of his death. For purposes of this
Agreement, the term "total disability" means an inability of Employee, due to a
physical or mental illness, injury or impairment, to perform a substantial
portion of his duties for a period of one hundred eighty (180) or more
consecutive days, as determined by a competent physician selected by the Board
of Directors and reasonably agreed to by the Employee, following such one
hundred eighty (180) day period.
4.2 TERMINATION BY THE COMPANY FOR CAUSE. Any of the following
acts or omissions shall constitute grounds for the Company to terminate the
Employee's employment pursuant to this Agreement for "cause":
(a) Willful misconduct by Employee causing material harm to
the Company but only if Employee shall not have discontinued such misconduct
within 30 days after receiving written notice from the Company describing the
misconduct and stating that the Company will consider the continuation of such
misconduct as cause for termination of this Agreement.
(b) Any material act or omission by the Employee involving
gross negligence in the performance of the Employee's duties to, or material
deviation from any of the policies or directives of, the Company, other than a
deviation taken in good faith by the Employee for the benefit of the Company;
(c) Any illegal act by the Employee which materially and
adversely affects the business of the Company or any felony committed by
Employee, as evidenced by conviction thereof, provided that the Company may
suspend the Employee with pay while any allegation of such illegal or felonious
act is investigated.
Termination by the Company for cause shall be accomplished by
written notice to the Employee and shall be preceded by a written notice
providing a reasonable opportunity for the Employee to correct his conduct.
4.3 TERMINATION FOR GOOD REASON. Employee's employment
pursuant to this Agreement may be terminated by the Employee for "good reason"
if the Employee voluntarily terminates his employment as a result of any of the
following:
2
<PAGE>
(a) Without the Employee's prior written consent, a
reduction in his then current Base Salary;
(b) Without Employee's prior written consent, a
relocation of the Employee's place of employment outside of [__________],
California;
(c) Resignation as a result of unlawful
discrimination, as evidenced by a final court order;
(d) A reduction in duties and responsibilities which
results in the Employee no longer having duties customary for the President; or
(e) The Company materially breaches any provision of
this Agreement.
4.4 TERMINATION WITHOUT CAUSE. The Company may terminate this
Agreement, and the employment of the Employee under this Agreement, without
cause at any time upon at least thirty (30) days prior written notice to the
Employee.
4.5 PAYMENTS UPON REMOVAL OR TERMINATION. If during the term
of this Agreement, the Employee resigns for one of the reasons stated in Section
4.3, or the Company terminates the Employee's service, except as provided in
Sections 4.1 or 4.2 hereof, the Employee shall be entitled to the following
compensation: (i) the portion of his then current Base Salary which has accrued
through his date of termination, (ii) any payments for unused vacation and
reimbursement expenses, which are due, accrued or payable at the date of
Employee's termination, (iii) severance payment in an amount (the "Severance
Amount") equal to Employee's then-current Base Salary, payable for the remainder
of the Term; and (iv) all of Employee's options to purchase shares of the
Company's common stock and restricted stock shall accelerate and automatically
vest by one additional year, and such options shall otherwise be exercisable in
accordance with their terms.
All payments required to be made by the Company to
the Employee pursuant to this Section 4.5 shall be paid on a regular basis in
accordance with the Company's normal payroll procedures and policies, including,
without limitation, the Severance Amount which shall be paid at such times and
in such amounts consistent with the Company's normal payroll procedures and
policies over the number of months immediately succeeding the date of
termination that is equal to the number of months of Base Salary payable as the
Severance Amount. If the Company terminates the Employee's employment pursuant
to Sections 4.1 or 4.2, or if the Employee voluntarily resigns (except as
provided in Section 4.3), then the Employee shall be entitled to only the
compensation set forth in items (i) and (ii) or the first paragraph of this
Section 4.5.
4.6 RETURN OF COMPANY PROPERTY. Upon termination of employment
for any reason, Employee immediately shall return to the Company without
condition all files, records, keys, and other property of the Company.
5. CONFIDENTIALITY. Employee acknowledges and agrees that Employee will be
entrusted with trade secrets and proprietary information regarding products,
processes, technical data, formulas, know-how, methods, designs, work in
progress, business plans, videos, electronic mail, inventions, vendor lists and
information, contacts and information, prices, costs, personnel and payroll
3
<PAGE>
information and records, mailing lists, financial and accounting records,
contracts, leases, research and development, computer software and data bases,
copyrights, trademarks, patents, marketing techniques, and future business
plans, as well as customer lists and information concerning the identity, needs,
and desires of actual and potential customers of the Company and its
subsidiaries, joint ventures, partners, and other affiliated persons and
entities ("Confidential Information"), all of which derive significant economic
value from not being generally known to others outside the Company.
5.1 NON-DISCLOSURE. During the entire term of Employee's
employment with the Company, and at all times thereafter, Employee shall not
disclose or exploit any Confidential Information except as necessary in the
performance of Employee's duties under this Agreement or with the Company's
express written consent.
5.2 SOLICITATION. During the term of this Agreement and for
one year thereafter, Employee shall not (i) induce or solicit any employee,
agent, consultant, or independent contractor of the Company to quit his/her
employment or other business relationship with the Company or to work for any
person or entity other than the Company; or (ii) call on, solicit, or take away,
or attempt to call on, solicit or take away, any past or present customer of the
Company with respect to the same or similar business services now or in the
future provided by the Company.
5.3 VIOLATION OF CONFIDENTIALITY. Employee acknowledges and
agrees that any violation of this Section 5 would cause immediate irreparable
damage to the Company, and that it would be extremely difficult or impossible to
determine the amount of damage caused to the Company. Employee therefore
consents to the issuance of a temporary restraining order, preliminary and
permanent injunction, and other appropriate relief to restrain any actual or
threatened violation of this Section, without limiting any other remedies the
Company may have.
5.4 OTHER AGREEMENTS. Employee represents that he is not
subject to any confidentiality, non-competition, or other agreement with any
other party that would conflict with this Agreement or prevent Employee from
performing all of his assigned duties as an employee of the Company.
6. CONFLICT OF INTERESTS. During the term of this Agreement, Employee shall
devote Employee's full working time, ability, and attention to the business of
the Company, and shall not accept other employment or engage in any other
outside business activity which interferes with the performance of Employee's
duties and responsibilities under this Agreement or which involves actual or
potential competition with the business of the Company, except with the express
written consent of the Board of Directors.
7. ARBITRATION. Any dispute whatsoever relating to or arising out of this
Agreement or its construction, validity or enforcement shall be submitted to
final and binding arbitration in Orange County, California, by and pursuant to
the Employment Dispute Resolution Rules of the American Arbitration Association.
The arbitrator shall be entitled to award any relief which might be available at
law or in equity, including that of a provisional, permanent or injunctive
nature.
8. ASSIGNMENT. This Agreement shall not be assignable, in whole or in part, by
either party without the written consent of the other party, except that the
Company may, without the consent of the Employee, assign its rights and
obligations under this Agreement to an Affiliate or to any
4
<PAGE>
corporation, firm or other business entity (i) with or into which the Company
may merge or consolidate, or (ii) to which the Company may sell or transfer
all or substantially all of its assets.
7. SUCCESSORS. This Agreement shall inure to the benefit of and be enforceable
by the Employee's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Employee's devisee, legatee, or other designee or, if
there be no such designee, to the Employee's estate.
9. NOTICES. All notices required by this Agreement may be delivered by first
class mail at the following addresses:
To the Company: iChargeit, Inc.
300 Pacific Coast Highway
Suite 308
Huntington Beach, CA 92648
To Employee: Saied R. Akavan
1731 Barry Avenue, Apartment #111
Los Angeles, CA 90025
10. AMENDMENT. This Agreement may be modified only by written agreement signed
by the party against whom any amendment is to be enforced.
11. CHOICE OF LAW. This Agreement shall be governed by the laws of the State of
California.
12. PARTIAL INVALIDITY. In the event any provision of this Agreement is void or
unenforceable, the remaining provisions shall continue in full force and effect.
13. COMPLETE AGREEMENT. This Agreement, including the Incentive Stock Option
Agreement [and Stock Issuance Agreement] attached as EXHIBIT A [and EXHIBIT B,
respectively], contains the entire agreement between the parties, and supersedes
any and all prior and contemporaneous oral and written agreements, including
Employee's previous employment contracts, which shall have no further force and
effect.
14. WITHHOLDING TAXES. The Company may withhold from any salary and benefits
payable under this Agreement all federal, state, city or other taxes or amounts
as shall be required to be withheld pursuant to any law or governmental
regulation or ruling.
15. NO WAIVER. No term or condition of this Agreement shall be deemed to have
been waived nor shall there be any estoppel to enforce any provisions of this
Agreement, except by a statement in writing signed by the party against whom
enforcement of the waiver or estoppel is sought. Any written waiver shall not be
deemed a continuing waiver unless specifically stated, shall operate only as to
the specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.
5
<PAGE>
16. SEVERABILITY. To the extent any provision of this Agreement shall be invalid
or unenforceable, it shall be considered deleted herefrom and the remainder of
such provision and of this Agreement shall be unaffected and shall continue in
full force and effect.
17. COUNTERPART EXECUTION. This Agreement may be executed by facsimile and in
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute but one and the same instrument.
18. ATTORNEYS FEES. Should any legal action or arbitration be required to
resolve any dispute over the meaning or enforceability of this Agreement or to
enforce the terms of this Agreement, the prevailing party shall be entitled to
recover its or his reasonable attorneys fees and costs incurred in such action,
in addition to any other relief to which that party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year set forth above.
"COMPANY"
iCHARGEIT, INC.,
a Texas corporation
By:
------------------------------
Its:
------------------------------
"EMPLOYEE"
---------------------------------
Saied R. Akavan
6
<PAGE>
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT B
STOCK ISSUANCE AGREEMENT
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into by
and among Para-Link, Inc., hereinafter "Seller", and James F. Carroll,
hereinafter "Purchaser".
RECITALS:
A. Seller can deliver of record 250,000 shares of restricted Common
Stock (the "Stock") of Para-Link, Inc. ("Para-Link"), a Texas corporation; and
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 250,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees
to purchase from Seller, 250,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $25.00
($.0001 per share). At the Closing of the purchase of the Stock, Purchaser
shall pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999, and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
purchaser that Seller (I) owns the Stock free and clear of any claim
whatsoever by any parties, (ii) Seller has not pledged or encumbered the
Stock in any manner, (iii) the Stock is nonassessable, (iv) Seller has
granted no right; warrant; purchase option, or any other right which directly
or indirectly affects the Stock, and (v) the Stock is freely assignable by
Seller to Purchaser in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stack (set forth in paragraph 4) are met; and Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants
and supersedes all prior written or oral agreements, negotiations,
understandings, or commitments.
<PAGE>
8. PARTIES BOUND. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by Seller and Purchaser, their heirs, executors,
administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign his
rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement.
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11, 1999.
SELLER:
/s/ Jesse Cohen
--------------------------------
Para-Link, Inc.
PURCHASER:
/s/ James F. Carroll
--------------------------------
James F. Carroll
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into by and
among Para-Link, Inc., hereinafter "Seller", and Jesse Cohen, hereinafter
"Purchaser".
RECITALS:
A. Seller can deliver of record 315,000 shares of restricted Common
Stock (the "Stock") of Para-Link, Inc. ("Para-Link"), a Texas corporation; and
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 315,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 315,000 shares of restricted Common Stock.
2. .PURCHASE PRICE. The purchase price of the Stock shall be $31.50 (S
.0001 per share). At the Closing of the purchase of the Stock. Purchaser shall
pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999, and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (i) owns the Stock free and clear of any claim whatsoever
by any parties, (ii) Seller has not pledged or encumbered the Stock in any
manner, (iii) the Stock is nonassessable, (iv) Seller has granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stock is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent to
the purchase of the Stock (set forth in paragraph 4) are met, and Seller should,
neveziheless, fail to complete the sale of the Stock and warrants, Purchaser may
elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific peiformance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or amended
by a written agreement signed by Seller and Purchaser.
Page 1
<PAGE>
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understandings,
or commitments.
8. PARTIES BOUND. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by Seller and Purchaser, their heirs, executors,
administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign his
rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement.
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11,1999.
SELLER:
/s/ Jesse Cohen
----------------------------
Para-Link, Inc.
PURCHASER:
/s/ Jesse Cohen
----------------------------
Jesse Cohen
Page 2
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into and by
and among iChargeit, Inc., hereinafter "Seller", and Future Holding Corp.,
hereinafter "Purchaser".
RECITALS:
A. Seller can deliver of record 210,000 shares of restricted Common
Stock (the "stock") of iChargeit, Inc. ("iChargeit"), a Texas
corporation;
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 210,000 shares of restricted Common Stock.
NOW, THEREFORE, in consideration of the promises and other goods and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 210,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $21.00
($.0001 per share). At the Closing of the purchase of the Stock. Purchaser shall
pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999, and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (i) owns the Stock free and clear of any claim whatsoever
by any parties, (ii) Seller has not pledged or encumbered the Stock in any
manner (iii) the Stock is nonassessable, (iv) Seller has Granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stock is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stock (set forth in paragraph 4) are met, the Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
Purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understanding or
commitments.
<PAGE>
8. PARTIES BOUND. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by Seller and Purchaser, their heirs, executors,
administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign
his rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement.
11. APPLICABLE LAW. It is the intention of the Seller and Purchaser
that the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11, 1999.
SELLER:
/s/ Jesse Cohen
------------------------------
iChargeit, Inc.
PURCHASER:
/s/ (illegible)
------------------------------
Future Holding Corp.
<PAGE>
Exhibit 6.59
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into by and among
Para-Link, Inc., hereinafter "Seller", and Dean Dumonte, hereinafter
"Purchaser".
RECITALS:
A. Seller can deliver of record 10,000 shares of restricted Common
Stock (the "Stock") of Para-Link, Inc. ("Para-Link"), a Texas corporation; and
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 10,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 10,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $1.00 (S
.0001 per share). At the Closing of the purchase of the Stock, Purchaser shall
pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999, and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (I) owns the Stock free and clear of any claim whatsoever
by any parties, (ii) Seller has not pledged or encumbered the Stock in any
manner, (iii) the Stock is nonassessable, (iv) Seller has granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stack is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stock (set forth in paragraph 4) are met, and Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
Purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understandings,
or commitments.
<PAGE>
8. PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by Seller and Purchaser, their heirs,
executors, administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign
his rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement.
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11, 1999.
SELLER:
/s/ Jesse Cohen
-------------------------------------
Para-Link, Inc.
PURCHASER:
/s/ Dean Dumont
-------------------------------------
Dean Dumont
<PAGE>
Exhibit 6.60
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into by and
among Para-Link, Inc., hereinafter "Seller", and Eagle Holdings Investments,
Ltd., hereinafter "Purchaser".
RECITALS:
A. Seller can deliver of record 25,000 shares of restricted Common
Stock (the "Stock") of Para-Link, Inc. ("Para-Link"), a Texas corporation; and
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 25,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 25,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $2.50 ($
.0001 per share). At the Closing of the purchase of the Stock, Purchaser shall
pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999, and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (1) owns the Stock free and clear of any claim whatsoever
by any parties, (ii) Seller has not pledged or encumbered the Stock in any
manner, (iii) the Stock is nonassessable, (iv) Seller has granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stock is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stock (set forth in paragraph 4) are met, and Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
Purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
<PAGE>
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understandings,
or commitments.
8. PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by Seller and Purchaser, their heirs,
executors, administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion may assign
his rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement.
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11, 1999.
SELLER:
/s/ Jesse Cohen
------------------------------------
Para-Link, Inc.
PURCHASER:
/s/ (illegible)
------------------------------------
Eagle Holdings Investments, Ltd.
<PAGE>
Exhibit 6.61
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into by and
among Para-Link, Inc., hereinafter "Seller", and James J. Wrobel, hereinafter
"Purchaser".
R E C I T A L S :
A. Seller can deliver of record 25,000 shares of restricted Common
Stock (the "Stock") of Para-Link, Inc. ("Para-Link"), a Texas corporation; and
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 25,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 25,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $2.50 ($
.0001 per share). At the Closing of the purchase of the Stock, Purchaser shall
pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999. and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (i) owns the Stock free and clear of any claim whatsoever
by any parties. (ii) Seller has not pledged or encumbered the Stock in any
manner, (iii) the Stock is nonassessable, (iv) Seller has granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stock is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stock (set forth in paragraph 4) are met, and Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
Purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
<PAGE>
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understandings,
or commitments.
8. PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by Seller and Purchaser, their heirs,
executors, administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign
his rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement.
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11, 1999.
SELLER:
/s/ Jesse Cohen
-------------------------------------
Para-Link, Inc.
PURCHASER:
/s/ James J. Wrobel
-------------------------------------
James J. Wrobel
<PAGE>
Exhibit 6.62
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into and by
and among iChargeit, Inc., hereinafter "Seller", and Mac-Group, Inc. hereinafter
"Purchaser".
RECITALS:
A. Seller can deliver of record 110,000 shares of restricted Common
Stock (the "Stock") of iChargeit, Inc. ("iChargeit"), a Texas corporation;
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 110,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other goods and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 110,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $11.00
($.0001 per share). At the Closing of the purchase of the Stock, Purchaser
shall pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999, and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (i) owns the Stock free and clear of any claim whatsoever
by any parties, (ii) Seller has not pledged or encumbered the Stock in any
manner (iii) the Stock is nonassessable, (iv) Seller has Granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stock is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stock (set forth in paragraph 4) are met, the Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
Purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
<PAGE>
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understandings,
or commitments.
8. PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by Seller and Purchaser, their heirs,
executors, administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign
his rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement.
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11, 1999.
SELLER:
/s/ Jesse Cohen
-------------------------------------
Para-Link, Inc.
PURCHASER:
/s/ (illegible) Pres
-------------------------------------
Mac-Group, Inc.
2
<PAGE>
Exhibit 6.63
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into by and
among Para-Link, Inc., hereinafter "Seller", and Twitchell Corporation,
hereinafter "Purchaser".
R E C I T A L S :
A. Seller can deliver of record 210,000 shares of restricted Common
Stock (the "Stock") of Para-Link, Inc. ("Para-Link"), a Texas corporation; and
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 210,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 210,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $21.00
($ .0001 per share). At the Closing of the purchase of the Stock, Purchaser
shall pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before March
11, 1999, and as soon as the necessary due diligence on the Stock has been
completed by Purchaser. The Closing shall be held at such place and time as
shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (i) owns the Stock free and clear of any claim whatsoever
by any parties, (ii) Seller has not pledged or encumbered the Stock in any
manner, (iii) the Stock is nonassessable, (iv) Seller has granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stock is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stock (set forth in paragraph 4) are met, and Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
Purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
<PAGE>
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understandings,
or commitments.
8. PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by Seller and Purchaser, their heirs,
executors, administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign
his rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement. -
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of March 11, 1999.
SELLER:
/s/ Jesse Cohen
-------------------------------------
Para-Link, Inc.
PURCHASER:
/s/ (illegible)
-------------------------------------
Twitchell Corporation
2
<PAGE>
Exhibit 6.64
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into by and
among Para-Link, Inc., hereinafter "Seller", and Randy Waldman, hereinafter
"Purchaser".
R E C I T A L S :
A. Seller can deliver of record 250,000 shares of restricted Common
Stock (the "Stock") of Para-Link, Inc. ("Para-Link"), a Texas corporation; and
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser 250,000 shares of restricted Common Stock,
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Seller and Purchaser agree as follows:
1. TRANSFER OF SHARES. At the Closing, as such term is hereinafter
defined, Seller agrees to sell and deliver to Purchaser, and Purchaser agrees to
purchase from Seller, 250,000 shares of restricted Common Stock.
2. PURCHASE PRICE. The purchase price of the Stock shall be $25.00
($ .0001 per share). At the Closing of the purchase of the Stock, Purchaser
shall pay the Seller and the Seller shall deliver tradable shares free of any
encumbrances.
3. CLOSING. The closing ("Closing") shall be held on or before
June 1, 1999, and as soon as the necessary due diligence on the Stock has
been completed by Purchaser. The Closing shall be held at such place and time
as shall be designated by Seller.
4. WARRANTIES AND REPRESENTATIONS. Seller warrants and represents to
Purchaser that Seller (i) owns the Stock free and clear of any claim whatsoever
by any parties, (ii) Seller has not pledged or encumbered the Stock in any
manner, (iii) the Stock is nonassessable, (iv) Seller has granted no right,
warrant, purchase option, or any other right which directly or indirectly
affects the Stock, and (v) the Stock is freely assignable by Seller to Purchaser
in accordance with this Agreement.
5. REMEDIES UPON DEFAULT. In the event that all conditions precedent
to the purchase of the Stock (set forth in paragraph 4) are met, and Seller
should, nevertheless, fail to complete the sale of the Stock and warrants,
Purchaser may elect one of the following remedies:
A. Purchaser may terminate this Agreement; or
B. Enforce specific performance of this Agreement.
6. AMENDMENT. This Agreement can only be altered, modified, or
amended by a written agreement signed by Seller and Purchaser.
<PAGE>
7. ENTIRE AGREEMENT. This Agreement contains the only agreement of
Seller and Purchaser with respect to the purchase of the Stock and warrants and
supersedes all prior written or oral agreements, negotiations, understandings,
or commitments.
8. PARTIES BOUND. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by Seller and Purchaser, their heirs,
executors, administrators, successors, and assigns.
9. ASSIGNMENT RIGHTS. Purchaser, in his sole discretion, may assign
his rights under this Agreement to any person or persons.
10. FURTHER AGREEMENTS. Seller and Purchaser agree to execute such
other and further agreements as are necessary or desirable to effect the intent
of this Agreement. -
11. APPLICABLE LAW. It is the intention of Seller and Purchaser that
the laws of the State of Texas govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of Seller
and Purchaser, and the enforcement of this Agreement.
EXECUTED to be effective as of June 1, 1999.
SELLER:
/s/ Jesse Cohen
-------------------------------------
Para-Link, Inc.
PURCHASER:
/s/ Randy Waldman
-------------------------------------
Randy Waldman
2
<PAGE>
ARTICLES OF MERGER
COMES NOW, iChargeit, Inc., a Nevada Corporation, and Para-Link, Inc.,
a Texas Corporation, and files this Articles of Merger pursuant to the
requirements of the State of Texas and of the State of Nevada and as required
therein would show:
1. The Plan and Agreement of Merger, under the terms and conditions of
which iChargeit, Inc., a Nevada corporation, is merged into Para-Link, Inc., a
Texas corporation is attached hereto as EXHIBIT "1" and made a part hereof.
2. As to iChargeit, Inc., a Nevada corporation, the number of shares
outstanding is 25,000,000 shares of common stock. The only class of stock issued
and outstanding of such corporation is common stock. The par value of such
common stock is $.001 per share. No shares of any class are entitled to vote as
a class.
As to Para-Link, Inc., a Texas corporation, the number of shares of
common stock outstanding is 1,343,655 as of January 10, 1999. Pursuant to the
Plan and Agreement of Merger, (the plan) the number of outstanding shares of
common stock will be 5,343,655 shares. Such stock has a par value of $.001.
The only class of stock issued and outstanding of such corporation is common
stock.
3. As to iChargeit, Inc., a Nevada corporation, 4,000,000 shares of
common stock voted for the Plan of Merger and no shares voted against such Plan.
As to Para-Link, Inc., a Texas corporation, 1,343,655 shares
voted for the Plan of Merger and no shares voted against such Plan. No shares
of any class are entitled to vote as a class.
4. The Plan of Agreement and Merger as to Para-Link was duly authorized
by all action required by the laws of Texas and by it constituents documents;
this Agreement as to iChargeit was duly authorized by all action required by the
laws of Nevada and by it constituents documents.
5. Copies of the Plan of Exchange shall be provided to any shareholder
of Para-Link, Inc. or iChargeit, Inc., without charge, upon written request by
such shareholder.
6. The agent for service of process of Para-Link, Inc., a Texas
corporation shall be Victor L. McCall, Esq., 7642 Pebble Drive, Fort Worth,
Texas 76181.
7. The forwarding agent for service of process of iChargeit, Inc., a
Nevada corporation shall be Victor L. McCall, Esq., 7642 Pebble Drive, Fort
Worth, Texas 76181.
<PAGE>
IN WITNESS WHEREOF, these Articles of Merger are executed this 26th day
of May, ratifying these Articles of Merger effective as of the 10th day of
March, 1999 by iChargeit, Inc., a Nevada corporation, and Para-Link, Inc., a
Texas corporation, each acting by and through their duly authorized officers.
(seal) ICHARGEIT, INC.
By:
----------------------------------------
Jesse Cohen, President and Secretary
(seal) PARA-LINK, INC.
By:
----------------------------------------
Joseph Meredith, President and Secretary
2
<PAGE>
EXHIBIT "A"
STATE OF CALIFORNIA )
)
COUNTY OF ORANGE )
This day personally appeared before me, a Notary Public in and for the
county and state heretofore mentioned, Jesse Cohen, with whom I am personally
acquainted, and who acknowledged to me that he executed and delivered the
foregoing Articles of Merger on behalf of iChargeit, Inc., pursuant to authority
granted by its Board of Directors.
Given under my hand and official seal of office on the _____ day of
________, 1999.
----------------------------------
Notary Public
My Commission Expires:
- ----------------------
STATE OF CALIFORNIA )
)
COUNTY OF ORANGE )
This day personally appeared before me, a Notary Public in and for the
county and state heretofore mentioned, Joseph Meredith, with whom I am
personally acquainted, and who acknowledged to me that he executed and delivered
the foregoing Articles of Merger on behalf of Para-Link, Inc. pursuant to
authority granted by its Board of Directors.
Given under my hand and official seal of office on the ______ day of
__________, 1999.
----------------------------------
Notary Public
My Commission Expires:
- ----------------------
<PAGE>
PLAN AND AGREEMENT OF MERGER
ICHARGEIT, INC.
INTO
PARA-LINK, INC.
PLAN AND AGREEMENT OF MERGER ("Agreement"), dated as of March 10, 1999,
by and between iChargeit, Inc., a Nevada Corporation ("iChargeit") and
Para-Link, Inc., a Texas Corporation ("Para-Link").
R E C I T A L S :
A. iChargeit, Inc. is a corporation duly organized and validly existing
under the laws of the State of Nevada, having been incorporated on January 6,
1999 under that name;
B. Para-Link, Inc. is a corporation duly organized and validly existing
under the laws of the State of Texas, having been incorporated on January 22,
1997 in the state of Texas under that name;
C. The authorized capital stock of iChargeit, Inc. consists of
25,000,000 shares of Common Stock, $.001 par value per share, of which 4,000,000
shares are outstanding;
D. The authorized capital stock of Para-Link consists of Fifty Million
shares of Common Stock, such Common Stock having a par value of $.001, of which
Six Million Seven Hundred Eighteen Thousand Two Hundred Seventy-Five (6,718,275)
shares of Common Stock of $.001 par value were outstanding until a 5 for 1
reverse split with record date of February 9, 1999 and an effective date of
February 10, 1999 lowered the outstanding Common Stock to One Million Three
Hundred Forty-Three Thousand Six Hundred Fifty-Five (1,343,655) shares; an
additional 184,000 shares of Common Stock were issued for services and salaries
on March 4, 1999, further 4,000,000 will be issued to complete the share
exchange between HerbRx, Inc., a Nevada Corporation ("HerbRx") and Para-Link,
wherein HerbRX became a wholly-owned subsidiary of Para-Link, Inc. The
Principals of HerbRx, Inc., as consideration for spinning off HerbRx as its own
public corporation at a future date, agree to tender the shares they receive to
the iChargeit Principals for completion of the spin off of the HerbRx, Inc.
subsidiary, at such time the HerbRx Principals will be issued 4,000,000 common
shares of HerbRx.
E. The Board of Directors of both Corporations deem it advisable for
the general welfare and advantage of their Corporations and their respective
shareholders that iChargeit merge into Para-Link pursuant to this Agreement and
pursuant to the applicable provisions of the laws of the State of Texas ) the
"Merger").
NOW, THEREFORE, in consideration of the premises and the terms
hereinafter set forth, it is agreed as follows:
<PAGE>
1. MERGER. At Effective Time of Merger, the separate existence of
iChargeit, Inc. shall cease and iChargeit, Inc., shall be deemed to have merged
with and into Para-Link, Inc. The "Effective Time of Merger" shall be that date
on which articles of merger substantially in the form of EXHIBIT "A", which is
attached hereto and incorporated herein by reference, are filed in the office of
the Secretary of the State of Texas and in the office of the Secretary of State
of the State of Nevada, all after satisfaction of the respective requirements of
applicable laws of said states prerequisite to such filings. Para-Link shall be
the surviving corporation and shall complete a name change to iChargeit, Inc. (a
Texas corporation) after the merger.
2. DIRECTORS AND OFFICERS OF PARA-LINK, INC. The Board of Directors of
Para-Link consists of 1 director, each of whom shall hold office until the
annual meeting of the shareholders of the Para-Link to be held in 1999. The
names and addresses of the directors of the Para-Link are:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Joseph Meredith 7642 Pebble
Fort Worth, Texas 76181
</TABLE>
The principal officers of Para-Link, each of whom shall hold office
until his of her successor has been duly appointed or elected, are:
<TABLE>
<CAPTION>
Office Name Address
- ------ ---- -------
<S> <C> <C>
Chairman of the Board, President, Joseph Meredith 7642 Pebble
Treasurer & Secretary Fort Worth, Texas 76181
</TABLE>
3. CONVERSION OF SHARES IN THE MERGER. The manner and basis of
converting the shares of the iChargeit into shares of Para-Link shall be as
follows:
A. CONVERSION OF PARA-LINK, INC. COMMON STOCK. None of the Common
Stock of Para-Link, Inc. shall be converted at the Effective Time of Merger
but shall remain issued shares of Common Stock of Para-Link.
B. ICHARGEIT, INC. COMMON STOCK. At Effective Time of Merger, all
of the shares of iChargeit, Inc. Common Stock shall be surrendered to
Para-Link as payment for the merger and 4,000,000 shares of Para-Link Common
Stock from the HerbRx Principals will be distributed as soon as practicable
to the iChargeit shareholders who are shareholders on the Effective Date of
the Merger according to a percentage formula of ownership to issued shares.
C. SURRENDER OF ICHARGEIT, INC. STOCK. As soon as practicable
after the Effective Time of Merger, the stock certificates representing
common stock of iChargeit, Inc. shall be tendered to Para-Link as stated
above. Until so surrendered for exchange, each such stock certificate
nominally representing Common Stock of Para-Link shall be deemed for all
corporate purposes (except for payment of dividends, which shall be subject
to the exchange of stock certificates as provided above) to evidence the
number of shares of Common Stock of Para-Link which the holder thereof would
be entitled to receive upon its surrender to the Para-Link.
2
<PAGE>
D. FRACTIONAL INTERESTS. No fractional shares of the Common Stock
of Para-Link or certificate of scrip representing the same shall be issued.
In lieu of fractional interests, each holder of a fractional interest in a
share of Common Stock shall be entitled to payment of the fair market value
thereof by Para-Link. Any payment due to a fractional interest shall be paid
on demand in cash and shall be paid by the transfer agent from funds advanced
by Para-Link.
E. RESTRICTION ON TRANSFER. All Stock of HerbRx, Inc. which
converts into Common Stock of Para-Link is issued without being registered
under the Securities Act of 1933, as amended (the "Act") in reliance upon the
exemption from registration afforded by the Act. All such shares will thus be
"restricted securities" as such term is defined in Rule 144 of the General
Rules of the Securities and Exchange Commission as promulgated under the Act,
and, as such, may be sold only in compliance with Rule 144 or pursuant to a
registration statement or other exemption from such registration.
4. EFFECT OF MERGER. At the Effective Time of Merger of iChargeit,
Inc., a Nevada corporation and Para-Link, Inc., a Texas corporation, Para-Link,
Inc., which shall complete a name change to become iChargeit, Inc., a Texas
corporation, shall succeed to, without other transfer, and shall possess and
enjoy, all the rights, privileges, immunities, powers and franchises both of a
public and a private nature, and be subject to all the restrictions,
disabilities and duties of each of the corporations, and all the rights,
privileges, immunities, powers and franchises of each of the corporations and
all property real, personal and mixed, and all debts due to either of said
corporations on whatever account, for stock subscriptions as well as for all
other things in action or belonging to each of said corporations shall be vested
in Para-Link as they were of the respective corporations, and the title to any
real estate vested by deed or otherwise in either of said corporations shall not
revert or be in any way impaired by reason of the Merger; provided, however,
that all rights of creditors and all liens upon any property of either of said
corporation, shall be preserved unimpaired, limited in lien to the property
affected by such liens at the effective time of Merger, and all debts,
liabilities and duties of said Corporations, respectively, shall thenceforth
attach to Para-Link and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by iChargeit.
5. CONDITIONS PRECEDENT TO MERGER. Notwithstanding anything herein to
the contrary, the Merger is expressly conditioned on each of the following
events or actions transpiring or occurring on or before the Effective Time of
Merger:
A. The financial statements of iChargeit delivered to Para-Link
in accordance with this Agreement herein reveal no liabilities or claims or
any nature whatsoever and Para-Link has no basis to conclude that any such
liabilities or claims exist;
B. All filing fees which are due and owing by iChargeit to be in
good standing with the State of Nevada shall be paid iChargeit;
C. Para-Link shall provide at iChargeit's cost all of the
necessary documents to list the stock with Standard and Poor's;
D. The Common Stock of Para-Link shall be listed as an OTC
bulletin board stock for over the counter trading;
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E. Para-Link shall, at iChargeit's cost, complete and update all
state and federal security filings, including but not limited to a 15c 2-11;
F. Para-Link shall have received audited financial statements
prepared by an independent certified public accountant for iChargeit;
G. All loans of Para-Link and its subsidiary, HerbRx, Inc., will
be repaid by iChargeit, Inc. as consideration for merging with Para-Link, not
to exceed $50,000.00; and
H. The Para-Link subsidiary, HerbRx, Inc., as consideration for
iChargeit merging into Para-Link, will be spun off as its own public separate
entity at a future time.
6. ACCOUNTING MATTERS. The assets and liabilities of the Corporations
as at the Effective Time of Merger, shall be recorded on the books of Para-Link
at the amounts at which they were carried at that time on the books of the
respective Corporations.
7. APPROVAL OF SHAREHOLDER; FILING ARTICLES OF MERGER. This Merger
shall be submitted to the shareholders of each of the Corporations as provided
by their respective articles of incorporation at meetings which shall be held on
or before March 10, 1999, or such later date as the Boards of Directors of the
Corporations shall mutually approve. After such adoption and approval, and
subject to the conditions contained in the Agreement, Articles of Merger in
substantially the form attached hereto as EXHIBIT "A" shall be signed, verified
and delivered to the Secretary of State of Texas and to the Secretary of State
of the State of Nevada for filing.
8. ACTIONS AUTHORIZED BY ALL ACTION REQUIRED BY THE LAWS OF TEXAS AND
NEVADA. This Agreement as to Para-Link was duly authorized by all action
required by the laws of Texas and by its constituents documents; this Agreement
as to iChargeit was duly authorized by all action required by the laws of Nevada
and by it constituents documents.
9. ICHARGEIT REPRESENTATIONS AND WARRANTIES. iChargeit represents and
warrants to Para-Link as Follows:
A. ORGANIZATION. iChargeit is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
iChargeit has the corporate power to carry on its business as it is now being
conducted and is qualified to do business in every jurisdiction in which the
character and location of the assets owned by it or the nature of the
business transacted by it require qualification.
B. CAPITALIZATION. iChargeit's capitalization consist of
25,000,000 authorized shares of Common Stock (.001 par value per share), of
which 4,000,000 shares are issued and outstanding as of the date of this
Agreement. Each issued share is validly issued, fully paid, non-assessable
and each outstanding share is entitled to one vote. No options are
outstanding as of the date of this Agreement with respect to any shares of
iChargeit Stock.
10. FINANCIAL STATEMENTS DELIVERED BY ICHARGEIT TO PARA-LINK. iChargeit
has delivered to Para-Link:
(I) Copies of its audited balance sheets and income statements for
February, 1999.
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All of such financial statements are true and complete and have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated, except as otherwise
indicated in the notes thereto. Each of such balance sheets presents a true and
complete statement as of its date of the financial condition and assets and
liabilities of iChargeit. Except as and to the extent reflected or reserved
against therein (including the notes thereto), iChargeit did not have, as of the
date of each such balance sheet, any liabilities or obligations (whether
accrued, absolute, contingent or otherwise) of a nature customarily reflected in
a corporate balance sheet or the notes thereto, prepared in accordance with
generally accepted accounting principles. Each such statement of earnings and
retained earnings presents a true and complete statement of the results of
operations by iChargeit for the periods indicated.
11. PARA-LINK WARRANTIES AND REPRESENTATIONS TO ICHARGEIT. Para-Link
represents and warrants to iChargeit as follows:
A. ORGANIZATION. Para-Link is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
Para-Link has the corporate power to carry on its business as it is now being
conducted and is qualified to do business in every jurisdiction in which the
character and location of the assets owned by it or the nature of the
business transacted by it require qualification.
B. CAPITALIZATION. The authorized capital stock of Para-Link is
Fifty Million shares of Common Stock, such Common Stock having a par value of
.001, of which Six Million Seven Hundred Eighteen Thousand Two Hundred
Seventy-Five (6,718,275) shares of Common Stock of .001 par value were
outstanding until a 5 for 1 reverse split with record date of February 9,
1999 and an effective date of February 10, 1999 lowered the outstanding
Common Stock to One Million Three Hundred Forty-Three Thousand Six Hundred
Fifty-Five (1,343,655) shares, an additional 4,000,000 will be issued to
complete the HerbRx, Inc. merger; and the Principals of HerbRx, Inc. agree to
tender the shares they receive to the iChargeit Principals for completion of
the spin off of the HerbRx, Inc. subsidiary at the time of the spin off. Each
issued share is validly issued, fully paid, nonassessable and each
outstanding share is entitled to one vote. No options are outstanding as of
the date of this Agreement with respect to any shares of Para-Link Stock.
12. FINANCIAL STATEMENTS DELIVERED BY PARA-LINK TO ICHARGEIT. Para-Link
has delivered to iChargeit:
(I) Copies of its balance sheets and income statements for the period
ending December 31, 1998 all audited by Charlie Smith, independent certified
public accountant.
All of such financial statements are true and complete and have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated, except as otherwise
indicated in the notes thereto. Each such balance sheets presents a true and
complete statement as of its date of the financial condition and assets and
liabilities of Para-Link. Except as and to the extent reflected or reserved
against therein (including the notes thereto), Para-Link did not have, as of
the date of each such balance sheet, any liabilities or obligations (whether
accrued, absolute, contingent or otherwise) of a nature customarily reflected
in a corporate balance sheet or the notes thereto, prepared in accordance
with generally accepted accounting principles. Each such statement of
earnings and retained earnings presents a true and complete statement of the
results of operations by Para-Link for the periods indicated.
5
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13. PROHIBITED ACTIONS OF BOTH CORPORATIONS. Between the date hereof
and the Effective Date of Merger, neither iChargeit nor Para-Link will
without the prior written consent of the other: (a) issue or sell any stock
or other corporate securities; (b) incur any obligation or liability
(absolute or contingent), except current liabilities already incurred, and
obligations under contracts entered into in the ordinary course of business;
(c) discharge or satisfy any lien or encumbrance or pay any obligation or
liability (absolute or contingent), other than current liabilities shown on
their respective balance sheets, and current liabilities incurred since this
date in the ordinary course of business; (d) make any dividend or other
payment of distribution to its shareholders or purchase or redeem shares of
its capital stock; (e) mortgage, pledge, create a security interest in or
subject to lien or other encumbrance any of its assets, tangible or
intangible; (f) sell or transfer any of its tangible assets or cancel any
debts or claims except in each case in the ordinary course of business; (g)
sell, assign, or transfer any trademark, trade name, patent, or other
intangible asset; (h) waive any right of any substantial value; or (i) enter
into any transaction other than in the ordinary course of business.
14. CONDITIONS TO MERGE. Notwithstanding anything herein to the
contrary, the Merger shall not be made effective if prior to the Effective Time
of Merger:
A. The Boards of Directors of iChargeit and Para-Link elect
that it shall not be made effective, or
B. The holders of a sufficiently large number of Common Shares of
Para-Link shall have objected to the merger so as to render it inadvisable,
in the opinion of the Board of Directors of iChargeit to proceed with the
merger, or
C. If any material litigation shall be pending or threatened
against of affecting iChargeit or Para-Link, or any of their respective
assets, or the merger, which in the judgement of the Board of Directors of
either iChargeit or Para-Link renders it inadvisable to proceed with the
merger.
If the Board of Directors of either iChargeit or Para-Link elects that
the merger shall not be made effective as provided in this section, notice shall
be given to the other, and thereupon, or upon the election of both such Boards
of Directors that the merger shall not be made effective as provided in
subparagraph "A" of this Section 16, this Agreement shall become wholly void and
of no effect and there shall be no liability on the part of either iChargeit or
Para-Link or their respective Boards of Directors or shareholders.
15. FURTHER DOCUMENTS. To the extent permitted by law, from time to
time, as and when requested by Para-Link or by its successors or assigns,
iChargeit shall execute and deliver, or cause to be executed and delivered, all
such deeds and instruments, and to take, or cause to be taken, such further or
other action as Para-Link may deem necessary or desirable, in order to vest in
and confirm to Para-Link title to, and possession of, any property of iChargeit
acquired by reason of or as result of the Merger, and otherwise to carry out the
intent and purposes hereof; and the proper officers and directors of Para-Link
and the proper officers and directors of Para-Link are fully authorized, in the
name of Para-Link or otherwise, to take any and all such action.
16. EXPENSES. Should this Agreement be terminated prior to the
Effective Time of Merger each Corporation shall bear its own expenses. In the
event that the Merger is consummated,
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iChargeit shall pay all legal expenses actually incurred by Para-Link in
consummation of the Merger provided that such legal expense shall not exceed
the sum of $2,500.
EXECUTED this 26th day of May, 1999, ratifying this Agreement as of the
day and year first above written.
(seal) iChargeit, Inc.
ATTEST By:
----------------------------------------
Jesse Cohen, President and Secretary
(seal) Para-Link, Inc.
ATTEST By:
----------------------------------------
Joseph Meredith, President and Secretary
7
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STATE OF CALIFORNIA )
)
COUNTY OF ORANGE )
This day personally appeared before me, a Notary Public in and for the
county and state heretofore mentioned, Jesse Cohen, with whom I am personally
acquainted, and who acknowledged to me that he executed and delivered the
foregoing Articles of Merger on behalf of iChargeit, Inc., pursuant to authority
granted by its Board of Directors.
Given under my hand and official seal of office on the _____ day of
________, 1999.
----------------------------------
Notary Public
My Commission Expires:
- ----------------------
STATE OF CALIFORNIA )
)
COUNTY OF ORANGE )
This day personally appeared before me, a Notary Public in and for the
county and state heretofore mentioned, Joseph Meredith, with whom I am
personally acquainted, and who acknowledged to me that he executed and delivered
the foregoing Articles of Merger on behalf of Para-Link, Inc. pursuant to
authority granted by its Board of Directors.
Given under my hand and official seal of office on the ______ day of
__________, 1999.
----------------------------------
Notary Public
My Commission Expires:
<PAGE>
AGREEMENT AND PLAN OF MERGER
OF
ICHARGEIT, INC., A TEXAS CORPORATION
AND
ICHARGEIT, INC., A DELAWARE CORPORATION
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of
November 11, 1999, is made and entered into by and between iChargeit, Inc., a
Texas corporation ("iChargeit-Texas"), and iChargeit, Inc., a Delaware
corporation ("iChargeit-Delaware"), which corporations are sometimes referred to
herein as the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, iChargeit-Texas is a corporation organized and existing under
the laws of the State of Texas and had an authorized capital of 55,000,000
shares, 50,000,000 of which are designated "Common Stock," $.001 par value, and
5,000,000 of which are designated "Preferred Stock," $1.00 par value. As of
October 20, 1999, 7,861,405 shares of Common Stock were issued and outstanding.
No shares of Preferred Stock were outstanding. iChargeit-Texas originally was
incorporated as Para-Link, Inc. on January 22, 1997; and
WHEREAS, iChargeit-Delaware is a wholly-owned subsidiary corporation of
iChargeit-Texas, having been incorporated on November 5, 1999; and
WHEREAS, the respective Boards of Directors of iChargeit-Texas and
iChargeit-Delaware have determined that it is in the best interests of
iChargeit-Texas and its shareholders that iChargeit-Texas merge with and into
iChargeit-Delaware (the "Merger"); and
WHEREAS, the respective Boards of the Constituent Corporations have
approved this Agreement and have directed that this Agreement be submitted to a
vote of their respective stockholders; and
WHEREAS, the parties intend by this Agreement to effect a
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that
iChargeit-Texas shall be merged into iChargeit-Delaware upon the terms and
conditions set forth.
ARTICLE I
MERGER
On the effective date of the Merger (the "Effective Date") as provided
herein, iChargeit-Texas shall be merged into iChargeit-Delaware, the separate
existence of iChargeit-Texas shall cease and iChargeit-Delaware (hereinafter
sometimes referred to as the "Surviving Corporation") shall continue to exist
under the name of iChargeit, Inc. by virtue of, and shall be governed by, the
laws of the State of Delaware. The address of the registered office of the
Surviving Corporation in the State of Delaware will be 1013 Centre Road,
Wilmington, Delaware 19801.
<PAGE>
ARTICLE II
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1. CERTIFICATE OF INCORPORATION. The name of the Surviving
Corporation shall be "iChargeit, Inc." The Certificate of Incorporation of the
Surviving Corporation as in effect on the date hereof shall be the Certificate
of Incorporation of iChargeit-Delaware (the "Delaware Charter") without change
unless and until amended in accordance with Article VI of this Agreement or
otherwise amended in accordance with applicable law.
2.2. BYLAWS. The Bylaws of the Surviving Corporation as in effect on
the date hereof shall be the Bylaws of iChargeit-Delaware (the "Delaware
Bylaws") without change unless and until amended in accordance with applicable
law.
2.3. OFFICERS AND DIRECTORS. Upon the Effective Date, the officers and
directors of iChargeit-Texas shall become the officers and directors of
iChargeit-Delaware, and such persons shall hold office in accordance with the
Delaware Bylaws until their respective successors shall have been appointed or
elected.
If upon the Effective Date, a vacancy shall exist in the Board of
Directors of the Surviving Corporation, such vacancy shall be filled in the
manner provided by the Delaware Bylaws.
ARTICLE III
EFFECT OF MERGER ON STOCK OF CONSTITUENT CORPORATIONS
3.1. CONVERSION OF SHARES. On the Effective Date, each outstanding
share of common stock of iChargeit-Texas, par value $.001 per share (the "Common
Stock"), other than the shares, if any, for which appraisal rights shall be
perfected under Articles 5.12 and 5.13 of the Texas Business Corporation Act
("TBCA"), shall be converted into and exchanged for one share of
iChargeit-Delaware common stock, par value $.001 per share (the "Delaware Common
Stock"), and each outstanding share of Delaware Common Stock held by
iChargeit-Texas shall be retired and canceled. The shares of Delaware Common
Stock shall be identical to the shares of Common Stock in all other aspects.
3.2. OPTIONS. All options and rights to acquire the Common Stock under
iChargeit 1999 Stock Incentive Plan, and under all other outstanding options,
warrants or rights outstanding on the Effective Date automatically will be
converted into equivalent options and rights to purchase the same number of
shares of Delaware Common Stock. A number of shares of the Surviving
Corporation's Common Stock shall be reserved for issuance upon the exercise of
options, equal to the number of shares of iChargeit-Texas Common Stock so
reserved immediately before the Effective Date of the Merger.
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3.3. EXCHANGE OF CERTIFICATES. After the Effective Date, certificates
representing shares of the Common Stock will represent shares of Delaware Common
Stock and upon surrender of the same to the transfer agent for
iChargeit-Delaware, the holder thereof shall be entitled to receive in exchange
therefor a certificate or certificates representing the number of shares of
Delaware Common Stock into which such shares of Common Stock shall have been
converted pursuant to Article 3.1 of this Agreement.
Until Certificates representing shares of iChargeit-Texas are
surrendered for transfer or conversion, the registered owner of the Common Stock
of the Surviving Corporation represented by such Certificate on the books and
records of the Surviving Corporation shall have voting and other rights with
respect to and to receive dividends and other distributions upon the Shares of
Common Stock of the Surviving Corporation represented by such Certificates as
provided above.
Each certificate representing Common Stock of the Surviving Corporation
so issued in the merger shall bear the same legends, if any, with respect to
restrictions on transferability as the certificates of iChargeit-Texas so
converted and given in exchange therefor, unless otherwise determined by the
Board of Directors of the Surviving corporation in compliance with applicable
laws.
If any certificate for shares of iChargeit-Delaware stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that such transfer otherwise be proper.
ARTICLE IV
CORPORATE EXISTENCE, POWERS AND
LIABILITIES OF THE SURVIVING CORPORATION
4.1. TRANSFER OF ASSETS AND LIABILITIES. On the Effective Date, the
separate existence of iChargeit-Texas shall cease. iChargeit-Texas shall be
merged with and into iChargeit-Delaware, the Surviving Corporation, in
accordance with the provisions of this Agreement. Thereafter, iChargeit-Delaware
shall possess all the rights, privileges, powers and franchises of a public as
well as of a private nature of each of the Constituent Corporations, and shall
be subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations; all singular rights, privileges, powers and franchises
of iChargeit-Texas and iChargeit-Delaware, and all property, real, personal and
mixed and all debts due to each of them on whatever account, shall be
transferred to and vested in iChargeit-Delaware; and all property, rights,
privileges, powers and franchises, and all and every other interest of each of
the Constituent Corporations shall be thereafter as effectively the property of
iChargeit-Delaware, the Surviving Corporation, as they were of each of the
Constituent Corporations, and the title to any real estate, whether by deed or
otherwise, vested in iChargeit-Texas and iChargeit-Delaware, or either of them,
shall not revert or be in any way impaired by reason of the Merger, but all
rights of creditors and all liens upon the property of each of the Constituent
Corporations, shall be preserved unimpaired, and all debts, liabilities and
duties of iChargeit-Texas, shall thenceforth attach to iChargeit-Delaware, and
may be enforced against it to the same extent as if said debts, liabilities and
duties had been incurred or contracted by it.
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<PAGE>
4.2. FURTHER ASSURANCES. iChargeit-Texas agrees that it will execute
and deliver, or cause to be executed and delivered, all such deeds and other
instruments and will take or cause to be taken such further or other action as
the Surviving Corporation may deem necessary in order to vest in and confirm to
the Surviving Corporation title to and possession of all the property, rights,
privileges, immunities, powers, purposes and franchises, and all and every other
interest of iChargeit-Texas and otherwise to carry out the intent and purposes
of this Agreement.
ARTICLE V
DISSENTING SHARES
Holders of shares of Common Stock who have complied with all
requirements for perfecting their rights of appraisal set forth in Articles 5.12
and 5.13 of the TBCA shall be entitled to their rights under Texas law.
ARTICLE VI
APPROVAL BY SHAREHOLDERS, EFFECTIVE DATE,
CONDUCT OF BUSINESS PRIOR TO EFFECTIVE DATE
6.1. APPROVAL. As soon as practicable after the approval of this
Agreement by the requisite number of shareholders of iChargeit-Texas, the
respective Boards of Directors of iChargeit-Texas and iChargeit-Delaware will
cause their duly authorized officers to make and execute Articles of Merger and
a Certificate of Ownership and Merger or other applicable certificates or
documentation effecting this Agreement and shall cause the same to be filed with
the Secretaries of State of Texas and Delaware, respectively, in accordance with
the Texas Business Corporation Act (the "TBCA") and the Delaware General
Corporation Law (the "DGCL"), the Effective Date shall be the date on which the
Merger becomes effective under the DGCL.
6.2. AMENDMENT. The Boards of Directors of iChargeit-Texas and
iChargeit-Delaware may amend this Agreement and the Delaware Charter at any time
prior to the Effective Date, provided that an amendment made subsequent to the
approval of the Merger by the shareholders of iChargeit-Texas may not (i) change
the assessment or type of shares to be received in exchange for or on conversion
of the shares of the Common Stock; or (ii) change any term of the terms and
conditions of this Agreement if such change would adversely affect the holders
of the Common Stock.
ARTICLE VII
TERMINATION OF MERGER
This Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Date, whether before or after shareholder approval of
this Agreement, by the consent of the Board of Directors of iChargeit-Texas and
iChargeit-Delaware. In the event this Agreement is terminated, it shall become
wholly void and of no effect and no liability on the part of either Constituent
Corporation, its Board or stockholders shall arise by virtue of such
termination.
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<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware and, insofar as applicable,
the Merger provisions of the Texas Business Corporation Act.
8.2. EXPENSES. If the Merger becomes effective, the Surviving
Corporation shall assume and pay all expenses in connection therewith not
theretofore paid by the respective parties. If for any reason the Merger shall
not become effective, iChargeit-Texas shall pay all expenses incurred in
connection with all the proceedings taken in respect of this Merger Agreement or
relating thereto.
8.3. AGREEMENT. An executed copy of this Merger Agreement will be on
file at the principal place of business of the Surviving Corporation at 2184
West 10th Street, Torrance, California, 90504, and, upon request and without
cost, a copy thereof will be furnished to any shareholder.
8.4. COUNTERPARTS. This Merger Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Presidents and Secretaries, all as of the day and
year first above written.
ATTEST: iChargeit, INC.,
a Texas corporation
/s/ Jesse Cohen By: /s/ Jesse Cohen
- --------------------------------- ---------------------------
Jesse Cohen, Secretary Jesse Cohen, President
ATTEST: iChargeit, INC.,
a Delaware corporation
/s/ Jesse Cohen By: /s/ Jesse Cohen
- --------------------------------- ------------------------------------
Jesse Cohen, Secretary Jesse Cohen, Chief Executive Officer
6
<PAGE>
AGREEMENT OF MERGER
OF
BAY MICRO COMPUTERS INC., A CALIFORNIA CORPORATION
AND
BMC ACQUISITION CORP., A DELAWARE CORPORATION
THIS AGREEMENT OF MERGER (the "Agreement") dated as of November 12,
1999, is made and entered into by and between Bay Micro Computers Inc., a
California corporation dba PC Shopping Planet ("Bay Micro"), and BMC Acquisition
Corp., Inc., a Delaware corporation ("Acquisition"), which corporations are
sometimes referred to herein as the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, Bay Micro is a corporation organized and existing under the
laws of the State of California and had an authorized capital of 100,000 shares
of common stock, no par value per share (the "Bay Micro Common Stock"), of which
1,288 are issued and outstanding, and no shares of preferred stock; and
WHEREAS, Acquisition is a corporation organized and existing under the
laws of the State of Delaware and had an authorized capital of 100,000 shares of
common stock, par value $0.001 per share (the "Acquisition Common Stock"), of
which one share is issued and outstanding, and no shares of preferred stock; and
WHEREAS, the respective Boards of Directors of Bay Micro and
Acquisition have determined that it is in the best interests of Bay Micro and
its shareholders that Acquisition merge with and into Bay Micro (the "Merger");
and
WHEREAS, the respective Boards of Directors and shareholders of the
Constituent Corporations have approved this Agreement and the Merger; and
WHEREAS, the parties intend by this Agreement to effect a
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that
Acquisition shall be merged into Bay Micro upon the terms and conditions set
forth.
ARTICLE I
MERGER
1.1 MERGER. On the effective date of the Merger (the "Effective Date")
as provided herein, Acquisition shall be merged into Bay Micro, the separate
existence of Acquisition shall cease and Bay Micro (hereinafter sometimes
referred to as the "Surviving Corporation") shall continue to exist under the
name of Bay Micro Computers Inc. by virtue of, and shall be governed by, the
laws of the State of California.
<PAGE>
ARTICLE II
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 ARTICLES OF INCORPORATION. The name of the Surviving Corporation
shall be "Bay Micro Computers Inc." The Articles of Incorporation of the
Surviving Corporation as in effect on the date hereof shall be the Articles of
Incorporation of Bay Micro (the "Articles of Incorporation") without change.
2.2 BYLAWS. The Bylaws of the Surviving Corporation as in effect on the
date hereof shall be the Bylaws of Acquisition (the "Bylaws") without change
unless and until amended in accordance with applicable law.
2.3 OFFICERS AND DIRECTORS. Upon the Effective Date, the officers of
Bay Micro shall be the officers of the Surviving Corporation, and the members of
the Board of Directors of Bay Micro shall be the current members of the Board of
Directors of the Surviving Corporation and Jesse Cohen. Such persons shall hold
office in accordance with the Bylaws until their respective successors shall
have been appointed or elected.
If upon the Effective Date, a vacancy shall exist in the Board of
Directors of the Surviving Corporation, such vacancy shall be filled in the
manner provided by the Bylaws.
ARTICLE III
EFFECT OF MERGER ON STOCK OF CONSTITUENT CORPORATIONS
3.1 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Bay
Micro Common Stock or any shares of Acquisition Common Stock:
(a) each share of Bay Micro Common Stock owned by Bay Micro,
Acquisition or by iChargeit, Inc., a Texas corporation and sole stockholder of
Acquisition ("Parent") or any subsidiary of any of Bay Micro, Parent or
Acquisition immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(b) each share of common stock of Acquisition outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock of the Surviving Corporation
and such shares shall constitute the only outstanding shares of capital stock of
the Surviving Corporation (the "Surviving Corporation Shares"); and
(c) each share of Bay Micro Common Stock outstanding immediately
prior to the Effective Time shall, except as otherwise provided in Section
3.1(a), be converted into the right to receive 3,105.5901 shares of Parent's
common stock, $.001 par value per share (the "Parent Common Stock"), without
interest, together with cash in lieu of any fractional share of Parent Common
Stock, which fractional interests of each holder of shares of Bay Micro Common
Stock will be aggregated so that no holder of shares of Bay Micro Common Stock
will receive cash in an amount equal to or greater than the value of one whole
share of Parent Common Stock, which the parties hereto agree shall be $2.00 (the
"Merger Consideration").
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<PAGE>
ARTICLE IV
GENERAL
4.1 FURTHER ASSURANCES. Each of Bay Micro and Acquisition agrees that
it will execute and deliver, or cause to be executed and delivered, all such
deeds and other instruments and will take or cause to be taken such further or
other action as the Surviving Corporation may deem necessary in order to vest in
and confirm to the Surviving Corporation title to and possession of all the
property, rights, privileges, immunities, powers, purposes and franchises, and
all and every other interest of Bay Micro and Acquisition and otherwise to carry
out the intent and purposes of this Agreement.
4.2 AMENDMENT. The Boards of Directors of Bay Micro and Acquisition may
amend this Agreement at any time prior to the Effective Date, provided further
that any change to the principal terms of the Merger shall require shareholder
approval.
4.3 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Date, whether before or after
shareholder approval of this Agreement, by the consent of the Board of Directors
of Bay Micro and Acquisition. In the event this Agreement is terminated, it
shall become wholly void and of no effect and no liability on the part of either
Constituent Corporation, its Board of Directors or shareholders shall arise by
virtue of such termination.
4.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance by the laws of the State of California, without giving effect to the
principles of conflicts of laws thereof.
4.5 FEES AND EXPENSES. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
4.6 COUNTERPARTS. This Merger Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Presidents and Secretaries, all as of the day and
year first above written.
BMC ACQUISITION, INC.,
a Delaware corporation
By: /s/ Jesse Cohen
----------------------------------------
Jesse Cohen, Chief Executive Officer and
Secretary
BAY MICRO COMPUTERS INC.,
a California corporation dba PC Shopping
Planet
By: /s/ Saeid Akavan
-----------------------------------------
Saeid R. Akavan, President and Secretary
4
<PAGE>
EXHIBIT 12.1 - SUBSIDIARIES OF THE COMPANY
Bay Micro Computers, Inc. a California corporation, and a wholly-owned
subsidiary of iChargeit.com, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL PERIOD
ENDED JUNE 30, 1999 AND THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999
(UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-2000
<PERIOD-START> JAN-06-1999 JUL-01-1999
<PERIOD-END> JUN-30-1999 SEP-30-1999
<CASH> 349,963 232,000
<SECURITIES> 47,000 81,000
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 10,600 11,000
<CURRENT-ASSETS> 40,150 60,000
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 449,213 469,000
<CURRENT-LIABILITIES> 106,790 81,000
<BONDS> 0 0
0 0
0 0
<COMMON> 13,098,829 12,029,000
<OTHER-SE> (12,756,406) (11,641,000)
<TOTAL-LIABILITY-AND-EQUITY> 449,213 0
<SALES> 0 2,000
<TOTAL-REVENUES> 31,421 19,000
<CGS> 0 1,000
<TOTAL-COSTS> 90,997 12,000
<OTHER-EXPENSES> 6,613,575 2,410,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (6,613,575) (2,390,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (11,421,075) (2,390,000)
<EPS-BASIC> (1.10) (0.30)
<EPS-DILUTED> (1.10) (0.30)
</TABLE>
