<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 30, 2000
----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____ to _____
Commission file number 000-27107
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THE BIGHUB.COM, INC.
(Exact name of small business issuer as specified in its charter)
Florida 65-0580634
------------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2939 Mossrock, Suite 100, San Antonio, TX 78230
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(Address of principal executive offices)
(210) 979-9228
--------------
Registrant's telephone number, including area code
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No ___.
---
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
There were 17,355,976 shares of common stock outstanding at February 15,
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2000.
- ----
Transitional Small Business Disclosure Format (check one):
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Yes No X.
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<PAGE>
THE BIGHUB.COM, INC.
Form 10-QSB
For the Quarterly Period ended January 30, 2000
Table of Contents
<TABLE>
<CAPTION>
Page No.
<S> <C>
Part I. Financial information
Item 1. Financial Statements
Condensed consolidated balance sheets - January 30, 2000 (unaudited) and October 31, 1999 1
Condensed consolidated statements of operations and comprehensive operations -
fiscal quarters ended January 30, 2000 and 1999 (unaudited) 2
Condensed consolidated statements of cash flows - fiscal quarters ended January 30, 2000 and 1999 (unaudited) 3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 4
Part II. Other information
Item 1. Legal Proceedings 10
Item 2 . Changes in Securities and Use of Proceeds 10
Item 3 . Defaults Upon Senior Securities 10
Item 4 . Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
The financial statements included herein have been prepared by The BigHub.com,
Inc. (the "Company" or the "Registrant"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (the "SEC"). As
contemplated by the SEC under Rule 10-01 of Regulation S-X (as amended by
Regulation S-B), the accompanying financial statements have been condensed and
therefore do not contain all disclosures required by generally accepted
accounting principles. However, the Company believes that the disclosures are
adequate to make the information presented not misleading. All dollar amounts
referenced in this document are denominated in United States dollars. The
accompanying financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended October 31, 1999 as filed with the SEC
(file number 000-27107).
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
January 30, October 31,
2000 1999
(Unaudited) (Audited)
------------------ -----------------
<S> <C> <C>
Assets
Current assets:
Cash $ 8,591 $ 87,858
Marketable securities 1,031,250 -
Accounts receivable 172,323 5,133
------------------ -----------------
Total current assets 1,212,163 92,991
Property and equipment, net 1,587,884 1,502,226
Other assets 1,800 1,800
------------------ -----------------
$ 2,801,847 $ 1,597,017
================== =================
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable $ 1,488,087 $ 1,199,503
Accrued liabilities 517,063 197,512
Related party payables 344,170 785,172
Unearned revenue from related parties 473,465 -
Notes payable to related parties 1,815,000 950,000
------------------ -----------------
Total current liabilities 4,637,785 3,132,187
------------------ -----------------
Stockholders' deficit:
Preferred stock, 25,000,000 shares authorized, $0.001 par value,
no shares outstanding - -
Common stock, 50,000,000 shares authorized, $0.001 par value,
16,105,976 shares outstanding 16,106 16,106
Additional paid-in capital 5,232,628 4,232,628
Accumulated deficit (7,115,922) (5,783,904)
Accumulated other comprehensive income 31,250 -
------------------ -----------------
Total stockholders' deficit (1,835,938) (1,535,170)
------------------ -----------------
$ 2,801,847 $ 1,597,017
================== =================
</TABLE>
See accompanying notes to condensed consolidated financial statements
1
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
January 30, January 30,
2000 1999
------------ ------------
<S> <C> <C>
Net sales 256,249 2,918
Cost of sales 89,138 2,387
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Gross profit 167,111 531
------------ ------------
Operating expenses:
General and administrative 1,312,557 103,127
Depreciation 152,632 48,785
------------ ------------
Total operating expenses 1,465,189 151,912
------------ ------------
Loss from operations (1,298,078) (151,381)
------------ ------------
Other income (expense):
Interest expense (33,939) (412,500)
Other expense - -
------------ ------------
Loss before extraordinary item (1,332,017) (563,881)
Extraordinary item - gain on forgiveness of debt - 67,000
Net loss (1,332,017) (496,881)
Other comprehensive income - unrealized gain on
marketable securities available for sale, net of tax of -$0- 31,250 -
------------ ------------
Comprehensive loss $ (1,300,767) $ (496,881)
============ ============
Net income (loss) per common share: $ (0.08) (0.14)
============ ============
Weighted average number of common shares
outstanding 16,105,976 3,437,618
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
2
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
January 30, January 30,
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,300,767) $ (496,881)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 152,632 48,785
Unrealized gain on marketable securities
available for sale (31,250) -
Value of shares issued for consulting services - 75,000
Interest imputed on conversion of preferred
shares to Class A special preferred shares - 412,500
Extraordinary item - Gain on forgiveness of debt - (67,000)
Changes in operating assets and liabilities
Accounts receivable (167,190) (1,448)
Related party payables (441,002) -
Accounts payable and accrued liabilities 608,135 18,589
Unearned revenue 473,465 -
------------ ------------
Net cash used in operating activities (705,977) (10,455)
------------ ------------
Cash flows used in investing activities:
Purchases of property and equipment (238,290) -
------------ ------------
Cash flows from financing activities:
Proceeds from sale of common stock - 28,000
Proceeds from notes payable to related parties 865,000 -
------------ ------------
Net cash provided by investing activities 865,000 28,000
------------ ------------
Net change in cash (79,267) 17,545
Cash at beginning of fiscal quarter 87,858 644
------------ ------------
Cash at end of fiscal quarter $ 8,591 $ 18,189
============ ============
Supplemental disclosure of cash flow information -
Cash paid during the fiscal quarter for interest $ - $ -
============ ============
Cash paid during the fiscal quarter for income taxes $ - $ -
============ ============
Supplemental disclosure of non-cash financing and
investing activity:
During the quarter ended January 30, 2000, the Company's largest shareholder contributed stock with a
value of $1,000,000 (See Note 2)
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 30, 2000
(Unaudited)
1. Summary of significant accounting policies
------------------------------------------
Management's representation
The management of the BigHub.com, Inc. (the "Company") without audit has
prepared the financial statements included herein. Certain information and
note disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been omitted.
In the opinion of the management of the Company, all adjustments considered
necessary for fair presentation of the financial statements have been
included and were of a normal recurring nature, and the accompanying
financial statements present fairly the financial position of the Company
as of January 30, 2000, the results of operations and cash flows for the
fiscal quarters ended January 30, 2000 and 1999.
It is suggested that these financial statements be read in conjunction with
the Company's audited financial statements and notes for the years ended
October 31, 1999 and 1998 filed with the Company's annual report on Form
10-KSB. The interim results are not necessarily indicative of the results
for a full year.
Change in Fiscal Year End
Effective November 1, 1999, the Company changed its reporting period from a
fiscal year ending on October 31 to a fiscal year ending on the last Sunday
of October.
Comprehensive Income
The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income." SFAS 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. The
effect of SFAS 130 is reflected in these financial statements.
2. Marketable Securities
---------------------
In January 2000, a significant shareholder of the Company contributed
additional paid-in capital consisting of 250,000 shares of the common stock
of Techlabs, Inc. The common stock of Techlabs, Inc. trades on the over-
the-counter bulletin board under the stock symbol TKLB. No cash or equity
consideration was paid to
4
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 30, 2000
(Unaudited)
the stockholder or to any party and no liabilities exist for future
consideration in connection with the contribution.
The Company has treated the stock as available for sale under Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities."
At the end of each reporting period, the Company assesses the fair value of
its marketable securities and records adjustments as appropriate. As of
January 30, 2000 the Company determined the fair value of the Techlabs
common stock to be $1,031,250 and, accordingly, reported an unrealized gain
of $31,250 as other comprehensive income for the fiscal quarter.
3. Stockholders' Equity (Deficit)
------------------------------
Equity Transactions' Common Stock.
There were no common stock equity transactions during the fiscal quarter
ended January 30, 2000. See Note 5. "Subsequent Events."
Stock Options.
The following is a summary of the stock options activity for the fiscal
quarter ended January 30, 2000:
Balance, October 31, 1999 472,500
Granted --
Canceled (92,500)
--------
Balance, January 30, 2000 380,000
========
Exercisable, January 30, 2000 --
========
Warrants.
From time to time, the Company issues warrants pursuant to various
consulting agreements. All warrants were either exercised or expired
during fiscal 1998 and no new warrants were issued in the fiscal quarter
ended January 30, 2000.
5
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 30, 2000
(Unaudited)
4. Related Party Transactions.
---------------------------
Accounts Receivable from Related Parties
Included in accounts receivable at January 30, 2000 is $5,857 due from
an affiliate.
Unearned Revenue
Unearned revenue is comprised of pre-paid monthly fees pursuant to an
Affiliate Agreement (see below) that provides for $573,465 owed by the
Company to the affiliate to be offset against the first year fees due to
the Company for providing advertising and marketing for the affiliate. The
amount of $573,465 represents the net present value of the monthly fees
over twelve months at a discount rate of 10%. As of January 30, 2000,
$473,465 of unearned revenue remained to be amortized.
Related Party Payables
Related party payables include $84,170 payable to an affiliate for services
performed by the affiliate for the development of the Company's search
engine and web site. In addition, related party payables include a
$260,000 payable to a related party pursuant to a consulting agreement (see
below).
Notes Payable to Related Parties
During the fiscal quarter ended January 30, 2000, the Company borrowed an
aggregate of $865,000 for working capital purposes from two affiliates and
a stockholder. The notes bear interest of 10% per annum and are due on the
earlier of the closing of the first tranche of the Company's future private
placement or May 16, 2000. Interest expense related to all notes payable to
related parties totaled $33,939 during the fiscal quarter.
Subsequent to January 30, 2000, the Company repaid $1,100,000 of notes
payable with a combination of $580,396 in cash and $519,604 in software to
two related parties plus accrued interest.
6
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 30, 2000
(Unaudited)
Operating Lease
The Company sub-leases its facilities from an affiliate on a month-to-month
basis. Pursuant to the sub-lease agreement, the monthly lease amount was
$6,800 per month for November and December of 1999 and -$0- for January,
2000.
Affiliate Agreement
The Company has a three-year Affiliate Agreement with an affiliate pursuant
to which the Company provides strategic placement of advertising and
marketing internet banners on the Company's web site in consideration for a
monthly fee payable to the Company. The monthly fee is $50,000 in the first
year, $100,000 in the second year, and $125,000 in the third year. At
January 30, 2000, the Company had recorded revenue of $100,000 related to
this agreement along with a corresponding amortization of unearned revenue.
Consulting Agreement
In April 1999, the Company entered into a three-year consulting agreement
with a related party pursuant to which the Company agreed to pay the
related party $41,500 per month for consulting services and to provide the
lead consultant with full health and life insurance benefits during the
term of the agreement. As of January 1, 2000, the agreement was
terminated. As of January 30, 2000, the Company owed $260,000 which is
included in related party payables (see above).
5. Subsequent Events.
------------------
Equity Offering.
During February and March 2000, the Company issued 2,500,000 shares of its
common stock in exchange for aggregate cash proceeds of $5,000,000. The
shares were sold to several accredited investors in private, unsolicited
transactions pursuant to Rule 506 of Regulation D, as promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as
amended. In addition, the placement agent received placement fees in the
aggregate amount of $50,000 and warrants to purchase 875,000 shares of the
Company's common stock exercisable at a price of $2.00 per share at any
time through March 6, 2005.
7
<PAGE>
THE BIGHUB.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 30, 2000
(Unaudited)
Software
Subsequent to January 30, 2000, the Company disposed of software in the
aggregate amount of $519,604 to a related party in exchange for an
equivalent reduction in notes payable to the related party. The accumulated
depreciation associated with the software of $86,175 will be charged to
additional paid-in capital in the fiscal quarter ended April 30, 2000.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations.
- --------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information contained herein
(as well as information included in oral statements or other written statements
made or to be made by the Company contains statements that are forward-looking,
such as statements relating to anticipated future revenues and expenses of the
Company and the success of current and planned product offerings. Such forward-
looking information involves important risks and uncertainties that could
significantly affect anticipated results in the future, and accordingly, such
results may differ materially from those expressed in any forward-looking
statements made by or on behalf of the Company. The potential risks and
uncertainties include, among others, limited operating history, competitive and
economic factors of the marketplace including acceptance of the Company's
proprietary search engine and licensed e-commerce technology and content
products, the continued growth and acceptance of the Internet, Year 2000 issues,
and the state of the economy.
Introduction
The following discussion is based upon, and should be read in conjunction
with, the audited financial statements of the Company as of and for the fiscal
years ended October 31, 1999 and 1998, together with the notes thereto, and the
unaudited financial statements of the Company as of January 30, 2000 and for the
fiscal quarters ended January 30, 2000 and 1999.
During 1999, the Company underwent a restructuring of its core business
to Internet e-commerce. Accordingly, the Company believes that the following
presentation of comparative results of operations, while required, is not
meaningful. In addition, the Company believes that historical results are not
indicative of future results.
This Form 10-QSB contains forward-looking statements that involve risks
uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements.
Results of Operations
Fiscal Quarter Ended January 30, 2000 Compared with the Fiscal Quarter Ended
- ----------------------------------------------------------------------------
January 30, 1999
- ----------------
Sales for the fiscal quarter ended January 30, 2000 increased $253,331
to $256,249 over the $2,918 recorded during the comparative prior year quarter
and was comprised primarily of private label and affiliate fee revenue in
contrast with the banner advertising revenue reported in fiscal 1999. Included
in sales for the January 30, 2000 fiscal quarter is $100,000 from a related
party. Cost of sales in the first fiscal quarter of 2000 increased $86,751 to
$89,138 as compared with the $2,387 reported in the fiscal quarter ended January
30, 1999.
During the fiscal quarter ended January 30, 2000, general and
administrative expenses increased by $1,209,430 to $1,312,557 from the $103,127
reported in the comparative prior year quarter. This change resulted from the
increase in the overall business development activities of the Company including
upgrading its search engine and web site and developing new sources of revenue,
in contrast to the prior year quarter's activities which were centered around
the restructuring of the Company's core business to Internet e-commerce.
Depreciation expense increased by $103,847 to $152,632 in the fiscal
quarter ended January 30, 2000 compared to $48,785 reported in the comparative
prior year quarter. This increase resulted from the increase in value of the
Company's search engine and website as a result of improvements capitalized in
the second half of 1999.
Interest expense decreased by $378,561 to $33,939 in the fiscal quarter
ended January 30, 2000 compared to $412,500 reported in the fiscal quarter ended
January 30, 1999. Non-cash interest expense in the first quarter of 1999 was
incurred in connection with certain equity transactions as set forth in the
Company's annual report on Form 10-KSB for the fiscal year ended October 31,
1999. In contrast, interest expense in the first quarter of 2000 was incurred
in connection with notes payable to related parties.
As a result of the foregoing, for the fiscal quarter ended January 30,
2000, the Company reported a net loss of ($1,300,767), or ($0.08) per share.
This compares to a net loss of ($496,881), or ($0.14) per share for the
comparative prior year quarter.
9
<PAGE>
Liquidity and Capital Resources
During the fiscal quarter ended January 30, 2000, the Company's net cash
position decreased by $79,267. Although the Company generated $865,000 from
financing activities, the Company's operating and investing activities used net
cash of $944,267. These activities contributed to a net working capital deficit
as of January 30, 2000 of ($3,425,622).
During fiscal 1999 and the first fiscal quarter of 2000, the Company has
relied heavily on funds borrowed from two affiliates and a stockholder who
supplied $865,000 for the fiscal quarter ended January 30, 2000. The Company may
be required to borrow additional funds from these parties or other sources.
There cannot be any assurances that funds will continue to be available from
either of these parties or any other source.
Because the Company had incurred cumulative losses over the last two fiscal
years of $4,460,812, had a working capital deficit of approximately $3,039,196
as of October 31, 1999 and because of the lack of profitable operational history
in Internet services, the Company's auditors, in their report on the financial
statements of the Company as of October 31, 1999, expressed doubt as to the
Company's ability to continue as a going concern which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. In addition, the Company incurred a net loss of $1,332,017
for the fiscal quarter ended January 30, 2000. The Company intends to obtain
additional debt and equity financing for marketing, software development and the
funding of operations as well as the generating of income from strategic
alliances and sales of products and services. Management believes these
funding sources will be sufficient to fund its capital expenditures, working
capital requirements and other cash requirements through October 31, 2000.
During February and March 2000, the Company issued 2,500,000 shares of its
common stock in exchange for aggregate cash proceeds of $5,000,000. The shares
were sold to several accredited investors in private, unsolicited transactions
pursuant to Rule 506 of Regulation D, as promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended. In addition,
the placement agent received placement fees in the aggregate amount of $50,000
and warrants to purchase 875,000 shares of the Company's common stock
exercisable at a price of $2.00 per share at any time through March 6, 2005.
There is no assurance the Company will be able to obtain sufficient
additional funds when needed, or that such funds, if available, will be
obtainable on terms satisfactory to the Company.
Risk Factors That May Affect Future Results.
LIMITED OPERATING HISTORY; NO ASSURANCE OF PROFITABILITY OR POSITIVE CASH
FLOWS. The Company has historically generated only limited revenues.
Accordingly, the Company has a limited operating history upon which to evaluate
its current business. In addition, the Company's business model is evolving and
relies substantially upon private labeling, the sale of advertising on the Web
and the collection of fees under affiliate agreements. The Company and its
present affiliates are Web companies and part of a developing industry. Many
companies in the new and rapidly evolving Web industry have demonstrated that
they require considerable cash expenditures before achieving positive cash
flows, and display a trend of operating losses for one to three years from
inception. Accordingly, the Company's business must be considered in light of
the risks, expenses and problems frequently encountered by companies in their
early stages of development, particularly companies in new and rapidly evolving
markets such as Web advertising and e-commerce.
Specifically, such risks include, without limitation:
. the inability of the Company to derive sufficient revenues from the
co-branded services of its web-sites and the additional costs the
Company expects to incur in order to perform its obligations under
agreements with its affiliates;
. the inability of the Company to expand its international operations,
particularly in light of the Company's limited operating experience in
the international market;
10
<PAGE>
. the failure by the Company to continue to develop and extend the
BigHub.com and related brands;
. the inability of the Company to develop or acquire content for its
services;
. the inability of the Company's affiliates to generate e-commerce
revenues;
. the failure of the Company to anticipate and adapt to a developing
market;
. the introduction and development of equal or superior services or
products by competitors, particularly in light of the fact that
Microsoft and Netscape, operators of two of the most heavily-
trafficked web-sites, offer competitive services;
. government regulation;
. the inability of the Company to identify, attract, retain and motivate
qualified personnel; and
. general economic conditions.
The Company may not be able to succeed in addressing such risks.
ACQUISITIONS MAY AFFECT THE COMPANY'S BUSINESS. The Company has in the
past acquired, and may in the future acquire, businesses, technologies,
services, product lines, content databases, or access to content databases.
Acquisitions involve a number of special risks, including, among other things:
. the difficulty of assimilating the technologies, operations and
personnel of acquired companies with those of the Company;
. the potential disruption of the Company's business;
. the diversion of resources, the incurrence of acquisition-related
expenses, the write-off or amortization of intangible assets and the
assumption of unknown liabilities; and
. the inability to maintain uniform standards, controls, procedures and
policies and the impairment of relationships with employees and
strategic partners as a result of such acquisitions or the integration
of new personnel.
Any failure to successfully address these acquisition-related risks may
have a material adverse affect on the Company's business.
A SUBSTANTIAL PORTION OF THE COMPANY'S REVENUE WILL BE DERIVED FROM PRIVATE
LABELING AGREEMENTS. Private Labeling is where the Company provides to another
business a complete website and e-commerce solution for the business to consumer
and business to business sectors. This will include all front and back end
processing as well as access to an e-commerce content of up to approximately
5,000,000 SKU's. There will be a setup fee that the Company anticipates will
range from $25,000 to $100,000, as well as monthly processing fees and in some
instances revenue sharing on products sold. The target market will be companies
that have annual volume of at least $25.0 million.
THE COMPANY'S BUSINESS DEPENDS ON THE CONTINUED GROWTH IN INTERNET USE.
The Company and its business may be adversely affected if usage of the Internet
or other online services does not continue to grow. This growth could be
hindered by a number of factors including: the adequacy of the Internet's
infrastructure to meet increased usage demands; privacy and security concerns;
and availability of cost-effective service. Any of these issues could cause the
Internet's performance or level of usage to decline.
<PAGE>
RISKS ASSOCIATED WITH DEVELOPING WEB ADVERTISING MARKETS. The Web as an
advertising medium has not been available for a sufficient period of time to
gauge its effectiveness as compared with traditional advertising media.
Therefore, the Web is an unproven medium for advertising-supported services.
Accordingly, the Company's future operating results will depend substantially
upon the increased use of the Web for information, publication, distribution and
commerce and the emergence of the Web as an effective advertising medium.
The Company's ability to generate significant advertising revenues will
also depend on, among other things, the development of a large base of users of
the Company's services possessing demographic characteristics attractive to
advertisers, the ability of the Company to accurately measure its user base and
the ability of the Company to develop or acquire effective advertising delivery
and measurement systems. Many of the Company's advertisers have only limited
experience with the Web as an advertising medium, have not yet devoted a
significant portion of their advertising expenditures to Web-based advertising,
and may not find such advertising to be effective for promoting their products
and services relative to traditional print and broadcast media. The adoption of
Web advertising, particularly by those entities that have historically relied
upon traditional media for advertising, requires the acceptance of a new way of
conducting business and exchanging information. Entities that already have
invested substantial resources in other methods of conducting business may be
reluctant to adopt a new strategy that may limit or compete with their existing
efforts. The market for Web advertising may not continue to emerge or become
sustainable. If the market fails to develop or develops more slowly than
expected, the Company's business may be materially and adversely affected. No
standards have been widely accepted for the measurement of the effectiveness of
Web-based advertising, and there can be no assurance that such standards will
develop sufficiently to support the Web as an effective advertising medium.
Advertisers may not continue to accept the Company's or other third-party
measurements of impressions, and such measurements may contain errors. In such
event, the Company's advertising revenues may be materially adversely affected,
which may have a material adverse affect on the Company's business.
In addition, there is intense competition in the sale of advertising on the
Web, resulting in a wide range of rates quoted and a variety of pricing models.
This makes it difficult to project future levels of advertising revenues and
rates. It is also difficult to predict which pricing models will be adopted by
the industry or advertisers. For example, advertising rates based on the number
of "click-throughs", or user requests for additional information made by
clicking on the advertisement from the Company's network to the advertiser's Web
pages, instead of rates based solely on the number of impressions displayed on
users' computer screens, would materially adversely affect the Company's
revenues. As a result of these risks, the Company may not succeed in generating
significant future advertising revenues from Web-based advertising. The failure
to do so may have a material adverse affect on the Company's business.
Advertisers may also determine that banner advertising is not an effective
or attractive advertising medium. The Company may not be able to effectively
transition to any other forms of Web advertising should they develop and achieve
market acceptance. Moreover, "filter" software programs that limit or prevent
advertising from being delivered to a Web user's computer are available.
Widespread adoption of such software by users may have a material adverse affect
upon the commercial viability of Web advertising.
RISK OF CAPACITY CONSTRAINTS OR SYSTEM FAILURES. The Company is dependent
on its ability to generate a high volume of traffic to the Company's web sites.
Accordingly, the performance of the Company's web-sites is critical to the
Company's reputation, its ability to attract advertisers and to achieve market
acceptance of the Company's web-sites. Any system failure that causes
interruptions in the availability of or that increases response time of the
Company's services could reduce user satisfaction and traffic to the Company's
web sites and, if sustained or repeated, would reduce the attractiveness of the
Company's web-sites to advertisers and consumers. An increase in the volume of
searches conducted through the Company's web-sites could strain the capacity of
the software or hardware deployed by the Company, which could lead to slower
response time or system failures. In addition, as the amount of Web pages and
traffic on the Company's services increases, there can be no assurance that the
Company's web sites will be able to scale proportionately. The Company is also
dependent upon timely feeds and downloads of information from content providers
and is dependent upon providers of Web browsers and on Internet and online
service providers and other web-site operators, which have experienced
significant outages in the past, for access to its network. In the past, Web
consumers have experienced outages,
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delays and other difficulties due to system failures unrelated to the Company's
systems and services. Additional difficulties may also materially and adversely
affect consumer and advertiser satisfaction. To the extent that the capacity
constraints described above are not effectively addressed by the Company, such
constraints may have a material adverse affect on the Company's business.
Substantially all of the Company's communications hardware and certain of
its computer hardware operations are located at leased facilities in Santa Ana,
California, an area susceptible to earthquakes. The Company has experienced
system failures or outages from time to time in the past, which have disrupted
the operation of the Company's web-sites. A system failure at this location may
adversely affect the performance of the Company's web sites. These systems are
also vulnerable to damage from fire, floods, earthquakes, power loss,
telecommunications failures, break-ins and similar events. In the event that
the Company seeks to replicate its systems at other locations, it would face a
number of technical challenges, particularly with respect to database
replication and the need to constantly update distributed databases, the Company
may not be able to successfully address these challenges. Although the Company
carries property insurance, it does not carry business interruption insurance.
In addition, the low coverage limits on the property insurance are likely to be
inadequate to compensate the Company for all losses that may occur. The
Company's servers are also vulnerable to computer viruses, physical or
electronic break-ins and similar disruptive problems. Computer viruses, break-
ins or other problems caused by third parties could lead to interruptions,
delays or cessations in service to users of the Company's web-sites. The
occurrence of any of these risks may have a material adverse affect on the
Company's business.
Year 2000 Compliance.
--------------------
To the fullest extent permitted by law, the following discussion is a "Year
---------------------------------------------------------------------------
2000 Readiness Disclosure" within the meaning of the Year 2000 Information and
- ------------------------------------------------------------------------------
Readiness Disclosure Act 105 p.l. 271. Compliance with the Year 2000
- ----------------------------------------------------------------------
Information and Readiness Disclosure Act does not preclude claims for violations
- --------------------------------------------------------------------------------
of federal securities laws.
- --------------------------
The Year 2000 problem is the result of computer programs being written to
recognize two digits rather than four to define the applicable year. This causes
computer programs to interpret a date using "00" as the year 1900 rather than
the year 2000, which could result in computer failures and miscalculations. The
effects of this issue will vary from system to system and may adversely affect
an entity's operations and its ability to prepare financial statements.
All systems and applications at the Company are Year 2000 compliant. This
includes both servers and desktop systems and applications. The overall
infrastructure of Company was built starting in May 1999. We undertook specific
steps to ensure that all systems and applications acquired are Year 2000
compliant. The MetaSearch technology acquired from Isleuth was completely
reengineered and is also Year 2000 compliant. However, there can be no
assurance that the Year 2000 problem will not affect the Company by causing
disruptions in the business operations of persons with whom the Company does
business, such as customers or suppliers. Year 2000 problems could have a
material adverse effect on the Company.
If the necessary providers of power, communications and other such
providers of important services are not fully prepared for the Year 2000, the
Year 2000 could have a material impact on the Company. We have no way of knowing
how the Year 2000 will affect Internet functions.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
As of the date hereof, the Company (or its property) is not a party to any
pending legal proceeding and is not aware of any such legal proceeding being
contemplated by a governmental authority.
Item 2. Changes in Securities and Use of Proceeds
- --------------------------------------------------
None.
Item 3. Defaults Upon Senior Securities
- ----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
Item 5. Other Information
- -------------------------
Effective November 1, 1999, the Company changed its reporting period from a
fiscal year ending on October 31 to a fiscal year ending on the last Sunday of
October.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger between Optima Medical
Group of Hileah, Inc. and Optima Medical Group of No.
Miami, Inc. and Coordinated HealthCare, Inc., dated
October 16, 1995.****
2.2 Articles of Merger of Optima Medical Group of Hileah,
Inc., Optima Medical Group of No. Miami, Inc. and
Coordinated HealthCare, Inc. dated October 16,
1995.****
2.3 Agreement for Purchase and Sale of Assets by and
between Coordinated Healthcare, Inc. and ALF Realty I,
Inc. dated July 15, 1998.****
2.4 Agreement and Plan of Reorganization by and between
Happy Landings, Inc. and Isleuth.com, Inc. dated
September 3, 1998.****
3.1 Articles of Incorporation of Coordinated Healthcare
Inc., filed February 16, 1995.****
3.2 Articles of Amendment to Articles of Incorporation of
Coordinated HealthCare, Inc. authorizing 5,000,000
shares of Common Stock at a par value of $0.001 per
share, filed January 17,1996.****
3.3 Articles of Amendment to Articles of Incorporation of
Coordinated HealthCare, Inc., authorizing 20,000,000
shares of Common Stock at a par value of $0.001 per
share, filed June 24, 1996.****
3.4 Articles of Amendment to Articles of Incorporation of
Coordinated HealthCare, Inc. authorizing 25,000,000
shares of Common Stock at a par value of $0.001 per
share and 10,000 shares of Preferred Stock at a par
value of $0.001 per share, filed July 29, 1998.***
3.5 Articles of Amendment to Articles of Incorporation of
Coordinated HealthCare, Inc., changing the name of
Coordinated Healthcare, Inc. to Isleuth.com, Inc.,
filed July 29, 1998.****
<PAGE>
3.6 Articles of Amendment to Articles of Incorporation of
Isleuth.com, Inc. authorizing 25,000,000 shares of
Special Preferred Stock at a par value of $0.001 per
share, filed October 15, 1998.****
3.7 Articles of Amendment to Articles of Incorporation of
Isleuth.com, Inc. designating 12,500,000 shares of the
Special Preferred Stock as Class A Special Preferred
Stock at a par value of $0.001 per share, filed
December 28, 1998.****
3.8 Articles of Amendment to Articles of Incorporation
Isleuth.com, Inc., changing the name of Isleuth.com,
Inc. to The BigHub.com, Inc., filed April 29, 1999.
****
3.9 Articles of Amendment to Articles of Incorporation of
The BigHub.com, Inc., authorizing 50,000,000 shares of
Common Stock of a par value of $0.001 per share and
25,000,000 shares of Preferred Stock at a par value of
$0.001 per share, filed October 18, 1999.**
3.10 Bylaws of the registrant.****
10.1 Option Agreement by and between Happy Landings, Inc.
and Maverick Communication Corp. dated August 3,
1998.****
10.2 Stock Purchase Agreement by and between SJI Group, Inc.
and Isleuth.com, Inc. dated August 7, 1998.****
10.3 Employment Agreement by and between The BigHub.com,
Inc. and Patrick J. DeMicco Dated July 9, 1999.****
10.4 Employment Agreement by and between The BigHub.com,
Inc. and Douglas Martinez dated June 28, 1999.****
10.5 Employment Agreement by and between The BigHub.com,
Inc. and Chet Howard dated June 14, 1999.****
10.6 Employment Agreement by and between The BigHub.com,
Inc. and Mark Doumani dated June 30, 1999.****
16
<PAGE>
10.7 Sublease Agreement dated June 1, 1999 between The
BigStore.com, Inc., a Delaware corporation and The
BigHub.com, Inc. a Florida corporation.***
10.8 Comarketing Agreement dated July 6,1999 between Deal-
Time and the BigHub.com, Inc.***
10.9 Strategic Marketing Agreement entered into as of
September 2, 1999 by and between the BigHub.com, Inc.
And Biomerica, Inc. (The BigRX.com).****
10.10 Affiliate Agreement dated September 1, 1999 by and
between The BigHub.com, Inc. and the BigStore.com,
Inc.****
10.11 Consulting Agreement dated June 7, 1999 by and between
The BigHub.com, Inc. and Stilden Co., Inc. **
10.12 Licensing Agreement dated October 29, 1999 by and
between The BigHub.com, Inc. and Pricenet USA, Inc.**
10.13 Licensing Agreement dated November 12, 1999 by and
between The BigHub.com, Inc. and The BigStore.com,
Inc.**
10.14 Sublicensing Agreement dated January 20, 2000 by and
between TheBigHub.com, Inc. and Starting Point, Inc.**
10.15 E-Commerce Services and Sublicense Agreement dated
February 25, 2000 by and between the Company and
QuePasa.com, Inc.*
10.16 Direct-Link Advertising Agreement dated March 6, 2000
by and between the Company and The BigFNI.com, Inc.*
10.17 Advertising Agreement dated November 30, 1999 by and
between the Company and The BigBallot.com, Inc.*
10.18 Advertising and Content Agreement dated November 30,
1999 by and between the Company and The BigBallot.com,
Inc.*
10.19 Stock Purchase Agreement dated November 30, 1999 by and
between the Company and The BigBallot.com, Inc.*
10.20 Master Web Site Services Agreement dated November 30,
1999 by and between the Company and The BigBallot.com,
Inc.*
27.1 Financial Data Schedule*
____________________
* Filed herewith.
** Filed with the Form 10-KSB of The BigHub.com, Inc. filed on January 27,
2000
*** Filed with Amendment No. 1 to the Form 10-SB of The BigHub.com, Inc. filed
on October 1, 1999.
**** Filed with the Form 10-SB of The BigHub.com, Inc. filed on August 20, 1999.
(b) Reports on Form 8-K
17
<PAGE>
Date Filed Subject
---------- -------
11/5/99 Resignation of Pat DeMicco
11/10/99 Change in auditors
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The BigHub.com, Inc.
By: /s/ Chet Howard
- ------------------------------------------
Chet Howard, Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
Date: March 14, 2000
<PAGE>
Exhibit 10.15
E-COMMERCE SERVICES AND SUBLICENSE AGREEMENT
QuePasa.com / The BigHub.com
This E-Commerce Services and Sublicense Agreement (the "Agreement") is made this
25 day of February, 2000 (the "Effective Date") by and between The BigHub.com,
Inc., a Florida corporation ("Company") and QuePasa.com, Inc., an Arizona
corporation ("QuePasa.com") on the terms and conditions set forth herein.
1. Introduction.
1.1 QuePasa.com is an online portal and web site community, which
primarily markets to the Latino community. QuePasa.com is engaged in,
among other things, providing content, community and services to its
subscribers and others (together with any affiliated or successor
services thereto, the "QuePasa.com Service").
1.2 The Company provides third parties with the content, applications and
services necessary to create, configure, maintain and conduct certain
business through electronic commerce ("e-commerce") sites via the
Internet substantially similar to the e-commerce site currently
maintained by the Company at http://www.thebighub.com (together with
------------------------
any successor sites thereto, the "Company Site"). Such services to be
provided hereunder (the "Company Service") include, but are not
limited to, product offerings, transaction processing, credit/debit
card validation, fraud detection, order tracking, transaction
accounting, reporting and records retention, vendor communications and
relations, customer profile maintenance, and all such other
capabilities as may be necessary to operate a complete e-commerce
store for consumer products. As part of the Company Service, the
Company utilizes certain proprietary technology (the "Technology")
that the Company has an exclusive license to market. The exclusive
license enables the Company, among other things, to process e-commerce
transactions received over the Internet in an efficient and effective
manner and to track customer orders from the time the order is placed
through delivery to the customer's designated shipping address.
1.3 QuePasa.com desires to receive, and the Company desires to provide,
the Company Service and sublicense the Technology in order to create
an online store (the "QuePasa.com Mall") to be made available to users
of the QuePasa.com Service and others ("Users") throughout the Term
(as defined in Section 5.1).
1.4 Accordingly, QuePasa.com and the Company hereby agree as follows:
1
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2. QuePasa.com Mall.
2.1 Storefront Design and Display. The Company will develop, with the
input and assistance of QuePasa.com, the pages of the QuePasa.com
Service that constitute the QuePasa.com Mall. Such pages will promote
and describe the products offered by the Company Service. QuePasa.com
will design the style, look and feel of such pages at its sole
discretion, and may change such design at any time. Each page of the
QuePasa.com Mall will include, at QuePasa.com's request, branding for
QuePasa.com and may include hyperlinks to other pages maintained by or
for QuePasa.com or to sites of third parties as determined by
QuePasa.com in its sole discretion. The Company will execute and
implement any changes within a commercially reasonable time after
receiving such changes.
2.2 The QuePasa Mall site will offer all products currently available to
the Company. After 30 days from the date the QuePasa mall is
live,Product Selection and Content. QuePasa.com will be entitled to
select the products or categories of products to be displayed and
offered within the QuePasa.com Mall, and may elect to display and list
any or all (or none) of the products available on the Company Service.
Further, QuePasa.com may elect to display all or any part of the
Product Information in connection therewith, or any information in
addition thereto or in lieu thereof. At QuePasa.com's request, the
Company will provide reasonable assistance and marketing expertise to
QuePasa.com to assist QuePasa.com in the selection and display of
products. With respect to each product offered through the Company
Service (the "Product Selection"), the Company will display within the
QuePasa.com Mall (i) a short description, review or other reference
pertaining to that product, as well as pricing, shipping and other
information (the "Product Information"); and (ii) an opportunity for
the User to purchase such product. As between QuePasa.com and the
Company, the Company will be responsible for the content of the
Product Information.
2.3 Hosting and Maintenance; Technical Specifications. The Company will
host and maintain all pages of the QuePasa.com Mall on the Company's
servers (or on servers within its reasonable control) and will provide
all computer hardware, software and personnel necessary to operate and
maintain the QuePasa.com Mall as a functional site accessible to
Users.
2.4 Content Standards. The Company will not, within the Service, permit to
appear, including by way of links, sublinks or otherwise, any
messages, data, images, programs or products that (i) are illegal; or
(ii) would knowingly or intentionally on the part of the Company
violate the property rights of others, including unauthorized
copyrighted text, images or
2
<PAGE>
programs, trade secrets or other proprietary information, or
trademarks or service marks used in an infringing fashion.
2.5 Order Processing and Fulfillment. As between QuePasa.com and the
Company, the Company will be responsible for processing User orders,
overseeing the preparation of order forms, processing User payments,
cancellations and returns, tracking sales through the QuePasa.com
Mall, providing QuePasa.com with reports summarizing such sales
activity, and all other functions and duties necessary and incidental
to the Company Service.
2.6 Returns and Refunds. As between QuePasa.com and the Company, the
Company will be responsible for administering any returns and refunds
for products ordered through the Company Service. The Company will
provide QuePasa.com with a monthly report of returns, refunds,
cancellations, chargebacks and bad debts in sufficient detail to allow
the calculation of Net Merchandise Profit.
2.7 Advertising revenue. Each party may keep its respective advertising
revenue generated from their site. For purposes of clarity,
QuePasa.com is entitled to advertising revenue generated from the
QuePasa.com Mall
2.8 The Company will make available a Spanish version, mechanically
translated, immediately. The Company will provide a fluent Spanish
version within 6 months.
2.9 QuePasa.com may, in its sole discretion, exclude from the quepasa Mall
any links which would cause a user to leave the quepasa Mall.
2.10 QuePasa.com may, in its sole discretion, exclude any manufacturer or
product category from the quepasa Mall as defined in section 2.2. In
addition, QuePasa may, to the extent available, customize or exclude
specific individual product offerings. Any and all customization work
on the mall must be approved by the Company, of which approval will
not be unreasonably withheld.
3. Additional Obligations.
3.1 Reporting. On or before the 30 days following the end of each month
during the Term, the Company will provide to QuePasa.com a report
detailing all transactions on the QuePasa.com Mall during the previous
month. Such report will reflect the calculation of Net Merchandise
Profits earned by QuePasa.com for such month, which amount should
agree to the funds received by QuePasa.com for such month pursuant to
Section 4. In the event of any difference or discrepancy, the Company
will accompany the transmission of such funds with an exception or
reconciliation report.
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Such report will also detail the number of purchases made in such
month by Users through the QuePasa.com Mall.
3.2 Quality of Services. The Company agrees and represents that the
Company Services, including the Product Selection and Product
Information, will be at least equal, in terms of quality, accuracy,
scope and timeliness, as any similar services made available by the
Company to other users or partners. Unless otherwise requested by
QuePasa.com, throughout the Term the Company Services will include all
of the information, features and functionality, and performance
substantially similar to other Company Client Sites.
3.3 Responsibility for Products and Services. The Company acknowledges and
agrees that, as between the Company and QuePasa.com, the Company will
be solely responsible for the operation of the Company Services. The
Company acknowledges and agrees that QuePasa.com does not intend to,
and will not be required to, edit or review for accuracy any of the
Product Information, with the exception of Spanish language
translations. The Company will provide QuePasa.com with the name and
contact information of an individual who will act as a point of
contact between QuePasa.com and the Company on all customer service
issues, and the Company will update such information from time to time
as necessary. QuePasa.com is not authorized to make, and agrees not to
make, any representations or warranties concerning the Company, except
to the extent (if any) contained within the Product Information
delivered to QuePasa.com by the Company. The foregoing restriction
will not limit QuePasa.com's ability to make editorial statements
regarding the Company or the Products.
3.4 Prohibited Products and Content. Company will not provide, sell or
offer to sell, or otherwise make available through links, sublinks or
otherwise, the following products or content (or services related to
the same): pharmaceutical or any other controlled substances; illegal
drugs, illegal drug contraband; alcohol; firearms; weapons; pirated
computer programs; illicitly pornographic sexual products; illegal
goods; or computer software viruses or software designed to create a
virus.
3.5 Technical Support. The Company will use its best efforts to provide
all necessary maintenance and technical support to QuePasa.com in
connection with QuePasa.com's use of the Technology or the Company
Services. The Company will provide QuePasa.com with three technical
contacts that will be accessible 24 hours per day, seven days per
week, 365 days per year. The Company will use its best efforts to
respond to all requests for support by QuePasa.com within four hours,
day or night. The Company will notify QuePasa.com at least three days
in advance of any
4
<PAGE>
planned service outage period for systems maintenance or other
purposes, which outage periods will not occur during peak traffic
hours.
3.6 Modifications to Services. Except for the addition of new tools and
services, the Company will modify the Company Services only upon the
prior written consent of QuePasa.com.
3.7 Most Favored Customer. If the Company offers to any new or existing
partner any feature or function that the company may provide to any
other client, such features, functions or services will be available
to QuePasa.com at the lowest cost any client pays or obtains free of
charge.
3.8 Fraudulent Transactions. The Company will provide QuePasa.com with a
prompt report of any fraudulent order placed through the QuePasa.com
Mall of which it has knowledge, including the date, screenname or e-
mail address, and amount associated with such order, promptly
following the Company's obtaining knowledge that the order is, in
fact, fraudulent.
3.9 Page Impressions. The Company shall disavow and not take credit for
the page impressions that it receives on the QuePasa.com Mall. The
Company shall provide to QuePasa.com a monthly report of page
impressions on the QuePasa.com Mall.
3.10 To the extent it is commercially reasonable, the Company will
cooperate with QuePasa.com to assist them in identifying and creating
their own buying agreements with their own vendors.
4. Fees and Payments.
4.1 Certain Definitions. For purposes of this Agreement:
(a) "Net Merchandise Profits" shall equal Qualifying Product Sales,
less the cost of the product sold, taxes, gift-wrapping,
shipping, handling, customer service fees, credit card
processing, fraud and detection fees, charge backs, bad debt,
credits for refunds, cancellations, any third party related
return costs and returned products and a BigHub transaction fee
equal to 6% of the cost of goods sold. In no event will the
amounts related to customer service fees when coupled with all
other costs as defined here exceed the Net Merchandise Profits.
(b) Customer Service Costs will only be accounted for and related to
the direct and sole support of the QuePasa Mall.
(c) A "Qualifying Product Sale" occurs when a customer (i) places an
order on the pages of the QuePasa.com Mall, (ii) purchases the
product(s) using the automated ordering system of the Company
Service, (iii) accepts delivery of the product(s) at the
customer's
5
<PAGE>
shipping destination, (iv) remits full payment to the Company or
its designee, and (v) does not return the product(s) within a
commercially reasonable time.
(d) Set up fee $0
(e) Monthly hosting fee $0
4.2 Pricing. QuePasa.com may set prices for all products offered on the
QuePasa.com Mall, pricing to include costs as defined in section
4.1(a). Subject to the Company's commercially reasonable discretion,
QuePasa.com may from time to time set prices for certain special
promotional products below Cost. For any Qualifying Product Sale the
price of which product is below cost, Quepasa is responsible to pay
the Company the difference between the below cost product sale and the
product cost and all customary mall charges as defined in sec 4.1 (a)
no Net Merchandise Profit will be payable by or to either Party.
4.3 Payment; Monthly Commissions. Within 30 days following the end of each
month during the Term, the Company will transmit to QuePasa.com all
Net Merchandise Profit on Qualifying Product Sales for such Month
("Monthly Commissions"). The Company will, at QuePasa.com's request,
deposit such Monthly Commissions into an account of QuePasa.com's
choice.
4.4 Audit Rights. Each party will maintain complete, clear and accurate
records of all expenses, revenues, fees, transactions and related
documentation (including agreements) in connection with the
performance of this Agreement. All such records will be maintained for
a minimum of two years following expiration or termination of this
Agreement. For the sole purposes of ensuring compliance with this
Agreement, each party will have the right, at its sole expense, to
examine (either itself or through a designated representative)
portions of the records of the other party, which are directly related
to the obligations sought to be examined. A party may conduct such
examination no more than once per quarter, and upon at least 14 days'
written notice. In the event that QuePasa.com discovers, through such
examination, an underpayment of fees for any three-month period in
excess of ten percent, then, in addition to promptly paying to
QuePasa.com the amount of such underpayment, the Company will
reimburse QuePasa.com for its reasonable costs incurred in conducting
such examination.
5. Term; Termination.
5.1 Term. The term of this Agreement (the "Initial Term") will commence on
the Effective Date and, unless earlier terminated in accordance with
this
6
<PAGE>
Section 5, will continue for a period of two (2) years after the
Effective Date. This Agreement may be renewed for successive
additional terms (each, a "Renewal Term") if the parties so agree at
least 60 days before the end of the then-current term. The Initial
Term and all Renewal Terms (if any) are collectively referred to
herein as the "Term."
5.2 Termination for Breach. Either party may terminate this agreement
immediately if the other party commits a material breach of its
obligations hereunder that is not cured within 30 days after receiving
written notice thereof. For purposes of this Section 5.2, failure by
the Company to fulfill any of the Work Phases required by this
Agreement will be deemed a material breach of its obligations
hereunder.
5.3 Termination for Convenience. QuePasa.com may terminate this Agreement
at any time during the Term for any reason (or no reason) by giving a
written notice of termination to the Company at least 30 days prior to
the effective date of such termination.
5.4 Termination Upon Bankruptcy/Insolvency. Either party (the "Terminating
Party") may terminate this Agreement immediately, and will have no
further obligation under this Agreement, if the other party (i)
becomes insolvent; (ii) makes an assignment for the benefit of
creditors; (iii) makes or sends notice of a bulk transfer; (iv) calls
a meeting of its creditors with respect to its inability to pay its
obligations owed to such creditors on customary terms; (v) defaults
under any agreement, document or instrument relating to its
indebtedness for borrowed money; (vi) ceases to do business as a going
concern; (vii) has a petition is filed by or against it under any
bankruptcy or insolvency laws; (viii) experiences a change in its
ownership, such that a competitor of the Terminating Party holds an
equity interest in it, without the Terminating Party's prior, written
consent to such ownership; or (ix) sells all or substantially all of
its assets.
5.5 Survival. Sections 3.1, 4, 5.6, 5.7, and 6 through 12, and all then-
pending payment obligations and order processing and fulfillment
obligations will survive any termination or expiration of this
Agreement.
5.6 Rights Upon Termination. Upon the expiration or termination of this
Agreement, all Confidential Information, upon the disclosing Party's
written request (i) will be returned to the disclosing Party or (ii)
the recipient will execute a written certification that all
Confidential Information has been destroyed.
6. Proprietary Rights and Sublicense.
6.1 Ownership. As between QuePasa.com and the Company, (i) the Exclusive
Technology License is and will remain the sole and exclusive property
of
7
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The BigHub.com, and QuePasa.com possesses no, and will not obtain by
virtue of this Agreement, right, title or interest in or to the
Technology, except as provided by the sublicense rights granted under
Section 7.2; and (ii) except for the Product Information, all aspects
and content of the QuePasa.com Service and the QuePasa.com Mall are
and will remain the sole and exclusive property of QuePasa.com, and
the Company possesses no, and will not obtain by virtue of this
Agreement, right, title or interest therein or thereto. Neither party
will use, publish or publicly display the trademarks, trade names,
service marks and logos of the other party without the prior consent
of the other party.
6.2 Sublicense. Subject to the terms and conditions of this Agreement, the
Company hereby grants to QuePasa.com a perpetual, nonexclusive,
worldwide right and sublicense to [use and operate] the Exclusive
Technology in connection with the QuePasa.com Mall. This license
includes all elements of the Exclusive Technology necessary to
install, implement and maintain all aspects of the Company Services
throughout the Term.
6.3 QuePasa.com Marks. QuePasa.com hereby grants to the Company a
nonexclusive, restricted, worldwide license, effective throughout the
Term, to use, display, distribute, perform and publish QuePasa.com's
trademarks, service marks and logos (collectively, the "QuePasa.com
Marks") on the QuePasa.com Mall.
7. Warranties and Representations.
7.1 Warranties and Representations of Company. The Company represents and
warrants that:
a. neither the Technology, nor any of the Company's activities or
Services performed hereunder, infringes on any patent, copyright,
trademark, trade secret or other intellectual property rights or
similar rights of any third party;
b. it has all necessary right, power and authority to perform all
acts required under this Agreement, including the right, power
and authority to (i) sublicense the Technology and (ii) offer and
sell each product offered through the Company Services (including
all necessary licenses from all necessary jurisdictions to engage
in the advertising and sale of the goods offered within the
Company Services);
c. its entry into this Agreement and the performance of its
obligations and duties hereunder does not and will not violate
any agreement to which it is a party or by which it otherwise is
bound;
8
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d. all Product Information is and will be accurate and complete in
all respects to the Company's best knowledge; and
e. the Company has the necessary knowledge and skills to
successfully operate and conduct the Company Services as required
by this Agreement.
7.2 Warranties and Representations of QuePasa.com. QuePasa.com represents
and warrants that:
a. it has all necessary right, power and authority to perform all
acts required under this Agreement; and
b. its entry into this Agreement and the performance of its
obligations and duties hereunder does not and will not violate
any agreement to which it is a party or by which it otherwise is
bound.
7.3 Disclaimer. EACH PARTY ACKNOWLEDGES AND AGREES THAT THE OTHER HAS NOT
MADE ANY REPRESENTATIONS, WARRANTIES OR AGREEMENTS OF ANY KIND,
EXPRESS OR IMPLIED, INLCUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING
THE FOREGOING, THE COMPANY SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY
OR REPRESENTATION THAT THE USE OF THE TECHNOLOGY WILL PROVIDE
QUEPASA.COM ANY PARTICULAR RESULT OR WILL BE SUITABLE FOR
QUEPASA.COM'S PURPOSES.
8. Privacy and Security.
8.1 The Company Services will include Secure Socket Layer Software or
similar commercially accepted security technology to protect the data
and secure the transactions entered through the Company Services. Such
software will encrypt all personal information provided by Users,
including credit card number, name and address as it is transmitted
over the Internet.
8.2 All information pertaining to Users, including personal identification
information and product purchase information (collectively, "User
Data"), is and will remain the sole property of QuePasa.com. The
Company will not, during the Term or thereafter, send Users bulk e-
mail communications, except where the User has purchased products from
the Company through means other than the QuePasa.com Service. In no
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event will the Company (i) provide User Data to any third party, or
(ii) rent, sell or barter User Data.
9. Confidentiality. In connection with the activities contemplated by this
Agreement, each party may have access to confidential or proprietary
technical or business information of the other party, including without
limitation (i) business plans, proposals, ideas or research related to
possible new products or services; (ii) financial results, statements and
other financial information; (iii) User Data; (iv) requirements and
sources, contracts, and means, methods and processes of providing services;
(v) copyrights, patents, trademarks, and trade secrets; (vi) any reporting
information herein; and (vii) the material terms of the relationship
between the parties; provided, however, that such information will be
considered confidential only if it is conspicuously designated as
"Confidential," or if provided orally, identified at the time of disclosure
(collectively, "Confidential Information"). Each party will take reasonable
precautions to protect the confidentiality of the other party's
Confidential Information, which precautions will be at least equivalent to
those taken by such party to protect its own Confidential Information.
Except as required by law or as necessary to perform under this Agreement,
neither party will knowingly disclose the Confidential Information of the
other party or use such Confidential Information for the benefit of any
third party. Each party's obligations in this Section with respect to any
portion of the other party's disclosed Confidential Information will
terminate when the party seeking to avoid its obligation under such
Paragraph can document that such disclosed Confidential Information: (i)
was in the public domain at or subsequent to the time it was communicated
to the receiving party ("Recipient") by the disclosing party ("Discloser")
through no fault of Recipient; (ii) was rightfully in Recipient's
possession free of any obligation of confidence at or subsequent to the
time it was communicated to Recipient by Discloser; (iii) was developed by
employees or agents of Recipient independently of and without reference to
any information communicated to Recipient by Discloser; (iv) was
communicated by the Discloser to an unaffiliated third party free of any
obligation of confidence; or (v) was in response to a valid order by a
court or other governmental body, was otherwise required by law or was
necessary to establish the rights of either party under this Agreement;
provided, however, that both parties will stipulate to any orders necessary
to protect said information from public disclosure.
10. Limitations of Liability. EXCEPT FOR CLAIMS ARISING UNDER SECTIONS 9 OR 11,
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY PUNITIVE, INCIDENTAL OR
CONSEQUENTIAL DAMAGES IN ANY ACTION ARISING FROM OR RELATED TO THIS
AGREEMENT, WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), INTENDED
CONDUCT OR OTHERWISE, INCLUDING WITHOUT LIMITATION, DAMAGES RELATING TO THE
LOSS OF PROFITS, INCOME OR GOODWILL, REGARDLESS OF WHETHER SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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<PAGE>
11. Indemnification.
11.1 Each party (the "Indemnifying Party") will indemnify the other party
(the "Indemnified Party") against any and all claims, losses, costs
and expenses, including court costs, reasonable expenses and
reasonable attorneys' fees (collectively, "Losses"), which the
Indemnified Party may incur as a result of claims in any form by third
parties arising from the Indemnifying Party's breach of any
warranties, representations or covenants contained in this Agreement.
Further, the Company will indemnify QuePasa.com against any and all
Losses QuePasa.com may incur as a result of claims by a third party
that the Technology or the Company Service or any aspect thereof
infringes upon patent, trademark copyright, trade secret or other
intellectual property rights.
11.2 If an Indemnified Party makes an indemnification request to the
Indemnifying Party to control the defense, disposition or settlement
of the matter at its own expense; provided that the Indemnifying Party
will not, without the consent of the Indemnified Party enter into any
settlement or agree to any disposition that imposes an obligation on
the Indemnified Party that is not wholly discharged or dischargeable
by the Indemnifying Party, or imposes any conditions or obligations on
the Indemnified Party other than the payment of monies that are
readily measurable for purposes of determining the monetary
indemnification or reimbursement obligations of Indemnifying Party.
The Indemnified Party will notify the Indemnifying Party promptly of
any claim for which Indemnifying Party is responsible and will
cooperate with the Indemnifying Party in every commercially reasonable
way to facilitate defense of any such claim; provided that the
Indemnified Party's failure to notify Indemnifying Party will not
diminish Indemnifying Party's obligations under this Section except to
the extent that Indemnifying Party is materially prejudiced as a
result of such failure. An Indemnified Party will at all times have
the option to participate in any matter or litigation through counsel
of its own selection and at its own expense.
12. Miscellaneous.
12.1 Taxes. As between QuePasa.com and the Company, the Company will be
solely responsible for all sales taxes that may be imposed upon sales
of products through the Company Service, now or in the future.
Notwithstanding the foregoing, each party will be solely responsible
for all taxes based upon its own net income.
12.2 Publicity. Neither party will make any public statement or other
announcement (including, without limitation, issuing a press release
or pre-briefing any member of the press or other third party) relating
to the
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terms or existence of this Agreement without the prior written
approval of the other party.
12.3 Assignment. Neither party may, without the prior written consent of
the other, assign any of its rights or delegate any of its obligations
under this Agreement; provided, however, that a party shall have the
right to assign this Agreement without the prior consent of the other
party in the case of a merger or a sale of all or substantially all of
the party's assets to a party that is not a competitor of the other
party. Subject to the foregoing, this Agreement will be fully binding
upon, inure to the benefit of, and be enforceable by the parties
hereto and their respective successors and assigns.
12.4 Notices. Any notice or other communication under this Agreement will
be sufficiently given if given in writing and delivered by hand
delivery, or in lieu of such personal service, 24 hours after delivery
to a national, overnight courier service, to the addresses listed
below. Either party may designate a different address by giving a
notice of change of address in the manner provided above.
TheBigHub, Inc. QuePasa.com, Inc.
2939 Mossrock 400 E. Van Buren, 4/th/ Floor
San Antonio, Texas 78230 Phoenix, AZ 85004
Facsimile: 210.979.6336 Facsimile: 602.716.0200
Attn: Frank W. Denny Attn: Robert G. Weinstein
12.5 Governing Law. This Agreement will be construed in accordance with,
and governed by, the laws of the State of California, jurisdicted of
Orange County, without regard to the principles of conflicts of law
thereof. The parties mutually consent and submit to the jurisdiction
of the federal and state courts in and for Orange County, California.
12.6 Force Majeure. Subject to the limitations of this Agreement and except
as specifically provided in this Agreement to the contrary, neither
party will be liable for defaults, delays or non-performance of any
covenant, agreement, work, service, or other act required under this
Agreement to be performed by such party, or for any damages,
including, without limitation, any incidental or consequential
damages, arising out of the failure to perform any of its obligations,
by reason of any circumstance or condition beyond its reasonable
control, including, without limitation, failure of power or other
utilities, strikes, lockouts and other labor disputes or other
industrial disturbances, unavoidable accidents, acts of terrorism,
sabotage, embargoes, blockades, injunction or other administrative
order, governmental law or regulations (including changes in United
States foreign policy) which prevent or substantially interfere with
the required performance, condemnations, riots, insurrections, martial
law, conflicts
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(declared or undeclared), civil commotion or disorders and any
adverse change in political, economic or social conditions, fire,
explosion, flood, earthquakes and other casualty, acts of God, or any
other cause beyond the control of such party (each, a "Force Majeure
Event"). In the event of any such Force Majeure Event, the
performance of any covenant, agreement, obligation, work or service,
or other act of the party affected by such Force Majeure Event under
this Agreement shall be excused for the period of delay and the
period for the performance of the same shall be extended by such
period. Each of the parties hereto shall take all reasonable steps to
resume performance hereunder with the least possible delay.
12.7 Relationship of the Parties. Nothing in this Agreement will be
construed to constitute either party as a partner, joint venturer,
agent or employee of the other party, and neither party will act or
attempt to act or represent itself, directly or by implication, as a
partner, joint venturer, agent or employee of the other party.
Neither party nor any of its representatives will have any authority
to enter into any contract, make any commitment or otherwise bind the
other party to any obligations without the other party's prior
written consent.
12.8 Severability. If any provision of this Agreement conflicts with the
law under which this Agreement is to be construed or if any such
provision is held invalid, illegal or unenforceable, (i) such
provision will be deemed to be restated to reflect as nearly as
possible the original intentions of the parties in accordance with
applicable law, and (ii) the remaining terms, provisions, covenants
and restrictions of this Agreement will remain in full force and
effect.
12.9 Section Headings. The various section headings are inserted for
purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement or any section hereof.
12.10 No Waiver. The failure of either party to insist upon or enforce
strict performance by the other party of any provision of this
Agreement or to exercise any right under this Agreement will not be
construed as a waiver or relinquishment to any extent of such party's
right to assert or rely upon any such provision or right in that or
any other instance; rather, the same will be and remain in full force
and effect. All waivers must be in writing to be enforceable.
12.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed a duplicate original and
all of which, when taken together, will constitute one Agreement.
12.12 Entire Agreement. This Agreement constitutes and contains the entire
agreement between the parties with respect to the subject matter
hereof
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and supersedes any prior oral or written agreements. This Agreement
may not be amended except in writing signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date.
The BigHub.com, Inc. QuePasa.com, Inc.
By: /s/ Frank W. Denny By: /s/ Gary L. Trujillo
------------------------ ---------------------------------
Name: Frank W. Denny Name: Gary L. Trujillo
----------------------- ------------------------------
Title: President / CEO Title: President / CEO / Chairman
----------------------- -----------------------------
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Exhibit A
Product Category Commissions
The Net Merchandise profits (defined supra):
Current Power Stores:
Audio Books: 3%
Books: 5-8%
Cameras: 3%
Computer Hardware: 3%
Computer Software: 2%
Consumer Electronics: 3-6%
Drug Store: 5%
Home Improvement: 7%
Housewares: 7%
Janitorial Supplies: 5-10%
Lawn & Garden: 6-8%
Magazines: 3-5%
Movies: 3%
Music: 3%
Office Furniture: 6-8%
Office Supplies: 6-10%
Pet & Farm: 6-10%
Video Games: 3%
Apparel: 6-10%
Automotive: 10%
Baby/Nursery: 6-10%
Cosmetics/Fragrance: 4-6%
Fitness: 6-10%
Gift: 10-12%
Gourmet Foods: 10-12%
Jewelry: 15%
Marine Supplies: 10%
Sporting Goods: 6-10%
Toys: 6-10%
Travel: 3%
Watches: 10%
Wines: 4%
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Exhibit 10.16
DIRECT-LINK ADVERTISING AGREEMENT
THIS AGREEMENT is entered into as of the 6th day of March 2000 (the
"Effective Date"), by and between The BigHub.com, Inc., a Florida corporation
(the "Company"), and Harborside Acceptance Company, Inc., a California
corporation dba The BigFNI.com (the "BigFNI"), both referred to as ("Parties")
with reference to the following facts:
WHEREAS, the Company owns and operates a web site on the Internet at
www.thebighub.com which, among other things, is an advanced portal and contains
a megasearch engine and specialty search engines;
WHEREAS, the BigFNI desires to have a direct-link advertising banner on the
Company's web site, upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the covenants, agreements and
considerations herein contained, the Company and the BigFNI agree as follows:
1. Advertising. The Company hereby agrees, during the Term hereof (as
defined below), to provide strategic placement of advertising and marketing for
the BigFNI on the Company's web site, which shall include permanent, perpetual
and continuous advertising on the Company's web site and continuous banners on
and links from its web site to the Company's web site. All advertising and
banners shall be pre-approved by the Company.
2. Fees.
(a) In consideration for the advertising on the Company's web site
pursuant to Section 1 above, the BigFNI agrees that, during the Term (as defined
below), it shall pay the Company a fee for certain transactions processed by the
BigFNI through the direct-link advertising banner (the "Transaction Fee"), in
accordance with the following schedule:
1. Successful binding of an insurance policy other than life insurance -
Ten dollars ($10.00) per bound transaction.
2. Successful prime credit card application - Twenty dollars ($20.00) per
bound transaction.
3. Successful sub-prime credit card application - Ten dollars ($10.00)
per bound transaction.
4. Successful life insurance application - Thirty-five dollars ($35.00)
per bound transaction.
5. Parties understand that the BigFNI will develop other products and
services available on the site and will pay to the Company an amount
equal to or greater then the same Transaction Fee percentage as paid
on the products and services currently available. The Transaction Fee
paid to the Company for present and future products and services will
always be more favorable than any other affiliate of the BigFNI.
The Transaction Fee for each transaction shall be due and payable on
the first business day of the month following the month during which the
transaction was completed.
(b) In addition to the Transaction Fee, the BigFNI also agrees to pay
a minimum monthly fee to the Company (the "Minimum Monthly Fee"), in accordance
with the following schedule:
1. April 2000 - Five Thousand Dollars ($5,000.00) per month.
2. May 2000 - Ten Thousand Dollars ($10,000.00) per month.
3. June 2000 through the end of the Term (as defined below) -Fifteen
Thousand Dollars ($15,000.00) per month.
<PAGE>
The minimum Monthly Fee shall be due and payable on the first business
day of each month.
3. Reserved.
4. Indemnification.
(a) The BigFNI shall defend, indemnify and hold harmless Company and
its affiliates from and against any loss, cost or damage arising out of any
claim by third parties relating to any materials provided by the BigFNI to the
Company for use in connection with the advertisements posted by the Company on
its web site.
(b) Company shall defend and hold harmless the BigFNI and its
affiliates against any loss, cost or damage arising out of any claim by third
parties relating to the Company's web site, except to the extent such claim
relates to materials provided by the BigFNI to the Company for use in connection
with the advertisements posted by the Company on its web site.
(c) The obligation of each party ("Indemnitor") in either clause (a)
and (b) above to indemnify, defend and hold harmless the other party
("Indemnitee") shall be subject to the Indemnitee providing prompt notice of the
claim giving rise to such obligation, and Indemnitee's right to select legal
counsel to represent both parties, provided there is no conflict between such
counsel's representation of both Indemnitor and Indemnitee.
5. Limitation of Liability. In no event shall either party be liable to
the other in contract or in tort, or under any other legal theory (including
strict liability), for any indirect, special, incidental, consequential or
similar damages, including lost profits or revenues, arising out of or in
connection with the performance or nonperformance of this Agreement, or for any
claim made against such party by any other entity, even if such party has been
advised of the possibility of such claim.
6. Representations and Warranties. Each party to this Agreement
represents and warrants to the other party that:
(a) such party has the full corporate right, power and authority to
enter into this Agreement and to perform the acts required of it hereunder;
(b) the execution of this Agreement by such party, and the
performance by such party of its obligations and duties hereunder, do not and
will not violate such party's charter documents or any agreement to which such
party is a party or by which it is otherwise bound; and
(c) when executed and delivered by such party, this Agreement will
constitute the legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
7. Term and Termination.
(a) The term of this Agreement shall commence on the Effective Date,
and shall, unless sooner terminated as provided below or as otherwise agreed,
remain effective for an initial term of three (3) years (the "Initial Term").
After the Initial Term, this Agreement shall automatically be extended for
successive additional one-year periods (each an "Extension Term"), unless
otherwise terminated by either party by giving written notice to the other party
of its intent not to extend not less than sixty (60) days prior to the end of
the Initial Term or any Extension Term then in effect. As used herein, the
"Term" shall mean the Initial Term and any Extension Term(s). The compensation
to be paid
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to the Company for each Extension Term shall be at the current rate, unless
prior to the commencement of each Extension Term, the parties negotiate new
compensation hereunder.
(b) Notwithstanding the foregoing, this Agreement may be terminated
at any time by either party, effective immediately upon notice, if the other
party: (i) becomes insolvent; (ii) files a petition in bankruptcy; (iii) makes
an assignment for the benefit of its creditors; or (iv) breaches its obligations
of confidentiality set forth in Section 8 below. Either party may terminate this
Agreement, effective upon thirty (30) days notice, in the event that the other
party breaches any of its representations, warranties, covenants or agreements
contained herein which breach is not remedied within thirty (30) days following
written notice to such party.
(c) Any termination pursuant to this Section 7 shall be without any
liability or obligation of the terminating party, other than with respect to any
breach of obligations under this Agreement prior to termination. The provisions
in Sections 4, 5, 8, and 9 shall survive any termination or expiration of this
Agreement.
(d) This Agreement may be terminated immediately by either party,
without liability to the other, upon written notice, if said party terminates or
cancels its web site on the Internet.
Upon any termination of this Agreement, each party shall promptly
deliver to the other party all Confidential Information (as defined below) and
property belonging to the other party that is in its possession or under its
control, and neither party shall retain copies or reproductions of such
Confidential Information.
8. Confidentiality and Non-Circumvention.
(a) Each party acknowledges and agrees that it will have access to or
be provided with confidential information of the other party during the term of
this Agreement. As used herein, the term "Confidential Information" shall mean
any and all proprietary or confidential information of a party, including,
without limitation such party's business plan, business presentation or related
proprietary and financial information as well as other confidential or
proprietary information of such party regarding such party's business, plans,
financial results and statements, markets, projected activities, customers and
results of operations, requirements and sources, contracts, means, methods and
processes of providing services, copyrights, patents, trademarks, trade secrets,
and financial information.
(b) Each party agrees to keep the Confidential Information of the
other party in the strictest confidence, and agrees that it will not, directly
or indirectly, publish or disclose, or authorize the publication or disclosure
of, or assist any third party in publishing or disclosing, any Confidential
Information to anyone other than its employees or consultants, but only to the
extent necessary for the fulfillment of its obligations under this Agreement and
subject in each such case to the such party using its best efforts to ensure
that the persons to whom Confidential Information is disclosed keep such
information confidential and do not use such Confidential Information except for
the purposes for which the disclosure is made. Each party agrees to comply with
the other party's policies and regulations, as may be reasonably established
from time to time, for the protection of its Confidential Information.
(c) Each party's confidentiality obligations shall continue with
respect to each item of Confidential Information, including after the
termination of this Agreement, until such time as such party can show that any
such item of Confidential Information (i) has legally and properly entered the
public domain through a source other than its own and through no fault of its
own, (ii) has legally and properly been received from an unrelated third party
through no breach of any agreement with the other party and without an
obligation to keep it confidential, or (iii) was known to such party or was in
such party's
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<PAGE>
possession prior to the receipt of such item of Confidential Information from
the other party.
(d) Each party acknowledges that the other party's Confidential
Information is of a special, unique and extraordinary character and for that
reason the other party will be irreparably damaged in the event that the
confidentiality or non-circumvention obligations imposed upon it, as set forth
herein, are not specifically enforced. Accordingly, each party agrees that the
other party shall be entitled, at its election, to institute and prosecute
proceedings against it, as set forth herein, in any court of competent
jurisdiction, either at law or equity, to: (a) obtain damages for breach of the
obligations hereunder; (b) enforce specific performance of said obligations, or
both. Such remedies are cumulative and not exclusive and shall be in addition to
any and all other remedies which the other party may have, at law or in equity,
in the event the a party breaches any of its obligations hereunder. The parties
hereto confirm that the covenants in this Agreement are expressly deemed to
cover acts of negligence and any inadvertent disclosure or violation of the
terms herein.
9. Independent Contractor Relationship. This Agreement shall in no way be
construed to constitute either party as a partner, joint venturer, agent, or
employee of the other party, and neither party shall act or attempt to act or
represent itself, directly or by implication, as a partner, joint venturer,
agent or employee of the other party. Neither party nor any of its respective
employees shall have any authority to enter into contracts, make commitments or
otherwise bind the other party to any obligations without the other party's
prior written consent.
10. Force Majeure. Neither party shall be liable to the other for any
default or delay in the performance of any of its obligations under this
Agreement if such default or delay is caused, directly or indirectly, by fire,
flood, earthquake or other acts of God; labor disputes, strikes or lockouts;
wars, rebellions or revolutions, riots or civil disorders; accidents or
unavoidable casualties; interruptions in third party transportation or
communications facilities or delays in transit or communications; supply
shortages or the fault or any third party to perform any commitment to such
party; laws, treaties, agreements, actions, inaction's, rulings, regulations,
decisions or requirements of any government, tribunal or governmental agency;
litigation to which such party may become a party; or any other cause, whether
similar or dissimilar to those enumerated herein, beyond such party's reasonable
control.
11. Assignment. Neither party may assign this Agreement without the prior
written consent of the other, which consent shall not be unreasonably withheld;
provided, however, that no consent shall be necessary for a party to assign this
Agreement to one of its affiliates or an entity acquiring all or substantially
all of the stock or assets of such party.
12. Exhibits. The BigFNI represents and warrants that it has read and
understands the Company's Website Traffic Information attached as Exhibit A
hereto and the Company's Fiscal Year 2000 Operating Budget attached as Exhibit B
hereto.
13. Miscellaneous.
(a) This Agreement contains the complete and exclusive agreement
between the parties with respect to the subject matter hereof, superseding and
replacing any and all prior agreements, communications, and understandings, both
written and oral, regarding such subject matter. This Agreement may only be
modified, or any rights under it waived, by a written document executed by both
parties.
(b) This Agreement will be governed by and construed in accordance
with the laws of the State of California, without reference to conflicts of laws
rules, and without regard to its location of execution or performance.
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(c) If any provision of this Agreement is found invalid or
unenforceable, that provision will be enforced to the maximum extent
permissible, and the other provisions of this Agreement will remain in force.
(d) All notices, requests and other communications called for by this
Agreement shall be deemed to have given upon receipt if made by mail, courier or
personal delivery, or immediately if made by telecopy or electronic (confirmed
by concurrent written notice sent first-class U.S. mail, postage prepaid):
The BigHub.com, Inc.: The BigFNI.com:
2939 Moss Rock 27631 La Paz Road
Suite 100 Laguna Niguel, California 92677
San Antonio, Texas 78230 Facsimile: (949) 448-4199
Facsimile: (210) 979-6336 Attn: Dick Greco, President
Attn: Frank Denny, Chairman
or to such other addresses as either party shall specify to the other. Notice
by any other means shall be deemed made when actually received by the party to
which notice is provided.
(e) Except for matters covered by Section 8 above, all disputes
arising out of or in connection with this Agreement shall be finally settled
under the Rules of American Arbitration Association ("AAA") by one or more
arbitrators appointed in accordance with said Rules. The place of arbitration
shall be Orange County, California. The parties hereby renounce any right of
recourse which they may have before the court of any jurisdiction except to
obtain preliminary or injunctive relief or enforce an award of the arbitrator.
If any award rendered by AAA in accordance with this arbitration
clause would not be capable of being executed in the jurisdiction of a party
against whom a claim for payment is made or where that party resides or carries
on business, neither the award nor the said arbitration clause shall bar a party
hereto from taking action before the courts that have jurisdiction over such
other party.
(f) In the event that any party shall bring an action or arbitration
in connection with the performance, breach or interpretation hereof, then the
prevailing party in such action, as determined by the court or other body having
jurisdiction, shall be entitled to recover from the losing party in such action,
as determined by the court or other body having jurisdiction, all reasonable
costs and expenses of litigation or arbitration, including reasonable attorneys'
fees, court costs, costs of investigation and other costs reasonably related to
such proceeding, in such amounts as may be determined in the discretion of the
court or other body having jurisdiction.
(g) The various section headings are inserted for purposes of
convenience only and shall not affect the meaning or interpretation of this
Agreement or any section hereof.
(h) No failure of either party to exercise or enforce any of its
rights under this Agreement will act as a waiver of such rights.
(i) This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute a single instrument. Execution and
delivery of this Agreement may be evidenced by facsimile transmission.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.
THE BIGHUB.COM, INC. HARBORSIDE ACCEPTANCE
COMPANY, INC., DBA THE
BIGFNI.COM
By: /s/ Mark Doumani By: /s/ Dick Greco
----------------------- --------------------------
Mark Doumani Name: Dick Greco
-----------------------
EVP Title: President
----------------------
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EXHIBIT 10.17
ADVERTISING AGREEMENT
THIS AGREEMENT is made effective this 30/th/ day of November, 1999 (the
"Effective Date"), by and between The BigHub.com, Inc., a Florida corporation
(the "Company"), and The BigBallot, Inc., a Delaware corporation (the
"BigBallot"), with reference to the following facts:
WHEREAS, the Company owns and operates a web site on the Internet at
www.thebighub.com which, among other things, is an advanced portal and contains
a megasearch engine and specialty search engines;
WHEREAS, the Company has developed certain proprietary technology
("Technology"), which enables the Company, among other things, to conduct
surveys, balloting and polling and to collect, tabulate, sort and process data
on the Internet in an efficient and effective manner;
WHEREAS, the BigBallot is an affiliate within the Company's network of
"Big" affiliates which has a worldwide, nonexclusive, perpetual, fully paid,
royalty free license to use the Technology in connection with an Internet web
site to be operated by BigBallot where users can voice their opinions and vote
on a wide range of topics;
WHEREAS, the BigBallot desires to have a direct-link advertising banner
site on the Company's web site and such other forms of advertising upon which
the parties may agree, upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the covenants, agreements and
considerations herein contained, the Company and BigBallot agree as follows:
1. Advertising. The Company hereby agrees, during the Term hereof,
to provide strategic placement of advertising and marketing for the BigBallot on
the Company's web site, which shall include permanent, perpetual and continuous
advertising on the Company's web site and continuous banners on and links from
its web site to the Company's web site. All advertising and banners shall be
pre-approved by the Company. The Company further agrees to promote the BigBallot
throughout the Company's web site along with its other "Big" affiliates and make
available to BigBallot those services and benefits provided to the other
affiliates.
2. Fees. In consideration for the advertising on the Company's web
site pursuant to Section 1 above, BigBallot agrees that, during the Term, it
shall pay to the Company a monthly fee of thirty thousand dollars ($30,000.00).
The monthly fees shall be due and payable in advance on the first business day
of each month.
3. Reserved.
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4. Indemnification.
(a) BigBallot shall defend, indemnify and hold harmless Company and
its affiliates from and against any loss, cost or damage arising out of any
claim by third parties relating to any materials provided by BigBallot to the
Company for use in connection with the advertisements posted by the Company on
its web site.
(b) Company shall defend and hold harmless BigBallot and its
affiliates against any loss, cost or damage arising out of any claim by third
parties relating to the Company's web site, except to the extent such claim
relates to materials provided by BigBallot to the Company for use in connection
with the advertisements posted by the Company on its web site.
(c) The obligation of each party ("Indemnitor") in either clause (a)
and (b) above to indemnify, defend and hold harmless the other party
("Indemnitee") shall be subject to the Indemnitee providing prompt notice of the
claim giving rise to such obligation, and Indemnitee's right to select legal
counsel to represent both parties, provided there is no conflict between such
counsel's representation of both Indemnitor and Indemnitee.
5. Limitation of Liability. In no event shall either party be liable to
the other in contract or in tort, or under any other legal theory (including
strict liability), for any indirect, special, incidental, consequential or
similar damages, including lost profits or revenues, arising out of or in
connection with the performance or nonperformance of this Agreement, or for any
claim made against such party by any other entity, even if such party has been
advised of the possibility of such claim.
6. Representations and Warranties. Each party to this Agreement
represents and warrants to the other party that:
(a) such party has the full corporate right, power and authority to
enter into this Agreement and to perform the acts required of it hereunder;
(b) the execution of this Agreement by such party, and the
performance by such party of its obligations and duties hereunder, do not and
will not violate such party's charter documents or any agreement to which such
party is a party or by which it is otherwise bound; and
(c) when executed and delivered by such party, this Agreement will
constitute the legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
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7. Term and Termination.
(a) The term of this Agreement shall commence on the Effective Date,
and shall, unless sooner terminated as provided below or as otherwise agreed,
remain effective for an initial term of one (1) year (the "Initial Term").
After the Initial Term, this Agreement shall automatically be extended for
successive additional one-year periods (each an "Extension Term"), unless
otherwise terminated by either party by giving written notice to the other party
of its intent not to extend not less than sixty (60) days prior to the end of
the Initial Term or any Extension Term then in effect. As used herein, the
"Term" shall mean the Initial Term and any Extension Term(s). The compensation
to be paid to the Company for each Extension Term shall be at the current rate,
unless prior to the commencement of each Extension Term, the parties negotiate
new compensation hereunder.
(b) Notwithstanding the foregoing, this Agreement may be terminated
at any time by either party, effective immediately upon notice, if the other
party: (i) becomes insolvent; (ii) files a petition in bankruptcy; (iii) makes
an assignment for the benefit of its creditors; or (iv) breaches its obligations
of confidentiality set forth in Section 8 below. Either party may terminate this
Agreement, effective upon thirty (30) days notice, in the event that the other
party breaches any of its representations, warranties, covenants or agreements
contained herein which breach is not remedied within thirty (30) days following
written notice to such party.
(c) Any termination pursuant to this Section 7 shall be without any
liability or obligation of the terminating party, other than with respect to any
breach of obligations under this Agreement prior to termination. The provisions
in Sections 4, 5, 8, and 9 shall survive any termination or expiration of this
Agreement.
(d) This Agreement may be terminated immediately by either party,
without liability to the other, upon written notice, if said party terminates or
cancels it web site on the Internet.
Upon any termination of this Agreement, each party shall promptly
deliver to the other party all Confidential Information (defined below) and
property belonging to the other party that is in its possession or under its
control, and neither party shall retain copies or reproductions of such
Confidential Information.
8. Confidentiality and Non-Circumvention.
(a) Each party acknowledges and agrees that it will have access to or
be provided with confidential information of the other party during the term of
this Agreement. As used herein, the term "Confidential Information" shall mean
any and all proprietary or confidential information of a party, including,
without limitation such party's business plan, business presentation or related
proprietary and financial information as well as other
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<PAGE>
confidential or proprietary information of such party regarding such party's
business, plans, financial results and statements, markets, projected
activities, customers and results of operations, requirements and sources,
contracts, means, methods and processes of providing services, copyrights,
patents, trademarks, trade secrets, and financial information.
(b) Each party agrees to keep the Confidential Information of the
other party in the strictest confidence, and agrees that it will not, directly
or indirectly, publish or disclose, or authorize the publication or disclosure
of, or assist any third party in publishing or disclosing, any Confidential
Information to anyone other than its employees or consultants, but only to the
extent necessary for the fulfillment of its obligations under this Agreement and
subject in each such case to the such party using its best efforts to ensure
that the persons to whom Confidential Information is disclosed keep such
information confidential and do not use such Confidential Information except for
the purposes for which the disclosure is made. Each party agrees to comply with
the other party's policies and regulations, as may be reasonably established
from time to time, for the protection of its Confidential Information.
(c) Each party's confidentiality obligations shall continue with
respect to each item of Confidential Information, including after the
termination of this Agreement, until such time as such party can show that any
such item of Confidential Information (i) has legally and properly entered the
public domain through a source other than its own and through no fault of its
own, (ii) has legally and properly been received from an unrelated third party
through no breach of any agreement with the other party and without an
obligation to keep it confidential, or (iii) was known to such party or was in
such party's possession prior to the receipt of such item of Confidential
Information from the other party.
(d) Each party acknowledges that the other party's Confidential
Information is of a special, unique and extraordinary character and for that
reason the other party will be irreparably damaged in the event that the
confidentiality or non-circumvention obligations imposed upon it, as set forth
herein, are not specifically enforced. Accordingly, each party agrees that the
other party shall be entitled, at its election, to institute and prosecute
proceedings against it, as set forth herein, in any court of competent
jurisdiction, either at law or equity, to: (a) obtain damages for breach of the
obligations hereunder; (b) enforce specific performance of said obligations, or
both. Such remedies are cumulative and not exclusive and shall be in addition
to any and all other remedies which the other party may have, at law or in
equity, in the event the a party breaches any of its obligations hereunder. The
parties hereto confirm that the covenants in this Agreement are expressly deemed
to cover acts of negligence and any inadvertent disclosure or violation of the
terms herein.
9. Independent Contractor Relationship. This Agreement shall in no way
be construed to constitute either party as a partner, joint venturer, agent, or
employee of the other party, and neither party shall act or attempt to act or
represent itself, directly or by implication, as a partner, joint venturer,
agent or employee of the other party. Neither party nor any of its
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respective employees shall have any authority to enter into contracts, make
commitments or otherwise bind the other party to any obligations without the
other party's prior written consent.
10. Force Majeure. Neither party shall be liable to the other for any
default or delay in the performance of any of its obligations under this
Agreement if such default or delay is caused, directly or indirectly, by fire,
flood, earthquake or other acts of God; labor disputes, strikes or lockouts;
wars, rebellions or revolutions, riots or civil disorders; accidents or
unavoidable casualties; interruptions in third party transportation or
communications facilities or delays in transit or communications; supply
shortages or the fault or any third party to perform any commitment to such
party; laws, treaties, agreements, actions, inaction's, rulings, regulations,
decisions or requirements of any government, tribunal or governmental agency;
litigation to which such party may become a party; or any other cause, whether
similar or dissimilar to those enumerated herein, beyond such party's reasonable
control.
11. Assignment. Neither party may assign this Agreement without the prior
written consent of the other, which consent shall not be unreasonably withheld;
provided, however, that no consent shall be necessary for a party to assign this
Agreement to one of its affiliates or an entity acquiring all or substantially
all of the stock or assets of such party.
12. Miscellaneous.
(a) This Agreement contains the complete and exclusive agreement
between the parties with respect to the subject matter hereof, superseding and
replacing any and all prior agreements, communications, and understandings, both
written and oral, regarding such subject matter. This Agreement may only be
modified, or any rights under it waived, by a written document executed by both
parties.
(b) This Agreement will be governed by and construed in accordance
with the laws of the State of California, without reference to conflicts of laws
rules, and without regard to its location of execution or performance.
(c) If any provision of this Agreement is found invalid or
unenforceable, that provision will be enforced to the maximum extent
permissible, and the other provisions of this Agreement will remain in force.
(d) All notices, requests and other communications called for by this
Agreement shall be deemed to have given upon receipt if made by mail, courier or
personal delivery, or immediately if made by telecopy or electronic (confirmed
by concurrent written notice sent first-class U.S. mail, postage prepaid):
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The BigHub.com, Inc.: The BigBallot, Inc.:
2939 Moss Rock 4400 MacArthur Blvd.
Suite 100 Suite 500
San Antonio, Texas 78230 Newport Beach, CA 92660
Facsimile: (210) 979-6336 Facsimile: (714) 955-4983
Attn: Frank W. Denny Attn: Jeff, Gehl, President
or to such other addresses as either party shall specify to the other. Notice
by any other means shall be deemed made when actually received by the party to
which notice is provided.
(e) Except for matters covered by Section 8 above, all disputes
arising out of or in connection with this Agreement shall be finally settled
under the Rules of American Arbitration Association ("AAA") by one or more
arbitrators appointed in accordance with said Rules. The place of arbitration
shall be Orange County, California. The parties hereby renounce any right of
recourse which they may have before the court of any jurisdiction except to
obtain preliminary or injunctive relief or enforce an award of the arbitrator.
If any award rendered by AAA in accordance with this arbitration
clause would not be capable of being executed in the jurisdiction of a party
against whom a claim for payment is made or where that party resides or carries
on business, neither the award nor the said arbitration clause shall bar a party
hereto from taking action before the courts that have jurisdiction over such
other party.
(f) In the event that any party shall bring an action or arbitration
in connection with the performance, breach or interpretation hereof, then the
prevailing party in such action, as determined by the court or other body having
jurisdiction, shall be entitled to recover from the losing party in such action,
as determined by the court or other body having jurisdiction, all reasonable
costs and expenses of litigation or arbitration, including reasonable attorneys'
fees, court costs, costs of investigation and other costs reasonably related to
such proceeding, in such amounts as may be determined in the discretion of the
court or other body having jurisdiction.
(g) The various section headings are inserted for purposes of
convenience only and shall not affect the meaning or interpretation of this
Agreement or any section hereof.
(h) No failure of either party to exercise or enforce any of its
rights under this Agreement will act as a waiver of such rights.
(i) This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute a single instrument. Execution and
delivery of this Agreement may be evidenced by facsimile transmission.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.
THE BIGHUB.COM, INC. THE BIGBALLOT, INC.
By: /s/ Frank W. Denny By: /s/ Jeff Gehl
------------------------------ ---------------------------------
Name: Frank W. Denny Name: Jeff Gehl
----------------------------
Title: CEO Title: President
---------------------------
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<PAGE>
EXHIBIT 10.18
ADVERTISING AND CONTENT AGREEMENT
THIS AGREEMENT is made effective this 30/th/ day of November, 1999 (the
"Effective Date"), by and between The BigHub.com, Inc., a Florida corporation
(the "Company"), and The BigBallot, Inc., a Delaware corporation (the
"BigBallot"), with reference to the following facts:
WHEREAS, the Company owns and operates a web site on the Internet at
www.thebighub.com which, among other things, is an advanced portal and contains
a megasearch engine and specialty search engines;
WHEREAS, the Company has developed certain proprietary technology
("Technology"), which enables the Company, among other things, to conduct
surveys, balloting and polling and to collect, tabulate, sort and process data
on the Internet in an efficient and effective manner;
WHEREAS, the BigBallot is an affiliate within the Company's network of
"Big" affiliates which has a worldwide, nonexclusive, perpetual, fully paid,
royalty free license to use the Technology in connection with an Internet web
site to be operated by BigBallot where users can voice their opinions and vote
on a wide range of topics;
WHEREAS, BigBallot's Internet web site ("BigBallot web site") contains news
and discussions on a variety of topics, including business, finance, sports,
entertainment, and politics, and conducts opinion polls which allow users to
vote and express their opinions on various issues relating to such topics
(collectively, the "Content");
WHEREAS, the Company desires to (i) have a direct-link advertising banner
site on the BigBallot web site and such other forms of advertising upon which
the parties may agree, and (ii) with respect to the Company's own web site,
display Content from the BigBallot web site including, without limitation,
conducting its own polling and balloting relating to the Content on its web
site, upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the covenants, agreements and
considerations herein contained, the Company and BigBallot agree as follows:
1. Advertising and License.
(a) The BigBallot hereby agrees, during the Term hereof, to provide
strategic placement of advertising and marketing for the Company on the
BigBallot's web site, which shall include permanent, perpetual and continuous
advertising on the BigBallot's web site and continuous banners on and links from
its web site to the Company's web site. All advertising and banners shall be
pre-approved by the Company.
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(b) The BigBallot hereby grants to Company, during the Term hereof,
the non-exclusive, non-transferable right to exhibit, display, transmit,
reproduce or reformat all or any part of the Content on the Company's web site,
including, without limitation, the right of Company to concurrently conduct
polling and balloting relating to the Content on the Company's web site.
(c) BigBallot shall deliver the Content including all updates
thereof, at such times as the parties may agree, but no less frequently than
monthly.
(d) Company shall exhibit, display, transmit, reproduce and otherwise
deliver the Content in its entirety (without any alteration or deletion other
than reformatting as reasonably permitted by BigBallot), including all credits
and copyright notices included in the Content as provided to Company. Company
acknowledges that the Content will consist solely of balloting and polling
related information and that BigBallot may change the style, form or content of
and eliminate or discontinue segments of the Content from time to time and at
any time in BigBallot's sole discretion. Use of the Content shall be confined
to the exercise of the rights and licenses granted herein, and Company shall
exhibit, display, transmit, reproduce and otherwise deliver the Content without
interruption and shall not edit, alter, modify or prepare any derivative works
of the Content or any portion thereof except as necessary to reformat the
Content as reasonably permitted by BigBallot. Further, in no event shall
Company imply, directly or indirectly, including, without limitation, by
juxtaposing the Content with content provided by Company or others, that
BigBallot provides, endorses, sponsors, certifies or approves of any other
content included within the Company's web sites or any products or services
advertised in or near the Content.
(e) The parties agree that they shall share equally the $10,500 per
month fee payable to Associated Press for the newswire feed pursuant to the
terms of the agreement with Associated Press attached hereto as Exhibit 1(e),
and shall equally any other reasonably incurred charges pursuant to such
agreement.
2. Fees.
(a) In consideration for the advertising on the BigBallot web site
pursuant to Section 1(a) above, Company agrees that, during the Term, it shall
pay to the BigBallot a monthly fee of fifteen thousand dollars ($15,000.00).
(b) In consideration for the Content license from the BigBallot
pursuant to Section 1(b) including, without limitation, the right to
concurrently conduct polling and balloting on its web site, Company agrees that,
during the Term, it shall pay to the BigBallot a monthly fee of seventeen
thousand dollars ($17,000.00).
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(c) The monthly fees shall be due and payable in advance on the first
business day of each month.
3. Ownership.
(a) Company hereby acknowledges and agrees that, as between BigBallot
and Company, BigBallot is the sole owner of all right, title and interest in and
to the Content.
4. Indemnification.
(a) Company shall defend, indemnify and hold harmless BigBallot and
its affiliates from and against any loss, cost or damage arising out of any
claim by third parties relating to any materials provided by BigBallot to the
BigBallot for use in connection with the advertisements posted by the Company on
its web site.
(b) Company shall defend and hold harmless BigBallot and its
affiliates against any loss, cost or damage arising out of any claim by third
parties relating to the Company's web site or its misuse of the Content;
provided, however, that Company shall not be obligated under the foregoing to
the extent the claim is covered by clause (c) below.
(c) BigBallot shall defend, indemnify and hold harmless Company and
its affiliates from and against any loss, cost or damage arising out of any
claim by third parties that the Content infringes any U.S. copyright or
trademark of, or results in the misappropriation of trade secrets of, another
party, unless such claim rises out of (i) the specific requirement of Company,
(ii) any modification of the Content by Company, or (iii) a combination of the
Content with other data, products, materials, programming, or information not
provided by BigBallot.
(d) The obligation of each party ("Indemnitor") under this Section 4
to indemnify, defend and hold harmless the other party ("Indemnitee") shall be
subject to the Indemnitee providing prompt notice of the claim giving rise to
such obligation, and Indemnitee's right to select legal counsel to represent
both parties, provided there is no conflict between such counsel's
representation of both Indemnitor and Indemnitee.
5. No Warranty. ALL BALLOTING AND POLLING INCLUDED WITHIN THE CONTENT
ARE PROVIDED "AS IS". BIGBALLOT MAKES NO REPRESENTATION OR WARRANTY OF ANY
KIND, NATURE OR DESCRIPTION, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONTENT,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY IMPLIED WARRANTIES ARISING FROM A COURSE OF DEALING OR
A COURSE OF PERFORMANCE, AND BIGBALLOT HEREBY EXPRESSLY DISCLAIMS THE SAME.
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6. Limitation of Liability. In no event shall either party be liable to
the other in contract or in tort, or under any other legal theory (including
strict liability), for any indirect, special, incidental, consequential or
similar damages, including lost profits or revenues, arising out of or in
connection with the performance or nonperformance of this Agreement, or for any
claim made against such party by any other entity, even if such party has been
advised of the possibility of such claim.
7. Representations and Warranties. Each party to this Agreement
represents and warrants to the other party that:
(a) such party has the full corporate right, power and authority to
enter into this Agreement and to perform the acts required of it hereunder;
(b) the execution of this Agreement by such party, and the
performance by such party of its obligations and duties hereunder, do not and
will not violate such party's charter documents or any agreement to which such
party is a party or by which it is otherwise bound; and
(c) when executed and delivered by such party, this Agreement will
constitute the legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
8. Term and Termination.
(a) The term of this Agreement shall commence on the Effective Date,
and shall, unless sooner terminated as provided below or as otherwise agreed,
remain effective for an initial term of one (1) year (the "Initial Term").
After the Initial Term, this Agreement shall automatically be extended for
successive additional one-year periods (each an "Extension Term"), unless
otherwise terminated by either party by giving written notice to the other party
of its intent not to extend not less than sixty (60) days prior to the end of
the Initial Term or any Extension Term then in effect. As used herein, the
"Term" shall mean the Initial Term and any Extension Term(s). The compensation
to be paid to the Company for each Extension Term shall be at the current rate,
unless prior to the commencement of each Extension Term, the parties negotiate
new compensation hereunder.
(b) Notwithstanding the foregoing, this Agreement may be terminated
at any time by either party, effective immediately upon notice, if the other
party: (i) becomes insolvent; (ii) files a petition in bankruptcy; (iii) makes
an assignment for the benefit of its creditors; or (iv) breaches its obligations
of confidentiality set forth in Section 9 below. Either party may terminate this
Agreement, effective upon thirty (30) days notice, in the event that the other
party
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<PAGE>
breaches any of its representations, warranties, covenants or agreements
contained herein which breach is not remedied within thirty (30) days following
written notice to such party.
(c) Any termination pursuant to this Section 8 shall be without any
liability or obligation of the terminating party, other than with respect to any
breach of obligations under this Agreement prior to termination. The provisions
in Sections 3, 4, 5, 6, 9, and 10 shall survive any termination or expiration of
this Agreement.
(d) This Agreement may be terminated immediately by either party,
without liability to the other, upon written notice, if said party terminates or
cancels it web site on the Internet.
Upon any termination of this Agreement, each party shall promptly
deliver to the other party all Confidential Information (defined below) and
property belonging to the other party that is in its possession or under its
control, and neither party shall retain copies or reproductions of such
Confidential Information.
9. Confidentiality and Non-Circumvention.
(a) Each party acknowledges and agrees that it will have access to or
be provided with confidential information of the other party during the term of
this Agreement. As used herein, the term "Confidential Information" shall mean
any and all proprietary or confidential information of a party, including,
without limitation such party's business plan, business presentation or related
proprietary and financial information as well as other confidential or
proprietary information of such party regarding such party's business, plans,
financial results and statements, markets, projected activities, customers and
results of operations, requirements and sources, contracts, means, methods and
processes of providing services, copyrights, patents, trademarks, trade secrets,
and financial information.
(b) Each party agrees to keep the Confidential Information of the
other party in the strictest confidence, and agrees that it will not, directly
or indirectly, publish or disclose, or authorize the publication or disclosure
of, or assist any third party in publishing or disclosing, any Confidential
Information to anyone other than its employees or consultants, but only to the
extent necessary for the fulfillment of its obligations under this Agreement and
subject in each such case to the such party using its best efforts to ensure
that the persons to whom Confidential Information is disclosed keep such
information confidential and do not use such Confidential Information except for
the purposes for which the disclosure is made. Each party agrees to comply with
the other party's policies and regulations, as may be reasonably established
from time to time, for the protection of its Confidential Information.
(c) Each party's confidentiality obligations shall continue with
respect to each item of Confidential Information, including after the
termination of this Agreement, until
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such time as such party can show that any such item of Confidential Information
(i) has legally and properly entered the public domain through a source other
than its own and through no fault of its own, (ii) has legally and properly been
received from an unrelated third party through no breach of any agreement with
the other party and without an obligation to keep it confidential, or (iii) was
known to such party or was in such party's possession prior to the receipt of
such item of Confidential Information from the other party.
(d) Each party acknowledges that the other party's Confidential
Information is of a special, unique and extraordinary character and for that
reason the other party will be irreparably damaged in the event that the
confidentiality or non-circumvention obligations imposed upon it, as set forth
herein, are not specifically enforced. Accordingly, each party agrees that the
other party shall be entitled, at its election, to institute and prosecute
proceedings against it, as set forth herein, in any court of competent
jurisdiction, either at law or equity, to: (a) obtain damages for breach of the
obligations hereunder; (b) enforce specific performance of said obligations, or
both. Such remedies are cumulative and not exclusive and shall be in addition
to any and all other remedies which the other party may have, at law or in
equity, in the event the a party breaches any of its obligations hereunder. The
parties hereto confirm that the covenants in this Agreement are expressly deemed
to cover acts of negligence and any inadvertent disclosure or violation of the
terms herein.
10. Independent Contractor Relationship. This Agreement shall in no way
be construed to constitute either party as a partner, joint venturer, agent, or
employee of the other party, and neither party shall act or attempt to act or
represent itself, directly or by implication, as a partner, joint venturer,
agent or employee of the other party. Neither party nor any of its respective
employees shall have any authority to enter into contracts, make commitments or
otherwise bind the other party to any obligations without the other party's
prior written consent.
11. Force Majeure. Neither party shall be liable to the other for any
default or delay in the performance of any of its obligations under this
Agreement if such default or delay is caused, directly or indirectly, by fire,
flood, earthquake or other acts of God; labor disputes, strikes or lockouts;
wars, rebellions or revolutions, riots or civil disorders; accidents or
unavoidable casualties; interruptions in third party transportation or
communications facilities or delays in transit or communications; supply
shortages or the fault or any third party to perform any commitment to such
party; laws, treaties, agreements, actions, inaction's, rulings, regulations,
decisions or requirements of any government, tribunal or governmental agency;
litigation to which such party may become a party; or any other cause, whether
similar or dissimilar to those enumerated herein, beyond such party's reasonable
control.
12. Assignment. Neither party may assign this Agreement without the prior
written consent of the other, which consent shall not be unreasonably withheld;
provided, however, that no consent shall be necessary for a party to assign this
Agreement to one of its affiliates or an entity acquiring all or substantially
all of the stock or assets of such party.
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13. Miscellaneous.
(a) This Agreement contains the complete and exclusive agreement
between the parties with respect to the subject matter hereof, superseding and
replacing any and all prior agreements, communications, and understandings, both
written and oral, regarding such subject matter. This Agreement may only be
modified, or any rights under it waived, by a written document executed by both
parties.
(b) This Agreement will be governed by and construed in accordance
with the laws of the State of California, without reference to conflicts of laws
rules, and without regard to its location of execution or performance.
(c) If any provision of this Agreement is found invalid or
unenforceable, that provision will be enforced to the maximum extent
permissible, and the other provisions of this Agreement will remain in force.
(d) All notices, requests and other communications called for by this
Agreement shall be deemed to have given upon receipt if made by mail, courier or
personal delivery, or immediately if made by telecopy or electronic (confirmed
by concurrent written notice sent first-class U.S. mail, postage prepaid):
The BigHub.com, Inc.: The BigBallot, Inc.:
2939 Moss Rock 4400 MacArthur Blvd.
Suite 100 Suite 500
San Antonio, Texas 78230 Newport Beach, CA 92660
Facsimile: (210) 979-6336 Facsimile: (714) 955-4983
Attn: Frank Denny Attn: Jeff Gehl, President
or to such other addresses as either party shall specify to the other. Notice
by any other means shall be deemed made when actually received by the party to
which notice is provided.
(e) Except for matters covered by Section 9 above, all disputes
arising out of or in connection with this Agreement shall be finally settled
under the Rules of American Arbitration Association ("AAA") by one or more
arbitrators appointed in accordance with said Rules. The place of arbitration
shall be Orange County, California. The parties hereby renounce any right of
recourse which they may have before the court of any jurisdiction except to
obtain preliminary or injunctive relief or enforce an award of the arbitrator.
If any award rendered by AAA in accordance with this arbitration
clause would not be capable of being executed in the jurisdiction of a party
against whom a claim for payment is made or where that party resides or carries
on business, neither the award nor the said
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<PAGE>
arbitration clause shall bar a party hereto from taking action before the courts
that have jurisdiction over such other party.
(f) In the event that any party shall bring an action or arbitration
in connection with the performance, breach or interpretation hereof, then the
prevailing party in such action, as determined by the court or other body having
jurisdiction, shall be entitled to recover from the losing party in such action,
as determined by the court or other body having jurisdiction, all reasonable
costs and expenses of litigation or arbitration, including reasonable attorneys'
fees, court costs, costs of investigation and other costs reasonably related to
such proceeding, in such amounts as may be determined in the discretion of the
court or other body having jurisdiction.
(g) The various section headings are inserted for purposes of
convenience only and shall not affect the meaning or interpretation of this
Agreement or any section hereof.
(h) No failure of either party to exercise or enforce any of its
rights under this Agreement will act as a waiver of such rights.
(i) This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute a single instrument. Execution and
delivery of this Agreement may be evidenced by facsimile transmission.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.
THE BIGHUB.COM, INC. THE BIGBALLOT, INC.
By: /s/ Frank W. Denny By: /s/ Jeff Gehl
-------------------------------- --------------------------------
Name: Frank W. Denny Name: Jeff Gehl
-------------------------------
Title: CEO Title: President
------------------------------
-8-
<PAGE>
Exhibit 1(e)
Associated Press Agreement
-9-
<PAGE>
EXHIBIT 10.19
STOCK PURCHASE AGREEMENT
This Agreement ("Agreement") is made effective as of this 30/th/ day of
---------
November, 1999, by and between The BigBallot, Inc., a Delaware corporation with
its principal place of business in California ("BigBallot"), and The BigHub.com,
---------
Inc., a Florida corporation with its principal place of business in California
("BigHub").
------
R E C I T A L S:
---------------
A. WHEREAS, BigBallot will operate an Internet website for sports and
entertainment balloting and which will contain information relating to such
industries and others (the "Website").
-------
B. WHEREAS, BigHub desires to provide to BigBallot, and BigBallot desires
to receive from BigHub, certain services related to the set-up, administration
and operation of the Website, pursuant to a Master Website Services Agreement to
be executed simultaneously herewith, a copy of which is attached hereto as
Exhibit A (the "Services Agreement").
- --------- ------------------
C. WHEREAS, the Services Agreement contemplates amongst other things,
that BigBallot shall be the exclusive balloting entity for the BigHub web
portal.
D. WHEREAS, in consideration for the BigHub's undertaking to satisfy
its obligations under the Services Agreement, BigBallot is willing to issue to
BigHub, and BigHub desires to receive from BigBallot, shares of BigBallot's
common stock (the "Shares") according to the terms and conditions of this
------
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. Issuance of Shares/Warrants.
---------------------------
(a) Issuance of Shares. In consideration of entering into the Services
------------------
Agreement, BigBallot shall issue to BigHub, and BigHub shall accept from
BigBallot, six hundred twenty-two thousand two hundred twenty-two (622,222)
Shares upon execution of this Agreement.
(b) Issuance of Warrants. In consideration for BigBallot's receipt of
--------------------
and subject to BigHub raising on behalf of BigBallot (the "Offering") up to Four
--------
Million Dollars ($4,000,000) in equity capital for no greater than a Thirty-
Three percent (33%) equity interest, on a fully diluted basis, in BigBallot from
third party investors ("Equity Capital") on or before April 30, 2000, BigBallot
--------------
shall grant BigHub a warrant (the "Warrant") to purchase Three Hundred Seventy-
-------
Seven Thousand Seven Hundred Seventy-Eight (377,778) Shares of Common Stock of
BigBallot. A copy of the form of the Warrant is attached hereto as Exhibit
-------
1(b). Partial or proportional credit shall be given toward earning the Warrant.
- ----
For example, if BigHub raises One Million Dollars ($1,000,000) in Equity
Capital, the Warrant shall only be exercisable into Ninety-Four Thousand Four
Hundred Forty-Four and One-Half (94,444.5) Shares of Common
<PAGE>
Stock of BigBallot (which is One-Fourth (1/4) of Three Hundred Seventy-Seven
Thousand Seven Hundred Seventy-Eight (377,778) shares). BigHub acknowledges and
agrees to (i) BigBallot's duties to comply with federal and state securities
laws in evaluating potential subscribers for the Equity Capital; (ii) BigBallot
is concurrently attempting to raise the first round of capital financing of
approximately Four Million Dollars ($4,000,000); and (iii) notwithstanding any
of the foregoing, that BigBallot's Board of Directors has as its sole discretion
the right to refuse to accept any subscribers for Equity Capital.
2. Right of First Refusal.
----------------------
Before any Shares registered in the name of BigHub or any transferee
thereof may be sold or transferred, such Shares shall first be offered to
BigBallot in the manner set forth below.
(a) Notice of Sale. BigHub or BigHub's transferee shall deliver a
--------------
notice (the "Notice") in writing to the Secretary of BigBallot of such person's
------
bona fide intention to sell or transfer such shares. The notice shall specify
(i) the proposed buyer or buyers, (ii) the number of the shares to be sold or
transferred, (iii) the price per share, and (iv) the terms upon which BigHub or
the transferee intends to make such sale or transfer. In the event that the
consideration to be received is other than cash, the Notice shall fully describe
such consideration and state the fair market value thereof. BigBallot, at its
option and at the expense of BigHub or the transferee of BigHub, may in good
faith require that the fair market value of such consideration be determined by
an independent appraiser selected by BigBallot. In the case of a noncash
consideration, the price per share shall be based upon the fair market value of
the consideration as stated in the Notice, unless BigBallot exercised its option
to require the aforementioned independent appraisal, in which case the price per
share shall be based upon such independently appraised fair market value.
(b) Included Transactions. A sale or transfer shall be deemed to have
---------------------
occurred for the purpose of this Section 2 whenever any interest in any of the
---------
Shares is transferred voluntarily, involuntarily or by operation of law,
irrespective of whether any change in the record ownership results therefrom and
without regard to whether or not any consideration is received for such
transfer.
(c) Exercise of Right. Within 30 days after receipt of the Notice,
-----------------
BigBallot or its assignee shall have the prior right to purchase the Shares
referred to in the Notice at the price and upon the terms and conditions stated
in the Notice. The Corporation or its assignee may elect to purchase all (but
not less than all) of the Shares referred to in the Notice at the price and upon
the terms and conditions stated therein by giving notice in writing to BigHub or
the transferee of the BigHub within such 30 day period and tendering payment to
such individual within 30 days after giving such notice against delivery of the
Shares duly endorsed for transfer. In the event an appraisal is requested under
Section 2(a) hereof, the period for payment shall be extended for so long as it
- ------------
necessary to obtain the appraisal report.
(d) Right to Sell or Transfer. If BigBallot or its assignee does not elect
-------------------------
to purchase the Shares as provided in Section 2(d), BigBallot and its assignee
------------
shall be deemed to have
2
<PAGE>
waived their right to acquire the Shares, and BigHub's or BigHub's transferee
may sell or transfer the Shares within a period of 15 days after such deemed
waiver and provided further that any such sale or transfer is in accordance with
the terms and conditions specified in the Notice. Any shares so transferred
shall continue to be subject to the right of first refusal provided in this
Section 2. Any such transfer must also be in compliance with applicable
- ---------
securities laws and the provisions of Section 4 of this Agreement. If BigHub or
---------
BigHub's transferee does not sell or transfer all the Shares referred to in the
Notice within the aforesaid 15 day period, the Shares shall become again subject
to the restrictions imposed by this Section 2.
---------
(e) Other Transfers Void. Any sale or transfer, or purported sale or
--------------------
transfer, of the Shares shall be null and void unless made in accordance with
the terms, conditions and provisions of this Section 2. BigBallot shall not be
---------
required (i) to transfer on its share register any Shares which shall have been
purportedly sold or transferred if such transfer would be in violation of this
Agreement or (ii) to treat as owner of such Shares, to accord the right to vote
as such owner, or to pay dividends to any purported transferee to whom such
Shares shall have purportedly been so transferred.
(f) Termination of Provisions. The provisions of this Section 2 shall
------------------------- ---------
terminate and cease to have effect upon the earliest to occur of (i) the
consummation of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Act") covering the offer and sale of BigBallot's common stock, (ii) the
---
date upon which BigBallot becomes a reporting company under either Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, or (iii) the
closing date of a sale of assets or merger of BigBallot or other acquisition
transaction pursuant to which the shareholders of BigBallot receive securities
of a buyer whose shares are publicly traded.
3. Capital Changes.
---------------
(a) Definition of a Capital Change. For purposes of this Agreement, a
------------------------------
"Capital Change" shall include:
--------------
(i) Any stock divided or liquidating dividend of cash and/or
property, stock split, or other change in the character or amount of any of the
outstanding securities of BigBallot; or
(ii) Any liquidation or consolidation or merger of BigBallot with
another corporation.
(b) Effect of Capital Changes. If a Capital Change occurs, then any and
-------------------------
all new, substitute or additional securities, or other property, other than
cash, to which BigHub is entitled by reason of BigHub's ownership of the Shares,
shall be immediately subject to this Agreement and be included in the word
"Shares" for all purposes with the same force and effect as the Shares presently
subject to the forfeiture provisions, right of first refusal, and other terms of
this Agreement.
4. Securities Law Compliance.
-------------------------
3
<PAGE>
(a) Exemption From Registration. The Shares have not been registered
---------------------------
under the Act and are being issued to BigHub in reliance upon the exemption from
such registration provided by Section 4(2) of the Act. The Shares have not been
qualified under the California Corporate Securities Law of 1968 and are being
issued to BigHub in reliance upon the exemption from qualification provided by
Section 25102(f) of the Corporations Code.
(b) Investment Representations. As an inducement to BigBallot to issue
--------------------------
the Shares to BigHub, and in order to establish the suitability of BigHub for
such an investment, BigHub hereby represents and warrants to BigBallot as
follows:
(i) Investment Intent. BigHub is aware of and familiar with
-----------------
BigBallot's business affairs and financial condition and has acquired sufficient
information about BigBallot to reach a knowledgeable and informed decision to
acquire the Shares. BigHub is acquiring the Shares for investment for his own
account, not for resale, without any intention of or view toward or for
participating, directly or indirectly, in a distribution of the Shares or any
portion thereof.
(ii) Representatives. BigHub has consulted with such professional
---------------
advisors (the "Representatives"), if any, as BigHub has seen fit in connection
with this proposed investment.
(iii) Experience. BigHub and BigHub's Representatives, if any, have
----------
such knowledge and experience in financial and business matters that BigHub is
capable of evaluating the merits and risks of investment in the Shares.
(iv) Risks. BigHub understands that an investment in BigBallot is
-----
speculative, that any possible profits therefrom are uncertain, and that BigHub
must bear the economic risks of the investment in BigBallot for an indefinite
period of time. BigHub is able to bear these economic risks and to hold the
Shares for an indefinite period.
(v) Information. BigHub and BigHub's Representatives, if any,
-----------
understand that all documents required to be made available to BigHub under Rule
502(b)(2)(iii) of the rules promulgated under the Act, and all records and books
pertaining to this investment have been made available for inspection by him or
his advisor and that the books and records of BigBallot will be available upon
reasonable notice by investors during reasonable business hours at its principal
place of business. BigHub and BigHub's Representatives, if any, have had a
reasonable opportunity to ask questions of and receive answers from BigBallot,
or a person or persons acting on its behalf, concerning the Shares in connection
with an evaluation of the merits and risks of this investment in BigBallot, and
all such questions have been answered to the full satisfaction of BigHub and
BigHub's Representatives, if any.
(vi) Domicile. BigHub's principal place of business is in the State
--------
of California, and BigHub does not have any present intention of moving its
principal place of business from California.
4
<PAGE>
(vii) Legends. BigHub understands and agrees that (i) the legends
-------
set forth in Section 5 will be placed on the certificate(s) evidencing the
Shares and on certificate(s) issued to transferees; (ii) the stock records of
BigBallot will be noted with respect to such restrictions; and (iii) BigBallot
will not be under any obligation to register the Shares or to comply with any
exemption available for sale of the Shares without registration.
(viii) Restrictions on Resale. BigHub understands that, under
----------------------
relevant securities law requirements, additional restrictions on the
transferability of the Shares will apply, unless BigBallot, in its discretion,
otherwise determines. BigHub understands that the Shares must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. BigBallot is under no obligation
to so register the Shares. BigHub understands that Rule 144 of the Securities
and Exchange Commission permit limited public resale of securities acquired in a
non-public offering subject to satisfaction of certain conditions. BigHub
understands that BigBallot may not be satisfying, and is not obligated to
satisfy, any requirement of Rule 144 at such time as BigHub might wish to sell
any of the Shares, and, if so, BigHub must be precluded from selling any of the
Shares under Rule 144.
(c) Further Limitations on Disposition. Without in any way limiting the
----------------------------------
representations set forth above. BigHub further agrees that BigHub shall in no
event make any disposition of any portion of the Shares unless and until:
(i) (A) There is in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with said registration statement; or (B)(1) BigHub shall have notified BigBallot
of the proposed disposition and shall have furnished BigBallot with a detailed
statement of the circumstances surrounding the proposed disposition, (2) BigHub
shall have furnished BigBallot with an opinion of the BigHub's counsel to the
effect that such disposition will not require registration of such shares under
the Act and (3) such opinion of the BigHub's counsel shall have been concurred
in by counsel for BigBallot and BigBallot shall have advised BigHub of such
concurrence; and
(ii) There has been compliance with the right of first refusal
provisions contained in Section 2.
---------
5. Legends on Shares.
-----------------
Each certificate representing the Shares shall have conspicuously printed
on it the following legends:
(a) "THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), OR THE
SECURITIES LAWS OF THE VARIOUS STATES, AND HAVE BEEN ISSUED AND SOLD PURSUANT TO
AN EXEMPTION FROM THE ACT, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
BY THE HOLDER THEREOF AT ANY TIME EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT COVERING THESE SHARES, OR (2) UPON
DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL
5
<PAGE>
SATISFACTORY TO THE CORPORATION THAT THESE SHARES MAY BE TRANSFERRED WITHOUT
REGISTRATION."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF FIRST REFUSAL AS SET FORTH IN AN
AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER OR HIS PREDECESSOR
IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION."
(c) Any legend required to be placed thereon by the California
Commissioner of Corporation, or required by the applicable blue sky laws of any
state.
6. Other Provisions.
----------------
(a) Valuation of Shares. BigHub understands that the Shares have been
-------------------
valued by the board of directors of BigBallot for the purpose of this sale, and
that BigBallot believes this valuation represents a fair attempt at reaching an
accurate appraisal of their worth. BigHub also understands, however, that
BigBallot can give no assurances that such price is in fact the fair market
value of the Shares and that it is possible that the Internal Revenue Service
would successfully assert that the value of the Shares on the date of purchase
is substantially greater than so determined. If the Internal Revenue Service
were to succeed in a determination that the Shares had value greater than the
purchase price, the additional value would constitute income as of the date of
its receipt. The additional taxes (and interest) due would be payable by
BigHub, and there is no provision for BigBallot to reimburse BigHub for that tax
liability. BigHub assumes all responsibility for such potential tax liability.
(b) Market Lock Up.
--------------
(i) Lock Up Period. In connection with any underwritten public
--------------
offering by BigBallot of its equity securities pursuant to an effective
registration statement filed under the Act, including BigBallot's initial public
offering, BigHub shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to any of the Shares without the prior written consent of BigBallot or
its underwriters, for such period of time from and after the effective date of
such registration statement as may be requested by BigBallot or such
underwriters; provided, however, that in no event shall such period exceed one
hundred-eighty (180) days. This Section 7(b) shall only remain in effect for the
------------
two-year period immediately following the effective date of BigBallot's initial
public offering and shall thereafter terminate and cease to be in force or
effect.
(ii) Limitation. BigHub shall be subject to the market lock up
----------
provisions of this Section 6(b) provided and only if the officers and directors
------------
of BigBallot are also subject to similar arrangements.
6
<PAGE>
(iii) Stop Transfer. In order to enforce the provisions of Section
------------- -------
6(b), BigBallot may impose stop-transfer instructions with respect to the Shares
- ----
until the end of the applicable lock up period.
7. Mutual Confidentiality.
----------------------
(a) Confidential Information. The term "Confidential Information" shall
------------------------ ------------------------
include all business and financial information, written or oral, including, but
not limited to, technical know-how, specifications, quality standards, formulae,
instructions, financial data, marketing information, strategies, procedures,
processes, client, customer or product lists and all other proprietary and
confidential information of any party hereto or an affiliate of such party.
Notwithstanding the foregoing, Confidential Information shall not include any
information which:
(i) is in the public domain at the time of receipt by receiving
party or which comes into the public domain without breach of any obligation
assumed hereunder; or
(ii) was already known by the receiving party at the time of receipt
from the disclosing party without reference to the current or any prior
relationship between the receiving party and the disclosing party; or
(iii) is required to be disclosed by the receiving party pursuant to
a judgment, order or other mandate of any court of competent jurisdiction or any
administrative, governmental or regulatory body, agency, or office.
(b) Disclosure and Use. The disclosure of Confidential Information by any
------------------
party to the other party or to any director, officer, employee, agent or
representative of such other party shall be received, used and retained by such
other party and its directors, officers, employees, agents and representatives
on a strictly confidential basis and, except as expressly provided for herein or
as required by applicable law, shall not be disclosed to any third party or in
any way used by such other party or any such other person. Neither party nor any
of its directors, officers, employees, agents or representations receiving any
Confidential Information shall disclose any such information to any person
outside of its organization or to any other third party without the prior
written consent of a duly authorized representative of the disclosing party.
Each party agrees to use its best efforts to limit dissemination of and access
to any Confidential Information only to the persons within such party's
immediate organization (and not to any subsidiary, parent company or affiliate
of such party) and then only to those persons who have a need for access to such
Confidential Information. All tangible reproductions, copies or embodiments, in
whole or in part, of any Confidential Information shall carry a confidential,
proprietary notice similar to that, if any, with which it was submitted to the
receiving party.
(c) Term of Confidentiality. The foregoing obligations under this
-----------------------
Section 7 shall continue in effect for a period of three (3) years following the
- ---------
execution of this Agreement.
8. Attorneys' Fees.
---------------
7
<PAGE>
The prevailing party in any legal action arising out of this Agreement
shall be entitled, in addition to any other rights and remedies such party may
have, to reimbursement for its expenses, including costs and reasonable
attorneys' fees.
9. Rights as a Shareholder.
-----------------------
Subject to the provisions and limitations hereof, BigHub may, during the
term of this Agreement, exercise all rights and privileges of a shareholder of
BigBallot with respect to the Shares.
10. Miscellaneous Provisions.
------------------------
(a) Independent Contractor Status. The parties hereto are independent
-----------------------------
contractors as to each other and nothing in this Agreement shall, or shall be
construed to, constitute an agency, partnership or joint venture relationship
between the parties hereto.
(b) Additional Actions. The parties will execute such further instruments
------------------
and take such further action as may reasonably be necessary to carry out the
intent of this Agreement.
(c) Notices. All notices, requests, consents and other communications
-------
required or permitted under this Agreement shall be in writing and shall be sent
by registered or certified mail, postage prepaid, or transmitted by telegram or
facsimile if confirmed by such mailing, to BigHub and BigBallot at the
respective addresses set forth on the signature page hereto. Either party may
change its address by written notice to the other.
(d) Assignment. BigBallot may assign its rights and delegate its duties
----------
under this Agreement. This Agreement shall inure to the benefit of the
successors and assigns of BigBallot and, subject to the restrictions on transfer
herein set forth, be binding upon BigHub, BigHub's heirs, executors,
administrators, successors and assigns.
(e) No Waiver. The failure of BigBallot (or its assignees) in any
---------
instance to exercise the right of first refusal, shall not constitute a waiver
of any other rights of first refusal that may subsequently arise under the
provisions of this Agreement or any other agreement between BigBallot and
BigHub. No waiver of any breach of condition of this Agreement shall be deemed
to be a waiver of any other or subsequent breach or condition, whether of like
or different nature.
(f) Cancellation of Shares. If BigBallot (or its assignees) shall make
----------------------
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be repurchased in accordance with
the provisions of this Agreement, then from and after such time, the person from
whom such Shares are to be repurchased shall no longer have any rights as a
holder of such Shares (other than the right to receive payment of such
consideration in accordance with this Agreement), and such Shares shall be
deemed purchased in accordance with the applicable provisions hereof and
BigBallot (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
8
<PAGE>
(g) Entire Agreement. This Agreement and Exhibit(s) hereto represent the
----------------
entire agreement between the parties and supersedes all prior or contemporaneous
oral or written agreements of the parties. This Agreement may be modified,
amended or changed only by a written instrument signed by the parties. No course
of conduct or dealing between the parties shall act as a modification or waiver
of any provisions of this Agreement.
(h) Governing Law. This Agreement shall be governed as to validity,
-------------
enforcement, construction, effect and in all other respects, by the laws of the
State of California, and the parties hereto hereby consent to the jurisdiction
of the courts of the State of California to enforce this Agreement.
(i) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be an original but all of which, when taken
together, shall be deemed to be one and the same original instrument. The
execution of any number of counterparts shall have the same effect as if all
parties hereto had signed the same document. The facsimile execution of this
Agreement by a party hereto shall be considered to be the original execution of
the Agreement by such party.
(j) Severability. If any provision of this Agreement is held to be
------------
unenforceable or illegal, the other provisions of this Agreement shall not be
affected by any such holding and shall remain in full force and effect and shall
be construed in accordance with the purpose and terms of this Agreement. In such
event the parties shall use all reasonable efforts to replace any such
unenforceable or illegal provision with a provision reflecting as nearly as
possible the intent, purpose and economic effect of such provision.
(k) Amendments. This Agreement may not be amended, modified or
----------
supplemented except by a writing executed by both parties.
(l) Headings. The section headings contained in this Agreement are
--------
included for convenience of reference only and are not intended by the parties
to be a part of or to affect the meanings or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BIGHUB: The BigHub.com, Inc.,
a Florida corporation
By: /s/ Frank W. Denny
----------------------------------
Frank W. Denny, CEO
-----------------------------------
(Print Name, Title)
Address:
9
<PAGE>
2939 Mossrock
-------------------------------------
Suite 100
-------------------------------------
San Antonio, TX 78230
-------------------------------------
BIGBALLOT: The BigBallot, Inc.,
a Delaware corporation
By: /s/ Jeff Gehl
------------------------------------
Jeff Gehl, President
Address:
4400 MacArthur Blvd.
Suite 500
Newport Beach, CA 92660
10
<PAGE>
EXHIBIT A
SERVICES AGREEMENT
------------------
11
<PAGE>
Exhibit 10.20
MASTER WEB SITE SERVICES AGREEMENT
THIS MASTER WEB SITE SERVICES AGREEMENT ("Agreement") is made effective
---------
this 30/th/ day of November, 1999 (the "Effective Date"), by and between THE
--------------
BIGHUB.COM, INC., a Florida corporation, with its principal place of business at
2939 Moss Rock, Suite 100, San Antonio, TX 78230 ("Hub") and THE
---
BIGBALLOT.COM, INC., a Delaware corporation, with its principal place of
business at 4400 MacArthur Blvd., Suite 500, Newport Beach, CA 92660
("BigBallot").
---------
R E C I T A L S
WHEREAS, the Hub in cooperation with its affiliate The BigStore.com, Inc.,
has developed, or is in the process of developing an infrastructure, which
includes certain proprietary technology, which enables the Hub, among other
things, to be able to conduct surveys and collect, tabulate, sort and process
data on the Internet in an efficient and effective manner (the "Hub
---
Technology"), and to create, host, operate and support the interactive web site
- ----------
on the Internet (the "Services").
--------
WHEREAS, BigBallot desires to leverage the Hub Technology by retaining the
Hub to provide certain Services, more particularly described below, in
connection with an Internet web site to be operated by BigBallot where users can
voice their opinions and vote on a wide range of topics, upon the terms and
conditions set forth below.
WHEREAS, Hub desires to acquire a significant equity position in BigBallot
and, as consideration and payment for the Services provided by Hub herein, has
been issued such equity by BigBallot (the "BigBallot Equity") under the terms of
----------------
that certain Stock Purchase Agreement by and between Hub and BigBallot dated
November 30, 1999.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the covenants, terms
and conditions contained herein, the parties hereto hereby agree as follows:
1. SERVICES PROVIDED
1.1 Basic Web Site Content; Basic Services; Statement of Work for
-------------------------------------------------------------
Additional Services. All work to be performed hereunder shall be described on a
- -------------------
Statement of Work attached hereto (the "Statement of Work"). The Statement of
-----------------
Work shall, among other things required to be included therein by this
Agreement, designate whether such work constitutes basic Services or Compensated
Services (as defined in Section 1.1(b)).
--------------
(a) Hub shall use the Hub Technology to provide Services
including without limitation, developing, hosting, operating and supporting
a BigBallot Internet display/web site (the "Site") and related direct-link
----
advertising banner site for use on each of the Hub server and BigBallot
server. Upon the provision by BigBallot to Hub of
<PAGE>
text, graphics or other information (collectively, "Content") for use in
-------
the Internet Site from time to time, Hub shall within the time frame set
forth on Schedule 1.1(a) adapt, translate and reformat the Content as
---------------
necessary into HTML format to produce a high quality, technologically
state-of-the-art Site. Hub shall make no changes to the text or appearance
of any graphics in or other artistic portion of the Content without the
prior written approval of BigBallot. BigBallot shall make the final
determination of all Content to be used on the Internet Site. All
photographs, trademarks, images or other works owned or controlled by
BigBallot or its clients and licensees and which are specified by BigBallot
for inclusion in the Internet Site shall be provided by BigBallot in "web
ready format," or in other format agreed upon by the parties and shall
remain the property of BigBallot, its clients or licensees, as the case may
be. Hub shall make no further use of any of the Content without BigBallot's
written consent. As part of the Services, Hub shall provide on-going
maintenance of all Site-related Hub Technology and to make available to
BigBallot at no cost all enhancements, upgrades, new versions, and
modifications developed by Hub to such Hub Technology.
(b) Hub shall also provide the following basic development and
hosting Services and related Work Product without additional cost to
BigBallot:
(i) Configuration and Operation of Server. Configure and operate
-------------------------------------
state of the art server hardware with high speed direct Internet
connection. The server shall include and utilize state of the art
hypertext transfer protocol-compliant server software. Hub shall
locate its primary server at Hub's premises (or at a locked and
secured location at a third party's premises, provided no third party
will have access to the server or any confidential information of
BigBallot) and shall operate and maintain the server in accordance
with the performance levels set forth herein. Hub shall provide
commercially adequate levels of server redundancy, capacity and
emergency power as is customary in the industry in the event of a
power failure or power reduction. Prior to the establishment of the
BigBallot's Internet Site, Hub shall consult with BigBallot with
respect to the hardware and software leases, licenses, maintenance
agreements and operating agreements to be obtained on behalf of
BigBallot to implement the required server operations. Hub shall pay
all costs and fees in connection with such agreements during the term
of this Agreement. Without limitation of the foregoing, to the extent
that any third party software licenses are required to be obtained by
Hub to perform its obligations hereunder, Hub shall obtain such
licenses on BigBallot's behalf at no additional cost.
(ii) Telecommunications Software and/or Hardware. Obtain access
-------------------------------------------
to, and the right to use high speed telecommunications software and/or
state-of-the-art hardware to function with the server (which software
and/or hardware may be the property of Hub or of any third party).
Hub shall arrange for the installation of high speed telecommunication
lines for the server as described on Schedule 1.1(b)(ii). Hub shall
-------------------
also advise and consult with BigBallot with respect to BigBallot's
procurement of telecommunications services for the BigBallot server to
be located at BigBallot's premises as described on Schedule
--------
1.1(b)(ii).
----------
2
<PAGE>
Hub shall have no liability with respect to performance by any third-
party telecommunications service provider except that Hub shall
require confirmation of the number of possible simultaneous users and
speed of transmission which levels shall be adequate for BigBallot's
intended use and volume of Site visits. Hub shall provide (i) e-mail
hosting and maintenance for BigBallot's Site users as well as for
BigBallot staff (including alias e-mail addresses for such staff), and
(ii) broadcast e-mail development and maintenance.
(iii) Redesign Translations into HTML Format. Provide consulting
--------------------------------------
services to BigBallot and translate BigBallot-supplied text, graphics
and other materials into Hypertext Markup Language (HTML) format major
redesigns of the BigBallot Internet Site.
(iv) Site Related Programs and Other Deliverables. Develop, in
--------------------------------------------
cooperation with representatives of BigBallot, new BigBallot Internet
Site software, including assisting in the alpha and beta testing of
such new software, as may be set forth from time to time in a
Statement of Work.
(v) Site Related Software Developed by BigBallot. Copy,
--------------------------------------------
reformat, improve, review and advise on the BigBallot Internet Site
and BigBallot web site related software developed by Hub, BigBallot,
or third parties as requested from time to time by BigBallot and as
set forth in any Statement of Work.
(vi) Software Scripting Routines. Develop software scripting
---------------------------
routines which will generate HTML to make BigBallot's information and
Site displays appear as specified in the Statement of Work and
install, configure and customize the Site server to enable and track
BigBallot voting, polling, and other interactive usage of and with the
BigBallot Site.
(vii) Record Keeping. Traffic logging and regular reporting of
--------------
BigBallot Site usage. Manage the recordation of all information made
available from people accessing the BigBallot Site, casting BigBallot
ballots thereon, or engaging in any other commerce in connection with
such Site, including, without limitation, name, address, credit card
numbers, products requested and any other information directly or
indirectly obtained from such users (collectively, "User
----
Information"). Hub shall also provide registration processes and
-----------
database maintenance concerning such users and the User Information.
(viii) Transmission of Information from Server to BigBallot.
----------------------------------------------------
Cooperate with BigBallot to make available the ability to transmit
information in a useful format from the host server to BigBallot. Hub
shall obtain and install the appropriate software at BigBallot's
designated location for receiving transmission of the User
Information.
(ix) Promoting the Site. Provide assistance as requested by
------------------
BigBallot in promoting the Site including, without limitation,
maintaining a conspicuous,
3
<PAGE>
direct link to the BigBallot banner on the primary Hub web site and
prominent banners on other Hub affiliated Internet sites (24 hours a
day - 365 days per year), press releases and messages to Usenet news
groups, selected World Wide Web sites or selected other sites. Hub
will not alter such banner and direct link, nor place any promotional
material or other media of any kind concerning BigBallot without
written approval by BigBallot in each instance. Hub shall not alter,
modify or change in any way such linkage/banner materials as provided
by BigBallot, and Hub shall use such materials in strict compliance
with the directions provided by the BigBallot. Hub shall not promote
sites competing with BigBallot on the Hub site or Hub affiliates.
(x) Training; Technical Assistance and Support. Provide such
------------------------------------------
training, technical assistance, support, advice and information
concerning the use and features of the Site and all related hardware
and software as BigBallot shall reasonably request from time to time
and development of publishing and administration software,
applications and all related documentation.
(xi) Additional Services Specified in Statement of Work. In
--------------------------------------------------
addition to the basic Services set forth in this Section 1.1, Hub will
-----------
provide such other web site design, development, programming and other
website services which may be outside the anticipated scope of
Internet site development services (the "Compensated Services") to
--------------------
create additional "Work Product" (as defined in Section 12.8), all as
------------
set forth in each statement of work agreed to by the parties from time
to time and attached and made a part hereof (the "Statement of Work").
-----------------
Each Statement of Work shall contain, at a minimum, the following
information: (a) a description of the services to be performed and
Work Product; (b) whether such services are part of the Services or
Compensated Services; (b) a projected timetable by which the services
and Work Product will be delivered, including a timetable for each
party's obligations to meet that delivery commitment; (c) BigBallot's
special conditions of acceptance, if any; (d) a description of
required status reports, if any; and (e) the commencement and
termination dates of the services. BigBallot shall pay for
Compensated Services as set forth in Section 1.2.
-----------
1.2 Changes to Statement of Work. The parties agree that BigBallot shall
----------------------------
have and maintain exclusive control over its business operations and the
direction of the development of its Site; provided, however, that, in the event
that the BigBallot requests Compensated Services, BigBallot and Hub agree to
negotiate in good faith the economics of such Compensated Services which
negotiation shall take into consideration the market value of the services to be
provided and the compensation being received by the Hub from affiliates for
similar services. Additions or modifications to any of the Services set forth in
Section 1.1 or in any Statement of Work may be accomplished through the use of a
- -----------
"Change Order." A Change Order must be in writing and signed by each party in
------------
order to be effective. The procedure for creating a Change Order is as follows:
(a) BigBallot shall submit a written request to Hub specifying the additions or
modifications to the Statement of Work desired (the "Change Notice"); (b) after
-------------
receipt of such Change Notice, Hub shall submit a change order proposal (the
"Change Order") to BigBallot
------------
4
<PAGE>
which shall include a statement of any work, any changes to the proposed
completion dates and, where such additions or modifications constitute
Compensated Services (as agreed by the parties hereto), any fees chargeable to
BigBallot. On BigBallot's written signature to the Change Order, the Change
Order will become part of the Statement of Work.
1.3 Personnel. Hub shall have the exclusive authority to make staffing
---------
decisions with respect to use of its personnel in the provision of the Services
and any Compensated Services. This authority includes the right to reassign
personnel; provided, however, that the Services and any Compensated Services
shall continue to be provided in accordance with the terms of this Agreement.
Hub will at all times retain sufficient engineering and technical staffing to
support and promote new development of the Hub Technology.
2. LICENSES PROVIDED
2.1 Work Product License. Hub grants to BigBallot, and BigBallot accepts,
--------------------
a non-exclusive, perpetual, worldwide, royalty-free license, to use, publicly
display and digitally perform the result of any Services, Compensated Services,
Work Product and the Tools (defined below) on the Internet or otherwise not
already a part of the BigBallot Properties (defined below).
2.2 Third-Party Product License. Hub grants to BigBallot, and BigBallot
---------------------------
accepts, a non-exclusive, limited, royalty-free (as to Hub) license to use the
Third-Party Products (defined below) at any current or future BigBallot
Location, for the purpose of using the result of any Services, Compensated
Services, or Work Product consistent with the terms and conditions of this
Agreement.
2.3 Trademarks. Each party hereby grants to the other party a limited,
----------
nonexclusive, non-sublicenseable, royalty-free, worldwide license to use the
other party's trademarks, service marks, trade names, logos or other commercial
or product designations (collectively, "Marks") for the purposes of creating
-----
content directories or indexes and for marketing and promoting the Site. The
holder of the Marks may terminate the other party's right to use the holder's
Marks, in whole or in part, if the usage of such Marks does not adhere to the
holder of the Mark's then-current standards for such Marks.
3. BIGBALLOT RESPONSIBILITIES
3.1 Cooperation. BigBallot shall cooperate with and assist Hub by
-----------
providing to Hub such information and such access to BigBallot's personnel,
facilities, equipment, databases, software, and other resources as are described
in the Statement of Work, basic Services set forth in Section 1.1, or as Hub may
-----------
reasonably request.
3.2 Availability. BigBallot shall ensure the availability and stability
------------
of its computing environment to support the services described on each Statement
of Work and acceptance testing set forth in this Agreement, if and to the extent
required in connection with the particular services as so described.
5
<PAGE>
3.3 Acceptance. All services and products delivered by Hub under this
----------
Agreement shall be subject to testing by BigBallot to determine whether the
services and products delivered contain the functionality and other objective
requirements ("Acceptance Criteria") described in the applicable Statement(s) of
-------------------
Work. This acceptance test shall run for thirty (30) days after delivery of
such services and products (the "Testing Period"). During the Testing Period,
--------------
BigBallot shall either: (a) notify Hub of its acceptance of the services and
products, or (b) provide Hub with written notice of any defects which cause the
Acceptance Criteria not to be met. Hub shall use commercially reasonable
efforts to cure any defects described in such written notification and BigBallot
will have an additional thirty (30) days to retest the services and products to
determine whether Hub has cured the defects listed in BigBallot's notice. This
process shall be repeated until the services and products are accepted or deemed
to have been accepted. All services and products (or revised services and
products) will be deemed to have been accepted if no written notice of defects
is provided to Hub within thirty (30) days after delivery of the services and
products.
4. CONSIDERATION
4.1 Hub's Services. Except as otherwise noted on a Statement of Work as
--------------
Compensated Services, all of Hub's Services hereunder are in exchange for (i)
the issuance by BigBallot to Hub of the BigBallot Equity, and (ii) a monthly
maintenance fee payable by BigBallot to Hub of $20,000. The monthly
maintenance fee shall be due on the first day of each calendar month during the
term of this Agreement.
4.2 Out of Scope Services. If the Statement of Work so indicates, Hub
---------------------
may be paid additional consideration for Compensated Services requested by
BigBallot outside the ordinary scope of this Agreement as may be determined and
agreed to by the parties hereto. The parties shall negotiate in good faith to
arrive at a mutually acceptable level of consideration for such additional
services.
4.3 Taxes. Hub shall be responsible for paying any applicable sales, use,
-----
excise, value added, or similar taxes or assessments imposed upon the Services
and Compensated Services rendered or other deliverables provided hereunder, by
any federal, state, or local government authority.
4.4 Payment Terms. Where the parties mutually agree to pay Hub additional
-------------
consideration for Compensated Services, Hub will invoice BigBallot in accordance
with the payment schedule specified in the applicable Statement of Work. All
invoices shall be due and payable in United States dollars on the date specified
in the Statement of Work, or, if no date is specified, within thirty (30)
calendar days after receipt of invoice.
6
<PAGE>
5. TERM AND TERMINATION
5.1 Term. The term of this Agreement ("Term") shall commence on the
---- ----
Effective Date and shall continue until the first anniversary of the Effective
Date, unless earlier terminated as provided herein. Thereafter, this Agreement
shall continue automatically for a series of one year terms unless and until
notice of termination is received by either party no later than sixty (60) days
prior to the end of such additional one year term, in which case this Agreement
shall terminate at the end of such one year term.
5.2 Termination. Either party may terminate this Agreement or a Statement
-----------
of Work upon the occurrence of (i) a material breach by the other party, which
material breach has not been cured within thirty (30) days after receipt of
written notice thereof by the breaching party from the other, (ii) upon filing
of any voluntary petition by the other party or upon the filing of any
involuntary petition against the other party under the Bankruptcy Code that is
not dismissed within thirty (30) days after filing, or upon any appointment of a
receiver for all or any portion of the other party's business or operations, or
any assignment of all or substantially all the assets of the other party for the
benefit of creditors; or (iii) upon BigBallot's written request to terminate Hub
Services with respect to the BigBallot web site, which shall be given no less
than thirty (30) days prior to the effective date of such termination.
5.3 Effect of Termination. Upon the termination of this Agreement for any
---------------------
reason, BigBallot shall have the right to such elements of the BigBallot Site
(including without limitation, the BigBallot Properties and any additional
source code, object code and all related documentation required for the then
existing level of operation of the BigBallot Site) so as to permit BigBallot to
immediate establish new web site operations at an alternative web site
host/developer. If any of the elements of the BigBallot Site contain Hub
Properties, Hub hereby grants to BigBallot a perpetual, royalty-free,
nonexclusive, worldwide license to use and modify such elements in the operation
of BigBallot's business. Hub shall cooperate with BigBallot's termination of Hub
Services and transfer to a new web site.
6. CONFIDENTIALITY
6.1 Confidential Information. The parties acknowledge that it will be
------------------------
necessary for each of them to disclose or make available to each other
information and materials (collectively the "Confidential Information") that may
------------------------
be confidential or proprietary or may contain valuable trade secrets, and that
some such information may already have been disclosed prior to the Effective
Date. Prior to disclosure, the disclosing party shall use reasonable efforts to
designate all Confidential Information by marking the information with the word
"Confidential" or similar legend. However, BigBallot and Hub agree that, even
if not so marked, the BigBallot Properties and the Hub Properties (as defined in
Sections 12.1 and 12.2) are Confidential Information, as are any passwords used
- ----------------------
in connection with the services and products delivered by Hub hereunder, any
server logs related to the services and products delivered by Hub hereunder, and
all documentation, descriptions, and embodiments of any of them.
6.2 Non-Disclosure. Both during and after the term of this Agreement,
--------------
each of the parties agrees: (a) to use commercially reasonable efforts to
protect the Confidential Information
7
<PAGE>
of the other party from unauthorized use or disclosure and to use at least the
same degree of care with regard thereto as it uses to protect its own
Confidential Information of a like nature; (b) to use and reproduce the
Confidential Information of the other party only as permitted under this
Agreement or as needed to perform its duties thereunder; and (c) not to disclose
or otherwise permit access to the Confidential Information of the other party to
any third party, without the other party's prior written consent.
6.3 Exceptions. Information will not be considered to be Confidential
----------
Information if it (a) is already, or otherwise becomes, publicly known by third
parties, as a result of no act or omission of the receiving party; (b) is
lawfully received, after disclosure hereunder, from a third party having the
fight to disseminate the information without restriction on disclosure; (c) is
furnished to others by the disclosing party without restriction on disclosure;
or (d) can be shown by the receiving party to have been independently developed
by such party prior to the execution of this Agreement. Furthermore, it is
understood that each party shall be free to use any ideas, concepts, know-how
and techniques related to the scope of its practice, provided they contain no
specific or identifiable elements unique to the other party hereto or its
operations. or its operations.
6.4 Injunctive Relief. The parties agree that any breach by either party
-----------------
or any of its officers, directors, or employees, of any provisions of Section 6
---------
may cause immediate and irreparable injury to the other party and that, in the
event of such breach, the injured party will be entitled to seek injunctive
relief as well as any and all other remedies available at law or in equity.
7. OWNERSHIP
7.1 Hub Properties. As between Hub and BigBallot, Hub shall at all times
--------------
be and remain the sole and exclusive owner of the Hub Properties. To the extent
that any work performed by BigBallot under this Agreement may be covered by the
definition of "Hub Properties," BigBallot hereby assigns and conveys its entire
right, title and interest therein and all copies thereof, and all copyright and
other proprietary rights therein, without further consideration, free from any
claim or lien or retention of rights, to Hub.
7.2 BigBallot Properties. As between Hub and BigBallot, BigBallot will at
--------------------
all times be and remain the sole and exclusive owner of the BigBallot
Properties. Hub hereby assigns and conveys its entire right, title and interest
therein and all copies thereof, and all copyright and other proprietary rights
therein, without further consideration, free from any claim or lien or retention
of rights to BigBallot.
7.3 Third Party Properties. Nothing herein shall cause or imply any
----------------------
sale, license, or other transfer of proprietary rights of or in any third party
software or products from one party to this Agreement to the other party.
7.4 User Information. User Information, as it may exist from the date of
----------------
this Agreement until the expiration of the Term, shall be owned jointly by Hub
and BigBallot. Any modification to the User Information after the expiration of
the Term shall belong to the party
8
<PAGE>
creating same. Notwithstanding the foregoing, certain information of BigBallot
clients (users) may not be disclosed to or used by Hub pursuant to the terms of
BigBallot's agreement with such clients. Accordingly, Hub shall not be granted
access to or use of such information.
8. INDEMNIFICATION
8.1 Intellectual Property. If either party (the "Indemnitee") promptly
--------------------- ----------
notifies the other (the "Indemnitor") in writing of a claim against Indemnitee
----------
that any of the Hub Properties or BigBallot Properties infringes a presently
existing proprietary right of a third party enforceable in the United States,
and if Indemnitee specifies in such notice that the claim is based to any extent
upon an alleged infringement enforceable in the United States by any portion of
the Indemnitor's properties (the Hub Properties or the BigBallot Properties, as
the case may be), the Indemnitor, with respect to and to the extent of the
portion of the claim pertaining to the Indemnitor's properties, shall indemnify
and defend such claim at its expense and pay any costs or damages (including
reasonable attorneys' fees) that may be incurred or finally awarded against the
Indemnitee.
8.2 Personal Injury, Property Damage. Each party shall indemnify, hold
--------------------------------
harmless and defend the other party from and against any and all suits, actions,
damages, costs, losses or expenses (including reasonable attorneys' fees)
relating to or arising out of bodily injury or death of any person or damage to
real and/or tangible property to the extent proximately caused by the negligent
or willful acts or omissions of the indemnifying party, its personnel or agents
in connection with the performance of activities relating to this Agreement.
8.3 Sole Control. To the extent of the portion of the claim pertaining
------------
to its own properties, the Indemnitor under any of the indemnities set forth in
this Section 8 shall have sole control of the defense of any such claim and all
---------
negotiations for settlement. The Indemnitor shall not be obligated to indemnify
the Indemnitee under any settlement made without the Indemnitor's written
consent or in the event the Indemnitee falls to cooperate fully (at the
Indemnitor's expense) in the defense of any such claim.
8.4 Option to Avoid Infringement. In the event that any portion of the
----------------------------
Hub Properties is likely to or does become the subject of a claim of
infringement of any letters patent, copyright, trademark, service mark, trade
name, trade secret or other intellectual or proprietary right of any third party
(the "Disputed Portion"), Hub may, at its sole option and expense, procure for
----------------
BigBallot the right to continue using, the Disputed Portion, modify the Disputed
Portion to make it noninfringing, or replace the Disputed Portion with a
substantially similar, noninfringing replacement. If none of the foregoing
alternatives is reasonably available, Hub may terminate BigBallot's right to use
the Disputed Portion upon thirty (30) days' written notice and Hub shall refund
a pro rata portion of fees paid by BigBallot to Hub for the Disputed Portion
plus any and all damages suffered by BigBallot as a result of such claim and
dispute.
9. WARRANTIES
Hub represents and warrants (i) that it will provide to BigBallot state of
the art services (including, without limitation, all services and products
contained on any Statement of Work, the
9
<PAGE>
Services and the Compensated Services) hereunder which permit BigBallot to enjoy
a high quality technically advanced web site and rapid access to such site via
Hub's link; (ii) all Hub's services will be performed in a timely and
workmanlike manner; (iii) all services and products contained on any Statement
of Work by Hub hereunder for the benefit of BigBallot shall be fit for the
purpose intended by BigBallot; (iv) that Hub is duly licensed, permitted and
authorized to perform the tasks contemplated by this Agreement pursuant to and
in compliance with all applicable laws, rules and regulations; and (v) that all
services and products contained on any Statement of Work, as provided by Hub, do
not and will not: (a) violate any law or regulation; (b) be defamatory or trade
libelous; (c) cause BigBallot to be directly linked to any site which is
pornographic or obscene; or (d) contain any viruses, Trojan horses, worms, time
bombs, cancelbots or other computer programming defects which are intended to
damage a user's system or data. Hub further represents and warrants that: (a) it
will use commercially reasonable efforts to ensure the services and products it
provides pursuant to each Statement of Work will substantially conform to the
Acceptance Criteria for a period of one (1) year after the completion of the
Testing Period; (b) Hub shall acquire all rights necessary for the production,
distribution, exhibition and exploitation of the services and products it
provides pursuant to each Statement of Work consistent with the licenses granted
in this Agreement; and (c) there is no outstanding contract, commitment or
agreement to which Hub is a party, or legal impediment of any kind known to Hub
which conflicts with this Agreement or might limit, restrict or impair the
rights granted to hereunder.
10. INSURANCE
Hub will maintain levels of insurance as is customary in the industry. Hub
will provide BigBallot with evidence of Hub's insurance as may be requested by
BigBallot from time to time.
11. NO EMPLOYEE SOLICITATION/HIRING
During the period beginning with the Effective Date and ending twelve (12)
months after the termination of this Agreement, neither party nor its affiliates
will offer employment to or hire any employee of the other party or its
affiliates without the prior written consent of the employing, party. For
purposes of the preceding sentence, the terms "employment" and "employee" shall
---------- --------
include any form of employment, consulting, contract relationship, or other
arrangement pursuant to which such individual will, directly or indirectly,
perform services for the other party.
12. DEFINITIONS
12.1 "BigBallot Properties" shall mean all text, pictures, sound,
--------------------
graphics, video and other data supplied by BigBallot to Hub and each and every
service and product developed by Hub and delivered to BigBallot in accordance
with the terms and conditions of this Agreement and each Statement of Work.
12.2 "Hub Properties" shall mean the Work Product, except for the
--------------
BigBallot Properties, Third Party Products and any Tools.
10
<PAGE>
12.3 "Location" shall mean BigBallot, 23 Corporate Plaza, Suite 145,
--------
Newport Beach, California 92660.
12.4 "Page" shall mean a file that can be scrolled, and may consist of
----
multiple Screens.
12.5 "Screen" means the information on one computer monitor screen.
------
12.6 "Third-Party Products" shall mean the computer hardware, computer
--------------------
software, files, and all other technology owned or distributed by third parties,
and delivered to BigBallot by Hub in accordance with the terms and conditions of
this Agreement or a Statement of Work, excluding the Tools.
12.7 "Tools" shall mean any tools, in object code form, which Hub
-----
licenses from a third party, but shall not include any tools which Hub has
already developed or created pursuant to this Agreement, which shall be
considered "Work Product." By way of example, Tools could include, without
limitation, toolbars for maneuvering between Pages, search engines, Java
applets, and ActiveX controls.
12.8 "Work Product" shall mean all HTML and/or Java files, graphics
------------
files, animation files, data files, technology, scripting and programming (in
object code form), and all documentation developed by Hub pursuant to this
Agreement. Work Product shall not include the BigBallot Properties, Tools, and
the Third-Party Products .
13. GENERAL
13.1 Complete Agreement. This Agreement, including any Statement of
------------------
Work hereunder, is the complete and exclusive statement of the agreement of the
parties with respect to the subject matter hereof and supersedes and merges all
prior proposals and agreements, oral or written, between the parties with
respect to the subject matter hereof. This Agreement may not be modified except
by a written instrument duly executed by the parties hereto.
13.2 Headings and Subsection. Section headings are provided for
-----------------------
convenience of reference and do not constitute part of this Agreement. Any
references to a particular section of this Agreement shall be deemed to include
reference to any and all subsections thereof.
13.3 Severability; No Waiver. If any provision of this Agreement is
-----------------------
held to be invalid or unenforceable for any reason, the remaining provisions
will continue in full force without being impaired or invalidated in any way.
The parties agree to replace any invalid provision with a valid provision which
most closely approximates the intent and economic effect of the invalid
provision. The waiver by either party of a breach of any provision of this
Agreement will not operate or be interpreted as a waiver of any other
or subsequent breach.
13.4 Enforceability. If any part of this Agreement shall be adjudged by
--------------
any court of competent jurisdiction to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby and shall be enforced to the maximum extent
permitted by applicable law. If any remedy set forth in this
11
<PAGE>
Agreement is determined to have failed of its essential purpose, then all other
provisions of this Agreement, including the limitations of liability and
exclusions of damages, shall remain in full force and effect.
13.5 Assignment. Neither party may assign or delegate any or all of its
----------
rights (other than the right to receive payments) or its duties or obligations
hereunder without the consent of the other party, which consent shall not be
unreasonably- withheld or delayed; provided, however, that either party may
assign this Agreement, without the need to obtain consent of the other party, to
an affiliate of such party or to a successor in interest to substantially all of
the business of that party to which this Agreement relates. An assignee of
either party authorized hereunder shall be bound by the terms of this Agreement
and shall have all of the rights and obligations of the assigning party set
forth in this Agreement.
13.6 No Third Party Benefit. The provisions of this Agreement are for
----------------------
the sole benefit of the parties hereto. This Agreement confers no rights,
benefits, or claims upon any person or entity not a party hereto.
13.7 Independent Contractors. The parties to this Agreement are
-----------------------
independent contractors, and no agency, partnership, joint venture or employee-
employer relationship is intended or created by this Agreement. Neither party
shall have the power to obligate or bind the other party. Personnel supplied by
Hub shall work exclusively for Hub and shall not, for any purpose, be considered
employees or agents of BigBallot. Hub assumes full responsibility for the acts
of such personnel while performing services hereunder and shall be solely
responsible for their supervision, direction and control, compensation, benefits
and taxes.
13.8 No Construction Against Drafter. If an ambiguity or question of
-------------------------------
intent arises with respect to any provision of this Agreement, the Agreement
will be construed as if drafted jointly by the parties and no presumption or
burden of proof will arise favoring or disfavoring either party by virtue of
authorship of any of the provisions of this Agreement.
13.9 Force Majeure. Either party shall be excused from performance and
-------------
shall not be liable for any delay in whole or in part, caused by the occurrence
of any contingency beyond the reasonable control either of the excused party or
its subcontractors or suppliers including, but not limited to, war, sabotage,
insurrection, riot or other act of civil disobedience, act of public enemy,
failure or delay in transportation, act of any government or any agency or
subdivision thereof affecting the terms hereof, accident, fire, explosion,
flood, severe weather or other act of God, or shortage of labor or fuel or raw
materials.
13.10 Notices. Any notice required or permitted hereunder to the parties
-------
hereto will be deemed to have been duly given only if in writing and delivered
by: (a) certified U.S. mail, return receipt requested or via overnight courier,
postage prepaid, to the address of the receiving party as set forth on the
initial page hereof or such other address as may be specified by such party in a
notice delivered to the other party in accordance with this Section, or (b) via
hand delivery. Notices shall be deemed delivered when received by the party
being notified.
12
<PAGE>
13.11 Governing, Law, Jurisdiction and Venue. This Agreement shall be
--------------------------------------
deemed to have been made in, and shall be construed pursuant to the laws of, the
State of and any action or proceeding arising out of or related to this
Agreement shall be brought only in the Court of Orange County, California, or
the United States District Court in Santa Ana, California. The parties hereby
consent to such jurisdiction and venue.
13.12 Attorneys' Fees. If any legal action is brought to construe or
---------------
enforce any provision of this Agreement, the prevailing party shall be entitled
to receive its reasonable attorneys' fees and court costs in addition to any
other relief it may receive.
13.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which shall
be taken together and deemed to be one instrument.
13
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement
as of the date first written above.
HUB BIGBALLOT
By: /s/ Frank W. Denny By /s/ Jeff Gehl
-------------------- -------------------------------
Jeff Gehl, President
Title: President and CEO
-----------------
Date: 1/14/2000 Date: 1/14/2000
--------- ---------
14
<PAGE>
STATEMENT OF WORK NO. _____
(describe Services or Compensated Services below)
AGREED TO: AGREED TO:
The BigHub.com, Inc. The BigBallot. com, Inc.
By: ___________________________ By_____________________________
Its:___________________________ Its:___________________________
Date:__________________________ Date:__________________________
15
<PAGE>
SCHEDULE 1.1(a)
Time Frame
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF THE COMPANY AS OF AND FOR THE FISCAL QUARTER
ENDED JANUARY 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> OCT-29-2000 OCT-31-1999
<PERIOD-START> NOV-01-1999 NOV-01-1998
<PERIOD-END> JAN-30-2000 JAN-30-1999
<CASH> 8,591 0
<SECURITIES> 1,031,250 0
<RECEIVABLES> 172,323 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,212,163 0
<PP&E> 1,960,831 0
<DEPRECIATION> (372,946) 0
<TOTAL-ASSETS> 2,801,847 0
<CURRENT-LIABILITIES> 4,637,785 0
<BONDS> 0 0
0 0
0 0
<COMMON> 16,106 0
<OTHER-SE> (1,852,044) 0
<TOTAL-LIABILITY-AND-EQUITY> 2,801,847 0
<SALES> 256,249 2,918
<TOTAL-REVENUES> 256,249 2,918
<CGS> 89,138 2,387
<TOTAL-COSTS> 89,138 2,387
<OTHER-EXPENSES> 1,465,189 151,912
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 33,939 412,500
<INCOME-PRETAX> (1,332,017) (563,881)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,332,017) (563,881)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 31,250 67,000
<CHANGES> 0 0
<NET-INCOME> (1,300,767) (496,881)
<EPS-BASIC> (0.08) (0.14)
<EPS-DILUTED> (0.08) (0.14)
</TABLE>
