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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF
SECURITIES UNDER SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
FINDWHAT.COM
(Name of Registrant in its Charter)
Nevada 88-0348835
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
121 West 27th Street, Suite 903, New York, New York 10001
(Address of Principal Executive Offices) (Zip Code)
(212) 255-1500
(Issuer's Telephone Number)
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of Class)
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An investment in our common stock involves significant risks which could result
in a loss of your entire investment. Please review "Risk Factors" starting on
page 7.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. This document contains forward-looking
statements which reflect the views of management with respect to future events
and financial performance. These forward-looking statements are subject to
certain uncertainties and other factors that could cause actual results to
differ materially from such statements. These uncertainties and other factors
include, but are not limited to, the words "anticipates", "believes",
"estimates", "expects", "plans", "projects", "targets" and similar expressions
which identify forward-looking statements. You should not place undue reliance
on these forward-looking statements, which speak only as of the date the
statements were made. We are not obligated to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Item 1. Business.
History
We were organized under the laws of the State of Nevada under the name
Collectibles America, Inc. in October 1995. We discontinued our business
operations and transferred our assets to satisfy liabilities in 1997. In June
1999, we acquired all of the outstanding capital stock of BeFirst Internet
Corporation, which was organized under the laws of the State of Delaware in
March 1998. We changed our corporate name to BeFirst.com at the time of the
acquisition. In September 1999, we changed our corporate name to FindWhat.com.
Unless we state otherwise, all references to us in this registration
statement describe the consolidated operations of FindWhat.com and our
wholly-owned subsidiary, BeFirst Internet Corporation.
Introduction
We offer services designed to increase traffic flow to our clients' web
sites on the Internet. We currently offer online advertisers our Be1st.com(SM)
web site optimization service. We are also in the process of commercially
launching our Pay For Position(SM) search service, FindWhat.com(SM). This search
service contains a listing system which is designed to allow web site owners to
pay for position on our FindWhat.com(SM) web site via an automated open bidding
system and preferred search rankings. FindWhat.com(SM) is intended to enable
Internet users to find relevant information without sorting through the pages of
irrelevant information frequently displayed by other Internet search services.
Our plan of operations includes increasing the promotional activities for
our BeFirst.com service, devoting substantial resources to the launching of our
FindWhat.com(SM) search service and further developing our proprietary software
and related software programs. We recently acquired a database license from
Inktomi, Inc. and are in the process of acquiring and leasing additional
equipment, including T3 telephone lines and certain computer hardware. Our
target market includes all companies which
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maintain Internet web sites and which desire to increase the volume of motivated
consumers to their web sites.
Industry Overview
Internet advertisers have historically relied on sites providing web
directories or "search engines" to supply a "mass" audience for their web sites
and advertising message. These search services enable consumers to search the
Internet for a listing of web sites matching a descriptive phrase, topic or
other term. Search services are among the most frequently used tools on the
Internet. As a result, web sites providing search services offer advertisers
significant exposure to the Internet audience. These web sites frequently offer
advertisers the opportunity to target consumer interests based on keyword or
topical search requests.
Many web sites providing search capabilities have begun to focus their
efforts on providing content and shopping opportunities for visitors. This
business model has earned these web sites, now more commonly called "portals",
higher advertising and e-commerce revenues. For the consumer seeking an array of
services, the portals offer a valuable package of resources. However, for the
visitor looking mainly for consumer information, products or services, the
search process on a typical portal site can be cumbersome.
We believe that there is increasing frustration and discontentment among
consumers concerning the lack of comprehensive information regarding the sale of
consumer products by existing Internet search services and that the growing
inability of consumers to find relevant results for items they wish to purchase
presents marketplace opportunities.
We intend to tailor our array of services to improve the consumer search
experience and more effectively link advertisers with their target consumers. We
believe that the pay per visitor business model is becoming more important to
online marketers and that corporate managers will seek out promotional
alternatives or supplements to banner advertisements. As a result, companies
seeking more effective ways to drive qualified traffic to their corporate web
sites may increasingly include gaining higher placements on search engines in
their strategy.
Be1st.com(SM)
Our Be1st.com(SM) service employs proprietary methodology and software
tools to achieve improved rankings on major Internet search engines for our
clients' web sites in response to search queries by the public. This service,
known as web site "optimization," aims to improve each client's placement in the
search results generated by an Internet search engine by optimizing search
phrases and keywords that will increase the volume of traffic relevant to each
client's business.
Our BeFirst.com(SM) service currently derives revenue from two sources:
o through set-up fees charged to new clients and
o through click-through rates charged for the traffic the service
generates for a client's web site.
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Both the set-up fee and the click-through rate are negotiated and generally
vary based on the client's industry, the frequency with which that category is
searched and the value of the keywords chosen. The negotiated click-through
rate is applied to the actual number of consumers clicking on the various search
engine placements established by the Be1st.com(SM) service on behalf of a
client. Each month, a client's bill is determined based upon the click-through
rate and the number of consumer clicks received. The traffic for each
Be1st.com(SM) service placement is tracked by Web Trends, a leading industry
tracking software program, and is updated daily. We believe that the
pay-for-results business model adds to the credibility of our Be1st.com(SM)
service with target customers and reduces the obstacles in their purchase
decision processes.
We believe that our Be1st.com(SM) web site optimization service is unique,
because each client's objectives are assessed on an individual basis, generating
customized programs in an industry where standard "one size fits all" models
prevail. Furthermore, our Be1st.com(SM) service seeks to optimize a client's
site on up to 450 search engines, directories and online yellow pages, while
other search optimization services limit their optimization techniques to a
smaller number of search engines. Another advantage of our Be1st.com(SM) service
is that it automates a substantial portion of the web optimization process,
decreasing the time and cost associated with optimizing clients' sites.
Our client list for the Be1st.com(SM) service has grown since last year.
Clients of our Be1st.com(SM) service include eBay, World Wrestling Federation
and TheStreet.com.
FindWhat.com(SM)
We have completed development and testing of FindWhat.com(SM), a new
Internet search service designed to assist both consumers seeking to quickly
access specific information and advertisers seeking to maximize their visibility
and traffic. It is an outgrowth of our initial Be1st.com(SM) web site
optimization service.
We expect our new Pay-for-Position(SM) search service to generate revenue
based on the number of consumer click-throughs resulting from an advertiser's
listing on our FindWhat.com(SM) web site. The click-through rate will be
determined by an auction among advertisers within the same category. We
anticipate that the FindWhat.com(SM) search service will generate additional
revenue from banner advertising to be placed on search result pages.
Search results on the FindWhat.com(SM) search service will be rank-ordered
through a competitive bidding process in which each advertiser's bid will
represent the amount it will pay FindWhat.com(SM) for each consumer
click-through. The advertiser with the highest bid will be listed first in the
search results, with the remaining advertisers appearing in descending bid
amount order. Since advertisers must pay for each click-through to their web
site, we expect that they will select and bid only on those search words or
phrases that are most relevant to their business offerings.
Advertisers desiring placement within the same search categories will bid
against one another for prime placement, with the winning bid being at least
$.01 greater than the next highest bid. The bid rate refers to the price an
advertiser will pay for each click-through on the category search result page.
FindWhat.com(SM) clients will pay only for traffic generated by the listing
placement. FindWhat.com(SM) will allow advertisers to target as many keywords
as they wish with the resources they deem appropriate to attract customers. For
example, a client may have 30 different search word placements, but decide
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it needs to be ranked first for only 10 of these word searches, with the
remaining 20 words having fifth place ranking.
Although similar in some aspects to "pay-for-placement" search services,
such as Goto.com(SM), an existing pay-for-placement search service which has
demonstrated the need for this new kind of promotional tool, FindWhat.com(SM) is
intended to improve on this search service model in certain ways. The
FindWhat.com(SM) search service minimizes information and community-based
services that can impede quick and easy searches and instead focuses on
providing a search service for consumers that will return the most relevant
results for each category. We intend for our web site to be user- and
advertiser-friendly.
We have recently entered into an agreement with Inktomi, a leading database
information provider, to provide supplemental databases for the FindWhat.com(SM)
search engine so that consumers will receive comprehensive search results in
response to their search queries. Utilizing Inktomi's database, FindWhat.com(SM)
can display search results in addition to the listings paid for by our clients.
We have also entered into an agreement with the Michigan Internet Communication
Association for Internet services which allow us to connect to the Internet with
sufficient capacity and bandwidth so that our FindWhat.com(SM) web site can
properly function and handle the anticipated increase in traffic to our web
site.
Growth Strategy
We intend to utilize an off-line promotional campaign and a strategic
marketing online program as separate parts of our overall marketing plan for
growth. Advertisers will be able to position their sites on our FindWhat.com(SM)
search service and enhance and optimize their rankings on other search engines
through our Be1st.com(SM) service.
Be1st.com(SM)
To obtain advertising clients for our Befirst.com(SM) service, we utilize a
sales force that uses direct phone and Internet selling to a target client list
culled from the large number of advertisers placing banner advertising on the
top search service web sites as well as smaller advertisers placing
advertisements on more targeted web sites. We anticipate that we will hire
additional sales staff in order to increase the direct queries made to potential
clients. We also intend to retain additional personnel or hire third party
contractors to assist in data entry and technical aspects of our service so that
we may service an increased client base.
FindWhat.com(SM)
The advertisers who utilize our Be1st.com(SM) service are a source of
potential clients for our FindWhat.com(SM) web site. Thus, our strategy to
obtain clients for FindWhat.com(SM) includes extensive cross-marketing. In
addition, we intend to create a consumer base to increase revenue from existing
clients by generating more click-throughs to our clients' web sites and to
attract new clients. We intend to create this base through promotion and
strategic marketing programs.
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We plan to link with other companies through a strategic marketing program
as a promotional tool. Participating companies would agree to place either a
general link (represented by our logo) or a search inquiry link on their web
sites which would lead consumers to our web site. We intend to offer to pay
these companies for click-throughs to our web site generated from these links or
from revenue we earn as a result of such click-throughs. We believe we can place
FindWhat.com(SM) links on high traffic, high profile, broadcast web sites. We
intend to pay other web site owners sufficient fees to provide the necessary
incentive for them to enter into link arrangements with us.
We intend to aggressively utilize public relations, radio, local cable
television in key markets, targeted e-mail, telemarketing and banners to promote
FindWhat.com(SM). We have entered into agreements with Clear Channel Los Angeles
and Los Angeles-based Star 98.7 FM, which will result in on-air and web site
promotions for FindWhat.com(SM).
Competition
We compete with online services, other web sites and advertising networks,
as well as with traditional off-line media such as television, radio and print
for a share of advertisers' total advertising budgets as well as for consumers'
attention. See "Risk Factors -- We Face Substantial and Increasing Competition."
Facilities
Our executive, administrative and sales offices are located in New York
City. Our technical operations are located in Fort Myers, Florida.
Employees
We currently have 17 employees, including our executive officers. In
addition, WPI Advertising, Inc., an affiliate of one of our executive officers,
currently supplies us with certain services, including office space and
additional staff support.
Available Information
Copies of this registration statement may be inspected, without charge, at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the New York Regional offices of the SEC located at 7 World Trade
Center, New York, New York 10048. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0300.
Copies of this material also should be available through the Internet by using
the SEC's EDGAR Archive, the address of which is http://www.sec.gov.
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RISK FACTORS
Our business is subject to numerous risks, including the following:
We have a limited operating history and have not yet commercialized our second
main product.
We began offering web site optimization marketing services through our
Be1st.com(SM) service in August 1998. We are in the process of commercially
launching FindWhat.com(SM), a new search service.
We have a limited relevant operating history upon which to base an
evaluation of our prospects. We will be subject to substantial risks, expenses
and difficulties associated with creating a new business. In addition, the
markets for Internet products and services are new and rapidly evolving and may
subject us to further risks, expenses and uncertainties. We may fail to continue
to develop and extend our services and brands, and may be unable to develop,
maintain and increase the level of traffic to our web site and those of our
customers. Internet vendors or the public may reject our services, and
competitors may develop similar or superior services or products. The Internet
may not achieve widespread acceptance as an advertising/marketing medium, and we
may fail to sell our marketing services successfully. We may not be successful
in addressing these and other risks. Our limited operating history and the
uncertain nature of the markets we address make the prediction of future results
of our operations difficult. Our operations may never generate significant
revenues, and we may never achieve profitable operations.
We may not successfully commercialize our FindWhat.com(SM) service.
We are in the process of commercially launching our FindWhat.com(SM) search
service. We may not be able to successfully commercialize our search service in
a timely manner or at all. Unanticipated delays, expenses, technical problems
and other difficulties could result in a substantial change in design or in a
delay or abandonment of our proposed applications. Technical issues concerning
our FindWhat.com(SM) search service may need to be resolved. Our success will
depend on meeting our targeted performance objectives and the timely
introduction of product and service enhancements into the marketplace. The
inability to complete successful commercialization of our FindWhat.com(SM)
search service would have a material adverse effect on us. Moreover, upon
widespread commercial introduction, we may find that this program will not be
able to satisfactorily perform all of the functions for which it is being
designed or that it is not reliable or durable in extensive applications.
We will require additional financing in the near future.
Based on our currently proposed plans and assumptions, we believe that we
will not require additional funds to implement our proposed operations over the
next 12 months. We do intend, however, to seek additional financing as needed in
the future in order to hire additional technical sales, management and marketing
personnel and to expand our marketing and promotional capabilities. We may seek
to obtain additional financing from a number of sources, including, possible
sales of our equity or debt securities or loans from banks, our affiliates or
other financial institutions. We do not have any arrangements with respect to,
or sources of, additional financing, and we may not be able to sell any such
securities or obtain any loans on terms and conditions acceptable to us or at
all when we need it. Such funds, even if received, may not be sufficient for our
purposes. If we fail to obtain additional financing
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in the future, it would have a material adverse effect on our operations,
possibly requiring postponing the implementation of our business plan. Any
equity financing may involve substantial dilution of the interests of current
stockholders. Any debt financing could subject us to the risks associated with
leverage, including the possible risk of an inability to repay the debt as it
comes due.
We will need to continue to understand and keep pace with search engine
technology.
The success of our Be1st.com(SM) service depends on our ability to
understand the technology of search engines. Providers of web directories,
search and information services oppose Internet web site optimization services
and seek to prevent such services from being effectively provided. Consequently,
to the extent that the technology of search engines changes, we will be required
to stay current with such new technologies in order to continue to be able to
provide our Be1st.com(SM) service.
We use internally developed proprietary systems for our Be1st.com(SM)
service. If we are unable to modify our systems as necessary to accommodate
changes in search engine algorithms or policies which effect optimization, the
result could be unanticipated disruptions, slower retail response times,
impaired quality of optimization, degradation in customer service and delays in
reporting accurate financial information. These events could result in a
material adverse effect on our business, operations and financial condition.
We will need to keep pace with rapid technological change in the Internet search
and advertising industries.
In order to remain competitive, we will be required to continually enhance
and improve the functionality and features of our existing Be1st.com(SM) service
and FindWhat.com(SM) search engine. The Internet and the online advertising and
promotion industries are rapidly changing. If our competitors introduce new
products and services embodying new technologies, or if new industry standards
and practices emerge, our existing services, technology and systems may become
obsolete. Our future success will depend on our ability to license and
internally develop leading technologies useful in our business; enhance our
existing services; develop new services and technologies that address the
increasingly sophisticated and varied needs of prospective consumers; and
respond to technological advances and emerging industry standards and practices
on a cost-effective and timely basis.
Developing our services and other proprietary technology entails
significant technical and business risks, as well as substantial costs. We may
use new technologies ineffectively, and we may fail to adapt our services,
transaction-processing systems and network infrastructure to evolving user
requirements or emerging industry standards. If we face material delays in
introducing new services, products and enhancements, our users may forego the
use of our services and select those of our competitors.
The market for our services is uncertain and still evolving.
Internet marketing and advertising, in general, and advertising through
priority placement in an Internet search service, in particular, is at an early
stage of development, is rapidly evolving and is characterized by an increasing
number of market entrants. The demand and market acceptance for such recently
introduced services is subject to a high level of uncertainty and risk. Most
potential advertisers have only limited experience advertising on the Internet
and have not devoted a significant portion of their
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advertising expenditures to Internet advertising. The market for our existing
and proposed services may not continue to develop and may not become
sustainable.
To date, we have marketed our Be1st.com(SM) service on a limited basis. We
are now in the beginning stage of commercializing our FindWhat.com(SM) search
service. Although we believe that our Be1st.com(SM) and FindWhat.com(SM)
services offer a cost-effective advertising solution, our competitors and
potential competitors may offer more cost-effective advertising solutions, which
could damage our business. Although we believe that our FindWhat.com(SM) service
will provide more relevant search results than those provided by traditional
search methods, it may not achieve significant acceptance by consumers. Because
our FindWhat.com(SM) service prioritizes search results based on advertising
bids associated with keywords, rather than on algorithmic or other traditional
search and retrieval technologies, consumers may perceive its results to be less
objective than those provided by traditional search methods. If our
Be1st.com(SM) and FindWhat.com(SM) services fail to achieve and maintain a
critical mass of advertisers, and, with respect to FindWhat.com(SM), a critical
mass of consumers, then our business revenues, our ability to establish other
services and our operational and financial condition could be materially and
adversely affected.
We may have difficulty attracting and retaining qualified personnel.
We will need to attract and retain highly qualified, technical and
managerial personnel in order to implement our strategy. Competition for such
personnel is intense, and we may be unable to locate and retain highly qualified
technical and managerial personnel either currently or in the future. Technology
companies generally have a higher employee turnover rate than non-technology
companies due to intense competition to attract the most qualified technical
personnel. If we are unable to attract and retain the necessary technical and
managerial personnel, it would have a material and adverse effect on our
business, results of operations and financial condition.
Our FindWhat.com(SM) service depends upon identifying and establishing future
online marketing participants.
We have not yet commenced significant marketing activities relating to our
services and have limited marketing experience and limited financial, personnel
and other resources to undertake extensive marketing activities. Our future
ability to generate revenue from our FindWhat.com(SM) web site will depend upon
our ability to get advertisers and generate traffic to the site. Part of our
strategy will be to obtain traffic from third-party sites that we anticipate
will participate in our strategic marketing program. We expect that these
third-party sites will provide their users with FindWhat.com(SM) search
capabilities on their sites or direct their traffic to the FindWhat.com(SM) web
site. We believe that obtaining and maintaining these relationships will be
important to generate traffic to our FindWhat.com(SM) web site, facilitate broad
market acceptance of its services and enhance its sales. We anticipate that the
sources of consumer traffic to our FindWhat.com(SM) web site will fluctuate in
any given month, but that we will typically depend upon one or a few of our
strategic marketing program sources for a significant majority of traffic and
searches conducted.
We do not have any agreements in place with third party web site owners to
participate in our strategic marketing program, which is still new and unproven.
If we are unable to enter into and maintain agreements or arrangements which
generate significant traffic to our FindWhat.com(SM) web site
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on commercially acceptable terms and later expand our strategic marketing
program, this significant aspect of our business will be damaged. We may not be
able to obtain any strategic marketing agreements on commercially acceptable
terms, or at all. Even if successfully obtained, future strategic marketing
agreements may not result in significant revenues for us.
We depend on our agreement with Inktomi to provide us with supplemental search
data.
In order to provide high quality search results in response to search
queries by consumers, FindWhat.com(SM) will require supplemental search results
to display in addition to the search results paid for by our clients.
Supplemental search data is expected to constitute a very high percentage of the
search results displayed by FindWhat.com(SM). We are currently relying upon one
third-party supplier, Inktomi, as our sole source of supplemental search results
displayed by FindWhat.com(SM). Pursuant to our agreement with Inktomi, we will
be required to make minimum aggregate payments of $600,000 over the next three
years for supplemental search results. If we fail to make any required payments,
Inktomi could terminate its services, which would result in a material
interruption of our operations until such time as we can obtain an alternative
source for such services. Alternative sources may not be available, and any
reliable third-party supplier will likely be a competitor.
We face substantial and increasing competition.
The market for Internet-based marketing services is relatively new,
intensely competitive and rapidly changing. Since the advent of web site
optimization and marketing services on the Internet, the number of marketing
services competing for the attention of businesses and related spending have
proliferated due to, among other reasons, the absence of substantial barriers to
entry. This competition may continue to further intensify. Such increased
competition may lead to reductions in market prices for search engine
optimization marketing and sales.
FindWhat.com(SM) may face increased pricing pressure for the sale of paid
listings, advertisements and direct marketing opportunities, which could
adversely affect our future business and operating results. Upon
commercialization, FindWhat.com(SM) will compete with providers of Web
directories, search and information services, all of whom offer advertising,
including, among others: America Online, Inc. (AOL.com, NetFind and Netscape
Netcenter), AskJeeves, Inc., CNET, Inc. (Snap), Excite, Inc. (including
WebCrawler and Magellan), GoTo.com, LookSmart, Ltd., Compaq Computer Corp. (Alta
Vista), Lycos, Inc. (including HotBot), Microsoft Corporation (LinkExchange,
Inc. and msn.com), The Walt Disney Company/Infoseek Corporation (including the
Go Network) and Yahoo! Inc. In addition, other companies may offer directly
competing services in the future. Most providers of Web directories, search and
information services offer additional features and content that we have elected
not to offer. We also compete with traditional off-line media such as
television, radio and print for a share of advertising budgets.
Most of our current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than we do. These competitors
may be able to respond more quickly to new or emerging technologies and changes
in search engine requirements and to devote greater resources to the
development, promotion and sale of their services than we can. Our competitors
may have or obtain certain intellectual property rights which may interfere or
prevent the use of our "pay for placement" business model. One such competitor,
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GoTo.com, has advised us of a pending patent application with respect to this
business model, but has refused to provide to us the details of its application.
If a patent is issued to a competitor which interferes or prevents us from using
the pay for placement business model, our business, operations and financial
condition could be materially and adversely affected. In addition, we may be
required to participate in litigation which we may not have the resources to
fund or be required to incur litigation costs which may adversely affect our
financial condition.
A number of competitors within the search engine optimization industry
offer alternative technologies to those we offer. We may not be able to compete
successfully against our current or future competitors, either within the search
engine and search engine optimization industry or otherwise.
We depend on third-party hardware and software for various aspects of our
business.
We depend on third-party software to track performance and to invoice
customers of our Be1st.com(SM) service. We expect to depend on third-party
software to commercialize FindWhat.com(SM). We will be obligated to integrate
any third-party technology we license in the future into our technology and
services. Although we believe that several alternative sources for this software
are available, any failure to obtain and maintain the rights to use such
software would have a material adverse effect on our operations. We also are
dependent upon third parties to provide our FindWhat.com(SM) search service with
the necessary access to the Internet with sufficient capacity and bandwidth so
that the search service can properly function and remain "online." We currently
have a one-year contract with Michigan Internet Communications Association for
such services. Any restrictions or interruption in our connection to the
Internet may cause significant revenue loss.
Our future success will depend on continued growth in the use of the Internet.
Our future success will depend substantially upon continued growth in the
use of the Internet to support the sale of our services and in the acceptance
and volume of commerce transactions on the Internet. Traditional businesses will
likely accept and adopt the Internet as a medium to conduct business only if the
Internet provides these businesses with greater efficiencies and improvements.
However, the number of Internet users may not continue to grow, and commerce
over the Internet may not become more accepted or widespread. As this is a new
and rapidly evolving industry, the ultimate demand and market acceptance for
Internet-related services is subject to a high level of uncertainty. The
Internet may not prove to be a viable commercial marketplace for a number of
reasons, including lack of acceptable security technologies, lack of access and
ease of use, congestion of traffic, inconsistent quality of service, lack of
availability of cost-effective, high-speed service, potentially inadequate
development of the necessary infrastructure, excessive governmental regulation,
uncertainty regarding intellectual property ownership or timely development and
commercialization of performance improvements, including high speed modems.
Our future success will depend upon the continued development and maintenance of
a viable Internet infrastructure.
Our future success depends upon the continued development and maintenance
of a viable Internet infrastructure to support the continued growth in the use
of the Internet. The maintenance and improvement of this infrastructure will
require timely development of products, such as high speed
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modems and communications equipment, to continue to provide reliable Internet
access and improved content. If the current Internet infrastructure is not able
to support an increased number of users or the increased bandwidth requirements
of users, the performance or reliability of the Internet, and therefore its
popularity, may be adversely affected. The effectiveness of the Internet may
decline due to delays in the development or adoption of new standards and
protocols designed to support increased levels of activity. The infrastructure
or products or services necessary to ensure the continued expansion of the
Internet may not be developed. The Internet may not become a viable commercial
medium for advertisers and marketers.
If the necessary infrastructure, standards, protocols, products, services
or facilities are not developed, or if the Internet does not become a viable
commercial medium, our business, operations and financial condition could be
materially and adversely affected.
Current capacity constraints will require us to expand our network
infrastructure and customer support capabilities.
Our ability to provide high-quality customer service largely depends on the
efficient and uninterrupted operation of our computer and communications systems
in order to accommodate any significant increases in the numbers of consumers
and advertisers using our services. We intend to expand our network
infrastructure and customer support capabilities in anticipation of an expanded
customer base. Such expansion will require us to make significant upfront
expenditures for servers, routers, computer equipment and additional Internet
and intranet work equipment and to increase bandwidth for Internet connectivity.
In addition, we may be required to manage multiple relationships with various
software and equipment vendors whose technologies may not be compatible, as well
as relationships with other third parties to maintain and enhance our technology
infrastructure. Any such expansion or enhancement will need to be completed
without system disruptions. We presently are dependent upon third parties to
provide the infrastructure we need to handle the anticipated traffic to our new
search engine. Failure to expand our network infrastructure or customer service
capabilities either internally or through third parties would materially
adversely affect our business and operations.
Our technical systems are vulnerable to interruption and damage.
We currently do not have a disaster recovery plan in effect, nor do we have
fully redundant systems for our services at an alternate site. A disaster could
cause interruption of our services for an indeterminate length of time and
severely damage our business and results of operations. Our primary network and
computer systems are currently located at our technical operations facility in
Fort Myers, Florida. We also have a back-up network in Detroit. Our systems and
operations are vulnerable to damage or interruption from fire, floods, power
loss, telecommunications failures, break-ins, sabotage and similar events. The
occurrence of a natural disaster or unanticipated problems at our technical
operations facility could cause interruptions or delays in our business, loss of
data or render us unable to provide services to customers. Failure to provide
data communications capacity we require, as a result of human error, natural
disaster or other operational disruptions could cause interruptions in our
service and web sites. The occurrence of any or all of these events could
adversely affect our reputation, brand and business.
-12-
<PAGE>
We may be unable to obtain the Internet domain names that we hope to use.
The Internet domain name we are using for our search service web site is
"FindWhat.com(SM)." This domain name will be an extremely important part of our
business. We may desire or it may be necessary in the future to use other domain
names in the United States and abroad. The acquisition and maintenance of domain
names generally are regulated by governmental agencies and their designees. In
the United States, the National Science Foundation has appointed Network
Solutions, Inc. as the current exclusive registrar for the ".com," ".net" and
".org" generic top-level domains. The regulation of domain names in the United
States and in foreign countries is subject to change in the near future. Future
changes in the United States are expected to include a transition from the
current system to a system that is controlled by a for-profit corporation and
the creation of additional top-level domains. Governmental authorities in
different countries may establish additional top-level domains, appoint
additional domain name registrars or modify the requirements for holding domain
names. As a result, we may be unable to acquire or maintain desired and relevant
domain names in all countries in which we will conduct business.
The impact of potential Year 2000 difficulties on our operations is unclear.
We believe that our internal software and hardware systems will function
properly with respect to dates in the year 2000 and thereafter and have
completed our internal information technology and non-information technology
assessments. We do not expect to incur any significant costs in the future for
year 2000 problems. We may experience unanticipated negative consequences from
year 2000 problems, including material costs caused by undetected errors or
defects in the technology we use in our internal systems.
We have not inquired as to the year 2000 readiness of our customers,
suppliers or vendors and are unable to determine what, if any, consequences
their year 2000 failures would have on our operations, liquidity or financial
condition. If our suppliers, vendors or customers experience any year 2000
problems, it could affect the revenues generated by our FindWhat.com(SM) search
service. In most cases, we believe that we could find replacement vendors or
suppliers which are year 2000 compliant without significant delay or expense.
However, if substantially all of our suppliers and vendors prove not to be year
2000 compliant and if we experience difficulties in finding replacement
suppliers and vendors, then our business could be materially adversely affected.
If our customers, suppliers and vendors experience year 2000 problems, it could
result in an interruption in, or a failure of, certain of our normal business
activities or operations. We could also be required to incur substantial
expenditures in order to adapt our services to changing technologies or to new
protocols as a result of any realized year 2000-related programming errors.
We may be unable to promote and maintain our brands.
We believe that establishing and maintaining brand identity of our services
is a critical aspect of attracting and expanding a large corporation client base
and that the importance of brand recognition will increase due to the growing
number of Internet search engine optimization marketing services and search
engines. Promotion and enhancement of our brands will depend largely on our
success in continuing to provide high quality service. If businesses do not
perceive our existing services to be of high quality, or if we introduce new
services or enter into new business ventures that are not favorably received by
businesses, we will risk diluting our brand identities and decreasing their
attractiveness to existing and potential customers.
-13-
<PAGE>
In order to attract and retain customers and to promote and maintain brands
in response to competitive pressures, we may find it necessary to substantially
increase our financial commitment to creating and maintaining a distinct brand
loyalty among our customers. If we incur excessive expenses in an attempt to
improve our services or to promote and maintain our brands, our business,
results of operations and financial condition could be materially affected. Our
brand identity may also be diluted as a result of any inability to protect our
service marks or domain names.
Credit card fraud could cause us losses in the future.
To date, we have not suffered losses as a result of orders placed with
fraudulent credit card data. Under current credit card practices, a merchant is
liable for fraudulent credit card transactions when that merchant does not
obtain a cardholder's signature, as is the case with the transactions we
process. We may not adequately control fraudulent credit card transactions in
the future.
The nature of our business exposes us to a variety of online security risks.
We are potentially vulnerable to attempts by unauthorized computer users
and "hackers" to penetrate our network security. If successful, such individuals
could misappropriate proprietary information or cause interruptions in our
online services. We may be required to expend significant capital and resources
to protect against the threat of such security breaches or to alleviate problems
caused by such breaches. In addition to security breaches, inadvertent
transmission of computer viruses could expose us to risk of loss or litigation
and possible liability. Continued concerns over the security of Internet
transactions and the privacy of the users may also inhibit the growth of the
Internet generally as a means of conducting commercial transactions, which may
reduce our potential income.
Government regulation of internet businesses such as ours may increase.
We are not subject to direct regulation by any government agency, other
than regulations applicable to businesses generally, and Internet businesses in
particular. Few laws or regulations are currently directly applicable to access
to or commerce on the Internet. However, the increasing popularity and use of
the Internet have caused several laws or regulations to come under consideration
by federal, state, local and foreign governmental authorities. In the future,
laws may be adopted with respect to the Internet relating to such issues as user
privacy, taxation, infringement, pricing and intellectual property ownership.
Any new legislation or regulation, or a new interpretation of existing laws,
could impact us in ways that are impossible to predict at present.
Our intellectual property rights may not be protectable or of significant value
in the future.
Legal standards relating to the validity, enforceability and scope of
protection of certain intellectual property rights in Internet-related
industries are uncertain and still evolving. The steps we take to protect our
intellectual property rights may not be adequate to protect our future
intellectual property rights. Third parties may also infringe or misappropriate
our copyrights, trademarks, service marks, trade dress and other proprietary
rights. Any such infringement or misappropriation could have a material adverse
effect on our business, operations and financial condition.
-14-
<PAGE>
We regard substantial elements of our services as proprietary and attempt
to protect them by relying on service mark, copyright and trade secret laws and
contractual restrictions on disclosure of information we deem to be
confidential. We have applied for service marks for "BeFirst(SM)", "Be1st(SM)"
and "FindWhat.com(SM)" with the United States Patent and Trademark Office. We
have been advised that a prior "intent-to-use" application has been filed by a
third party for "BeFirst" and that we may not have the right to use or
exclusively use the marks "BeFirst" or "Be1st." As a result, it may prove
necessary or advisable to change the name of our web promotion service, which
may entail additional expense and loss of goodwill. If other companies also
claim the words "BeFirst", "Be1st" and "FindWhat.com", it could involve us in
litigation or additional expense. We intend to apply for the registration of
additional service marks. Effective service mark, copyright and trade secret
protection may not be available in every country in which our service is
distributed or made available through the Internet.
In addition, the relationship between regulations governing domain names
and laws protecting trademarks and similar proprietary rights is unclear. We may
be unable to prevent third parties from acquiring domain names that are similar
to, infringe upon or otherwise decrease the value of our trademarks and other
proprietary rights, which may result in the dilution of the brand identity of
our services.
Our current and future business activities may infringe upon the
proprietary rights of others, and other parties may assert infringement claims
against us. Any such claims and resulting litigation could subject us to
significant liability for damages and could result in the invalidation of our
proprietary rights. Even if not meritorious, such claims could be
time-consuming, expensive to defend and could result in the diversion of our
management's time and attention.
We depend on the efforts of our key personnel, several of whom do not work for
us full-time.
Our success is substantially dependent on the performance of our senior
management and key technical personnel. In particular, our success depends
substantially on the continued efforts of Craig A. Pisaris-Henderson, our Chief
Technical Officer and Chairman of our board of directors, Robert D. Brahms, our
Chief Executive Officer, and Courtney P. Jones, our President.
We currently do not have key person life insurance on Messrs.
Pisaris-Henderson, Brahms or Jones and may be unable to obtain such insurance in
the near future due to high cost or other reasons. We also do not have written
employment agreements with any of these key personnel. We believe that the loss
of the services of any of our executive officers or other key employees could
have a material adverse effect on our business, operations and financial
condition.
Each of Messrs. Brahms, Jones and Pisaris-Henderson are actively involved
in the ownership, management and operation of other businesses, including other
Internet businesses. They may have conflicts of interest in the allocation of
their business time, and that may reduce the amount of time they can devote to
our business and operations.
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<PAGE>
Our current members of management are also controlling stockholders.
Craig A. Pisaris-Henderson, Robert D. Brahms and Courtney P. Jones
collectively own over 50% of our outstanding common stock. Thus, our executive
officers and directors will remain in a position to control all matters
requiring approval of our stockholders, including the election of directors and
proposed acquisitions.
We must comply with the OTC Bulletin Board eligibility rule.
In January of 1999, the SEC granted approval to the NASD OTC Bulletin Board
eligibility Rule 6530 which requires a company listed on the OTC Bulletin Board
to be a reporting company and current in its reports filed with the SEC. As a
result of this rule change we have filed this registration statement in order to
become a full reporting company and list our common stock on the OTC Bulletin
Board. The SEC reporting requirements will add additional expenses to our
operations, including the expense of filing this registration statement and
preparing annual and quarterly reports. Because the SEC may not reach a position
of no comment with regard to this registration statement prior to October 7,
1999, we may lose our listing on the OTC Bulletin Board, which may have an
adverse impact upon the market for our common stock. In the event of this
occurrence, we would anticipate trading on the OTC Bulletin Board soon after
this registration statement is declared effective.
We may not be able to maintain a liquid public market for our common stock.
Our shares of common stock are currently quoted on the OTC Electronic
Bulletin Board. However, prior to June 18, 1999, there was no significant or
long-term established public trading market for our common stock. A regular and
established market may not be maintained for our common stock, and there can
also be no assurance as to the depth or liquidity of any market for our common
stock or the prices at which holders may be able to sell our common stock.
The market price of our common stock may be extremely volatile.
The public market for our common stock has been established relatively
recently. In addition, the trading prices of the securities of many Internet
companies have fluctuated widely in recent months. The market price of our
common stock will be influenced by many factors and may be subject to
significant fluctuations in response to variations in our operating results,
investor perceptions, supply and demand, interest rates, developments with
regard to our activities, our future financial condition, changes in our
management, general economic conditions and conditions specific to the industry.
We may become subject to regulations associated with low priced securities.
Prior to our acquisition of BeFirst Internet Corporation, our common stock
frequently traded at a price below $5.00 per share. Trading in securities priced
below $5.00 per share is subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, as amended, which require
additional disclosure by broker-dealers in connection with any trades involving
a stock defined as a "penny stock" (generally, any non-Nasdaq equity security
that has a market price share of less than $5.00 per share). Such rules require
the delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated with it and impose
various sales
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<PAGE>
practice requirements on broker-dealers who sell penny stocks to persons other
than established customers and accredited investors (generally defined as an
investor with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 individually or $300,000 together with a spouse). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to the sale. The broker-dealer also must disclose the
commissions payable to the broker-dealer, current bid and offer quotations for
the penny stock and whether the broker-dealer is the sole market-maker with
presumed control over the market. Such information must be provided to the
customer orally or in writing before or with the written confirmation of trade
sent to the customer. Monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. The additional burdens imposed upon
broker-dealers by such requirements could discourage broker-dealers from
effecting transactions in our common stock which could severely limit its market
liquidity and the ability of holders of our common stock to sell it.
Our charter documents limit the liability of our directors and officers.
Our Articles of Incorporation include provisions, subject to certain
exceptions, to limit, to the fullest extent permitted by Nevada General
Corporation Law as in effect from time to time, the personal liability of our
directors for monetary damages arising from a breach of their fiduciary duties
as directors. Our Articles of Incorporation also include provisions to the
effect that we will, to the maximum extent permitted from time to time under the
law of the State of Nevada, indemnify any director or officer. In addition, our
By-laws require us to indemnify any director, officer, employee or agent for
acts which such person reasonably believes are not in violation of our corporate
purposes as set forth in our Articles of Incorporation, to the fullest extent
permitted by law.
A significant portion of our common stock is eligible for immediate public
trading.
Of the 12,500,000 shares of our common stock outstanding, 2,500,000 shares
are freely tradeable or immediately eligible for resale under Rule 144
promulgated pursuant to the Securities Act of 1933, as amended. Sales of
substantial amounts of our common stock in the public market could adversely
affect the market price of our common stock.
Our Articles of Incorporation authorize us to issue additional shares of stock.
We are authorized to issue up to 50,000,000 shares of common stock. Our
board of directors has the ability to issue additional shares of common stock in
the future for such consideration as the board of directors may consider
sufficient without seeking shareholder approval. The issuance of additional
common stock in the future will reduce the proportionate ownership and voting
power of current stockholders.
Our Articles of Incorporation also authorize us to issue up to 500,000
shares of preferred stock, the rights and preferences of which may be designated
by the board of directors. Such designations may be made without shareholder
approval. The designation and issuance of preferred stock in the future could
create additional securities which would have dividend and liquidation
preferences over the outstanding shares of common stock. These provisions could
also impede a non-negotiated change in control.
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<PAGE>
We do not intend to pay future cash dividends.
We currently do not anticipate paying cash dividends on our common stock at
any time in the near future. Any decision to pay dividends will depend upon our
profitability at the time, cash available and other factors. We may never pay
cash dividends or distributions on our common stock.
Item 2. Financial Information
Selected Financial Data
The following tables set forth selected historical financial data for
FindWhat.com that reflect the acquisition of all of the outstanding capital
stock of BeFirst Internet Corporation by us in June 1999. Since as a result of
the acquisition, the stockholders of BeFirst acquired effective control of us,
the accounting for the acquisition is identical to that resulting from a reverse
acquisition, except that no goodwill is recorded. Under reverse acquisition
accounting, our post-reverse acquisition historical financial statements are
those of BeFirst. Accordingly, our financial statements included elsewhere
herein are the audited historical financial statements of BeFirst as of December
31, 1998 and for the period from March 27, 1998 (the date of inception of
BeFirst) through December 31, 1998. The financial data as of December 31, 1998
and for the period from March 27, 1998 through December 31, 1998 are derived
from our audited financial statement included elsewhere herein. The interim
financial data as of June 30, 1999 and for the periods from March 27, 1998
through December 31, 1998 and for the six months ended June 30, 1998 are derived
from our unaudited financial statements included elsewhere herein and include,
in the opinion of management, all necessary adjustments (consisting of normal
and recurring accruals) for the fair presentation of such information. Interim
results may not necessarily be indicative of our results of operations for a
full year or any other future period. Also see Management's Discussion and
Analysis of Financial Information and our financial statements included
elsewhere herein.
<TABLE>
<CAPTION>
Period From Period From
March 27, 1998 March 27, 1998 Consolidated
(Date of Inception) (Date of Inception) Six Months Ended
To December 31, 1998 To June 30, 1998 June 30, 1999
-------------------- ----------------- -----------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Statement of Operations Data
Revenues $ 58,818 $ 1,500 $ 217,504
Cost of revenues 36,837 6,282 56,444
--------- --------- ---------
Gross profit 21,981 (4,782) 161,060
Operating Expenses
Selling, general and administrative 44,146 10,506 188,594
Stock option compensation 0 0 211,000
--------- --------- ---------
Net Loss $ (22,165) $(15,228) $(238,534)
========= ========= =========
</TABLE>
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<PAGE>
As of June 30,
As of December 31, 1999
1998 (unaudited)
Balance Sheet Data ----------------- ---------------
Cash and cash equivalents $ 6,702 $2,442,545
Total Assets 16,525 2,539,192
Total current liabilities 38,690 153,787
Stockholders' equity (deficit) (22,165) 2,385,405
Management's Discussion and Analysis of Financial Condition and Results of
Operation
Overview
In June 1999, we acquired all of the outstanding common stock of BeFirst
Internet Corporation, a Delaware corporation, in exchange for the issuance to
the holders of the outstanding capital stock of BeFirst of 8,750,000 shares of
our common stock. Such acquisition gives effect to the following transactions,
each of which was deemed to have occurred simultaneously with the acquisition:
o we cancelled 8,600,000 of our outstanding common stock contributed to
us by certain stockholders and we effected a one-for-two reverse split
of our own outstanding common stock, resulting in a decrease in our
outstanding common stock to 2,500,000 shares;
o we issued 1,250,000 post-split shares of our common stock in a private
transaction for a price of $2.00 per share;
o we changed our corporate name from Collectibles America, Inc. to
BeFirst.com; and
o the individual that had served as our sole officer and director prior
to our acquisition of BeFirst resigned and was replaced by a board of
directors consisting of the former holders of the outstanding capital
stock of BeFirst.
As a result of such transactions, BeFirst became a wholly-owned subsidiary
of ours and the former holders of capital stock of BeFirst acquired effective
control of us as the parent of BeFirst. In September 1999, we changed our
corporate name to FindWhat.com.
We were incorporated in October 1995. In 1997, we discontinued business
operations and transferred our operating assets to creditors to satisfy
outstanding liabilities. Therefore, the following discussion is a discussion of
the business of BeFirst.
BeFirst was incorporated in March 1998. BeFirst completed development of
proprietary methodology and software tools designed to optimize our client's web
sites and achieve improved ranking results in response to searches conducted by
consumers on major Internet search sites, known as "search engines" or
"portals", for search words and phrases selected by our clients within their
respective business categories. We are also in the process of commercially
launching our Internet web search service which is designed to assist consumers
who search the Internet to locate desired providers of
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<PAGE>
information, products and services to quickly and easily locate relevant
information and pass through our portal to the desired information.
Our web site optimization service, which we market under the Be1st.com(SM)
service mark, and our web site search service, which we market under the
FindWhat.com(SM) service mark, are designed to increase traffic to our clients'
web sites. Our Be1st.com(SM) service derives revenues from set-up fees charged
to new clients and through click-through rates charged for traffic the service
generates for a client's web site. Our search service is designed to generate
revenues based on the number of consumer click-throughs resulting from a
client's listing on our FindWhat.com(SM) web site. The click-through rate will
be determined by an auction among clients in the same category. Clients desiring
placement within a search category will bid against one another, with the
winning bid being at least $.01 greater than the next highest bid. We anticipate
that our search service will generate additional revenue from banner
advertisements to be placed on search result pages.
We began offering our Internet web site optimization service in August 1998
and we are in the process of commercially launching our FindWhat.com(SM) search
service. We have not yet generated any significant revenues and do not expect to
generate any significant revenues until after we commercially launch our
Internet search service and the number of clients we service and the volume of
click-throughs at our clients' web sites substantially increase.
In order to significantly increase revenues we will be required to incur
significant advertising and promotional expenses. In anticipation of an
expansion of our operations, we have recently employed additional management
personnel, including individuals to serve as our chief financial officer and
director of sales. We intend to employ additional personnel in such areas as
sales, technical support and finance. These actual and proposed increases in
personnel will significantly increase our selling, general and administrative
expenses.
Our limited operating history and the uncertain nature of the markets we
address or intend to address make prediction of our future results of operations
difficult. Our operations may never generate significant revenues, and we may
never achieve profitable operations.
Results of Operations
The following table sets forth our results of operations expressed as
percentage of total revenues:
<TABLE>
<CAPTION>
Period From March 27, 1998 Period From March 27, Six Months
(Date of Inception) through 1998 (Date of Inception) Ended
December 31, 1998 through June 30, 1998 June 30, 1999
---------------------------- ------------------------ --------------
<S> <C> <C> <C>
Revenues....................... 100% 100% 100%
==== ==== ====
Cost of Revenues............... 63% 419% 26%
Operating expenses............. 75 700 184
Net loss....................... (38) (1019) (110)
</TABLE>
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<PAGE>
Comparison of Six Months Ended June 30, 1999 to the Period from March 27, 1998
(Date of Inception) to June 30, 1998; and Comparison of the Six Months Ended
June 30, 1999 to the Period from Inception to December 31, 1998.
Revenues. Revenues increased from $1,500 for the period from March 27, 1998 to
June 30, 1998 to $217,504 for the six months ended June 30, 1999. In addition,
revenues increased from $58,818 for the period from inception to December 31,
1998 to $217,504 for the six months ended June 30, 1999. We introduced our
Be1st.com web site optimization service in August 1998. The increase in revenue
is primarily due to the increase in the number of clients using our Be1st.com
service, which increased from 25 as of December 31, 1998 to 105 as of June 30,
1999.
Cost of Revenues. Cost of revenues consists primarily of sales representative
commissions, domain registration expenses for clients and web site design
expenses. Our cost of revenues increased from $6,282 for the period from
inception to June 30, 1998 to $56,444 for the six months ended June 30, 1999. In
addition, our cost of revenues increased from $36,837 for the period from
inception to December 31, 1998 to $56,444 for the six months ended June 30,
1999. The increases were primarily attributable to increases in sales
representative commissions and additional client domain registration fees
required in connection with the expansion of our operations.
Operating Expenses. The two components of our operating expenses are selling,
general and administrative expenses and stock option compensation. Selling,
general and administrative expenses consist primarily of advertising, salaries
and related costs for general corporate functions, including professional fees
and depreciation of computer equipment. Stock option compensation consists of a
non-cash charge of $211,000 during the six months ended June 30, 1999 which was
recognized for the excess of the fair market value of our common stock over the
exercise price of options granted to non-employees.
Operating expenses increased from $10,506 for the period from March 27,
1998 to June 30,1998 to $399,594 for the period ended June 30, 1999. In
addition, operating expenses increased from $44,146 for the period from March
27, 1998 to December 31, 1998 to $399,594 for the six months ended June 30,
1999. Selling, general and administrative costs for the six months ended June
30, 1999 included $145,501 for advertising, professional fees and payroll.
Increases in advertising and salaries (other than the non-cash charge) are the
result of the expansion of our operation, the development of our FindWhat.com
search service and increased sales efforts. We anticipate additional increases
in advertising, payroll, professional fees and depreciation in the future. Also
included in selling, general and administrative expenses for the periods ended
December 31, 1998 and June 30, 1999 are $18,000 and $43,000, respectively for
rent allocation, support and other administrative services provided by WPI
Advertising, Inc.
Net Loss. As a result, our net loss increased from $15,288 for the period from
inception to June 30, 1998 to $238,534 for the six months ended June 30. 1999.
In addition, our net loss increased from $22,165 for the period from inception
to December 31, 1998 to $238,534 for the six months ended June 30, 1999.
Liquidity and Capital Resources
Through June 30, 1999, space and support services were provided to us by
WPI Advertising, Inc. and Internet Services International, Inc., affiliates of
certain of our officers and directors. Internet Services International, Inc., an
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Our cash requirements during this period were financed primarily from operating
cash flow and the net proceeds of a private placement of common stock. As of
June 30, 1999, we had cash and cash equivalents of approximately $2,435,000,
representing the net cash proceeds from the sale of 1,250,000 shares of our
common stock in a private placement. For the six months ended June 30, 1999,
operating activities provided net cash of approximately $21,500, due to cash
flows from operating activities. Net cash used in investing activities was
$20,837, reflecting purchase of equipment.
We are using the net cash proceeds from the private placement of our common
stock to purchase equipment, complete the development and launch of our Internet
search service, and finance salaries and other general expenses in anticipation
of an expansion in our customer base and activities.
We currently anticipate that the net proceeds from our private placement,
together with cash flow from operations, will be sufficient to finance our needs
for working capital and capital expenditures over at least the next 12 months.
Although we believe that there are sufficient funds to implement our
proposed operations over the next 12 months, we intend to seek additional funds
as needed in the future in order to finance additional technical, sales,
management and marketing personnel and to expand our marketing and promotional
capabilities. We cannot assume that we will be able to obtain any additional
funds when required on commercially reasonable terms, or at all.
Year 2000 Compliance
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. Beginning in the year
2000, these code fields will need to accept four digit entries to distinguish
the year 2000 and 21st century dates from other 20th century dates. As a result,
computer systems and/or software products used by many companies may need to be
upgraded to solve this problem.
We believe that our internal software and hardware systems will function
properly with respect to dates in the year 2000 and thereafter and have
completed our internal information technology and non-information technology
assessments. We do not expect to incur any significant costs in the future for
year 2000 problems. We may experience unanticipated negative consequences from
year 2000 problems, including material costs, caused by undetected errors or
defects in the technology used in our internal systems.
We have not inquired as to the year 2000 readiness of our customers,
suppliers or vendors and are unable to determine what, if any, consequences
their year 2000 failures would have on our operations, liquidity or financial
condition. If our suppliers, vendors or customers experienced any year 2000
problems, it could affect the revenues of our FindWhat.com(SM) services. In most
cases, we believe that we could find replacement vendors or suppliers which are
year 2000 compliant without significant delay or expense. However, if
substantially all of our suppliers and vendors prove not to be year 2000
compliant and if we experience difficulties in finding replacement suppliers and
vendors, then our business could be materially adversely affected. If our
customers, suppliers and vendors experience year 2000 problems, it could result
in an interruption in, or a failure of, certain of our normal business
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<PAGE>
activities or operations. We could also be required to incur substantial
expenditures in order to adapt our services to changing technologies or to new
protocols as a result of any realized year 2000-related programming errors.
Item 3. Properties.
We lease approximately 3,200 square feet of office space in Fort Myers,
Florida for current annual rent of $28,000. The lease commenced September 1,
1999 and has a three-year term.
Our sales activities are conducted out of the Manhattan offices of WPI
Advertising, Inc., a business owned and operated by Robert D. Brahms, an
executive officer and director of our company. WPI is providing us with office
space and support services on a cost allocation basis. As our sales operations
expand, we will determine whether to maintain our presence in the WPI offices or
to seek alternate space in Manhattan. We believe that this space is sufficient
for our current and anticipated sales activities.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information as of August 26, 1999
with respect to the beneficial ownership of our common stock by the following
individuals and groups:
o each of our directors
o each of our executive officers
o each person whom we know beneficially owns five percent (5%) or more
of our outstanding common stock
o all directors and executive officers as a group
<TABLE>
<CAPTION>
Percentage of
Name and Address of Number of Shares Shares Beneficially
Beneficial Owner Beneficially Owned Owned
---------------- ------------------ -------------------
<S> <C> <C>
Courtney P. Jones 2,413,688 19.1
Craig A. Pisaris-Henderson 2,418,688 19.1
Robert D. Brahms 2,350,658 18.6
Peter W. Miller 1,562,500 12.5
All directors and executive
officers as a group (3 persons) 7,183,034 54.9
</TABLE>
The address of Messrs. Jones, Pisaris-Henderson and Brahms is care of
FindWhat.com, 121 West 27th Street, Suite 903, New York, New York 10001. The
address of Mr. Peter Miller is care of Proskauer Rose LLP, 1545 Broadway, New
York 10036, attention: Jack P. Jackson, Esq.
-23-
<PAGE>
We believe that all of the persons named in the above table have sole
voting and investment power over all shares they beneficially own. Each person
in the table above is considered the beneficial owner of securities that he can
acquire through the exercise of options, warrants or convertible securities
within 60 days from the date of this registration statement. In calculating each
beneficial owner's percentage ownership, we have assumed that options held by
that person that are exercisable within 60 days from the date of this
registration statement have been exercised.
Messrs. Brahms, Jones and Pisaris-Henderson were granted options to
purchase 122,667, 125,667 and 130,667 shares of common stock, respectively, at
$2.20 per share pursuant to our 1999 Stock Option Plan. The applicable
percentage ownership amounts in the above table are based on 12,500,000 shares
of common stock outstanding as of August 26, 1999.
Item 5. Directors and Executive Officers.
The following table sets forth our directors and executive officers:
Name Age Position
---- --- --------
Courtney P. Jones 40 Chairman of Board of Directors and a Director
Craig A. Pisaris-Henderson 29 President, Chief Technology Officer,
Secretary and a Director
Robert D. Brahms 42 Chief Executive Officer,
Treasurer and a Director
Michael Schulman 43 Chief Financial Officer
Courtney P. Jones has served as our Chairman and as one of our directors
since we acquired BeFirst Internet Corporation in July 1999. Prior to that time,
he served as the President and as a director of BeFirst since its inception in
March 1998. He has served as President and a Director of V-Lite Video
Corporation, a direct marketing production and distributing company, for more
than the past five years. In 1993, Mr. Jones also created, wrote and produced
the "Electronic Entrepreneur," a program for aspiring electronic retailers that
was sold on television and radio. Mr. Jones attended the University of Missouri
for four years before leaving to begin his radio career.
Craig A. Pisaris-Henderson has served as our President, Secretary and Chief
Technology Officer and as one of our directors since we acquired BeFirst in June
1999. Prior to that time he served as the Vice President and Secretary and a
director of BeFirst since its inception in March 1998. He has served as
President and a director of Internet Services International Inc. since April
1998, and as chief executive officer and a director of E-Troop.com, an Internet
business since April 1998. From 1993 to April 1998, Mr. Pisaris-Henderson was
employed by Henderson Enterprises, an Internet business, in sales and web site
design.
Robert D. Brahms has served as our Chief Executive Officer and Treasurer
and as one of our directors since we acquired BeFirst in June 1999. Prior to
that time he served as a Vice President and Treasurer and as a director of
BeFirst since May 1998. Mr. Brahms has served as the President and director of
WPI Advertising Inc. since it was founded in 1986. WPI is a general advertising
firm and
-24-
<PAGE>
sales representative of other advertising media, including print and Internet.
Mr. Brahms is a graduate of the State University of New York.
Michael Schulman has served as our Chief Financial Officer since July 1999.
From 1996 to July 1999, he served as Vice President and Chief Financial Officer
for IPO, LLC/Fashion Express Worldwide. From 1991 to 1996, Mr. Schulman served
as Vice President and Chief Financial Officer of Gotham Apparel Corp. Mr.
Schulman has BS and MBA degrees from St. John's University in New York City.
Messrs. Brahms, Jones and Pisaris-Henderson are each actively involved in
the ownership, management and operation of other businesses, including other
Internet businesses. As such, they may have conflicts of interest in the
allocation of business time which may have an adverse affect on our business and
operations.
Directors are elected for a period of one year and serve until the next
annual meeting at which their successors are duly elected by the stockholders.
Officers and other employees serve at the will of the board of directors. There
are currently no arrangements or understandings regarding the length of time
each director is to serve in such a capacity. We have no audit or compensation
committees of our board of directors.
Item 6. Executive Compensation.
Commencing July 1, 1999, Robert D. Brahms, Courtney P. Jones and Craig A.
Pisaris-Henderson are being compensated at a rate of $120,000 per year. From
March 27, 1998 (the date of BeFirst's inception) through June 30, 1999, none of
our executive officers received any compensation from us. Messrs. Brahms, Jones
and Pisaris-Henderson have been granted incentive stock options to purchase
122,667, 125,667 and 130,667 shares of common stock, respectively, at an
exercise price of $2.20 per share under our 1999 Stock Option Plan. Each option
expires five years from its date of grant.
Michael Schulman, the Company's Chief Financial Officer, was employed by us
in July 1999 and is being compensated at a rate of $125,000 per year. In
addition, Mr. Schulman was granted incentive stock options to purchase 20,000
shares of common stock pursuant to our 1999 Stock Option Plan at an exercise
price of $2.00 per share. Such options expire five years from their date of
grant.
Directors' Compensation
Directors do not receive any compensation for services rendered in such
capacities.
Stock Option Plan
In June 1999, we adopted our 1999 Stock Option Plan, pursuant to which we
may grant options to purchase up to 1,000,000 shares of common stock to our key
employees, officers, directors, consultants and other agents and advisors.
Awards under this Plan will consist of stock options (both non-qualified options
and options intended to qualify as "incentive stock options" under Section 422
of the Internal Revenue Code of 1986, as amended), restricted stock awards,
deferred stock awards, stock appreciation rights and other stock-based awards.
-25-
<PAGE>
The Plan is administered by the board of directors, which may determine the
persons to whom awards will be granted, the number of awards to be granted and
the specific terms of each grant, including vesting, subject to the provisions
of the Plan.
The exercise price of incentive stock options may not be less than 100% of
the fair market value of our common stock on the date of grant (110% of the fair
market value in the case of a grantee holding more than 10% of our outstanding
stock). The aggregate fair market value of shares for which qualified stock
options are exercisable for the first time by such employee (10% shareholder)
during any calendar year may not exceed $100,000. Non-qualified stock options
granted under the Plan may be granted at a price determined by the board of
directors, which may not be less than the fair market value of the common stock
on the date of grant.
The Plan also contains certain change in control provisions which could
cause options and other awards to become immediately exercisable and
restrictions and deferral limitations applicable to other awards to lapse in the
event any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, including a "group" as defined in Section
13(d), but excluding certain stockholders of the Company, becomes the beneficial
owners of more than 25% of the outstanding shares of common stock.
To date, we have granted options to purchase up to 379,001 and 73,000
shares of common stock at $2.00 and $2.20 per share, respectively, to employees
and options to purchase up to an additional 216,712 shares at $2.00 per share to
non-employees.
Item 7. Certain Relationships and Related Transactions.
Our sales activities are conducted out of the Manhattan offices of WPI
Advertising Inc., a business owned and operated by Robert D. Brahms, an
executive officer and director of ours. As our sales operations expand, we will
determine whether to maintain our presence in the WPI offices or to seek
alternate space in Manhattan. From our inception in March 1998 through the date
hereof, WPI has provided office space and support and administrative services to
us. Through September 9, 1999, we have paid expenses to WPI of $70,980 and
Internet Services International, Inc. of $8,172 for certain sales services, as
well as for rent allocation and administrative costs.
We believe that prior transactions with our officers, directors and
principal stockholders were on terms that were no less favorable than we could
have obtained from unaffiliated third parties. All future transactions between
us and our officers, directors and stockholders beneficially owning 5% or more
of our outstanding voting securities or their affiliates will be on terms no
less favorable to us than we could obtain in arm's-length negotiations from
unaffiliated third parties.
Item 8. Legal Proceedings.
We are not a party to any pending legal proceedings and are not aware of
any threatened legal proceedings.
-26-
<PAGE>
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Shareholder Matters.
Market Information. Our common stock has traded since June 17, 1999 on the
NASD's OTC Bulletin Board under the symbol "FWHT." Prior to June 17, 1999, our
common stock was listed under the symbol "CAMJ" and traded infrequently. For the
period from June 17, 1999 to August 17, 1999, the high and low bid prices for
our common stock as reported by the NASD Over the Counter Bulletin Board were
$8.50 and $5.50, respectively. Such prices reflect inter-dealer quotations,
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
The number of record holders of our common stock was approximately 120 as
of August 26, 1999.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares for at least one year is entitled to sell, within any three month period,
a number of shares that does not exceed the greater of (i) one percent of the
shares outstanding, or (ii) the average weekly volume of trading in such shares
for the four calendar weeks preceding such sale, subject to the filing of a Form
144 with respect to such sale and certain other limitations and restrictions. In
addition, a person who is not deemed to have been one of our affiliates at any
time during the 90 days preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least two years, would be entitled to sell
such shares under Rule 144(k) without regard to the volume, manner of sale and
other limitations described above.
Dividend Policy. To date, we have not declared or paid any cash dividends
on our common stock. The payment of dividends, if any, in the future is within
the discretion of the board of directors and will depend upon our earnings,
capital requirements and financial condition and other relevant factors. We
presently intend to retain all earnings to finance our continued growth and the
development of our business and do not expect to declare or pay any cash
dividends in the foreseeable future.
Item 10. Recent Sales of Unregistered Securities.
In October 1997, we sold 12,000,000 shares of common stock to a former
officer for a purchase price of $15,000.
In June 1999, we cancelled 8,600,000 shares of common stock contributed to
us by certain stockholders and then effected a 1-for-2 reverse stock split of
the remaining outstanding shares of common stock.
Following the reverse split, in June 1999, we completed a private offering
of 1,250,000 shares of common stock to 39 purchasers for gross proceeds of
$2,500,000 pursuant to Rule 506 of Regulation D under the Securities Act of
1933, as amended.
In June 1999, we acquired all of the outstanding capital stock of BeFirst
Internet Corporation in exchange for the issuance of 8,750,000 shares of common
stock to the former shareholders of BeFirst Internet Corporation.
-27-
<PAGE>
In June 1999, we issued options under our 1999 Stock Option Plan to
purchase up to an aggregate of 668,713 shares of our common stock to certain
employees and non-employees of the Company at exercise prices of $2.00 and $2.20
per share.
Item 11. Description of Registrant's Securities to be Registered.
Our authorized capital stock consists of 50,000,000 shares of common stock,
$.001 par value per share, and 500,000 shares of preferred stock, $.001 par
value per share. As of August 26, 1999, there were 12,500,000 shares of common
stock outstanding, which as of that date were held of record by 120 holders. No
shares of preferred stock are outstanding.
Common Stock
Holders of common stock are entitled to share equally in all dividends and
distributions that the board of directors, in its discretion, declares from
legally available funds. No holder of common stock has a preemptive right to
subscribe for any securities. No shares of common stock are subject to
redemption or convertible into other securities. Upon our liquidation,
dissolution or winding up, and after payment of creditors and preferred
stockholders, if any, our assets will be divided pro-rata on a share-for-share
basis among the holders of common stock. All shares of common stock now
outstanding are fully paid, validly issued and nonassessable. Each share of
common stock is entitled to one vote on all matters for which shareholders are
required or permitted to vote. Holders of common stock do not have cumulative
voting rights. The holders of more than 50% of the combined shares voting for
the election of directors may elect all of the directors, if they choose to do
so. In that event, holders of the remaining shares of common stock will not be
able to elect any members to the board of directors.
Certain Provisions of Nevada Law
Anti-Takeover Provisions. Nevada law provides that any agreement providing
for the merger or consolidation for sale of all or substantially all of the
assets of a corporation be approved by the owners of at least the majority of
the outstanding shares of that corporation, unless a different vote is provided
for in our Articles of Incorporation. Our Articles of Incorporation do not
provide for a super-majority voting requirement in order to approve any such
transactions. Nevada law also gives appraisal rights for certain types of
mergers, plans of reorganization, or exchanges or sales of all or substantially
all of the assets of a corporation. Under Nevada law, a stockholder does not
have the right to dissent with respect to:
(a) a sale of assets or reorganization, or
(b) any plan of merger or any plan of exchange, if
(i) the shares held by the stockholder are part of a class of shares
which are listed on a national securities exchange or the NASDAQ
National Market System, or are held of record by not less than
2,000 shareholders, and
(ii) the stockholder is not required to accept for his shares any
consideration other than shares of a corporation that,
immediately after the effective time of the merger or exchange,
will
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<PAGE>
be part of a class of shares which are listed on a national
securities exchange or the NASDAQ National Market System, or are
held of record by not less than 2,000 holders.
Control Share Acquisition Provision. Under Nevada law, when a person has
acquired or offers to acquire one-fifth, one-third, or a majority of the stock
of a corporation, a stockholders' meeting must be held after delivery of an
"offeror's" statement, at the offeror's expense, so that the stockholders of the
corporation can vote on whether the owner(s) of the shares proposed to be
acquired (the "control shares") can exercise voting rights. Except as otherwise
provided in a corporation's Articles of Incorporation, the approval of the
owner(s) of a majority of the outstanding stock not held by the offerors is
required so that the stock held by the offerors will have voting rights. The
control share acquisition provisions are applicable to any acquisition of a
controlling interest, unless the articles of incorporation or by-laws of a
corporation in effect on the tenth day following the acquisition of a
controlling interest by an acquiring person provide that the control share
acquisition provisions do not apply. We have not elected out of the control
share acquisition provisions of Nevada law.
Combination Moratorium Provision. Nevada law provides that a corporation
may not engage in any "combinations," which is broadly defined to include
mergers, sales and leases of assets, issuances of securities, and similar
transactions with an "interested stockholder" (which is defined as the
beneficial owner of 10% or more of the voting power of the corporation) and
certain affiliates or their associates for three years after an interested
stockholder's date of acquiring the shares, unless the combination or the
purchase of the shares by the interested stockholder is approved by the board of
directors by the date the interested stockholder acquires the shares. After the
initial three-year period, any combination must still be approved by majority of
the voting power not beneficially owned by the interested stockholder or the
interested stockholders, affiliates or associates, unless the aggregate amount
of cash and the market value of the consideration other than cash that could be
received by stockholders as a result of the combination is at least equal to the
highest of:
(a) the highest bid per share of each class or series of shares,
including the common shares, on the date of the announcement of the
combination or on the date the interested stockholder acquired the shares;
or
(b) for holders of preferred stock, the highest liquidation value of
the preferred stock.
Other Provisions. Under Nevada law, the selection of a period for achieving
corporate goals is the responsibility of the directors. In addition, the
officers, in exercising their respective powers with a view to the interests of
the corporation, may consider:
(i) the interests of the corporation's employees, suppliers,
creditors, and customers,
(ii) the economy of the state and the nation,
(iii) the interests of the economy and of society, and
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<PAGE>
(iv) the long-term, as well as short-term, interests of the
corporation and its stockholders, including the possibility that
those interests may be best served by the continued independence
of the corporation.
The directors also may resist any change or potential change of control of
the corporation if the directors, by majority vote of a quorum, determine that a
change or potential change is opposed to or not in the best interests of the
corporation "upon consideration of the interest of the corporation's
stockholders," or for one of the other reasons described above. The directors
may also take action to protect the interests of the corporations' stockholders
by adopting or executing plans that deny rights, privileges, powers, or
authority to a holder of a specific number of shares or percentage of share
ownership or voting power.
Transfer Agent
Our transfer agent and registrar is Interwest Transfer Co., Inc., 1981 East
4800 South, Salt Lake City, Utah 84117, telephone number (801) 272-9294.
Dividend Policy
We have not paid any dividends on common stock to date and do not
anticipate paying dividends on common stock in the foreseeable future. We intend
to follow a policy of retaining all earnings, if any, for the foreseeable future
in order to finance the development and expansion of our business.
Item 12. Indemnification of Directors and Officers.
The General Corporation Law of Nevada limits the liability of our officers
and directors for breaches of their fiduciary duties except in certain specified
circumstances, and empowers us to indemnify our officers, directors, employees
and others from liability in certain circumstances, such as where a person
successfully defended himself or herself on the merits of an action or acted in
good faith in a manner he or she reasonably believed to be in our best
interests.
Our Articles of Incorporation, with certain exceptions, limit any personal
liability of a director or officer to us or our shareholders for monetary
damages for the breach of such person's fiduciary duty. Therefore, an officer or
director cannot be held liable for damages to us or our shareholders for gross
negligence or lack of due care in carrying out his or her fiduciary duties as a
director except in certain specified instances. Our by-laws provide for
indemnification to the full extent permitted under law, which includes all
liability, damages and costs or expenses arising from or in connection with
service for, employment by, or other affiliation with us to the maximum extent
and under all circumstances permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to our directors, officers and controlling
persons pursuant to these provisions or otherwise, we have been advised that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
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<PAGE>
Item 13. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
Page
----
FindWhat.com
Report of Independent Certified Public Accountants 32
Balance Sheets, December 31, 1998 and June 30, 1999
(unaudited) 33
Statements of Operations, from inception on March 27,
1998 through December 31, 1998, from inception through
June 30, 1998 (unaudited) and for the six months ended
June 30, 1999 (unaudited) 34
Statement of Stockholders' Equity (Deficit), from
inception on March 27, 1998 through December 31, 1998,
and for the six months ended June 30, 1999 (unaudited) 35
Statements of Cash Flows, from inception on March 27,
1998 through December 31, 1998, from inception on March
27, 1998 though June 30, 1998 (unaudited), and for the
six months ended June 30, 1999 (unaudited) 36
Notes to Financial Statements 37-42
Collectibles America, Inc. - Unaudited
Accountant's Disclaimer of Opinion 43
Unaudited Balance Sheet, June 16, 1999 44
Unaudited Statements of Operations, for the period
ended June 16, 1999, for the period ended June 30,
1998, and from inception on October 25, 1995 through
June 16, 1999 45
Unaudited Statement of Stockholders' Equity, from
inception on October 25, 1995 through June 16, 1999 46
Unaudited Statements of Cash Flows, for the period
ended June 16, 1999, for the period ended June 30,
1998, and from inception on October 25, 1995 through
June 16, 1999 47
Notes to Unaudited Financial Statements 48-50
Collectibles America, Inc.
Independent Auditors' Report 51
Balance Sheets, December 31, 1998 and 1997 52
Statements of Operations, for the years ended December
31, 1998 and 1997 and from inception on October 25,
1995 through December 31, 1998 53
Statement of Stockholders' Equity, from inception on
October 25, 1995 through December 31, 1998 54
Statements of Cash Flows, for the years ended December
31, 1998 and 1997 and from inception on October 25,
1995 through December 31, 1998 55
Notes to Financial Statements 56-58
Collectibles America, Inc.
Independent Auditors' Report 59
Balance Sheet, December 31, 1997 and 1996 60
Statement of Operations, for the years ended December
31, 1997 and 1996 and from inception on October 25,
1995 through December 31, 1997 61
Statement of Stockholders' Equity, from inception on
October 25, 1995 through December 31, 1997 62
Statement of Cash Flows, for the years ended December
31, 1997 and 1996 and from inception on October 25,
1995 through December 31, 1997 63
Notes to Financial Statements 64-66
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<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
FindWhat.com
We have audited the accompanying balance sheet of FindWhat.com as of December
31, 1998, and the related statements of operations, stockholders' equity
(deficit) and cash flows for the period from March 27, 1998 (date of inception)
through December 31, 1998. These financial statements are the responsibility of
FindWhat.com's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FindWhat.com as of December 31,
1998 and the results of its operations and its cash flows for the period from
March 27, 1998 (date of inception) through December 31, 1998 in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
New York, New York
August 19, 1999
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<PAGE>
FindWhat.com
BALANCE SHEETS
Consolidated
December 31, June 30,
1998 1999
------------ ------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,702 $ 2,442,545
Accounts receivable 8,463 78,421
Prepaid expenses 200
----------- -----------
Total current assets 15,165 2,521,166
EQUIPMENT - NET 1,360 18,026
----------- -----------
$ 16,525 $ 2,539,192
=========== ===========
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 11,348 $ 92,473
Customer deposits 19,353 6,000
Due to related party 7,989 55,314
----------- -----------
Total current liabilities 38,690 153,787
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (Deficit)
Preferred stock, $.001 par value; authorized,
500,000 shares; none issued and outstanding
Common stock, no par value; authorized,
issued and outstanding, 1,000 shares 1,000
Common stock, $.001 par value;
authorized, 50,000,000 shares; issued
and outstanding, 12,500,000 shares 12,500
Additional paid-in capital 9,000 2,643,604
Accumulated deficit (22,165) (260,699)
----------- -----------
(12,165) 2,395,405
Less stock subscription receivable (10,000) (10,000)
----------- -----------
(22,165) 2,385,405
----------- -----------
$ 16,525 $ 2,539,192
=========== ===========
The accompanying notes are an integral part of these statements.
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<PAGE>
FindWhat.com
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from Period from
March 27, March 27, Consolidated
1998 (date of 1998 (date of Six months
inception) to inception) to ended
December 31, June 30, June 30,
1998 1998 1999
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
Revenues $ 58,818 $ 1,500 $ 217,504
Cost of revenues 36,837 6,282 56,444
----------- ----------- -----------
Gross profit 21,981 (4,782) 161,060
Operating expenses
Selling, general and administrative 44,146 10,506 188,594
Stock option compensation 211,000
----------- ----------- -----------
NET LOSS $ (22,165) $ (15,288) $ (238,534)
=========== =========== ===========
Loss per share - basic and diluted $ 0 $ 0 $ 0.03
=========== =========== ===========
Weighted-average number of common
shares outstanding 8,750,000 8,750,000 9,375,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
FindWhat.com
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(Note B)
Period from March 27, 1998 (date of inception)
to December 31, 1998 and for the
six months ended June 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Common stock, Common stock,
no par value $.001 par value
Shares Amount Shares Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Issuance of common stock 1,000 $ 1,000
Net loss
------------ ------------
Balance at December 31, 1998 1,000 1,000
Reclassification of no par value
common stock into $.001
common stock (1,000) (1,000) 2,500,000 $ 2,500
Issuance of common stock in
connection with private
placement 1,250,000 1,250
Issuance of common stock, in
connection with acquisition
of BeFirst Internet Corporation 8,750,000 8,750
Stock option compensation
Consolidated net loss, June 30, 1999
------------ ------------ ------------ ------------
Consolidated balance at June 30, 1999
(unaudited) -- $ -- 12,500,000 $ 12,500
============ ============ ============ ============
<CAPTION>
Additional Stock
paid-in Accumulated subscription
capital deficit receivable Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Issuance of common stock $ 9,000 $ (10,000)
Net loss $ (22,165) $ (22,165)
------------ ------------ ------------ ------------
Balance at December 31, 1998 9,000 (22,165) (10,000) (22,165)
Reclassification of no par value
common stock into $.001
common stock (250) 1,250
Issuance of common stock in
connection with private
placement 2,432,604 2,433,854
Issuance of common stock, in
connection with acquisition
of BeFirst Internet Corporation (8,750)
Stock option compensation 211,000 211,000
Consolidated net loss, June 30, 1999 (238,534) (238,534)
------------ ------------ ------------ ------------
Consolidated balance at June 30, 1999
(unaudited) $ 2,643,604 $ (260,699) $ (10,000) $ 2,385,405
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
FindWhat.com
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from Period from
March 27, March 27, Consolidated
1998 (date of 1998 (date of Six months
inception) to inception) to ended
December 31, June 30, June 30,
1998 1998 1999
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (22,165) $ (15,288) $ (238,534)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation 340 4,167
Stock option compensation 211,000
Changes in operating assets and liabilities
Accounts receivable (8,463) (69,958)
Other current assets (200)
Accounts payable and accrued expenses 11,348 18,410 81,125
Customer deposits 19,353 6,995 (13,353)
Due to related party 7,989 1,000 47,325
----------- ----------- -----------
Net cash provided by operating activities 8,402 11,117 21,572
----------- ----------- -----------
Cash flows from investing activities
Purchase of equipment (1,700) (1,700) (20,833)
----------- ----------- -----------
Net cash used in investing activities (1,700) (1,700) (20,833)
----------- ----------- -----------
Cash flows from financing activities
Gross proceeds from private placement 2,500,000
Payment of financing costs (64,896)
-----------
Net cash provided by financing activities 2,435,104
----------- ----------- -----------
INCREASE IN CASH AND
EQUIVALENTS 6,702 9,417 2,435,843
Cash and cash equivalents at beginning of period 6,702
----------- ----------- -----------
Cash and cash equivalents at end of period $ 6,702 $ 9,417 $ 2,442,545
=========== =========== ===========
Supplemental noncash investing and financing activities
Capital contributions for stock subscription $ 10,000
===========
</TABLE>
The accompanying notes are an integral part of these statements.
-36-
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(information relating to June 30, 1999 and 1998 is unaudited)
NOTE A - NATURE OF BUSINESS
BeFirst.com was organized under the laws of the State of Nevada and,
beginning June 17, 1999, conducts its operations through its wholly-owned
subsidiary, BeFirst Internet Corporation. In September 1999, the Company
changed its name from BeFirst.com to FindWhat.com ("FindWhat" or the
"Company").
FindWhat offers internet optimization tools to increase traffic flow to
clients' web sites. The Company charges an initial set-up fee to enhance a
client's web page using keywords and utilizes software that tracks
click-through rates. The Company currently derives revenue from two
sources: set-up fees charged to new clients and click-through rates charged
for the traffic the service generates for a client's web site. The Company
operates in one reportable business segment.
NOTE B - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of FindWhat.com
and its wholly-owned subsidiary, BeFirst Internet Corporation.
On June 17, 1999, Collectibles America, Inc. ("Collectibles"), a
nonoperating public company with immaterial net assets, acquired 100% of
the outstanding common stock of BeFirst Internet Corporation, whose date of
inception was March 27, 1998 (the "Acquisition"). The Acquisition resulted
in the owners and management of BeFirst Internet Corporation having
effective control of the combined entity. Concurrent with the Acquisition,
Collectibles changed its name to BeFirst.com. In September 1999,
BeFirst.com changed its name to FindWhat.com.
Under generally accepted accounting principles, the Acquisition is
considered to be a capital transaction in substance, rather than a business
combination. That is, the Acquisition is equivalent to the issuance of
stock by BeFirst Internet Corporation for the net monetary assets of
FindWhat.com, accompanied by a recapitalization, and is accounted for as a
change in capital structure. Accordingly, the accounting for the
Acquisition is identical to that resulting from a reverse acquisition,
except that no goodwill is recorded. Under reverse takeover accounting, the
post-reverse-acquisition comparative historical financial statements of the
"legal acquirer" (FindWhat.com), are those of the "accounting acquirer"
(BeFirst Internet Corporation).
Accordingly, the financial statements of FindWhat.com as of December 31,
1998 and for the period from March 27, 1998 through December 31, 1998, are
the historical financial statements of BeFirst Internet Corporation for the
same period. The basic structure and terms of the Acquisition and related
events, all of which are deemed to have occurred simultaneously on June 17,
1999, together with the applicable accounting effects, were as follows:
-37-
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
(information relating to June 30, 1999 and 1998 is unaudited)
NOTE B (continued)
o FindWhat.com cancelled 8,600,000 unissued shares of common stock and
effected a 2-to-1 reverse stock split of its outstanding shares of
common stock, resulting in a decrease in the number of outstanding
shares to 2,500,000.
o FindWhat.com issued 1,250,000 post-split shares of common stock in a
private placement for $2.00 per share in cash (see Note K).
o FindWhat.com acquired all of the outstanding shares of common shares
of common stock of BeFirst Internet Corporation in exchange for
8,750,000 post-split shares of FindWhat.com. The common stock
exchanged, in addition to the existing FindWhat.com shares
outstanding, collectively resulted in the recapitalization of the
Company. Earnings per share ("EPS") calculations include the Company's
change in capital structure for all periods presented.
o The sole officer and director of FindWhat.com was replaced by a board
of directors from BeFirst Internet Corporation.
o The Company adopted a 1999 Stock Incentive Plan (see Note L) for
employees.
If the Acquisition had occurred at March 27, 1998 (date of inception of
BeFirst Internet Corporation), the Company's loss for the period ended
December 31, 1998 would have been $29,434, and the loss for the six-month
period ended June 30, 1999 would have been $40,491.
NOTE C - Unaudited Interim Results
The accompanying consolidated balance sheet as of June 30, 1999, the
consolidated statements of operations, cash flows and stockholders' equity
for the six months ended June 30, 1999, and the statements of operations
and cash flows for the period from March 27, 1998 to June 30, 1998, are
unaudited. The unaudited interim financial statements have been prepared on
the same basis as the annual financial statements and, in the opinion of
management, reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the Company's financial position,
results of operations and cash flows as of and for the six months ended
June 30, 1999 and for the period March 27, 1998 (inception) through June
30, 1998. The financial data and other information disclosed in these notes
to the financial statements related to these periods are unaudited. The
results for the six months ended June 30, 1999 are not necessarily
indicative of the results to be expected for the year ending December 31,
1999. Intercompany balances and transactions have been eliminated in the
June 1999 financial statements.
-38-
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
(information relating to June 30, 1999 and 1998 is unaudited)
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
2. Equipment
Equipment is stated at cost. Depreciation is computed using the
double-declining method over the estimated useful lives of five years.
Depreciation expense consists of the depreciation of computer
equipment. Accumulated depreciation was $340 at December 31, 1998 and
$4,507 at June 30, 1999.
3. Revenues
The Company currently derives revenues from two sources: through
set-up fees charged to new clients and through click-through rates
charged for the traffic the service generates to a client's web site.
Revenue is recognized when the set-up services are completed and
during the periods click-throughs are generated.
4. Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions in determining the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
5. Basic and Diluted Loss Per Share
Basic and diluted loss per share is calculated by dividing the net
loss by the weighted average number of shares of common stock
outstanding during each period. Stock options have been excluded from
the calculation of diluted loss per share as their effect would have
been antidilutive.
The issuance of 8,750,000 shares as described in Note B has been
reflected as of March 27, 1998.
-39-
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
(information relating to June 30, 1999 and 1998 is unaudited)
NOTE E - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
December 31, June 30,
1998 1999
----------- ---------
(unaudited)
Accounts payable $ 9,332 $ 6,998
Professional fees 871 40,510
Salaries and bonuses 1,145 44,965
------- -------
$11,348 $92,473
======= =======
NOTE F - RELATED PARTY TRANSACTIONS
The Company shares space both in New York and Florida with WPI Advertising
Inc. ("WPI") and Internet Solutions International ("ISI"), whose respective
owners are also the shareholders and officers of the Company.
Through June 30, 1999, the Company paid a 30% commission to WPI for sales
generated by WPI. The commission covered sales costs as well as rent
allocation and other administrative costs provided by WPI. These expenses
for the period ended December 31, 1998 and June 30, 1999 were approximately
$18,000 and $63,000 respectively, which are included in selling, general
and administrative expenses.
Beginning July 1, 1999, the Company hired its own sales staff and entered
into a revised arrangement with WPI whereby an allocation of the
above-mentioned rent and administrative expenses will be apportioned to the
Company. In addition, in July 1999, the Company signed a lease (with an
unrelated lessor) and will move its technical operations out of ISI's
offices. The lease term is for three years at $34,800 annually.
-40-
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
(information relating to June 30, 1999 and 1998 is unaudited)
NOTE G - DUE TO RELATED PARTY
Due to related party consists of the following:
December 31, June 30,
1998 1999
------------ --------
(unaudited)
Commissions payable due to WPI $ 4,989 $37,914
Other payables due to WPI 17,400
Loan due to WPI 3,000
------- -------
$ 7,989 $55,314
======= =======
NOTE H - CUSTOMER DEPOSITS
Customer deposits represents advances on account for future click-through
sales.
NOTE I - COMMITMENTS AND CONTINGENCIES
Beginning August 1, 1999, the Company leased office space under the terms
of an operating lease that expires in 2002.
Future minimum payments under noncancellable operating leases consisted of
the following at December 31, 1998:
1999 $11,700
2000 28,500
2001 30,300
2002 18,200
------
$88,700
=======
-41-
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
(information relating to June 30, 1999 and 1998 is unaudited)
NOTE J - CONCENTRATION OF FINANCIAL INSTRUMENTS
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents. The Company
places its cash and cash equivalents with EAB Bank. In general, such
instruments exceeded the FDIC insurance limit of $100,000. The amount of
funds as of June 30, 1999, in excess of this insurance coverage, was
approximately $2,400,000.
NOTE K - PRIVATE PLACEMENT
In June 1999, a private placement to offer 1,250,000 shares of $.001 par
value common stock at a price of $2.00 per share was completed by the
Company. The proceeds from the offering are being used as follows: (a)
upgrades to transactions processing systems; (b) the hiring of additional
sales and technical personnel; (c) development of a new search engine,
which is scheduled to be released in Fall 1999; and (d) purchase of
additional computer hardware and software.
As a result of the private placement, approximately $65,000 of legal costs
were incurred, which are being reflected as a reduction to additional
paid-in-capital.
NOTE L - STOCK INCENTIVE PLAN
In June 1999, the Board of Directors of the Company adopted the 1999 Stock
Incentive Plan ("the Plan"). The total number of shares reserved and
available for distribution to the Company's key employees, officers,
directors, consultants and other agents and advisors under this Plan will
be 1,000,000 shares. Awards under the Plan will consist of stock options
(both qualified and non-qualified options), restricted stock awards,
deferred stock awards and stock appreciation rights.
On June 17, 1999, the Company granted 450,000 options under the terms of
the Plan to its employees and 207,000 options to nonemployees, exercisable
at $2.00 per share. Total expense recognized for stock options given to
nonemployees amounted to approximately $211,000, which is included in the
statement of operations for the six months ended June 30, 1999.
NOTE M - SUBSEQUENT EVENT
In August 1999, the Company acquired a database license from Inktomi, Inc.
which will require minimum aggregate payments of $600,000 over the next
three years.
-42-
<PAGE>
ACCOUNTANT'S DISCLAIMER OF OPINION
Board of Directors
COLLECTIBLES AMERICA, INC.
Salt Lake City, Utah
The accompanying balance sheet of Collectibles America, Inc. as of June 16, 1999
and the related statements of operations, stockholders' equity and cash flows
for the period ended June 16, 1999, for the period ended June 30, 1998, and from
inception on October 25, 1995 through June 16, 1999 were not audited by us and,
accordingly, we do not express an opinion on them.
PRITCHETT, SILER & HARDY, P.C.
August 13, 1999
Salt Lake City, Utah
-43-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
UNAUDITED BALANCE SHEET
ASSETS
June 16,
1999
--------
CURRENT ASSETS:
Cash $ --
--------
Total Current Assets --
--------
$ --
--------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ --
--------
Total Current Liabilities --
========
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
25,000,000 shares authorized,
13,600,000 shares issued
and outstanding at June 16, 1999 13,600
Capital in excess of par value 73,000
Deficit accumulated during the
development stage (86,600)
--------
Total Stockholders' Equity --
--------
$ --
========
The accompanying notes are an integral part of
these unaudited financial statements.
-44-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
UNAUDITED STATEMENTS OF OPERATIONS
For the For the From Inception
Period Ended Period Ended on October 25,
June 16, June 30, 1995 Through
-------- -------- June 16,
1999 1998 1999
-------- -------- --------
REVENUES $ -- $ -- $ --
COST OF GOODS SOLD -- -- --
-------- -------- --------
GROSS PROFIT -- -- --
-------- -------- --------
EXPENSES:
General and administrative
expenses 12,957 120 15,195
-------- -------- --------
LOSS BEFORE INCOME TAXES (12,957) (120) (15,195)
CURRENT TAX EXPENSE -- -- --
DEFERRED TAX EXPENSE -- -- --
-------- -------- --------
LOSS FROM CONTINUING
OPERATIONS (12,957) (120) (15,195)
DISCONTINUED OPERATIONS:
Loss from operations of
discontinued line of business -- -- (71,405)
-------- -------- --------
NET LOSS $(12,957) $ (120) $(86,600)
-------- -------- --------
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00) $ (.00)
Discontinued operations (.00) (.00) (.01)
-------- -------- --------
Net Income (.00) (.00) (.01)
======== ======== ========
The accompanying notes are an integral part of
these unaudited financial statements.
-45-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
UNAUDITED STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON OCTOBER 25, 1995
THROUGH JUNE 16, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
------------------------- Excess of Development
Shares Amount Par Value Stage
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, October 25, 1995 -- $ -- $ -- $ --
Issuance of common stock upon initial
Organization for cash at $.0125 per
Share, October, 1995 1,200,000 1,200 13,800 --
Issuance of common stock, for cash
Pursuant to public offering,
December, 1995 at $.25 per
Share, less offering costs of $43,400 400,000 400 56,200 --
Net loss for the period ended
December 31, 1995 -- -- -- (2,851)
---------- ---------- ---------- ----------
BALANCE, December 31, 1995 1,600,000 1,600 70,000 (2,851)
Net loss for the year ended
December 31, 1996 -- -- -- (66,300)
---------- ---------- ---------- ----------
BALANCE, December 31, 1996 1,600,000 1,600 70,000 (69,151)
Issuance of common stock for cash
October 14, 1997 at $.00125 per share 12,000,000 12,000 3,000 --
Net loss for the year ended
December 31, 1997 -- -- -- (2,588)
---------- ---------- ---------- ----------
BALANCE, December 31, 1997 13,600,000 13,600 73,000 (71,739)
Net loss for the year ended
December 31, 1998 -- -- -- (1,904)
---------- ---------- ---------- ----------
BALANCE, December 31, 1998 13,600,000 13,600 73,000 (73,643)
Net loss for the period ended
June 16, 1999 -- -- -- (12,957)
---------- ---------- ---------- ----------
BALANCE, June 16, 1999 13,600,000 $ 13,600 $ 73,000 $ (86,600)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of
these unaudited financial statements.
-46-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the From Inception
Period Ended Period Ended on October 25,
June 16, June 30, 1995 Through
--------- --------- June 16,
1999 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows used by Operating Activities:
Net income (loss) $ (12,957) $ (120) $ (86,600)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Non-cash expenses -- -- 2,844
Depreciation -- -- --
Amortization 72 20 195
Change in assets and liabilities:
(Decrease) in accounts payable -- -- --
(Decrease) in accrued liabilities -- -- --
--------- --------- ---------
Net Cash Flows Used by
Operating Activities (12,885) (100) (83,561)
--------- --------- ---------
Cash Flows used by Investing Activities:
Additions of property and equipment -- -- (2,844)
Payment of organization costs -- -- (195)
--------- --------- ---------
Net Cash Used by Investing Activities -- -- (3,039)
--------- --------- ---------
Cash Flows provided by Financing Activities:
Proceeds from stock issuance -- -- 130,000
Payment of stock offering costs -- -- (43,400)
--------- --------- ---------
Net Cash Provided by Financing
Activities -- -- 86,600
--------- --------- ---------
Net Increase (Decrease) in Cash (12,885) (100) --
Cash at Beginning of Period 12,885 15,000 --
--------- --------- ---------
Cash at End of Period $ -- $ 14,900 $ --
--------- --------- ---------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended June 16, 1999:
None
</TABLE>
The accompanying notes are an integral part of
these unaudited financial statements.
-47-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Collectibles America, Inc. (the Company) was organized under
the laws of the State of Nevada on October 25, 1995 and has elected a
fiscal year end of December 31. The Company has not been successful in
establishing ongoing operations and is considered a development stage
company as defined in SFAS No. 7. The Company was formed to engage in the
business of acquiring and marketing collectible items such as trading cards
and autographed memorabilia from athletes and celebrities. During 1997 the
Company discontinued the marketing of collectibles, and is presently
considering other business opportunities. The Company has, at the present
time, not paid any dividends and any dividends that may be paid in the
future will depend upon the financial requirements of the Company and other
relevant factors.
Organization Costs - The Company was amortizing its organization costs,
which reflect amounts expended to organize the Company, over sixty [60]
months using the straight line method. During the period ended June 16,
1999, the Company adopted Statement of Position 98-5 and amortized the
remaining $72.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in
accordance with FASB 128 "Earnings Per Share". [See Note 5]
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a
maturity of three months or less to be cash equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reported period. Actual results
could differ from those estimated.
Recently Enacted Accounting Standards - SFAS No. 130, "Reporting
Comprehensive Income", SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", SFAS No. 132, "Employer's Disclosure
about Pensions and Other Postretirement Benefits", SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", and SFAS
No. 134, "Accounting for Mortgage-Backed Securities..." were recently
issued. SFAS No. 130, 131, 132, 133 and 134 have no current applicability
to the Company or their effect on the financial statements would not have
been significant.
NOTE 2 - DISCONTINUED OPERATIONS
During 1997, the Company abandoned and discontinued its collectibles
marketing operations. The Company's property and equipment were transferred
to a former officer of the company in satisfaction of consulting fees, and
the remaining assets were used to satisfy, in full, remaining liabilities.
The total revenues generated by the discontinued operations amounted to $0
and $120,744 during the years ended 1997 and 1996 respectively. The Company
currently has no on-going operations. At the point in time when the Company
discontinued its operations, there were 1,600,000 shares of common stock
issued and outstanding. The discontinued operations have been segregated on
the Statements of Operations.
-48-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK
Change in Control - During October, 1997, an individual purchased
12,000,000 shares of common stock of the Company giving him an 88%
controlling interest in the company. Total proceeds from the sale of stock
amounted to $15,000 or $.00125 per share. The former officers and directors
resigned and the individual was elected as the new president and board
member.
Public Stock Offering - During December, 1995, the Company completed a
public stock offering of 400,000 shares of common stock. Total proceeds
raised amounted to $100,000 and offering costs of $43,400 were offset
against the proceeds. The offering was believed to be exempt from
registration with the Securities and Exchange Commission under Rule 504 of
Regulation D.
Initial Organization - In connection with its organization the Company
issued 1,200,000 shares of common stock during October, 1995, to its
initial shareholders for $15,000 ($.0125 per share).
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - During the period ended June 16, 1999, the
Company did not pay any regular salary or compensation to its officers and
directors. However, during October, 1997, fixed assets with a book value of
$2,078 were transferred to a former officer of the Company in settlement of
consulting fees.
Office Space - During the period ended June 16, 1999, the Company did not
have a need to rent office space. An officer/shareholder of the Company is
allowing the Company to use his office as a mailing address, as needed, at
no expense to the Company.
NOTE 5 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share for
the periods presented:
<TABLE>
<CAPTION>
For the For the From Inception
Period Ended Period Ended on October 25,
June 16, June 30, 1995 Through
----------- ----------- June 16,
1999 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
Loss from continuing operations
available to common shareholders
(numerator) $(12,957) $(120) $(15,195)
----------- ----------- ------------
Loss from discontinued operations
available to common shareholders
(numerator) - - (71,405)
----------- ----------- ------------
Weighted average number of common
shares outstanding used in loss per
share for the period (denominator) 13,600,000 13,600,000 7,242,384
----------- ----------- ------------
</TABLE>
-49-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. At June 16, 1999, the Company
has available unused operating loss carryforwards of approximately $86,600,
which may be applied against future taxable income and which expire in
various years through 2019. The amount of the net operating loss
carryforward which can be utilized by the Company will be subject to annual
limitations due to the substantial change in ownership which has occurred
in the Company.
The amount of and ultimate realization of the benefits from the operating
loss carryforwards for income tax purposes is dependent, in part, upon the
tax laws in effect, the future earnings of the Company, and other future
events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards the
Company has established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset has been
recognized for the loss carryforwards. The net deferred tax asset is
approximately $29,000 as of June 16, 1999, with an offsetting valuation
allowance at June 30, 1999 of the same amount. The change in the valuation
allowance for the period ended June 16, 1999 is approximately $4,000.
NOTE 7 - SUBSEQUENT EVENTS
Business Acquisition - Subsequent to the date of these financial
statements, the Company completed an acquisition of all the issued and
outstanding shares of common stock of BeFirst Internet Corporation ("
BeFirst"), a Delaware corporation, in a stock-for-stock exchange. The
Company proposes to issue 8,750,000 shares of post-split common stock in
the exchange. Upon completion of the exchange, the Company further proposes
to issue 1,250,000 additional shares of post-split common stock in a
limited offering at a proposed price of $2.00 per share for cash. In the
event the acquisition is completed, the current shareholders of the Company
would only own approximately 20% of the combined enterprise after the
exchange and the limited offering. The current officers and directors of
the Company would resign and the shareholders of BeFirst would gain control
(approximately 70%) of the Company. Ultimate consummation of the
acquisition is subject to various terms including the signing of a
Definitive Agreement.
-50-
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
COLLECTIBLES AMERICA, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheets of Collectibles America, Inc. [A
Development Stage Company] at December 31, 1998 and 1997, and the related
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1998 and 1997 and from inception on October 25, 1995 through
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of
Collectibles America, Inc. for the period from inception on October 25, 1995
through December 31, 1996 were audited by other auditors whose report dated
April 14, 1997, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements audited by us present fairly, in all material respects, the
financial position of Collectibles America, Inc. as of December 31, 1998 and
1997, and the results of its operations and its cash flows for the years ended
December 31, 1998 and 1997 and for the period from inception through December
31, 1998, in conformity with generally accepted accounting principles.
March 4, 1999
Salt Lake City, Utah
-51-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
BALANCE SHEETS
ASSETS
December 31,
--------------------
1998 1997
-------- --------
CURRENT ASSETS:
Cash $ 12,885 $ 15,000
-------- --------
Total Current Assets 12,885 15,000
ORGANIZATION COSTS, net 72 111
-------- --------
Total Assets $ 12,957 $ 15,111
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued liabilities $ -- $ 250
-------- --------
Total Current Liabilities -- 250
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
25,000,000 shares authorized,
13,600,000 shares issued
and outstanding at December 31, 1998
and 1997 13,600 13,600
Capital in excess of par value 73,000 73,000
Deficit accumulated during the
development stage (73,643) (71,739)
-------- --------
Total Stockholders' Equity 12,957 14,861
-------- --------
$ 12,957 $ 15,111
======== ========
The accompanying notes are an integral part of these financial statements.
-52-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From Inception
on October 25,
December 31, 1995 Through
----------------------------- December 31,
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
COST OF GOODS SOLD -- -- --
-------- -------- --------
GROSS PROFIT -- -- --
-------- -------- --------
EXPENSES:
General and administrative expenses 1,904 289 2,238
-------- -------- --------
LOSS BEFORE INCOME TAXES (1,904) (289) (2,238)
CURRENT TAX EXPENSE -- -- --
DEFERRED TAX EXPENSE -- -- --
-------- -------- --------
LOSS FROM CONTINUING OPERATIONS (1,904) (289) (2,238)
DISCONTINUED OPERATIONS:
Loss from operations of discontinued
Line of business -- (2,299) (71,405)
-------- -------- --------
NET LOSS $ (1,904) $ (2,588) $(73,643)
-------- -------- --------
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00) $ (.00)
Discontinued operations (.00) (.00) (.01)
-------- -------- --------
Net Income (.00) (.00) (.01)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-53-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON OCTOBER 25, 1995
THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
----------------------------- Excess of Development
Shares Amount Par Value Stage
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, October 25, 1995 -- $ -- $ -- $ --
Issuance of common stock upon initial
Organization for cash at $.0125 per
Share, October, 1995 1,200,000 1,200 13,800 --
Issuance of common stock, for cash
Pursuant to public offering,
December, 1995 at $.25 per
Share, less offering costs of $43,400 400,000 400 56,200 --
Net loss for the period ended
December 31, 1995 -- -- -- (2,851)
---------- ---------- ---------- ----------
BALANCE, December 31, 1995 1,600,000 1,600 70,000 (2,851)
Net loss for the year ended
December 31, 1996 -- -- -- (66,300)
---------- ---------- ---------- ----------
BALANCE, December 31, 1996 1,600,000 1,600 70,000 (69,151)
Issuance of common stock for cash
October 14, 1997 at $.00125 per share 12,000,000 12,000 3,000 --
Net loss for the year ended
December 31, 1997 -- -- -- (2,588)
---------- ---------- ---------- ----------
BALANCE, December 31, 1997 13,600,000 13,600 73,000 (71,739)
Net loss for the year ended
December 31, 1998 -- -- -- (1,904)
---------- ---------- ---------- ----------
BALANCE, December 31, 1998 13,600,000 $ 13,600 $ 73,000 $ (73,643)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-54-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From Inception
For the Years Ended on October 25,
December 31, 1995 Through
------------------------ December 31,
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows used by Operating Activities:
Net income (loss) $ (1,904) $ (2,588) $ (73,643)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Non-cash expenses -- 2,844 2,844
Depreciation -- (539) --
Amortization 39 39 123
Change in assets and liabilities:
(Decrease) in accounts payable (250) -- --
(Decrease) in accrued liabilities -- (178) --
--------- --------- ---------
Net Cash Flows Used by
Operating Activities (2,115) (422) (70,676)
--------- --------- ---------
Cash Flows used by Investing Activities:
Additions of property and equipment -- -- (2,844)
Payment of organization costs -- -- (195)
--------- --------- ---------
Net Cash Used by Investing Activities -- -- (3,039)
--------- --------- ---------
Cash Flows provided by Financing Activities:
Proceeds from stock issuance -- 15,000 130,000
Payment of stock offering costs -- -- (43,400)
--------- --------- ---------
Net Cash Provided by Financing
Activities -- 15,000 86,600
--------- --------- ---------
Net Increase (Decrease) in Cash (2,115) 14,578 12,885
Cash at Beginning of Period 15,000 422 --
--------- --------- ---------
Cash at End of Period $ 12,885 $ 15,000 $ 12,885
========= ========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended December 31, 1998:
None
</TABLE>
The accompanying notes are an integral part of these financial statements.
-55-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State of
Nevada on October 25, 1995 and has elected a fiscal year end of December
31. The Company has not been successful in establishing ongoing operations
and is considered a development stage company as defined in SFAS No. 7. The
Company was formed to engage in the business of acquiring and marketing
collectible items such as trading cards and autographed memorabilia from
athletes and celebrities. During 1997 the Company discontinued the
marketing of collectibles, and is presently considering other business
opportunities. The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Organization Costs - The Company is amortizing its organization costs,
which reflect amounts expended to organize the Company, over sixty [60]
months using the straight line method. Amortization expense was $39 and $39
for the periods ended December 31, 1998 and 1997.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in
accordance with FASB 128 "Earnings Per Share". [See Note 5]
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a
maturity of three months or less to be cash equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reported period. Actual results
could differ from those estimated.
Recently Enacted Accounting Standards - SFAS No. 130, "Reporting
Comprehensive Income", SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", SFAS No. 132, "Employer's Disclosure
about Pensions and Other Postretirement Benefits", SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", and SFAS
No. 134, "Accounting for Mortgage-Backed Securities..." were recently
issued. SFAS No. 130, 131, 132, 133 and 134 have no current applicability
to the Company or their effect on the financial statements would not have
been significant.
NOTE 2 - DISCONTINUED OPERATIONS
During 1997, the Company abandoned and discontinued its collectibles
marketing operations. The Company's property and equipment were transferred
to a former officer of the company in satisfaction of consulting fees, and
the remaining assets were used to satisfy, in full, remaining liabilities.
The total revenues generated by the discontinued operations amounted to $0
and $120,744 during 1997 and 1996 respectively. The Company currently has
no on-going operations. At the point in time when the Company discontinued
its operations, there were 1,600,000 shares of common stock issued and
outstanding. The discontinued operations have been segregated on the
Statements of Operations.
-56-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK
Change in Control - During October, 1997, an individual purchased
12,000,000 shares of common stock of the Company giving him an 88%
controlling interest in the company. Total proceeds from the sale of stock
amounted to $15,000 or $.00125 per share. The former officers and directors
resigned and the individual was elected as the new president and board
member.
Public Stock Offering - During December, 1995, the Company completed a
public stock offering of 400,000 shares of common stock. Total proceeds
raised amounted to $100,000 and offering costs of $43,400 were offset
against the proceeds. The offering was believed to be exempt from
registration with the Securities and Exchange Commission under Rule 504 of
Regulation D.
Initial Organization - In connection with its organization the Company
issued 1,200,000 shares of common stock during October, 1995, to its
initial shareholders for $15,000 ($.0125 per share).
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - During the years ended December 31, 1998 and
1997, the Company did not pay any regular salary or compensation to its
officers and directors. However, during October, 1997, fixed assets with a
book value of $2,078 were transferred to a former officer of the Company in
settlement of consulting fees.
Office Space - During the years ended December 31, 1998 and 1997, the
Company did not have a need to rent office space. An officer/shareholder of
the Company is allowing the Company to use his office as a mailing address,
as needed, at no expense to the Company.
NOTE 5 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share for
the periods presented:
<TABLE>
<CAPTION>
For the From Inception
Year Ended on October 25,
December 31, 1995 Through
------------------------------ December 31,
1998 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Loss from continuing operations
available to common shareholders
(numerator) $ (1,904) $ (289) $ (2,238)
------------ ------------ ------------
Loss from discontinued operations
available to common shareholders
(numerator) -- (2,299) (71,405)
------------ ------------ ------------
Weighted average number of common
shares outstanding used in loss per
share for the period (denominator) 13,600,000 4,164,384 6,170,937
------------ ------------ ------------
</TABLE>
-57-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. At December 31, 1998, the
Company has available unused operating loss carryforwards of approximately
$73,600, which may be applied against future taxable income and which
expire in various years from 2010 to 2018. The amount of the net operating
loss carryforward which can be utilized by the Company will be subject to
annual limitations due to the substantial change in ownership which has
occurred in the Company.
The amount of and ultimate realization of the benefits from the operating
loss carryforwards for income tax purposes is dependent, in part, upon the
tax laws in effect, the future earnings of the Company, and other future
events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards the
Company has established a valuation allowance equal to the amount of the
loss carryforwards and, therefore, no deferred tax asset has been
recognized for the loss carryforwards. The net deferred tax asset is
approximately $25,000 as of December 31, 1998, with an offsetting valuation
allowance at December 31, 1998 of the same amount. The change in the
valuation allowance for 1998 is approximately $1,000.
-58-
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
COLLECTIBLES AMERICA, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Collectibles America, Inc. [A
Development Stage Company] at December 31, 1997, and the related statements of
operations, stockholders' equity and cash flows for the year ended December 31,
1997 and from inception on October 25, 1995 through December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Collectibles America, Inc. as of December
31, 1996 and for the period from inception on October 25, 1995 through December
31, 1996 were audited by other auditors whose report dated April 14, 1997,
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements audited by us present fairly, in all material respects, the
financial position of Collectibles America, Inc. as of December 31, 1997, and
the results of its operations and its cash flows for the year ended December 31,
1997 and for the period from inception through December 31, 1997, in conformity
with generally accepted accounting principles.
April 17, 1998
Salt Lake City, Utah
-59-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
--------------------
1997 1996
-------- --------
CURRENT ASSETS:
Cash $ 15,000 $ 422
-------- --------
Total Current Assets 15,000 422
PROPERTY AND EQUIPMENT, net -- 2,305
ORGANIZATION COSTS, net 111 150
-------- --------
$ 15,111 $ 2,877
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued liabilities $ 250 $ 428
-------- --------
Total Current Liabilities 250 428
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
25,000,000 shares authorized,
13,600,000 and 1,600,000 shares issued
and outstanding at December 31, 1997
and 1996 13,600 1,600
Capital in excess of par value 73,000 70,000
Deficit accumulated during the
development stage (71,739) (69,151)
-------- --------
Total Stockholders' Equity 14,861 2,449
-------- --------
$ 15,111 $ 2,877
======== ========
The accompanying notes are an integral part of this financial statement.
-60-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
STATEMENT OF OPERATIONS
From Inception
on October 25,
December 31, 1995 Through
-------------------- December 31,
1997 1996 1997
-------- -------- --------
REVENUES $ -- $ -- $ --
COST OF GOODS SOLD -- -- --
-------- -------- --------
GROSS PROFIT -- -- --
-------- -------- --------
EXPENSES:
General and administrative expenses (289) (39) (334)
-------- -------- --------
LOSS BEFORE INCOME TAXES (289) (39) (334)
CURRENT TAX EXPENSE -- -- --
DEFERRED TAX EXPENSE -- -- --
-------- -------- --------
LOSS FROM CONTINUING OPERATIONS (289) (39) (334)
DISCONTINUED OPERATIONS:
Loss from operations of discontinued
operation (2,299) (66,261) (71,405)
Loss on disposal of discontinued
operation -- -- --
-------- -------- --------
NET LOSS (2,588) $(66,300) $(71,739)
-------- -------- --------
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00) $ (.00)
Discontinued operations (.00) (.04) (.03)
-------- -------- --------
Net Income (.00) (.04) (.03)
======== ======== ========
The accompanying notes are an integral part of this financial statement.
-61-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON OCTOBER 25, 1995
THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
----------------------------- Excess of Development
Shares Amount Par Value Stage
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, October 25, 1995 -- $ -- $ -- $ --
Issuance of common stock, for cash
October 25, 1995 at $.071875 per
share less offering costs of $43,400 1,600,000 1,600 70,000 --
Net loss for the period ended
December 31, 1995 -- -- -- (2,851)
---------- ---------- ---------- ----------
BALANCE, December 31, 1995 1,600,000 1,600 70,000 (2,851)
Net loss for the year ended
December 31, 1996 -- -- -- (66,300)
---------- ---------- ---------- ----------
BALANCE, December 31, 1996 1,600,000 1,600 70,000 (69,151)
Issuance of common stock for cash
October 14, 1997 at $.00125 per share 12,000,000 12,000 3,000 --
Net loss for the year ended
December 31, 1997 -- -- -- (2,588)
---------- ---------- ---------- ----------
BALANCE, December 31, 1997 13,600,000 $ 13,600 $ 73,000 $ (71,739)
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-62-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
From Inception
For the Years Ended on October 25,
December 31, 1995 Through
----------------------------- December 31,
1997 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows used by Operating Activities:
Net income (loss) $ (2,588) $ (66,300) $ (71,739)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Non-cash expenses 2,844 -- 2,844
Depreciation (539) 539 --
Amortization 39 39 84
Change in assets and liabilities:
Increase (decrease) in accounts payable -- -- --
Accrued liabilities (178) 233 250
--------- --------- ---------
Net Cash Flows Used by
Operating Activities (422) (65,489) (68,561)
--------- --------- ---------
Cash Flows used by Investing Activities:
Additions of property and equipment -- (2,844) (2,844)
Payment of organization costs -- -- (195)
--------- --------- ---------
Net Cash Used by Investing Activities -- (2,844) (3,039)
--------- --------- ---------
Cash Flows provided by Financing Activities:
Proceeds from stock issuance 15,000 -- 130,000
Payment of stock offering costs -- -- (43,400)
--------- --------- ---------
Net Cash Provided by Financing
Activities 15,000 -- 86,600
--------- --------- ---------
Net Increase (Decrease) in Cash 14,578 (68,333) 15,000
Cash at Beginning of Period 422 68,755 --
--------- --------- ---------
Cash at End of Period $ 15,000 $ 422 $ 15,000
========= ========= =========
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
Supplemental schedule of Noncash Investing and Financing Activities:
For the period ended December 31, 1997:
None
</TABLE>
The accompanying notes are an integral part of this financial statement.
-63-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State of
Nevada on October 25, 1995 and has elected a fiscal year end of December
31. The Company has not been successful in establishing ongoing operations
and is considered a development stage company as defined in SFAS No. 7. The
Company was formed to engage in the business of acquiring and marketing
collectible items such as trading cards and autographed memorabilia from
athletes and celebrities. During 1997 the Company discontinued the
marketing of collectibles, and is presently considering other business
opportunities. The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Property and Equipment - Property and equipment are stated at cost.
Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized, upon being placed in
service. Expenditures for maintenance and repairs are charged to expense as
incurred. Depreciation is computed for financial statement purposes on a
straight-line basis over the estimated useful lives of the assets. For
federal income tax purposes, depreciation is computed under the modified
accelerated cost recovery system. [See Note 3]
Organization Costs - The Company is amortizing its organization costs,
which reflect amounts expended to organize the Company, over sixty [60]
months using the straight line method. Amortization expense was $39 and $39
for the periods ended December 31, 1997 and 1996.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in
accordance with FASB 128 "Earnings Per Share". [See Note 7]
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a
maturity of three months or less to be cash equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reported period. Actual results
could differ from those estimated.
NOTE 2 - DISCONTINUED OPERATIONS
During 1997 the Company abandoned and discontinued its collectibles
marketing operations. The Company's property and equipment were transferred
to a former officer of the company in satisfaction of consulting fees, and
the remaining assets were used to satisfy, in full, remaining liabilities.
The total revenues generated by the discontinued operations amounted to $0
and $120,744 during 1997 and 1996 respectively. The Company currently has
no on-going operations. At the point in time when the Company discontinued
its operations, there were 1,600,000 shares of common stock issued and
outstanding. The discontinued operations have been segregated on the
Statements of Operations.
-64-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1997 and
1996:
1997 1996
------- ------
Equipment $ -- $2,844
------- ------
Less Accumulated Depreciation -- (539)
------- ------
$ -- $2,305
======= ======
Depreciation expense for the periods ended December 31, 1997 and 1996
amounted to $227 and $539.
NOTE 4 - CAPITAL STOCK
Common Stock - During October 1997, the Company issued 12,000,000 shares of
its previously authorized, but unissued common stock. Total proceeds from
the sale of stock amounted to $15,000 or $.0125 per share.
NOTE 5 - CHANGE IN CONTROL
During October, 1997, an individual purchased 12,000,000 shares of common
stock of the Company [See Note 4] giving him an 89% controlling interest in
the company. The former officers and directors resigned and the individual
was elected as the new president and board member.
NOTE 6 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any regular salary or
compensation to its officers and directors. However, during October, 1997,
fixed assets with a book value of $2,078 were transferred to a former
officer of the Company in settlement of consulting fees.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his
office as a mailing address, as needed, at no expense to the Company.
-65-
<PAGE>
COLLECTIBLES AMERICA, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share for
the periods ended December 31, 1997 and 1996:
1997 1996
--------- ---------
Loss from continuing operations
available to common shareholders
(numerator) $(289) $(39)
--------- ---------
Loss from discontinued operations
available to common shareholders
(numerator) (2,299) (66,261)
--------- ---------
Weighted average number of common
shares outstanding used in loss per
share for the period (denominator) 4,164,384 1,600,000
========= =========
NOTE 8 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. At December 31, 1997, the
Company has available unused operating loss carryforwards of approximately
$71,500, which may be applied against future taxable income and which
expire in various years from 2010 to 2012. The amount of the net operating
loss carryforward which can be utilized by the Company will be subject to
annual limitations due to the substantial change in ownership which has
occurred in the Company.
The amount of and ultimate realization of the benefits from the operating
loss carryforwards for income tax purposes is dependent, in part, upon the
tax laws in effect, the future earnings of the Company, and other future
events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards the
Company has established a valuation allowance equal to the amount of the
loss carryforwards and, therefore, no deferred tax asset has been
recognized for the loss carryforwards. The net deferred tax asset is
approximately $24,000 as of December 31, 1997, with an offsetting valuation
allowance at December 31, 1997 of the same amount. The change in the
valuation allowance for 1997 is approximately $800.
-66-
<PAGE>
Item 14. Changes in and Disagreements with Accountants.
In August 1999, our board of directors retained Grant Thornton LLP as our
independent accountants and dismissed Pritchett, Siler & Hardy, P.C., the
accountants for Collectibles America, Inc., and Levine, Levine & Meyrowitz,
CPAs, P.C., the accountants for BeFirst Internet Corporation.
During the periods Pritchett, Siler & Hardy, P.C. and Levine, Levine &
Meyrowitz, CPAs, P.C. were retained, there were no disagreements with the former
auditors on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which would have caused them
to make reference to the subject matter in connection with their reports. No
accountants report prepared by the former auditors on our financial statements
for either of the past two years contained an adverse opinion or disclaimer of
opinion or was modified as to uncertainty, audit scope or accounting principles.
Prior to engaging Grant Thornton LLP, neither we nor anyone acting on our
behalf consulted with Grant Thornton LLP regarding the application of accounting
principles to any specific transaction or the type of audit opinion that might
be rendered on our financial statements.
Item 15. Financial Statements and Exhibits.
Number Exhibit
a) Financial Statements
FindWhat.com-Audited Financial Statements as of December 31,
1998 and June 30, 1999.
Collectibles America, Inc. - Unaudited Financial Statements
as of June 16, 1999 and June 30, 1998
Collectibles America, Inc. - Audited Financial
Statements as of December 31, 1998 and 1997
Collectibles America, Inc. - Audited Financial
Statements as of December 31, 1997 and 1996
b) Exhibits
2.1 Agreement and Plan of Reorganization dated June 17, 1999 by
and among BeFirst Internet Corporation, Collectibles
America, Inc. and Mick Jardine.
3.1 Articles of Incorporation of FindWhat.com, as amended.
3.2 By-laws of FindWhat.com
10.1 Portal Services Agreement dated June 18, 1999 between
Inktomi Corporation and BeFirst Internet Corporation.
10.2 Lease Agreement by and between Cambridge Management
Associates and BeFirst Internet Corporation.
10.3 Agreement dated August 18, 1999 between Michigan Internet
Communication Association and BeFirst.com Inc.
-67-
<PAGE>
10.4 BeFirst 1999 Stock Incentive Plan
10.5 Form of Incentive Stock Option Agreement
10.6 Form of Non-Qualified Stock Option Agreement
27.1 Financial Data Schedule
-68-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
FINDWHAT.COM
Date: September 14, 1999 By: /s/ Robert D. Brahms
---------------------------------
Robert D. Brahms, Chief Executive Officer
-69-
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
COLLECTIBLES AMERICA, INC.
AND
BEFIRST INTERNET CORPORATION
<PAGE>
TABLE OF CONTENTS
1. Plan of Reorganization.................................................1
2. Exchange of Shares.....................................................1
3. Pre-Closing Events.....................................................2
4. Exchange of Securities.................................................2
5. Other Events Occurring at Closing......................................3
6. Delivery of Shares.....................................................3
7. Representations of BeFirst Stockholders................................3
8. Representations of BeFirst.............................................4
9. Representations of CAI and Jardine.....................................5
10. Closing................................................................7
11. Conditions Precedent to the Obligations of BeFirst.....................7
12. Conditions Precedent to the Obligations of CAI ........................9
13. Indemnification.......................................................10
14. Nature and Survival of Representations................................10
15. Documents at Closing..................................................10
16. Finder's Fees.........................................................11
17. Miscellaneous.........................................................12
Signature Page................................................................13
Exhibit A - BeFirst Stockholder Schedule
Exhibit B - Amendment to Articles of Incorporation
Exhibit C - Investment Letter
(i)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement") is
entered into effective as of this ___ day of ___________, 1999, by and among
Collectibles America, Inc., a Nevada corporation (hereinafter "CAI"); Mick
Jardine, the principal shareholder of CAI (hereinafter "Jardine"); BeFirst
Internet Corporation, a Delaware corporation (hereinafter "BeFirst"), and the
owners of all the outstanding shares of common stock of BeFirst (hereinafter the
"BeFirst Stockholders").
RECITALS:
WHEREAS, the BeFirst Stockholders own all of the issued and outstanding
common stock of BeFirst which comprises 1,000 shares (the "BeFirst Common
Stock"). CAI desires to acquire the BeFirst Common Stock solely in exchange for
voting common stock of CAI, making BeFirst a wholly-owned subsidiary of CAI; and
WHEREAS, the BeFirst Stockholders (as set forth on the attached Exhibit
"A") desire to acquire voting common stock of CAI in exchange for the BeFirst
Common Stock, as more fully set forth herein.
NOW THEREFORE, for the mutual consideration set out herein and other good
and valuable consideration, the legal sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. Plan of Reorganization. It is hereby agreed that all of the BeFirst
Common Stock shall be acquired by CAI in exchange solely for CAI common voting
stock (the "CAI Shares"). It is the intention of the parties hereto that all of
the issued and outstanding shares of capital stock of BeFirst shall be acquired
by CAI in exchange solely for CAI common voting stock and that this entire
transaction qualify as a corporate reorganization under Section 368(a)(1)(B)
and/or Section 351 of the Internal Revenue Code of 1986, as amended, and related
or other applicable sections thereunder.
2. Exchange of Shares. CAI and BeFirst Stockholders agree that on the
Closing Date or at the Closing as hereinafter defined, the BeFirst Common Stock
shall be delivered to CAI in exchange for the CAI Shares, after giving effect to
a 2 to 1 reverse stock split (the "CAI Reverse Stock Split") as to all presently
outstanding shares of CAI common stock, as follows:
(a) At Closing, CAI shall, subject to the conditions set forth herein,
issue an aggregate of 8,750,000 shares of CAI common stock (after giving effect
to the CAI Reverse Stock Split)
<PAGE>
for immediate delivery to the BeFirst Stockholders in exchange for the CAI
Shares.
(b) Each BeFirst Stockholder shall execute this Agreement or a written
consent to the exchange of their BeFirst Common Stock for CAI Shares.
(c) Unless otherwise agreed by CAI and BeFirst this transaction shall close
only in the event CAI is able to acquire at least 80% of the outstanding BeFirst
Common Stock; however, it is the intent of the parties to have CAI acquire all
of the BeFirst Common Stock.
3. Pre-Closing Events. The Closing is subject to the completion of the
following:
(a) CAI shall have authorized 50,000,000 shares of $.001 par value common
stock and 500,000 shares of $.001 par value preferred stock. The preferred stock
shall be subject to issuance in such series and with such rights, preferences
and designations as determined in the sole discretion of the board of directors.
(b) Jardine shall have contributed 8,600,000 shares of CAI Common Stock to
CAI for cancellation, leaving 5,000,000 shares issued and outstanding prior to
the CAI Reverse Stock Split.
(c) CAI shall effectuate the CAI Reverse Stock Split at or about the time
of Closing, and shall have 2,500,000 shares of its common stock issued and
outstanding and no other shares of capital stock issued or outstanding not
taking into effect the shares to be issued under this Agreement.
(d) CAI shall demonstrate to the reasonable satisfaction of BeFirst that it
has no material assets and no liabilities contingent or fixed other than the
proceeds of the CAI Financing as described herein.
4. Exchange of Securities. As of the Closing Date each of the following
shall occur:
(a) All shares of BeFirst Common Stock issued and outstanding immediately
prior to the Closing Date shall be exchanged for the CAI Shares (up to an
aggregate amount of 8,750,000 CAI Shares to be delivered at Closing). All such
outstanding shares of BeFirst Common Stock shall be deemed, after Closing, to be
owned by CAI. The holders of such certificates previously evidencing shares of
BeFirst Common Stock outstanding immediately prior to the Closing Date shall
cease to have any rights with respect to such shares of BeFirst Common Stock
except as otherwise provided herein or by law;
(b) Any shares of BeFirst Common Stock held in the treasury of BeFirst
immediately prior to the Closing Date shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto;
2
<PAGE>
(c) The 2,500,000 shares of CAI common stock previously issued and
outstanding prior to the Closing, after giving effect to the CAI Reverse Split,
will remain outstanding.
5. Other Events Occurring at Closing. At Closing, the following shall be
accomplished:
(a) CAI shall file an amendment to its Articles of Incorporation with the
Secretary of State of the State of Nevada in substantially the form attached
hereto as Exhibit "B" effecting an amendment to its Articles of Incorporation to
(i) reflect a name change to a new name as selected by BeFirst and, (ii) to
change the authorized capitalization of CAI to 50,000,000 shares of $.001 par
value common stock and 500,000 shares of $.001 par value preferred stock, as set
forth in the attached Exhibit "B".
(b) The resignation of the existing CAI officer and director and
appointment of new officers and directors as directed by BeFirst.
(c) CAI shall have completed a private offering under Regulation D, Rule
506, as promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended, of 1,250,000 shares of its common stock at
$2.00 per share. The gross proceeds of this offering (the "CAI Financing") shall
be $2,500,000, which amount, less agreed upon costs, shall be delivered to the
control of new management of CAI at Closing in good funds or shall be
represented by the conversion of previous loans to BeFirst arranged for by CAI.
The CAI Financing shall have been completed in compliance with all applicable
state and federal securities laws and the securities sold shall be delivered at
Closing to the investors in the CAI Financing. Persons who have made bridge
loans to BeFirst pursuant to arrangements made by CAI, shall be given the
opportunity to convert the principal of said loans to the purchase of shares in
the private offering prior to Closing upon the same terms as other investors in
the private offering.
(d) CAI shall adopt a Stock Option Plan at Closing to include up to
1,000,000 shares of its common stock. The Plan shall include "incentive" stock
options under Section 422 of the Internal Revenue Code of 1986, as amended and
other options and similar rights. CAI shall grant options under said plan to
employees and others, at Closing, exercisable at $2.00 per share, as designated
by BeFirst subject to the reasonable approval of CAI.
6. Delivery of Shares. On or as soon as practicable after the Closing Date,
BeFirst will use its best efforts to cause the BeFirst Stockholders to surrender
certificates for cancellation representing their shares of BeFirst Common Stock,
against delivery of certificates representing the CAI Shares for which the
shares of BeFirst Common Stock are to be exchanged at Closing.
7. Representations of BeFirst Stockholders. Each BeFirst Stockholder hereby
represents and warrants each only as to its own BeFirst Common Stock, effective
this date and
3
<PAGE>
the Closing Date as follows:
(a) Except as may be set forth in Exhibit "A", the BeFirst Common Stock is
free from claims, liens, or other encumbrances, and at the Closing Date said
BeFirst Stockholder will have good title and the unqualified right to transfer
and dispose of such BeFirst Common Stock.
(b) Said BeFirst Stockholder is the sole owner of the issued and
outstanding BeFirst Common Stock as set forth in Exhibit "A";
(c) Said BeFirst Stockholder has no present intent to sell or dispose of
the CAI Shares and is not under a binding obligation, formal commitment, or
existing plan to sell or otherwise dispose of the CAI Shares.
8. Representations of BeFirst. BeFirst hereby represents and warrants as
follows, which warranties and representations shall also be true as of the
Closing Date:
(a) Except as noted on Exhibit "A", the BeFirst Stockholders listed on the
attached Exhibit "A" are the sole owners of record and beneficially of the
issued and outstanding common stock of BeFirst.
(b) BeFirst has no outstanding or authorized capital stock, warrants,
options or convertible securities other than as described in the BeFirst
Financial Statements or in Exhibit "A", attached hereto.
(c) The unaudited financial statements as of and for the period ended
December 31, 1998, which have been delivered to CAI (hereinafter referred to as
the "BeFirst Financial Statements") are complete and accurate in all material
respects and fairly present the financial condition of BeFirst as of the date
thereof and the results of its operations for the period covered. There are no
material liabilities or obligations, either fixed or contingent, not disclosed
in the BeFirst Financial Statements or notes thereto which are required to be
disclosed therein; BeFirst has no contracts or obligations in the ordinary
course of business which constitute liens or other liabilities which materially
alter the financial condition of BeFirst as reflected in the BeFirst Financial
Statements. BeFirst has good title to all assets shown on the BeFirst Financial
Statements subject only to dispositions and other transactions in the ordinary
course of business, the disclosures set forth therein and liens and encumbrances
of record. The BeFirst Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied (except as
may be indicated therein or in the notes thereto).
(d) Since the date of the BeFirst Financial Statements, there have not been
any material adverse changes in the financial position of BeFirst except changes
arising in the ordinary course of business, which changes will in no event
materially and adversely affect the financial position of BeFirst.
4
<PAGE>
(e) BeFirst is not a party to any material pending litigation or, to its
best knowledge, any governmental investigation or proceeding, not reflected in
the BeFirst Financial Statements, and to its best knowledge, no material
litigation, claims, assessments or any governmental proceedings are threatened
against BeFirst.
(f) BeFirst is in good standing in its jurisdiction of incorporation, and
is in good standing and duly qualified to do business in each jurisdiction where
required to be so qualified except where the failure to so qualify would have no
material negative impact on BeFirst.
(g) BeFirst has (or, by the Closing Date, will have filed) all material
tax, governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate provisions
for all taxes or assessments which have become due as of the Closing Date.
(h) BeFirst has not materially breached any material agreement to which it
is a party. BeFirst has previously given CAI copies or access thereto of all
material contracts, commitments and/or agreements to which BeFirst is a party
including all relationships or dealings with related parties or affiliates.
(i) BeFirst has no subsidiary corporations except as described in writing
to CAI.
(j) BeFirst has made all material corporate financial records, minute
books, and other corporate documents and records available for review to present
management of CAI prior to the Closing Date, during reasonable business hours
and on reasonable notice.
(k) The execution of this Agreement does not materially violate or breach
any material agreement or contract to which BeFirst is a party and has been duly
authorized by all appropriate and necessary corporate action under Delaware of
other applicable law and BeFirst, to the extent required, has obtained all
necessary approvals or consents required by any agreement to which BeFirst is a
party.
(l) All disclosure information regarding BeFirst which is to be set forth
in disclosure documents of CAI or otherwise delivered to CAI by BeFirst for use
in connection with the transaction (the "Acquisition") described herein is true,
complete and accurate in all material respects.
9. Representations of CAI and Jardine. CAI, and Jardine to the best of his
knowledge, hereby jointly and severally represent and warrant as follows, each
of which representations and warranties shall continue to be true as of the
Closing Date:
(a) As of the Closing Date, the CAI Shares, to be issued and delivered to
the BeFirst Stockholders hereunder will, when so issued and delivered,
constitute, duly authorized, validly
5
<PAGE>
and legally issued shares of CAI common stock, fully-paid and nonassessable. CAI
shall have completed its reverse stock split wherein each holder of CAI Shares
shall have received one share of the CAI Shares for each two CAI Shares
previously held. The total number of CAI Shares outstanding shall be 2,500,000
without giving effect to shares issued in the CAI Financing. No shares of CAI's
preferred stock, $0.001 par value, to be authorized at Closing, shall be
outstanding.
(b) At Closing, all of the issued and outstanding common stock of CAI,
including shares issued in the CAI Financing, shall be duly authorized, validly
issued, fully-paid and nonassessable and shall have been issued in compliance
with all applicable corporate and securities laws.
(c) CAI has the corporate power to enter into this Agreement and to perform
its obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the board of directors of CAI. The execution and performance of this
Agreement will not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which CAI is a party and
will not violate any judgment, decree, order, writ, rule, statute, or regulation
applicable to CAI or its properties. The execution and performance of this
Agreement will not violate or conflict with any provision of the Articles of
Incorporation or by-laws of CAI.
(d) CAI has delivered to BeFirst a true and complete copy of its audited
financial statements for the years ended December 31, 1996, 1997, and 1998, (the
"CAI Financial Statements"). The CAI Financial Statements are complete, accurate
in all material respects and fairly present the financial condition of CAI as of
the dates thereof and the results of its operations for the periods then ended.
There are no material liabilities or obligations either fixed or contingent not
reflected therein. The CAI Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes thereto).
(e) Since December 31, 1998, there have not been any material adverse
changes in the financial condition of CAI except with regard to disbursements to
pay reasonable and ordinary expenses in connection with maintaining its
corporate status and pursuing the matters contemplated in this Agreement. Prior
to Closing, all accounts payable and other liabilities of CAI shall be paid and
satisfied in full and CAI shall have no liabilities either contingent or fixed.
(f) Neither Jardine nor CAI is a party to or the subject of any pending
litigation, claims, or governmental investigation or proceeding not reflected in
the CAI Financial Statements or otherwise disclosed herein, and there are no
lawsuits, claims, assessments, investigations, or similar matters, to the best
knowledge of Jardine, threatened or contemplated against or affecting CAI, its
management or its properties or Jardine.
6
<PAGE>
(g) CAI is duly organized, validly existing and in good standing under the
laws of the State of Nevada; has the corporate power to own its property and to
carry on its business as now being conducted and is duly qualified to do
business in any jurisdiction where so required except where the failure to so
qualify would have no material negative impact on it.
(h) CAI has filed all federal, state, county and local income, excise,
property and other tax, governmental and/or related returns, forms, or reports,
which are due or required to be filed by it prior to the date hereof, except
where the failure to do so would have no material adverse impact on CAI, and has
paid or made adequate provision in the CAI Financial Statements for the payment
of all taxes, fees, or assessments which have or may become due pursuant to such
returns or pursuant to any assessments received. CAI is not delinquent or
obligated for any tax, penalty, interest, delinquency or charge.
(i) There are no existing options, calls, warrants, preemptive rights,
registration rights or commitments of any character relating to the issued or
unissued capital stock or other securities of CAI, except as contemplated in
this Agreement.
(j) The corporate financial records, minute books, and other documents and
records of CAI have been made available to BeFirst prior to the Closing and
shall be delivered to new management of CAI at Closing.
(k) CAI has not breached, nor is there any pending, or to the knowledge of
management, any threatened claim that CAI has breached, any of the terms or
conditions of any agreements, contracts or commitments to which it is a party or
by which it or its assets are is bound. The execution and performance hereof
will not violate any provisions of applicable law or any agreement to which CAI
is subject. CAI hereby represents that it has no business operations or material
assets and it is not a party to any material contract or commitment other than
appointment documents with its transfer agent, and that it has disclosed to
BeFirst all relationships or dealings with related parties or affiliates.
(l) CAI common stock is currently approved for quotation on the OTC
Bulletin Board under the symbol "CAMJ" and there are no stop orders in effect
with respect thereto and CAI has made all filings currently required to maintain
its listing.
(m) All information regarding CAI which has been provided to BeFirst or
otherwise disclosed in connection with the transactions contemplated herein, is
true, complete and accurate in all material respects. CAI and Jardine
specifically disclaim any responsibility regarding disclosures as to BeFirst,
its business or its financial condition.
10. Closing. The Closing of the transactions contemplated herein shall take
place on such date (the "Closing") as mutually determined by the parties hereto
when all conditions precedent have been met and all required documents have been
delivered, which Closing is
7
<PAGE>
expected to take place on or about June____ , 1999, but no later than June____ ,
1999, unless extended by mutual consent of all parties hereto. The "Closing
Date" of the transactions described herein (the "Acquisition"), shall be that
date on which all conditions set forth herein have been met and the CAI Shares
are issued in exchange for the BeFirst Common Stock.
11. Conditions Precedent to the Obligations of BeFirst. All obligations of
BeFirst under this Agreement are subject to the fulfillment, prior to or as of
the Closing and/or the Closing Date, as indicated below, of each of the
following conditions:
(a) The representations and warranties by or on behalf of Jardine and CAI
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of the
Closing and Closing Date as though such representations and warranties were made
at and as of such time.
(b) CAI shall have performed and complied with all covenants, agreements,
and conditions set forth in, and shall have executed and delivered all documents
required by this Agreement to be performed or complied with or executed and
delivered by it prior to or at the Closing.
(c) On or before the Closing, the board of directors, and shareholders
representing a majority interest the outstanding common stock of CAI, shall have
approved in accordance with applicable state corporation law the execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein.
(d) On or before the Closing Date, CAI shall have delivered to BeFirst
certified copies of resolutions of the board of directors and shareholders of
CAI approving and authorizing the execution, delivery and performance of this
Agreement and authorizing all of the necessary and proper action to enable CAI
to comply with the terms of this Agreement including the election of BeFirst's
nominees to the Board of Directors of CAI and all matters outlined herein.
(e) The Acquisition shall be permitted by applicable law and CAI shall have
sufficient shares of its capital stock authorized to complete the Acquisition.
(f) At Closing, the existing sole officer and director of CAI shall have
resigned in writing from all positions as director and officer of CAI effective
upon the election and appointment of the BeFirst nominees.
(g) At the Closing, all instruments and documents delivered to BeFirst and
BeFirst Stockholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for BeFirst.
(h) The shares of restricted CAI capital stock to be issued to BeFirst
Stockholders and
8
<PAGE>
in the CAI Financing at Closing will be validly issued, nonassessable and
fully-paid under Nevada corporation law and will be issued in compliance with
all federal, state and applicable corporation and securities laws.
(i) BeFirst and BeFirst Stockholders shall have received the advice of
their tax advisor, if deemed necessary by them, as to all tax aspects of the
Acquisition.
(j) BeFirst shall have received all necessary and required approvals and
consents from required parties and its shareholders.
(k) CAI shall have completed the CAI Financing.
(l) At the Closing, CAI shall have delivered to BeFirst an opinion of its
counsel dated as of the Closing to the effect that:
(i) CAI is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(ii) This Agreement has been duly authorized, executed and delivered
by CAI and is a valid and binding obligation of CAI enforceable in
accordance with its terms;
(iii) CAI through its board of directors and stockholders has taken
all corporate action necessary for performance under this Agreement;
(iv) The documents executed and delivered by CAI to BeFirst and
BeFirst Stockholders hereunder are valid and binding in accordance with
their terms and vest in BeFirst Stockholders, as the case may be, all
right, title and interest in and to the CAI Shares to be issued pursuant to
the terms hereof, and the CAI Shares when issued will be duly and validly
issued, fully-paid and nonassessable;
(v) CAI has the corporate power to execute, deliver and perform under
this Agreement;
(vi) Legal counsel for CAI is not aware of any liabilities, claims or
lawsuits involving CAI;
12. Conditions Precedent to the Obligations of CAI. All obligations of CAI
under this Agreement are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions:
(a) The representations and warranties by BeFirst and BeFirst Stockholders
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof
9
<PAGE>
shall be true in all material respects at and as of the Closing as though such
representations and warranties were made at and as of such time.
(b) BeFirst shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing;
(c) BeFirst shall deliver on behalf of the BeFirst Stockholders a letter
commonly known as an "Investment Letter," signed by each of said shareholders,
in substantially the form attached hereto as Exhibit "C", acknowledging that the
CAI Shares are being acquired for investment purposes.
(d) BeFirst shall deliver an opinion of its legal counsel to the effect
that:
10
<PAGE>
(i) BeFirst is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is
duly qualified to do business in any jurisdiction where so required except
where the failure to so qualify would have no material adverse impact on
BeFirst;
(ii) This Agreement has been duly authorized, executed and delivered
by BeFirst.
(iii) The documents executed and delivered by BeFirst and BeFirst
Stockholders to CAI hereunder are valid and binding in accordance with
their terms and vest in CAI all right, title and interest in and to the
BeFirst Common Stock, which stock is duly and validly issued, fully-paid
and nonassessable.
13. Indemnification. For a period of one year from the Closing, CAI and
Jardine agree to jointly and severally indemnify and hold harmless BeFirst, and
BeFirst agrees to indemnify and hold harmless CAI, at all times after the date
of this Agreement against and in respect of any liability, damage or deficiency,
all actions, suits, proceedings, demands, assessments, judgments, costs and
expenses including attorney's fees incident to any of the foregoing, resulting
from any misrepresentations made by an indemnifying party to an indemnified
party, an indemnifying party's breach of covenant or warranty or an indemnifying
party's nonfulfillment of any agreement hereunder, or from any misrepresentation
in or omission from any certificate furnished or to be furnished hereunder.
14. Nature and Survival of Representations. All representations, warranties
and covenants made by any party in this Agreement shall survive the Closing and
the consummation of the transactions contemplated hereby for one year from the
Closing. All of the parties hereto are executing and carrying out the provisions
of this Agreement in reliance solely on the representations, warranties and
covenants and agreements contained in this Agreement and not upon any
investigation upon which it might have made or any representation, warranty,
agreement, promise or information, written or oral, made by the other party or
any other person other than as specifically set forth herein.
15. Documents at Closing. At the Closing, the following documents shall be
delivered:
(a) BeFirst will deliver, or will cause to be delivered, to CAI the
following:
(i) a certificate executed by the President and Secretary of BeFirst
to the effect that all representations and warranties made by BeFirst under
this Agreement are true and correct as of the Closing, the same as though
originally given to CAI on said date;
(ii) a certificate from the jurisdiction of incorporation of BeFirst
dated at or about the Closing to the effect that BeFirst is in good
standing under the laws of said
11
<PAGE>
jurisdiction;
(iii) Investment Letters in the form attached hereto as Exhibit "C"
executed by each BeFirst Stockholder;
(iv) such other instruments, documents and certificates, if any, as
are required to be delivered pursuant to the provisions of this Agreement;
(v) certified copies of resolutions adopted by the shareholders and
directors of BeFirst authorizing this transaction; and
(vi) all other items, the delivery of which is a condition precedent
to the obligations of CAI as set forth herein.
(vii) the legal opinion required by Section 12(d) hereof.
(b) CAI will deliver or cause to be delivered to BeFirst:
(i) stock certificates representing the CAI Shares to be issued as a
part of the stock exchange as described herein;
(ii) a certificate of the President of CAI, to the effect that all
representations and warranties of CAI made under this Agreement are true
and correct as of the Closing, the same as though originally given to
BeFirst on said date;
(iii) certified copies of resolutions adopted by CAI's board of
directors and CAI's Stockholders authorizing the Acquisition and all
related matters described herein;
(iv) certificate from the jurisdiction of incorporation of CAI dated
at or about the Closing Date that CAI is in good standing under the laws of
said state;
(v) opinion of CAI's counsel as described in Section 11(l) above;
(vi) good funds representing the net proceeds of the CAI Financing;
(vii) resignation of the existing officer and director of CAI;
(viii) all corporate and financial records of CAI; and
(ix) all other items, the delivery of which is a condition precedent
to the obligations of BeFirst, as set forth in Section 12 hereof.
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<PAGE>
16. Finder's Fees. CAI represents and warrants to BeFirst, and BeFirst
represents and warrants to CAI that neither of them, or any party acting on
their behalf, has incurred any liabilities, either express or implied, to any
"broker" of "finder" or similar person in connection with this Agreement or any
of the transactions contemplated hereby other than arrangements, if any,
disclosed to BeFirst by CAI to compensate any person who introduced the parties,
which obligation shall be the sole responsibility of CAI. In this regard, CAI,
on the one hand, and BeFirst on the other hand, will indemnify and hold the
other harmless from any claim, loss, cost or expense whatsoever (including
reasonable fees and disbursements of counsel) from or relating to any such
express or implied liability other than as disclosed herein.
17. Miscellaneous.
(a) Further Assurances. At any time, and from time to time, after the
Closing Date, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with any
of its obligations, agreements or conditions hereunder may be waived in writing
by the party to whom such compliance is owed.
(c) Amendment. This Agreement may be amended only in writing as agreed to
by all parties hereto.
(d) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first class registered or certified mail, return receipt requested.
(e) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada.
(h) Binding Effect. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs, administrators,
executors, successors and assigns.
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<PAGE>
(i) Entire Agreement. This Agreement and the attached Exhibits constitute
the entire agreement of the parties covering everything agreed upon or
understood in the transaction. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof.
(j) Time. Time is of the essence.
(k) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
COLLECTIBLES AMERICA, INC.
By: /s/ Mick Jardine
-------------------------------------
Mick Jardine, President and Secretary
/s/ Mick Jardine
-----------------------------------------
Mick Jardine, individually
BEFIRST INTERNET CORPORATION
By: /s/ Craig Pisaris Henderson By: /s/ Craig Pisaris Henderson
----------------------------- -------------------------------------
Secretary President
SHAREHOLDERS OF BEFIRST
INTERNET CORPORATION
/s/ Robert Brahms
-----------------------------------------
Robert D. Brahms
/s/ Courtney Jones
-----------------------------------------
Courtney Phillips Jones
/s/ Craig Pisaris Henderson
-----------------------------------------
Craig A. Pisaris-Henderson
14
<PAGE>
/s/ Tony Garcia
-----------------------------------------
Tony Garcia
/s/ Christopher Whitaker
-----------------------------------------
Christopher Knight Whitaker
/s/ Peter Miller
-----------------------------------------
Peter Miller
15
Articles of Incorporation
of
Collectibles America, Inc.
A Nevada Corportion
The undersigned natural person, being more than eighteen (18) years of age,
do hereby establish a corporation under Nevada Revised Statute 70.010 et seq.,
and adopt the following Articles of Incorporation.
ARTCLE I
NAME
The name of the corporation shall be "Collectibles America, Inc."
ARTICLE II
REGISTERED OFFICE
The registered agent shall be James S. Kent, 4180 South Pecos, Suite 180,
Las Vegas, Nevada, 89121. The corporation may also maintain an office or offices
at such other place or places, either within or without the State of Nevada as
may be determined, from time to time, by the Board of Directors.
ARTICLE III
PURPOSE
The purpose for which the corporation is organized is to own and manage
sports collectibles items stores, including the
<PAGE>
purchase of such stores which may already be in existence, purchase of such
stores which may already be in existence, purchase and sale of inventory of
sports items, the purchase and sale of sports collectibles, exclusive agreements
with atheletes/celebrities, and any related business activity not forbidden by
law or these Articles of Incorporation.
ARTICLE IV
SHARES OF STOCK
Section 1. Authorized Shares. The aggregate number of shares which the
corporation shall have the authority to issue shall consist of 25,000,000 shares
of common stock with one-tenth of a cent ($0.001) par value. Said Incorporator
as set forth in Article VI below shall be the owner of all of the shares of
common stock.
ARTICLE V
DIRECTORS
A. The business and affairs of the corporation shall be managed by the
Board of Directors.
B. There shall be no fewer than one (1) director, and there shall be no
fewer directors than the number of shareholders.
C. The names and addresses of the Directors constituting the first Board of
Directors shall be:
James S. Kent
4180 S. Pecos, Suite 180
Las Vegas, NV 89121
<PAGE>
ARTICLE VI
INCORPORATORS
The name and address of the incorporators signing the Articles of
Incorporation shall be as follows:
James S. Kent
4180 S. Pecos, Suite 180
Las Vegas, NV 89121
ARTICLE VII
DIRECTORS' AND OFFICERS' LIABILITY
No director of officer of the corporation shall be personally liable to the
corporation or its stockholders for damages for breach of fiduciary duty as a
director or officer. However, this article does not eliminate or limit the
liability of the director or officer for:
(a) Acts or omissions which involve intentional misconduct, fraud, or
knowing violation of law; or
(b) The payment of dividends in violation of NRS 78.300.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto executed these Articles
of Incorporation on this 25th day of October, 1995.
/s/ James S. Kent
- -----------------
JAMES S. KENT
Incorporator
ACKNOWLEDGMENT
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On this 25th day of October, 1995, before me the undersigned Notary Public
in and for said County and State, personally appeared JAMES S. KENT, known to me
to be the person described in and who executed the foregoing Articles of
Incorporation, and who acknowledged to me that he executed the same freely and
voluntarily and for the uses and purposes therein mentioned.
WITNESS my hand and official seal.
/s/ Kathy Gentry
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NOTARY PUBLI
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
COLLECTIBLES AMERICA, INC.
Pursuant to the applicable provisions of the Nevada Business Corporations
Act, Collectibles America, Inc. (the "Corporation") adopts the following
Articles of Amendment to its Articles of Incorporation:
FIRST: The present name of the Corporation is Collectibles America, Inc..
SECOND: The following amendments to its Articles of Incorporation were
adopted by the board of directors and by majority consent of shareholders of the
Corporation in the manner prescribed by applicable law.
(1) The Article entitled ARTICLE I - NAME, is amended to read as follows:
ARTICLE I - NAME
The name of the corporation shall be: BeFirst.com
(2) The Article entitled ARTICLE IV - STOCK, is amended to read as follows:
ARTICLE IV - STOCK
Common. The aggregate number of common shares which this Corporation shall
have authority to issue is 50,000,000 shares of Common Stock having a par value
of $.001 per share. All common stock of the Corporation shall be of the same
class, common, and shall have the same rights and preferences. Fully-paid common
stock of this Corporation shall not be liable to any further call or assessment.
Preferred. The Corporation shall be authorized to issue 500,000 shares of
Preferred Stock having a par value of $.001 per share and with such rights,
preferences and designations determined by the board of directors.
THIRD: The Corporation has effectuated, effective with the commencement of
business on June 18, 1999, a 2 for 1 reverse stock split as to its shares of
common stock outstanding as of the opening of business on June 17, 1999, which
decreases the outstanding shares as of that date from 5,000,000 shares to
2,500,000 shares. The reverse split shall not change the number of shares of
Common Stock authorized for issuance by the Corporation.
<PAGE>
FOURTH: The number of shares of the Corporation outstanding and entitled to
vote at the time of the adoption of said amendment was 13,600,000.
FIFTH: The number of shares voted for such amendments was 13,440,000 (98%)
and no shares were voted against such amendment.
DATED this 17th day of June, 1999.
COLLECTIBLES AMERICA, INC.
By: /s/ Mick Jardine
---------------------------------
Mick Jardine, President/Secretary
VERIFICATION
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The undersigned being first duly sworn, deposes and states: that the
undersigned is the President of Collectibles America, Inc., that the undersigned
has read the Certificate of Amendment and knows the contents thereof and that
the same contains a truthful statement of the Amendment duly adopted by the
board of directors and stockholders of the Corporation.
/s/ Mick Jardine
---------------------------
Mick Jardine
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
Before me the undersigned Notary Public in and for the said County and
State, personally appeared the President and Secretary of Collectibles America,
Inc., a Nevada corporation, and signed the foregoing Articles of Amendment as
his own free and voluntary acts and deeds pursuant to a corporate resolution for
the uses and purposes set forth.
IN WITNESS WHEREOF, I have set my hand and seal this 17th day of June,
1999.
/s/ Thomas G. Kimble
---------------------------
NOTARY PUBLIC
Notary Seal
<PAGE>
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
BeFirst.com
Pursuant to the applicable provisions of the Nevada Business Corporations
Act, BeFirst.com (the "Corporation") adopts the following Certificate of
Amendment to Articles of Incorporation:
FIRST: The name of the Corporation is BeFirst.com.
SECOND: The following amendment to the Articles of Incorporation was
adopted by the Board of Directors and by the majority consent of Stockholders of
the Corporation in lieu of a meeting:
"ARTICLE I - NAME
The name of the corporation shall be FindWhat.com."
DATED: September 1, 1999
BeFirst.com
By: /s/ Craig Pisaris-Henderson
------------------------------
Name: Craig Pisaris-Henderson
Title: President & Secretary
STATE OF FLORIDA )
:
COUNTY OF LEE )
This instrument was acknowledged before me on September 1, 1999, by Craig
Pisaris-Henderson, as President, as designated to sign this certificate of
BeFirst.com.
/s/ Sandra E. Noble
-------------------
NOTARY PUBLIC
BY-LAWS OF
FINDWHAT.COM
ARTICLE I
STOCKHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the stockholders shall
be held at such date and time as shall be designated by the board of directors
and stated in the notice of the meeting or in a duly-executed waiver of notice
thereof. If the corporation shall fail to provide notice of the annual meeting
of the stockholders as set forth above, the annual meeting of the stockholders
of the corporation shall be held during the month of November or December of
each year as determined by the Board of Directors, for the purpose of electing
directors of the corporation to serve during the ensuing year and for the
transaction of such other business as may properly come before the meeting. If
the election of the directors is not held on the day designated herein for any
annual meeting of the stockholders, or at any adjournment thereof, the President
shall cause the election to be held at a special meeting of the stockholders as
soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the stockholders may be
called by the President or the Board of Directors and shall be called by the
President at the written request of the holders of not less than 51% of the
issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the stockholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
Section 1.03 Place of Meetings. Any meeting of the stockholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the stockholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The Secretary shall sign and deliver to all stockholders of record
written or printed notice of any meeting at least ten (10) days, but not
more than sixty (60) days, before
<PAGE>
the date of such meeting; which notice shall state the place, date and time
of the meeting, the general nature of the business to be transacted, and,
in the case of any meeting at which directors are to be elected, the names
of nominees, if any, to be presented for election.
(b) In the case of any meeting, any proper business may be presented
for action, except that the following items shall be valid only if the
general nature of the proposal is stated in the notice or written waiver of
notice:
(1) Action with respect to any contract or transaction between
the corporation and one or more of its directors or another firm,
association, or corporation in which one or more of its directors has
a material financial interest;
(2) Adoption of amendments to the Articles of Incorporation; or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution of the
corporation.
(c) The notice shall be personally delivered or mailed by first class
mail to each stockholder of record at the last known address thereof, as
the same appears on the books of the corporation, and the giving of such
notice shall be deemed delivered the date the same is deposited in the
United States mail, postage prepaid. If the address of any stockholder does
not appear upon the books of the corporation, it will be sufficient to
address any notice to such stockholder at the principal office of the
corporation.
(d) The written certificate of the person calling any meeting, duly
sworn, setting forth the substance of the notice, the time and place the
notice was mailed or personally delivered to the several stockholders, and
the addresses to which the notice was mailed shall be prima facie evidence
of the manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the stockholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the stockholders shall meet in person or by proxy, such meeting
shall be valid for all purposes without call or notice, and at such meeting any
corporate action may be taken.
Section 1.06 Determination of Stockholders of Record.
(e) The Board of Directors may at any time fix a future date as a
record date for the determination of the stockholders entitled to notice of
any meeting or to vote or entitled to receive payment of any dividend or
other distribution
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or allotment of any rights or entitled to exercise any rights in respect of any
other lawful action. The record date so fixed shall not be more than sixty (60)
days prior to the date of such meeting nor more than sixty (60) days prior to
any other action. When a record date is so fixed, only stockholders of record on
that date are entitled to notice of and to vote at the meeting or to receive the
dividend, distribution or allotment of rights, or to exercise their rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.
(f) If no record date is fixed by the Board of Directors, then (1) the
record date for determining stockholders entitled to notice of or to vote
at a meeting of stockholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to give consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the
day on which written consent is given; and (3) the record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto, or the sixtieth (60th) day prior to the date of such
other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(g) At any meeting of the stockholders, a majority of the issued and
outstanding shares of the corporation represented in person or by proxy,
shall constitute a quorum.
(h) If less than a majority of the issued and outstanding shares are
represented, a majority of shares so represented may adjourn from time to
time at the meeting, until holders of the amount of stock required to
constitute a quorum shall be in attendance. At any such adjourned meeting
at which a quorum shall be present, any business may be transacted which
might have been transacted as originally called. When a stockholders'
meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless the adjournment is for
more than ten (10) days in which event notice thereof shall be given.
Section 1.08 Voting.
(i) Each stockholder of record, such stockholder's duly authorized
proxy or attorney-in-fact shall be entitled to one (1) vote for each share
of stock standing registered in such stockholder's name on the books of the
corporation on the record date.
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<PAGE>
(j) Except as otherwise provided herein, all votes with respect to
shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by that individual or such individual's
duly authorized proxy or attorney-in-fact. With respect to shares held by a
representative of the estate of a deceased stockholder, guardian,
conservator, custodian or trustee, votes may be cast by such holder upon
proof of capacity, even though the shares do not stand in the name of such
holder. In the case of shares under the control of a receiver, the receiver
may cast votes carried by such shares even though the shares do not stand
in the name of the receiver provided that the order of the court of
competent jurisdiction which appoints the receiver contains the authority
to cast votes carried by such shares. If shares stand in the name of a
minor, votes may be cast only by the duly-appointed guardian of the estate
of such minor if such guardian has provided the corporation with written
notice and proof of such appointment.
(k) With respect to shares standing in the name of a corporation on
the record date, votes may be cast by such officer or agents as the by-laws
of such corporation prescribe or, in the absence of an applicable by-law
provision, by such person as may be appointed by resolution of the Board of
Directors of such corporation. In the event no person is so appointed, such
votes of the corporation may be cast by any person (including the officer
making the authorization) authorized to do so by the Chairman of the Board
of Directors, President or any Vice President of such corporation.
(l) Notwithstanding anything to the contrary herein contained, no
votes may be cast by shares owned by this corporation or its subsidiaries,
if any. If shares are held by this corporation or its subsidiaries, if any,
in a fiduciary capacity, no votes shall be cast with respect thereto on any
matter except to the extent that the beneficial owner thereof possesses and
exercises either a right to vote or to give the corporation holding the
same binding instructions on how to vote.
(m) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a stockholder
voting agreement or otherwise and shares held by two or more persons
(including proxy holders) having the same fiduciary relationship respect in
the same shares, votes may be cast in the following manner:
(1) If only one such person votes, the votes of such person binds
all.
(2) If more than one person casts votes, the act of the majority
so voting binds all.
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<PAGE>
(3) If more than one person casts votes, but the vote is evenly
split on a particular matter, the votes shall be deemed cast
proportionately as split.
(n) Any holder of shares entitled to vote on any matter may cast a
portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case
of elections of directors. If such holder entitled to vote fails to specify
the number of affirmative votes, it will be conclusively presumed that the
holder is casting affirmative votes with respect to all shares held.
(o) If a quorum is present, the affirmative vote of holders of a
majority of the shares represented at the meeting and entitled to vote on
any matter shall be the act of the stockholders, unless a vote of greater
number or voting by classes is required by the laws of the State of Nevada,
the Articles of Incorporation and these By-Laws.
Section 1.09 Proxies. At any meeting of stockholders, any holder of shares
entitled to vote may authorize another person or persons to vote by proxy with
respect to the shares held by an instrument in writing and subscribed to by the
holder of such shares entitled to vote. No proxy shall be valid after the
expiration of six (6) months from the date of execution thereof, unless coupled
with an interest or unless otherwise specified in the proxy. In no event shall
the term of a proxy exceed seven (7) years from the date of its execution. Every
proxy shall continue in full force and effect until its expiration or
revocation. Revocation may be effected by filing an instrument revoking the same
or a duly-executed proxy bearing a later date with the Secretary of the
corporation.
Section 1.10 Order of Business. At the annual stockholders meeting, the
regular order of business shall be as follows:
(1) Determination of stockholders present and existence of
quorum;
(2) Reading and approval of the minutes of the previous meeting
or meetings;
(3) Reports of the Board of Directors, the President, treasurer
and Secretary of the corporation, in the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
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<PAGE>
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting of
the stockholders are as valid as though had at a meeting duly-held after regular
call and notice if a quorum is present, either in person or by proxy, and if,
either before or after the meeting, each of the persons entitled to vote, not
present in person or by proxy (and those who, although present, either object at
the beginning of the meeting to the transaction of any business because the
meeting has not been lawfully called or convened or expressly object at the
meeting to the consideration of matters not included in the notice which are
legally required to be included therein) , signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened and except
that attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice if such objection is
expressly made at the beginning. Neither the business to be transacted at nor
the purpose of any regular or special meeting of stockholders need be specified
in any written waiver of notice, except as otherwise provided in Section 1.04
(b) of these By-Laws.
Section 1.12 Action Without Meeting. Any action which may be taken by the
vote of the stockholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or such
greater proportion as may be required by the laws of the State of Nevada, the
Articles of Incorporation, or these ByLaws. whenever action is taken by written
consent, a meeting of stockholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise provided
herein, the Board of Directors of the corporation shall consist of at least one
(1) but no more than nine (9) persons, who shall be elected at the annual
meeting of the stockholders of the corporation and who shall hold office for one
(1) year or until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
written notice to the chairman of the Board
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<PAGE>
of Directors, the President, or the Secretary of the corporation, unless the
notice specifies a later time for effectiveness of such resignation. If the
Board of Directors accepts the resignation of a director tendered to take effect
at a future date, the Board or the stockholders may elect a successor to take
office when the resignation becomes effective.
Section 2.03 Reduction in Number. No reduction of the number of directors
shall have the effect of removing any director prior to the expiration of his
term of office.
Section 2.04 Removal.
(a) The Board of Directors or the stockholders of the corporation, by
a majority vote, may declare vacant the office of a director who has been
declared incompetent by an order of a court of competent jurisdiction or
convicted of a felony.
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death, resignation,
removal, change in number of directors, or otherwise may be filled by the
stockholders at any regular or special meeting or any adjourned meeting
thereof or the remaining director(s) by the affirmative vote of a majority
thereof. A Board of Directors consisting of less than the maximum number
authorized in Section 2.01 of ARTICLE II constitutes vacancies on the Board
of Directors for purposes of this paragraph and may be filled as set forth
above including by the election of a majority of the remaining directors.
Each successor so elected shall hold office until the next annual meeting
of stockholders or until a successor shall have been duly-elected and
qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the stockholders shall
constitute less than a majority of the directors then in office, any holder
or holders of an aggregate of five percent (5%) or more of the total number
of shares entitled to vote may call a special meeting of stockholders to be
held to elect the entire Board of Directors. The term of office of any
director shall terminate upon such election of a successor.
Section 2.06 Regular Meetings. Immediately following the adjournment of,
and at the same place as, the annual meeting of the stockholders, the Board of
Directors, including directors newly elected, shall hold its annual meeting
without notice, other than this provision, to elect officers of the corporation
and to transact such further business as may be necessary or appropriate. The
Board of Directors may provide by resolution the place, date and hour for
holding additional regular meetings.
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<PAGE>
Section 2.07 Special Meetings. Special meetings of the Board of Directors
may be called by the chairman and shall be called by the chairman upon the
request of any two (2) directors or the President of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
Section 2.09 Notice of Meetings. Except as otherwise provided in section
2.06, the chairman shall deliver to all directors written or printed notice of
any special meeting, at least three (3) days before the date of such meeting, by
delivery of such notice personally or mailing such notice first class mail, or
by telegram. If mailed, the notice shall be deemed delivered two (2) business
days following the date the same is deposited in the United States mail, postage
prepaid. Any director may waive notice of any meeting, and the attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
unless such attendance is for the express purpose of objecting to the
transaction of business threat because the meeting is not properly called or
convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall constitute a
quorum.
(b) At any meeting of the Board of Directors where a quorum is not
present, a majority of those present may adjourn, from time to time, until
a quorum is present, and no notice of such adjournment shall be required.
At any adjourned meeting where a quorum is present, any business may be
transacted which could have been transacted at the meeting originally
called.
Section 2.11 Action Without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a written consent thereto is signed by all of the
members of the Board of Directors or of such committee. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors may be
held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the
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time of such meeting. Participation in such a meeting constitutes presence in
person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of Incorporation or
the laws of the State of Nevada, the Board of Directors is invested with
the complete and unrestrained authority to manage the affairs of the
corporation, and is authorized to exercise for such purpose as the general
agent of the corporation, its entire corporate authority in such manner as
it sees fit. The Board of Directors may delegate any of its authority to
manage, control or conduct the current business of the corporation to any
standing or special committee or to any officer or agent and to appoint any
persons to be agents of the corporation with such powers, including the
power to sub-delegate, and upon such terms as may be deemed fit.
(b) The Board of Directors shall present to the stockholders at annual
meetings of the stockholders, and when called for by a majority vote of the
stockholders at a special meeting of the stockholders, a full and clear
statement of the condition of the corporation, and shall, at request,
furnish each of the stockholders with a true copy thereof.
(c) The Board of Directors, in its discretion, may submit any contract
or act for approval or ratification at any annual meeting of the
stockholders or any special meeting properly called for the purpose of
considering any such contract or act, provided a quorum is present. The
contract or act shall be valid and binding upon the corporation and upon
all the stockholders thereof, if approved and ratified by the affirmative
vote of a majority of the stockholders at such meeting.
(d) In furtherance and not in limitation of the powers conferred by
the laws of the State of Nevada, the Board of Directors is expressly
authorized and empowered to issue stock of the Corporation for money,
property, services rendered, labor performed, cash advanced, acquisitions
for other corporations or for any other assets of value in accordance with
the action of the Board of Directors without vote or consent of the
stockholders and the judgment of the Board of Directors as to the value
received and in return therefore shall be conclusive and said stock, when
issued, shall be fully-paid and non-assessable.
Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board, but shall
not receive any compensation for
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<PAGE>
their services as directors until such time as the corporation is able to
declare and pay dividends on its capital stock.
Section 2.16 Board Officers.
(a) At its annual meeting, the Board of Directors shall elect, from
among its members, a chairman to preside at the meetings of the Board of
Directors. The Board of Directors may also elect such other board officers
and for such term as it may, from time to time, determine advisable.
(b) Any vacancy in any board office because of death, resignation,
removal or otherwise may be filled by the Board of Directors for the
unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at any meeting of the
Board of Directors shall be as follows:
(1) Determination of members present and existence of quorum;
(2) Reading and approval of the minutes of any previous meeting or
meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of stockholders, shall elect a President, a
Secretary, a Chief Financial Officer and a Treasurer to hold office for one (1)
year next coming and until their successors are elected and qualify. Any person
may hold two or more offices. The Board of Directors may, from time to time, by
resolution, appoint one or more Vice Presidents, Assistant Secretaries,
Assistant Treasurers and transfer agents of the corporation as it may deem
advisable; prescribe their duties; and fix their compensation.
Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the
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corporation would be served thereby. Any officer may resign at any time upon
written notice to the corporation without prejudice to the rights, if any, of
the corporation under any contract to which the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 President. The President shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The President shall preside
at all meetings of the stockholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the President shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the stockholders of any corporation in which the
corporation may hold stock and, at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer like powers
on any person or persons in place of the President to represent the corporation
for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or more
Vice Presidents who shall be vested with all the powers and perform all the
duties of the President whenever the President is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the Vice President shall perform such other duties as shall be prescribed by
the Board of Directors.
Section 3.06 Secretary. The Secretary shall keep the minutes of all
meetings of the stockholders and the Board of Directors in books provided for
that purpose. The Secretary shall attend to the giving and service of all
notices of the corporation, may sign with the President in the name of the
corporation all contracts authorized by the Board of Directors or appropriate
committee, shall have the custody of the corporate seal, shall affix the
corporate seal to all certificates of stock duly issued by the corporation,
shall have charge of stock certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors or appropriate
committee may direct, and shall, in general perform all duties incident to the
office of the Secretary. All corporate books kept
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by the Secretary shall be open for examination by any director at any reasonable
time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
Assistant Secretary who shall have such powers and perform such duties as may be
prescribed for him by the Secretary of the corporation or by the Board of
Directors.
Section 3.08 Chief Financial Officer. The Chief Financial Officer shall be
the chief financial officer of the corporation, subject to the supervision and
control of the Board of Directors, and shall have custody of all the funds and
securities of the corporation. When necessary or proper, the Chief Financial
Officer shall endorse on behalf of the corporation for collection checks, notes
and other obligations, and shall deposit all monies to the credit of the
corporation in such bank or banks or other depository as the Board of Directors
may designate, and shall sign all receipts and vouchers for payments made by the
corporation. Unless otherwise specified by the Board of Directors, the Chief
Financial Officer shall sign with the President all bills of exchange and
promissory notes of the corporation, shall also have the care and custody of the
stocks, bonds, certificates, vouchers, evidence of debts, securities and such
other property belonging to the corporation as the Board of Directors shall
designate, and shall sign all papers required by law, by these By-laws or by the
Board of Directors to be signed by the treasurer. The Chief Financial Officer
shall enter regularly in the books of the corporation, to be kept for that
purpose, full and accurate accounts of all monies received and paid on account
of the corporation and whenever required by the Board of Directors, the
treasurer shall render a statement of any or all accounts. The Chief Financial
Officer shall at all reasonable times exhibit the books of account to any
directors of the corporation and shall perform all acts incident to the position
of Chief Financial Officer subject to the control of the Board of Directors. The
Chief Financial Officer shall, if required by the Board of Directors, give a
bond to the corporation in such sum and with such security as shall be approved
by the Board of Directors for the faithful performance of all the duties of the
Chief Financial Officer and for restoration to the corporation in the event of
the Chief Financial Officer's death, resignation, retirement, or removal from
office, of all books, records, papers, vouchers, money and other property
belonging to the corporation. The expense of such bond shall be borne by the
corporation.
Section 3.09 Treasurer. The Board of Directors shall appoint a Treasurer
who shall have such powers and perform such duties as may be prescribed by the
Chief Financial Officer of the corporation or by the Board of Directors, and the
Board of Directors may require the Treasurer to give a bond to the corporation
in such sum and with such security as it may approve, for the faithful
performance of the duties of Treasurer, and for
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the restoration to the corporation, in the event of the Treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
Section 3.10 Assistant Treasurer. The Board of Directors may appoint an
Assistant Treasurer who shall have such powers and perform such duties as may be
prescribed for him by the Chief Financial Officer of the corporation or by the
Board of Directors.
ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be evidenced
by certificates for shares of stock in such form as shall be prescribed by the
Board of Directors, shall be under the seal of the corporation and shall be
signed by the President or the Vice President and also by the Secretary or an
Assistant Secretary. Each certificate shall contain the name of the record
holder, the number, designation, if any, class or series of shares represented,
a statement of summary of any applicable rights, preferences, privileges, or
restrictions thereon, and a statement that the shares are assessable, if
applicable. All certificates shall be consecutively numbered. The name and
address of the stockholder, the number of shares, and the date of issue shall be
entered on the stock transfer books of the corporation.
Section 4.03 Surrender: Lost or Destroyed Certificates. All certificates
surrendered to the corporation, except those representing shares of treasury
stock, shall be canceled and no new certificates shall be issued until the
former certificate for a like number of shares shall have been canceled, except
that in case of a lost, stolen, destroyed or mutilated certificate, a new one
may be issued therefor. However, any stockholder applying for the issuance of a
stock certificate in lieu of one alleged to have been lost, stolen, destroyed or
mutilated shall, prior to the issuance of a replacement, provide the corporation
with his, her or its affidavit of the facts surrounding the loss, theft,
destruction or mutilation and an indemnity bond in an amount and upon such terms
as the treasurer, or the Board of Directors, shall require. In no case shall the
bond be in amount less than twice the current market value of the stock and it
shall indemnify the corporation against any loss,
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damage, cost or inconvenience arising as a consequence of the issuance of a
replacement certificate.
Section 4.04 Replacement Certificate. When the Articles of Incorporation
are amended in any way affecting the statements contained in the certificates
for outstanding shares of capital stock of the corporation or it becomes
desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue a
new certificate therefor conforming to the rights of the holder, the Board of
Directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time to
be fixed by the Board of Directors. The order may provide that a holder of any
certificate(s) ordered to be surrendered shall not be entitled to vote, receive
dividends or exercise any other rights of stockholders until the holder has
complied with the order provided that such order operates to suspend such rights
only after notice and until compliance.
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the certificate
therefor, accompanied by an assignment or transfer by the registered owner made
either in person or under assignment. Whenever any transfer shall be expressly
made for collateral security and not absolutely, the collateral nature of the
transfer shall be reflected in the entry of transfer on the books of the
corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or more
transfer agents and registrars of transfer and may require all certificates for
shares of stock to bear the signature of such transfer agent and such registrar
of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be closed
for a period of ten (10) days prior to all meetings of the stockholders and
shall be closed for the payment of dividends as provided in Article V hereof and
during such periods as, from time to time, may be fixed by the Board of
Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power and
authority to make such rules and regulations not inconsistent herewith as it may
deem expedient concerning the issue, transfer and registration of certificates
for shares of the capital stock of the corporation.
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ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of the
laws of the State of Nevada and the Articles of Incorporation, by the Board of
Directors at any regular or special meeting and may be paid in cash, property,
shares of corporate stock, or any other medium. The Board of Directors may fix
in advance a record date, as provided in Section 1.06 of these By-laws, prior to
the dividend payment for the purpose of determining stockholders entitled to
receive payment of any dividend. The Board of Directors may close the stock
transfer books for such purpose for a period of not more than ten (10) days
prior to the payment date of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation in
the State of Nevada shall be located at the office of the corporation's resident
agent, and the corporation may have an office in any other state or territory as
the Board of Directors may designate.
Section 6.02 Records. A duplicate of the stock transfer books and a
certified copy of the By-laws, Articles of Incorporation, any amendments
thereto, and the minutes of the proceedings of the stockholders, the Board of
Directors, and committees of the Board of Directors shall be kept at the
principal office of the corporation for the inspection of all who have the right
to see the same and for the transfer of stock. All other books of the
corporation shall be kept at such places as may be prescribed by the Board of
Directors.
Section 6.03 Financial Report on Request. Any stockholder or stockholders
holding at least five percent (5%) of the outstanding shares of any class of
stock may make a written request for an income statement of the corporation for
the three (3) month, six (6) month, or nine (9) month period of the current
fiscal year ended more than thirty (30) days prior to the date of the request
and a balance sheet of the corporation as of the end of such period. In
addition, if no annual report for the last fiscal year has been sent to
stockholders, such stockholder or stockholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement of
changes in financial position for such fiscal year. The statement shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any stockholder demanding an examination of
them or a copy shall be mailed to each stockholder. Upon request by any
stockholder, there shall be mailed to the stockholder a copy of the last annual,
semiannual or quarterly income statement which it has prepared and a balance
sheet as of the end of the
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period. The financial statements referred to in this Section 6.03 shall be
accompanied by the report thereon, if any, of any independent accountants
engaged by the corporation or the certificate of an authorized officer of the
corporation that such financial statements were prepared without audit from the
books and records of the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of proceedings of the
stockholders and the Board of Directors and committees of the Board of Directors
shall be open to inspection upon the written demand of any stockholder or holder
of a voting trust certificate at any reasonable time during usual business hours
for a purpose reasonably related to such holder's interest as a stockholder or
as the holder of such voting trust certificate. This right of inspection shall
extend to the records of the subsidiaries, if any, of the corporation. Such
inspection may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
(b) Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kind and to inspect
the physical properties of the corporation and/or its subsidiary corporations.
Such inspection may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
Section 6.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall be
the calendar year or such other term as may be fixed by resolution of the Board
of Directors.
Section 6.07 Reserves. The Board of Directors may create, by resolution,
out of the earned surplus of the corporation such reserves as the directors may,
from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends or to repair or maintain any property of
the corporation, or for such other purpose as the Board of Directors may deem
beneficial to the corporation, and the directors may modify or abolish any such
reserves in the manner in which they were created.
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ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited by
Nevada Law, indemnify any person (an "Indemnitee") who is or was involved in any
manner (including, without limitation, as a party or a witness) or is threatened
to be so involved in any threatened, pending or completed action suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its favor
(collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise, against all Expenses and Liabilities actually and
reasonably incurred by him in connection with such Proceeding. The right to
indemnification conferred in this Article shall be presumed to have been relied
upon by the directors, officers, employees and agents of the corporation and
shall be enforceable as a contract right and inure to the benefit of heirs,
executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific rights
of indemnification in addition to the rights provided hereunder to the fullest
extent permitted by Nevada Law. Such agreements or arrangements may provide (i)
that the Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, must be paid by the corporation as they are
incurred and in advance of the final disposition of any such action, suit or
proceeding provided that, if required by Nevada Law at the time of such advance,
the officer or director provides an undertaking to repay such amounts if it is
ultimately determined by a court of competent jurisdiction that such individual
is not entitled to be indemnified against such expenses, (iii) that the
Indemnitee shall be presumed to be entitled to indemnification under this
Article or such agreement or arrangement and the corporation shall have the
burden of proof to overcome that presumption, (iii) for procedures to be
followed by the corporation and the Indemnitee in making any determination of
entitlement to indemnification or for appeals therefrom and (iv) for insurance
or such other Financial Arrangements described in Paragraph 7.02 of this
Article, all as may be deemed appropriate by the Board of Directors at the time
of execution of such agreement or arrangement.
Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses
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incurred by him in his capacity as a director, officer, employee or agent, or
arising out of his status as such, whether or not the corporation has the
authority to indemnify him against such liability and expenses. Such other
Financial Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article:
Expenses. The word "Expenses" shall be broadly construed and, without
limitation, means (i) all direct and indirect costs incurred, paid or accrued,
(ii) all attorneys' fees, retainers, court costs, transcripts, fees of experts,
witness fees, travel expenses, food and lodging expenses while traveling,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service, freight or other transportation fees and expenses, (iii) all
other disbursements and out-of-pocket expenses, (iv) amounts paid in settlement,
to the extent permitted by Nevada Law, and (v) reasonable compensation for time
spent by the Indemnitee for which he is otherwise not compensated by the
corporation or any third party, actually and reasonably incurred in connection
with either the appearance at or investigation, defense, settlement or appeal of
a Proceeding or establishing or enforcing a right to indemnification under any
agreement or arrangement, this Article, the Nevada Law or otherwise; provided,
however, that "Expenses" shall not include any judgments or fines or excise
taxes or penalties imposed under the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or other excise taxes or penalties.
Liabilities. "Liabilities" means liabilities of any type whatsoever,
including, but not limited to, judgments or fines, ERISA or other excise taxes
and penalties, and amounts paid in settlement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada Revised Statutes as
amended and in effect from time to time or any successor or other statutes of
Nevada having similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through 7.04 of these
bylaws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including this
Paragraph, of these Bylaws may be amended by the stockholders only by vote of
the holders of sixty-six and two-thirds percent (66 2/3%) of the entire number
of shares of
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each class, voting separately, of the outstanding capital stock of the
corporation (even though the right of any class to vote is otherwise restricted
or denied); provided, however, no amendment or repeal of this Article shall
adversely affect any right of any Indemnitee existing at the time such amendment
or repeal becomes effective.
Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph of
these Bylaws may be amended or repealed by the Board of Directors only by vote
of eighty percent (80%) of the total number of Directors and the holders of
sixty-six and two-thirds percent (66 2/3) of the entire number of shares of each
class, voting separately, of the outstanding capital stock of the corporation
(even though the right of any class to vote is otherwise restricted or denied);
provided, however, no amendment or repeal of this Article shall adversely affect
any right of any Indemnitee existing at the time such amendment or repeal
becomes effective.
ARTICLE VIII
BY-LAWS
Section 8.1 Amendment. Amendments and changes of these By-Laws may be made
at any regular or special meeting of the Board of Directors by a vote of not
less than all of the entire Board, or may be made by a vote of, or a consent in
writing signed by the holders of a majority of the issued and outstanding
capital stock.
Section 8.2 Additional By-Laws. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board of
Directors at which a quorum is present by an affirmative vote of a majority of
the directors present or by the unanimous consent of the Board of Directors in
accordance with Section 2.11 of these By-laws
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PORTAL SERVICES AGREEMENT
This Portal Services Agreement (this "Agreement") is entered into as of
June 18, 1999 (the "Effective Date"), by and between Inktomi Corporation, a
Delaware corporation with its principal place of business at 1900 South Norfolk
Street, Suite 310, San Mateo, California, 94403 ("Inktomi") and BeFirst Internet
Corporation, a Delaware corporation, with its principal place of business at 121
West 27th Street, Suite 903, New York, New York 10001 ("Customer").
RECITALS
A. Inktomi utilizes its technology to provide a variety of services
including without limitation those described on exhibits to this Agreement.
B. Customer desires to retain Inktomi to provide certain of Inktomi's
services to Customer in accordance with the terms and conditions of this
Agreement.
NOW THEREFORE, Inktomi and Customer agree as follows:
AGREEMENT
In consideration of the foregoing and the mutual promises contained herein
the parties agree as follows:
1. Definitions. For purposes of this Agreement, in addition to the other
terms defined elsewhere in this Agreement. the following terms shall have the
meanings set forth below:
1.1. "Intellectual Property Rights" means any and all rights existing
from time to time under patent law, copyright law, semiconductor chip
protection law, moral rights law, trade secret law, trademark law, unfair
competition law, publicity rights law, privacy rights law, and any and all
other proprietary rights, and any and all applications, renewals,
extensions and restorations thereof, now or hereafter in force and effect
worldwide.
1.2. "Inktomi Icon" means an icon to be provided by Inktomi from time
to time that indicates that Inktomi's technology is being used.
1.3. "Inktomi Technology" means the computer software, technology
and/or documentation which is supplied by Inktomi for use in or in
connection with delivery of a Service, including without limitation all
source code and object code therefor and all algorithms, ideas and
Intellectual Property Rights therein. The definition of "Inktomi
Technology" shall include any supplemented definition set forth in an
Exhibit for a Service.
1.4. "Services" means the various services to be provided by Inktomi
for Customer under this Agreement, as more fully described on the Exhibits
attached to this Agreement.
1.5. "Site" means a Web site and/or sites established and maintained
by Customer or other authorized entity (to the extent permitted) through
which end-users may access a Service as set forth in the Exhibit for such
Service.
1.6."Term" shall have the meaning indicated in Section 9.
<PAGE>
1.7. "Web" means the World Wide Web, containing, inter alia, pages
written in hypertext markup language (HTML) and/or any similar successor
technology.
1.8. "Web page" means a document on the Internet which may be viewed
in its entirety without leaving the applicable distinct URL address.
1.9. "Web site" means a collection of inter-related Web pages.
2. Provision of Services.
2.1. Services. Subject to the terms and conditions of this Agreement,
Inktomi shall provide each Service substantially in accordance with the
functionality specifications, performance criteria and limitations
specified in the Exhibit applicable to such Service.
2.2. Additional Services. Upon request, and provided that Customer is
current with service fees due under this Agreement, Inktomi may provide
Customer additional services in addition to the Services set forth in the
applicable Exhibit. Such additional service shall be mutually agreed upon
by the parties and shall be set forth, in Inktomi's reasonable discretion,
on a written work authorization or an additional Exhibit to this Agreement
which in either case has been executed by both parties. Such additional
service, if provided pursuant to: (i) a written work authorization shall be
provided at Inktomi's then applicable consulting rates and charges, and
shall be deemed rendered pursuant to and in accordance with the terms of
this Agreement; or (ii) an additional Exhibit shall be provided in
accordance with the rates, charges, terms and conditions of such Exhibit
and the terms of this Agreement. Any work authorizations issued under this
Agreement shall be sequentially numbered.
2.3. End-User Support. Inktomi, shall provide technical support for a
Service to the extent set forth in the Exhibit applicable to such Service.
Except as set forth in such Exhibit, Customer, at its own expense, shall
provide all support of the Site.
2.4. Nonexclusive Services. Customer understands that Inktomi will
provide the Services on a nonexclusive basis. Customer acknowledges that
Inktomi has customized and provided, and will continue to customize and
provide, its software and technology to other parties for use in connection
with a variety of applications, including, without limitation, search
engine, e-commerce and communication applications. Nothing in this
Agreement be deemed to limit or restrict Inktomi from customizing and
providing its software and technology to other parties for any purpose or
in any, way, affect the rights granted to such other parties. Inktomi
reserves the right to notify other customers of the signing of this
Agreement, but agrees not to provide such notice earlier than two (2) weeks
before a public announcement by Customer of its business relationship with
Inktomi or two (2) weeks before commercial launch of a Service provided by
Inktomi under this Agreement. whichever is later. Customer may not make any
public announcement involving Inktomi without Inktomi approval.
3. Intellectual Property Licenses/Ownership.
3.1. Trademark Licenses. Inktomi hereby grants Customer a
nontransferable, nonexclusive license to display the Inktomi Icon solely as
required in order to comply with its attribution obligations for each
Service. Customer hereby grants to Inktomi a nontransferable, nonexclusive
license under Customer's trademarks during the Term to advertise that
Customer is using Inktomi's services. Promptly following the Effective
Date, each party will provide to the other party its trademark usage
guidelines, as such guidelines may be amended from time to time. All uses
of trademarks as set forth
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above shall be in accordance with such guidelines. For uses outside of such
guidelines, a party will submit all materials of any kind containing the
other party's nonconforming trademarks to the other party before release to
the public for inspection, and such other party will have the right to
approve or disapprove such material prior to its distribution. Except as
set forth in this Section, nothing in this Agreement shall grant or shall
be deemed to grant to one party any right, title or interest in or to the
other party's trademarks. All use of Customer trademarks by Inktomi shall
inure to the benefit of Customer, and all use of Inktomi trademarks by
Customer shall inure to the benefit of Inktomi. At no time during or after
the Term shall one party challenge or assist others to challenge the
trademarks of the other party (except to the extent such restriction is
prohibited by applicable law) or the registration thereof or attempt to
register any trademarks, marks or trade names confusingly similar to those
of the other party.
3.2. Inktomi Technology. As between Customer and Inktomi, Customer
acknowledges that Inktomi owns all right, title and interest in and to the
Inktomi Technology (except for any software licensed by third parties to
Inktomi), and that Customer shall not acquire any right, title, and
interest in or to the Inktomi Technology, except as expressly set forth in
this Agreement. Customer shall not modify, adapt, translate, prepare
derivative works from, decompile, reverse engineer, disassemble or
otherwise attempt to derive source code from any Inktomi Technology, except
and only to the extent that such activity is expressly permitted by
applicable law notwithstanding this limitation. Customer will not remove,
obscure, or alter Inktomi's copyright notice, trademarks, or other
proprietary rights notices affixed to or contained within any Inktomi
software or documentation.
4. Warranties and Disclaimer. Each party agrees as follows:
4.1. Inktomi Warranties. Inktomi warrants that: (i) it has full power
and authority to enter into this Agreement: and (ii) it has not previously
and will not grant any rights in the Inktomi Technology to any third party
that are inconsistent with the rights granted to Customer hereunder, and
(iii) throughout the Term, each Service provided for Customer and the
Inktomi Technology provided in connection with each such Service shall be
free of material errors and defects and shall perform substantially in
accordance with the performance criteria set forth on the applicable
Exhibit for such Service. Inktomi does not warrant that the Services will
meet all of Customer's requirements or that performance of the Services
will be uninterrupted or error-free. INKTOMI MAKES NO OTHER WARRANTY OF ANY
KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT
LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND
NONINFRINGEMENT. IN PARTICULAR, INKTOMI MAKES NO WARRANTIES WHATSOEVER
REGARDING THE NATURE OF THE MATERIAL CONTAINED IN THE DATABASE AND TO THE
MAXIMUM EXTENT PERMITTED BY LAW DISCLAIMS ANY RESPONSIBILITY OR LIABILITY
FOR SUCH MATERIAL.
4.2. Inktomi Obligations. Inktomi's sole obligation under the
foregoing warranties is to use reasonable efforts to correct any portion of
the Inktomi Technology or its business practices that does not meet the
foregoing warranties within a reasonable period of time, and if Inktomi
fails to do so, then Customer shall have the right to immediately terminate
this Agreement and receive as a sole remedy a refund of all amounts
advanced by Customer for the Agreement following the date of such
termination.
4.3. Customer Warranties. Customer warrants that: (i) it has full
power and authority to enter into this Agreement: (ii) it will seek all
necessary governmental approvals required to effectuate this Agreement; and
(iii) it shall perform the online services provided by Customer through the
Site in accordance with all federal. state and local laws, including all
professional registration requirements
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related thereto. CUSTOMER MAKES NO OTHER WARRANTIES OF ANY KIND, WHETHER
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND
NONINFRINGEMENT.
5. Payments.
5.1. Fees. Customer shall pay Inktomi fees for each of the Services in
accordance with the applicable Exhibit.
5.2. Records. To the extent applicable for each Service and solely to
the extent each party has obligations to make payments to the other party
in connection with such Service each party shall: (i) maintain all records
relevant to calculating service fees and/or revenues for a Service for a
two (2) year period following the year in which any payments pertaining to
such service fees and/or revenues were due; and (ii) have the right to
examine the other party's records from time to time but no more than once
every six (6) months to determine the correctness of any payment made under
this Agreement. Such examination shall be conducted at reasonable times
during the audited party's normal business hours and upon at least ten (10)
business days' advance notice and in a manner so as not to interfere
unreasonably with the conduct of the audited party's business. If any such
examination indicates that the audited party has underpaid by more than
five percent (5%) of the aggregate payments due for the period subject to
such examination, the audited party shall reimburse the other party for
reasonable costs of such examination.
5.3. Taxes. Customer shall be responsible for all sales taxes, use
taxes, withholding taxes, value added taxes and any other similar taxes
imposed by any federal, state, provincial or local governmental entity on
the transactions contemplated by this Agreement, excluding taxes based upon
Inktomi's net income. When Inktomi has the legal obligation to pay or
collect such taxes, the appropriate amount shall be invoiced to and paid by
Customer unless Customer provides Inktomi with a valid tax exemption
certificate authorized by the appropriate taxing authority.
5.4. Payment. All fees quoted and payments made hereunder shall be in
U.S. Dollars. Customer shall pay all amounts due under this Agreement to
Inktomi at the address indicated at the address indicated at the beginning
of this Agreement or such other location as Inktomi designated in writing.
6. Confidentiality.
6.1. Definition of Confidential Information. All information and
documents disclosed or produced by either party in the course of this
Agreement which are disclosed in written form and identified by a marking
thereon as proprietary, or oral information which is defined at the time of
disclosure and confirmed in writing within ten (10) business days of its
disclosure, shall be deemed the "Confidential Information" of the
disclosing party. Notwithstanding the above, the parties agree that any
information (in any form, whether in tangible or Intangible) relating to
the Inktomi Technology is considered Confidential Information of Inktomi.
6.2. Treatment of Confidential Information. Each party agrees to
protect the other party's Confidential Information in the same manner as
such party protects its own Confidential Information of substantially
similar proprietary value, but in no case less than with reasonable care.
Each party agrees that it will use the Confidential Information of the
other party only for the purposes of this
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<PAGE>
Agreement and that it will not divulge, transfer, sell, license, lease, or
otherwise disclose or release any such information or documents to third
parties, with the exception of: (1) its employees or subcontractors who
require access to such for purposes of carrying out such party's obligation
hereunder; and (ii) persons who are employed as auditors by a public
accounting firm or by a federal or state agency. Each party will use
reasonable efforts to advise any person obtaining Confidential Information
that such information is, proprietary and to obtain a written agreement
obligating such person to maintain the confidentiality of any Confidential
Information belonging to the party or its suppliers.
6.3. No Other Confidential Information. Neither party shall have any
obligation under this Section 6 for information of the other party which
the receiving party can substantiate with documentary evidence that has
been or is: (1) developed by the receiving party independently and without
the benefit of information disclosed hereunder by the disclosing party;
(ii) lawfully obtained by the receiving party from a third party without
restriction and without breach of this Agreement; (iii) publicly available
without breach of this Agreement; or (iv) known to the receiving party
prior to its receipt from the disclosing party.
7. Indemnification.
7.1. Inktomi Indemnification. With regard to each Service, Inktomi
shall indemnify Customer solely as set forth on the applicable Exhibit for
such Service.
7.2. Customer Indemnification. Customer shall defend and/or settle,
and pay damages awarded pursuant to, any third party claim brought against
Inktomi: (i) related to the services provided by Customer through the Site
or representations, claims or statements pertaining thereto, and (ii)
which, if true, would constitute a breach of any warranty, representation
or covenant made by Customer under Section 4.3; provided, that, Inktomi
promptly notifies Customer in writing of any such claim and promptly
tenders the control of the defense and settlement of any such claim to
Customer at Customer's expense and with Customer's choice of counsel.
Inktomi shall cooperate with Customer, at Customer's expense, in defending
or settling such claim and Inktomi may join in defense with counsel of its
choice at its own expense. Customer shall not reimburse Inktomi for any
expenses incurred by Inktomi without the prior written approval of
Customer.
8. Limitation of Liability. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, IN NO EVENT WILL THE TOTAL LIABILITY OF INKTOMI AND ITS LICENSORS AND
SUPPLIERS ARISING OUT OF THIS AGREEMENT EXCEED THE NET AMOUNT INKTOMI HAS
ACTUALLY RECEIVED FROM CUSTOMER UNDER THIS AGREEMENT OVER THE PREVIOUS TWELVE
(12) MONTHS. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, INKTOMI AND ITS
LICENSORS AND SUPPLIERS SHALL NOT BE LIABLE FOR ANY LOST PROFITS OR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING DAMAGES FOR LOST DATA, HOWEVER
CAUSED AND UNDER ANY THEORY OF LIABILITY, INCLUDING BUT NOT LIMITED TO CONTRACT,
PRODUCTS LIABILITY, STRICT LIABILITY AND NEGLIGENCE, AND WHETHER OR NOT IT WAS
OR SHOULD HAVE BEEN AWARE OR ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THESE
LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.
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<PAGE>
9. Term and Termination.
9.1. Term. The term of this Agreement (the "Term") shall commence on
the Effective Date and shall continue in force until the expiration or
termination of the last Service.
9.2. Termination for Breach. Either party may suspend performance of
and/or terminate this Agreement if the other party materially breaches any
term or condition of this Agreement and fails to cure such breach within
thirty (30) days after receiving written notice of the breach.
9.3. Termination due to Insolvency. Either party may suspend
performance and/or terminate this Agreement if the other party becomes
insolvent or makes any assignment for the benefit of creditors or similar
transfer evidencing insolvency, or suffers or permits the commencement of
any form of insolvency or receivership proceeding, or has any petition
under bankruptcy law filed against it, which petition is not dismissed
within sixty (60) days of such filing, or has a trustee or receiver
appointed for its business or assets or any party thereof.
9.4. Effect of Termination. Upon the termination of this Agreement for
any reason: (i) all license rights granted under this Agreement shall
terminate; (ii) Customer shall immediately pay to Inktomi all amounts due
and outstanding as of the date of such termination; and (iii) each party
shall return to the other party, or destroy and certify the destruction of,
all Confidential Information of the other party.
9.5. Survival. In the event of any termination or expiration of this
Agreement for any reason, Sections 1, 3, 4, 5.2, 6, 7 (to the extent
designated to survive in the applicable Exhibit), 8, 9, 10 and 11 shall
survive termination or expiration of this Agreement. Neither party shall be
liable to the other party for damages or equitable remedies of any sort
resulting solely from terminating this Agreement in accordance with its
terms.
9.6. Remedies. Each party acknowledges that its breach of the
confidentiality or service/license restrictions contained herein may cause
irreparable harm to the other party, the extent of which would be difficult
to ascertain. Accordingly, each party agrees that, in addition to any other
remedies to which the other party may be legally entitled, such party shall
have the right to seek immediately injunctive relief in the event of a
breach of such sections by the other party or any of its officers,
employees, consultants or other agents.
10. Miscellaneous.
10.1. Understanding. Each party acknowledges that it has read this
Agreement. understands it and agrees to be bound by it. Each party
acknowledges that such party has not been induced to enter into such
agreements by any representations or statements, oral or written, not
expressly contained herein or expressly incorporated by reference.
10.2. Notice. Any notice required for or permitted by this Agreement
shall be in writing and shall be delivered as follows with notice deemed
given as indicated: (i) by personal delivery, when delivered personally:
(ii) by overnight courier upon written verification of receipt; (iii) by
telecopy or facsimile transmission when confirmed by telecopier or
facsimile transmission report, or (iv) by certified or registered mail,
return receipt requested, upon verification of receipt. All notices must be
sent to the addresses first described above or to such other address that
the receiving party may have provided for the purpose of notice in
accordance with this Section.
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<PAGE>
10.3. Assignment. Neither party may assign its rights or delegate its
obligations under this Agreement without the other party's prior written
consent, except to the surviving entity in a merger or consolidation in
which it participates or to a purchaser of all or substantially all of its
assets, so long as such surviving entity or purchaser shall expressly
assume in writing the performance of all of the terms of this Agreement.
10.4. No Third Party Beneficiaries. All rights and obligations of the
parties hereunder are personal to them. This Agreement is not intended to
benefit, nor shall it be deemed to give rise to, any rights in any third
party.
10.5. Governing Law. This Agreement will be governed and construed, to
the extent applicable, in accordance with United States law, and otherwise,
in accordance with California law, without regard to conflict of law
principles. Except for claims relating to a breach of confidentiality under
Section 6 or involving Intellectual Property Rights, any dispute or claim
arising out of or in connection with this Agreement shall be finally
settled by binding arbitration in San Mateo County, California under the
Commercial Rules of the American Arbitration Association by one arbitrator
appointed in accordance with said rules. Judgment on the award rendered by
the arbitrator may be entered in any court having Jurisdiction thereof. In
connection with any litigation between the parties hereto arising out of or
relating to this Agreement, each party hereto irrevocably consents to the
exclusive jurisdiction and venue in the federal and state courts located in
San Francisco and/or San Mateo County.
10.6. Independent Contractors. The parties are independent
contractors. Neither party shall be deemed to be an employee, agent,
partner or legal representative of the other for any purpose and neither
shall have any right, power or authority to create any obligation or
responsibility on behalf of the other.
10.7. Force Majeure. Neither party shall be liable hereunder by reason
of any failure or delay in the performance of its obligations hereunder
(except for the payment of money) on account of strikes, shortages, riots,
insurrection, fires, flood, storm, explosions, earthquakes,
telecommunications outages, acts of God, war, governmental action, or any
other cause which is beyond the reasonable control of such party.
10.8. Compliance with Law. Each party shall be responsible for
compliance with all applicable laws, rules and regulations, if any, related
to the performance of its obligations under this Agreement.
10.9. Waiver. The failure of either party to require performance by
the other party of any provision shall not affect the full right to require
such performance at any time thereafter; nor shall the waiver by either
party of a breach of any provision hereof be taken or held to be a waiver
of the provision itself.
10.10. Conflicts. In the event of a conflict between the terms of this
Agreement and an Exhibit attached hereto, the terms of the Exhibit shall
prevail.
10.11. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be contrary to law, such provision shall
be changed and interpreted so as to best accomplish the objectives of the
original provision to the fullest extent allowed by law and the remaining
provisions of this Agreement shall remain in full force and effect.
-7-
<PAGE>
10.12. Headings. The section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit,
construe or describe the scope or extent of such paragraph, or in any way
affect such agreements.
10.13. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be considered an original, but
all of which together will constitute one and the same instrument.
10.14. Entire Agreement. This Agreement, Exhibits, Attachments and
Schedules hereto, constitute the entire agreement between the parties with
respect to the subject matter hereof. This Agreement supersedes, and the
terms of this Agreement govern, any other prior or collateral agreements
with respect to the subject matter hereof. Any amendments to this Agreement
must be in writing and executed by an officer of the parties.
IN WITNESS WHEREOF, the parties have caused this Portal Services Agreement
to be signed by their duly authorized representatives.
BeFirst Internet Corporation INKTOMI CORPORATION
By: /s/ Craig Pisaris Henderson By: /s/ Jerry Kennelly
------------------------------- --------------------
Name: Craig A. Pisaris Henderson Name: Jerry Kennelly
----------------------------- -------------------
Title: President Title: CFO
---------------------------- ------------------
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<PAGE>
EXHIBIT A-I
TO THE
PORTAL SERVICES AGREEMENT
For BeFirst Internet Corporation ("Customer")
GENERAL SEARCH SERVICES
Customer's Site or Sites ("Site") shall be designated as follows:
This Exhibit to the Portal Services Agreement (this "Exhibit"), in conjunction
with the terms of the Portal Services Agreement (the "Agreement") shall
constitute the terms and conditions pursuant to which Inktomi shall provide
General Search Services to the Site set forth above:
1. Definitions. In addition to any terms defined in this Exhibit, the
following terms shall have the meanings set forth below. Any other terms not
otherwise defined in this Exhibit shall have the meanings prescribed to them in
the Agreement.
1.1. "Affiliate" means with respect to any person or entity, any other
person or entity directly or indirectly controlling or controlled by or
under direct or indirect common control with such person or entity.
"Control" means the possession of beneficial ownership of more than 50% of
the stock or other similar interest entitled to vote for election of the
Board of Directors or similar managing authority.
1.2. "Database" means Inktomi's full text index database of Web pages
accessible by end users of the Site at any given time. The Database
includes the "General Search Database."
1.3. "Search Database" is the database maintained as part of the
General Search Services described on Attachment A to this Exhibit.
1.4. "General Search Services" means the Internet Search Engine
services to be provided by Inktomi for Customer under this Exhibit, as more
fully described on Attachment A to this Exhibit.
1.5. "Inktomi Data Protocol" means the written specification on how an
Interface communicates and interacts with the Inktomi Search Engine.
1.6. "Inktomi Search Engine" means Inktomi's current Search Engine as
of the Effective Date as the same may be: (i) updated as provided on
Schedule 1 to the Agreement; and (ii) otherwise updated, upgraded,
modified, changed, or enhanced by lnktomi from time to time at its sole
discretion. The Inktomi Search Engine does not and will not include
features, options and modules developed and customized specifically for
third parties and provided to such third parties on an exclusive basis, or
features, options, modules and future products which Inktomi licenses or
provides separately.
1.7. "Inktomi Technology" means the lnktomi Search Engine, the Inktomi
Data Protocol, the Interface Construction Tools and all other computer
software, technology and/or documentation which is supplied by Inktomi for
use in or in connection with delivery of the General Search Services,
including, without limitation, all source code and object code therefor and
all algorithms, ideas and Intellectual Property Rights therein.
A1-1
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1.8. "Interface" means the editorial and graphical content and design
of the Web pages served to end users of the Site, including without
limitation all Search Pages, Results Pages, instruction pages, frequently
asked questions pages and any Site end user terms and guidelines.
1.9. "Interface Construction Tools" means all software tools, if any,
in object code form, provided by Inktomi to assist Customer to build the
Interface to the Inktomi Search Engine, including without limitation
Inktomi's application server currently known as Forge.
1.10. "Results Pages" means all Web pages displaying search results
presented to endusers directly as a result of accessing the query
mechanisms of the Inktomi Search Engine.
1.11. "Results Set" means a set of results consisting of between zero
and one hundred records presented in response to a search query.
1.12. "Search Engine" means computer software which crawls the
Internet, downloads and analyzes text and other data, sorts and organizes
the data, creates an index of accessible data, and after receiving a
particular search request (in the form of a word query), locates material
accessible in the database, and presents the results of the search.
1.13. "Search Pages" means all Web pages which enable end users of the
Site to initiate and send search queries to the Inktomi Search Engine.
1.14. "Usage Data" means the demographic, psychographic, statistical
and other end user data generated by operation of the lnktomi Search Engine
in connection with the search services provided by Customer to end users of
the Site, including without limitation all end user "click through"
information, but excluding Web usage data generated by the Database.
2. Provision of General Search Services: Site Implementation.
2.1. General Search Services and Site Implementation. Subject to the
terms and conditions of this Exhibit and the Agreement, Inktomi shall
provide the General Search Services to Customer for use in the Site, such
services to be provided substantially in accordance with the functionality
specifications, performance criteria and limitations specified on
Attachment A to this Exhibit. Inktomi, at its own expense, shall provide
all data transmission capacity (bandwidth), diskstorage, server capacity
and other hardware and software required to run the lnktomi Search Engine
and maintain the Database. Customer, at its own expense, shall create the
Interface to the Inktomi Search Engine for the Site, and shall provide all
disk storage, server capacity and other hardware and software required to
run and maintain the Site and the Interface, and to serve advertisements on
the Interface. Inktomi shall provide reasonable assistance (through
telephone, e-mail, the Web, or fax) to Customer during regular business
hours regarding development of the Interface and integration of the same
with the Inktomi Search Engine. Customer, at its own expense, shall provide
all data transmission capacity (bandwidth) required to connect to and
receive information from the Inktomi Search Engine. Customer may only
utilize the General Search Services in conjunction with search services
provided by Customer to end users of the Site, and Customer shall have no
right to provide, distribute, resell or provide services based on the
General Search Services or any information (including Results Sets)
generated therefrom to any other third party. Customer may not cache
Results Sets or any other information obtained from the Inktomi databases
without the prior written consent of Inktomi, which will not be
unreasonably withheld or delayed; and if Customer wishes to begin such
caching, Inktomi and Customer will First agree on appropriate Customer
reporting requirements to ensure proper accounting of payments hereunder.
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<PAGE>
2.2. Test Cluster. During the development period for the Interface,
Customer shall only have access through the Inktomi Data Protocol to a
non-production version of the Inktomi Search Engine (the "Test Cluster").
Upon completion of the Interface and all desired testing against the Test
Cluster, Customer shall present the Interface to Inktomi for review and
testing against the production version of the Inktomi Search Engine.
Inktomi shall promptly notify Customer of any problems or issues discovered
by Inktomi regarding the Interface. Once cleared by Inktomi, Inktomi shall
provide access to Customer to the production version of the Inktomi Search
Engine. Customer may run reasonable tests against the Test Cluster and the
production version of the Inktomi Search Engine, provided however that
Customer may not conduct any load testing (prior to commercial launch of
its search service) without the prior consent of Inktomi. Load testing as
used herein means the generation and delivery of more than five queries per
second. There shall no service fee payable by Customer for searches run
against the Test Cluster.
2.3. Delivery of Materials. Promptly following execution of this
Exhibit, Inktomi shall provide the Inktomi Data Protocol and the Interface
Construction Tools to Customer, which Customer may use solely in strict
compliance with the terms of Section 4.
2.4. Technical Support. Inktomi, at its own expense, shall provide
second level technical support services to Customer regarding the operation
of the Inktomi Search Engine. Such support services will be provided as set
forth on Schedule 1 of the Agreement.
3. Customer Obligations.
3.1. Technical Support. Except as set forth in Section 2.4, Customer
at its own expense shall provide all support including, without limitation,
first level Customer Support services to end-users of the Site.
3.2. Attribution. All Search Pages and Results Pages shall
conspicuously display an icon to be provided by Inktomi (the "Inktomi
Icon") that indicates that Inktomi's technology is being used. The Inktomi
Icon shall measure at least 41 x 126 pixels and shall provide a link to a
page of Inktomi's choice on Inktomi's Web site located at www.Inktomi.com.
The placement of the Inktomi Icon on the Web page shall be at Customer's
discretion.
4. Intellectual Property Licenses/Ownership.
4.1. Inktomi Data Protocol. Inktomi grants to Customer a
nontransferable, nonexclusive license during the Term (as defined below) to
use the Inktomi Data Protocol and the Interface Construction Tools solely
to create and maintain the Interface to the Inktomi Search Engine for the
Site. The license granted hereunder shall include the right to use the
Interface Construction Tool or to develop an Interface to the Inktomi
Search Engine for to Sites of Service Recipients.
4.2. Interface. As between Inktomi and Customer, Inktomi acknowledges
that Customer owns all right, title and interest, including without
limitation all Intellectual Property Rights, in and to the Interface
(except for any software licensed by third parties to Customer and except
for editorial content regarding the use and functionality of the Inktomi
Search Engine provided by Inktomi to Customer for incorporation into the
Site, which content shall be and remain Inktomi Technology), and that
Inktomi shall not acquire any right, title or interest in or to the
Interface, except as expressly set forth in this Exhibit or the Agreement.
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<PAGE>
4.3. Usage Data. The Usage Data belongs to Customer, provided however
that lnktomi shall have the right, during the term of this Agreement, to
use and redistribute the Usage Data solely for the purpose of billing
Customer for the queries and for ascertaining trends and demographic
preferences which can be used for targeting certain marketing campaigns at
end users.
5. Payment.
5.1. Service Fees. Customer shall pay Inktomi service fees in the
amount and on terms specified on Schedule 2 of the Agreement.
5.2. Records. For purposes of fulfilling its obligations under Section
5.2 of the Agreement, Customer shall keep complete and accurate records
pertaining to the number of Results Sets served during the applicable
period.
6. Indemnification. Inktomi shall defend and/or settle, and pay damages
awarded pursuant to any third party claim brought against Customer alleging the
software comprising the Inktomi Search Engine improperly includes any third
party copyrighted subject matter, third party patented subject matter or third
party trade secrets, provided that Customer promptly notifies Inktomi in writing
of any such claim and promptly tenders the control of the defense and settlement
of any such claim to Inktomi at Inktomi's expense and with Inktomi's choice of
counsel. Customer shall cooperate with Inktomi, at Inktomi's expense, in
defending or settling such claim and Customer may join in defense with counsel
of its choice at its own expense. Inktomi shall not reimburse Customer for any
expenses incurred by Customer without the prior written approval of Inktomi. The
indemnification obligation set forth in this Section 6 shall terminate upon the
expiration or termination of the General Search Services provided pursuant to
this Exhibit.
7. Term. The term of this Exhibit (the "Term") shall commence upon the
Effective Date and shall continue in force for a period of three (3) years,
thereafter unless otherwise terminated in accordance with the terms of the
Agreement.
IN WITNESS WHEREOF, the parties have caused this Exhibit to the Agreement
to be signed by their duly authorized representatives.
BeFirst Internet Corporation INKTOMI CORPORATION
By: /s/ Craig Pisaris Henderson By: /s/ Jerry Kennelly
----------------------------- ---------------------
Name: Craig A. Pisaris Henderson Name: Jerry Kennelly
--------------------------- -------------------
Title: President Title: CFO
-------------------------- ------------------
A1-4
<PAGE>
ATTACHMENT A
TO
EXHIBIT A-1
GENERAL SEARCH SERVICES
Capitalized terms not otherwise defined in this Attachment shall have the
meanings prescribed to them in the corresponding Exhibit to which this
Attachment is attached or the Portal Services Agreement to which such Exhibit
and Attachment are attached.
General Search Services
Inktomi will use the Inktomi Search Engine and its own editorial discretion
to crawl the Internet, download and analyze text and other data, sort and
organize the data, create an index of accessible data, and, after receiving a
particular search request from an end user (in the form of a word query), locate
material accessible in the General Search Database, and present the results of
the search to the end user. Inktomi will serve end user search queries out of
one or more of its search engine data centers at Inktomi's discretion. The
functionality specifications and performance criteria applicable to such
services are as follows:
Functionality Specifications:
lnktomi will operate the lnktomi Search Engine so as to enable end users of
the Site to run queries against the General Search Database with the following
functionality:
o Ability to search by keyword, file type, domain (up to three levels),
document title, modification dates, document contents, depth and
metaword
o Ability to search by full text and phrase, and search with Boolean
operators (including AND, NOT and OR). Default search, barring user
modification at query time by the end user, will be AND.
o Search on included object, covering the following objects: Acrobat,
Java applets, active x controls, audio, plugins, Flash, form, frame,
image, script, Shockwave, table, video and vrml
o Search on included file type, by file extension
o Search on specific script language, covering Javascript and Vbscript
o Limit search to words in the HTML "title" field
o Grammatical stemming
o Search by language
o Case sensitivity support
o Pornography filtration
o Ability to selectively control the size of each Results Set (0-10
records, 11-20 records, 21-30 records, 31-50 records, 51-75 records,
76-100 records)
Performance Criteria
o Size of Database - Minimum 54 million documents for all
queries and a minimum of 110 million
documents that may be accessed for up to
20% of daily queries
AA1-1
<PAGE>
o Database Freshness - Objective is minimum 13 updates per year
(approximately every 4 weeks, may vary
depending on operational circumstances)
o Uptime/Downtime - Minimum 99% uptime (1% downtime) over
monthly windows. Downtime = any 1 minute
period in which Inktomi Search Engine
processes no requests.
o Query/Response Speed - Average speed <= 750 milliseconds
Reports
Once a month, Inktomi will provide standard crawl and uptime reports to
Customer for the General Search Services.
Production Schedule
Customer will begin work on constructing the Interface, and Inktomi will
begin work on tuning its Search Engine to provide the services set forth herein
promptly, upon execution of the Exhibit. Both parties will use commercially
reasonable efforts so that the General Search Services are available to Customer
for use in the Site within thirty (30) days following the Effective Date.
AA1-2
<PAGE>
SCHEDULE 1
TO THE
PORTAL SERVICES AGREEMENT
SUPPORT GUIDELINES FOR
GENERAL SEARCH
Definitions.
(a) Hours of Operation. Inktomi will provide Customer with 7 x 24
support as set forth herein.
(b) Problem. Any error, bug, or malfunction that makes any feature of
the Inktomi Search Engine perform unpredictably or to otherwise
become intermittently unavailable, or that causes the Inktomi
Search Engine to have a material degradation in response time
performance.
(c) Severe Problem. Any error, bug, or malfunction that causes the
Inktomi Search Engine to become inaccessible to Customer and its
Site end users, or that causes any feature of the Inktomi Search
Engine to become continuously unavailable.
(d) Enhancement Request. A request by Customer to incorporate a new
feature or enhance an existing feature of the Inktomi Search
Engine.
(e) Fix. A correction, fix, alteration or workaround that solves a
Problem or a Severe Problem.
1. Contact points.
(a) Customer Technical Support Personnel. Customer will designate no
more than three Customer employees as qualified to contact
lnktomi for technical support.
(b) Inktomi Technical Support Personnel. Inktomi will ensure that its
Technical Support Personnel are adequately trained to provide
technical support to Customer. Inktomi will provide Customer with
a web interface or an email address (the "Support Address"), as
well as an email pager address (the "Support Page") for
contacting the Inktomi Technical Support Personnel no later than
one week prior to the Launch Date. Inktomi will also provide
Customer with contact information for executive escalation
personnel no later than one week prior to the Launch Date.
Inktomi may change its designated Technical Support Personnel and
executive escalation personnel at its discretion with reasonable
notice to Customer.
2. Support procedures.
(a) All Problems reported by Customer Technical Support Personnel to
Inktomi must be submitted via web site or email to the Support
Address.
(b) If Customer believes it is reporting a Severe Problem, Customer
will accompany its email request with a page via the Support
Pager.
S1-1
<PAGE>
(c) Upon receiving a report from Customer, Inktomi will determine
whether the request is a Problem, a Severe Problem, or an
Enhancement Request. Inktomi will respond to the request and use
reasonable commercial efforts to provide a Fix as described in
the support table set forth below.
(d) Inktomi will use commercially reasonable efforts to inform
Customer Technical Support Personnel of Fixes.
3. Support levels.
(a) Customer will provide technical support to end users of the Sites
who email or otherwise contact Customer directly with questions
about the Sites. Customer will use its commercially reasonable
efforts to Fix any Problems without escalation to Inktomi.
(b) Inktomi will provide the following technical support solely to
Customer Technical Support Personnel:
<TABLE>
<CAPTION>
=============================================================================================================================
Target response
Receipt of email Type of email Time from email Target Fix Time and
request request receipt Reporting
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
During business hours Problem Within one business Commercially
or other times day reasonable best
efforts with weekly
status reports to
Customer
- -----------------------------------------------------------------------------------------------------------------------------
During the hours Severe Problem Within two hours Commercially
between 6:00 a.m. reasonable best
and 9:00 p.m. Pacific efforts with daily
time status reports to
Customer
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
During other times Severe Problem Within four hours Commercially
reasonable best
efforts with daily
status reports to
Customer
- -----------------------------------------------------------------------------------------------------------------------------
During business hours Enhancement Requests Within five business At Inktomi's
or other times days discretion
=============================================================================================================================
</TABLE>
S1-2
<PAGE>
(c) In the event Inktomi does not respond to Customer within the
target response time from email receipt set forth above, then
Customer may contact the following Inktomi executive escalation
personnel in order:
Steve Crusenberry - Search Engine Technical Operations
Troy Toman - Director of Partner Services
Alex Edelstein - General Manager, Search Business Unit
Dick Pierce - Vice President Marketing
Dave Peterschmidt - CEO
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<PAGE>
SCHEDULE 2
TO THE
PORTAL SERVICES AGREEMENT
SERVICE FEES
1. Information Service Fee. Customer shall pay Inktomi a base information
services fee of $50,000 per year. For the first year under the Agreement, the
base information services fee shall be paid as follows: 1/4 of the fee shall be
paid within thirty (30) days of execution of the Agreement and 1/4 of the fee
shall be paid on the last day of each full calendar quarter thereafter. For
subsequent years, the base information services fee shall be paid in equal
monthly installments on the last day of each month.
2. Per Search Query Service Fee. In addition to the information service
fees set forth above, Customer shall pay Inktomi monthly per-query service fees
based on the total number of Results Sets served during the month for search
queries. These fees equal:
(A) the total number of Results Sets served during the month divided by
the total number of days in such month ("Average Daily Results Sets
Served").
(B) multiplied and added in accordance with the following graduated
schedule
For the first 500,000 Average Daily
Results Sets Served $.0034 per Results Sets Served
For the next 500,000 Average Daily
Results Sets Served $.0032 per Results Sets Served
For all Average Daily
Results Sets Served over 1 million $.0030 per Results Sets Served
(C) multiplied by the total number of days in such month.
(D) The Average Daily Result Set shall consist of 20 results per set.
The total per-query service fees payable by Customer shall not be less than
$130,000 for the first Year of the Term: $150,000 for the second Year of the
Term; and $170,000 for the third year of the Term. For the first year under the
Agreement, this minimum shall be paid as follows: 1/4 of the annual minimum fee
shall be paid within seven (7) days of execution of the Agreement and 1/4 of the
fee shall be paid on the last day of each full calendar quarter thereafter. For
subsequent years, the annual per-query minimums shall be paid in equal monthly
installments on the last day of each month. All such minimum payments shall be
credited against monthly per-query service fees otherwise due and payable.
3. All Services. The service fees set forth above are for General Search
Services provided by Inktomi as such Services are contemplated in the applicable
Exhibit. The total aggregate annual minimum fees due to Inktomi as set forth
above, shall be $180,000 for the first year of the Term, $200,000 for the second
year of the Term; and $220,000 for the third year of the Term.
S1-4
LEASE AGREEMENT
1. PARTIES: This Lease Agreement (hereinafter referred to as the "Lease) is
made this ____ day of _____________, 1999, by and between CAMBRIDGE MANAGEMENT
ASSOCIATES, A NEW JERSEY GENERAL PARTNERSHIP (hereinafter referred to as
"Landlord") and BE FIRST INTERNET CORPORATION (hereinafter referred to as the
"Lessee"), duly organized and existing under the laws of the State of Florida.
2. PREMISES: Landlord, for and in consideration of the rent to be paid and
the covenants to be performed by Lessee, as hereinafter set forth, does hereby
lease, demise and let unto Lessee that portion of the building known as
Westlinks III, 12751 Westlinks Drive, Ft. Myers, FL, (hereinafter referred to as
the "Building") consisting of 3,200 square feet of rentable area as determined
by typical BOMA standards and as outlined on the diagram attached hereto and
marked as Exhibit "A", known as Unit 3, (hereinafter referred to as the
"Premises").
3. TERM: The term of this Lease shall be for a period of three (3) years
and two (2) months commencing on August 1, 1999 or when premesis are
"substantially completed" as defined below (hereinafter referred to as the
"Commencement Date"), and terminating on September 30, 2002 (hereinafter
referred to as the "Termination Date"). If the Commencement date is other than
August 1, 1999, then Landlord and Lessee shall confirm the Commencement Date and
Termination Date in writing within fifteen (15) days of the Premises being ready
for occupancy, which shall thereafter be considered to be binding upon both
Landlord and Lessee.
4. LANDLORD CONSTRUCTION: Landlord will, at its own expense, cause the
Premises to be completed in the manner set forth in Exhibit "A", and the same
will be ready for occupancy on the Commencement Date. The Premises shall be
deemed ready for occupancy when the work being performed therein is
substantially completed. The term "substantially completed" shall be construed
to mean the issuance of a Certificate of Occupancy by the appropriate
governmental authority and such completion as shall enable Lessee to reasonably
and conveniently use and occupy the Premises for the conduct of its ordinary
business, even though minor details, decorations and mechanical adjustments
(hereinafter referred to as "Punch List Items") remain to be completed by the
Landlord.
5. RENT:
(a) Minimum Rent:
(1) From the Commencement Date for a period of two (2) months,
Lessee shall occupy the Premises free of Minimum Rent.
<PAGE>
(2) From two (2) months after the Commencement Date for a period
of one (1) year, Lessee shall pay to Landlord as yearly rent the sum
of Twenty-Eight Thousand Dollars and No Cents ($28,000.00), payable in
advance, without setoff or deduction, except as otherwise provided by
law, on the first business day of each calendar month in equal monthly
installments of Two Thousand Three Hundred Thirty-Three Dollars and
Thirty-Four Cents ($2,333.34), triple net as set forth below. The
first installment of rental shall be payable at the time of occupancy
under this Lease.
(3) From fourteen (14) months after the Commencement Date for a
period of one (1) year, Lessee shall pay to Landlord as yearly rent
the sum of Twenty-Nine Thousand Six Hundred Dollars and No Cents
($29,600.00), payable in advance, without setoff or deduction, except
as otherwise provided by law, on the first business day of each
calendar month in equal monthly installments of Two Thousand Four
Hundred Sixty-Six Dollars and Sixty-Seven Cents ($2,466.67), triple
net as set forth below.
(4) From twenty-six (26) months after the Commencement Date for a
period of one (1) year, Lessee shall pay to Landlord as yearly rent
the sum of Thirty-One Thousand Two Hundred Dollars and No Cents
($31,200.00), payable in advance, without setoff or deduction, except
as otherwise provided by law, on the first business day of each
calendar month in equal monthly installments of Two Thousand Six
Hundred Dollars and No Cents ($2,600.00), triple net as set forth
below.
In the event the term of this Lease commences on a day other than the first
business day of a calendar month, Lessee shall pay to Landlord, on or before the
Commencement Date of the term, a pro-rata portion of the monthly installment of
rent, such pro-rata portion to be based on the number of days remaining in such
partial month after the Commencement Date of the term. All Minimum Rent and
Additional Rent including Maintenance and Operation Expenses shall be subject to
Florida state sales tax.
(b) Additional Rent: Whenever, under the term of this Lease, any sum
of money is required to be paid by Lessee in addition to the rental herein
reserved and said additional amount so to be paid is not designated as
"additional rent", then said amount shall, nevertheless, at the option of
Landlord if not paid when due, be deemed "additional rent" and shall be
collectible as such with any installment of rent thereafter falling due
hereunder. Nothing herein contained shall be deemed to suspend or delay the
payment of any sum at the time the same becomes due and payable hereunder
or shall limit any other remedy of Landlord.
(c) Place of Payment of Rent and Additional Rent: All payments of rent
and additional rent shall be paid when due without demand at the office of
Cambridge Management Associates, 840 N. Lenola Road - Unit 1, Moorestown,
NJ 08057, or at such
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<PAGE>
other place as Landlord may from time to time direct in writing. All checks
shall be made payable to CAMBRIDGE MANAGEMENT ASSOCIATES.
(d) Security Deposit: Landlord acknowledges receipt upon the execution
hereof from the Lessee the sum of Two Thousand Dollars and No Cents
($2,000.00), to be held as collateral security for the payment of any
rentals and other sums of money payable by Lessee under this Lease, and for
the faithful performance of all other covenants and agreements of Lessee
hereunder; the amount of said security deposit is to be repaid to lessee
within thirty (30) days after the termination of this Lease and any renewal
thereof, provided Lessee shall have made all such payments and performed
all such covenants and agreements as provided for herein and provided
Lessee has not defaulted under the terms and conditions of this Lease. Upon
any default of Lessee hereunder, all or part of said security deposit may,
at the Landlord's sole option, be applied on account of such default, and
thereafter, Lessee shall promptly restore the resulting deficiency in said
security deposit, and said security deposit shall be deemed to be the
property of Landlord.
6. PEACEFUL POSSESSION: The Landlord covenants that the Lessee, on paying
the said rental and performing the covenants and conditions in this Lease
contained, shall and may peaceably and quietly have, hold and enjoy the demised
Premises for the term aforesaid. Landlord agrees that the adjacent space will
not be leased to any lessee that will unreasonably interfere with Lessee's
ability to conduct its business.
7. SERVICES:
(a) Utility Services: Landlord shall, at its expense, provide a
heating, cooling and ventilating system (hereinafter referred to as the
"HVAC System") sufficient to maintain the Premises in accordance with the
standards and specifications identified in Exhibit "B". Landlord shall
furnish Lessee with an electrical system having the minimum required
capacity identified in Exhibit "B" and Landlord shall also furnish hot and
cold water and sewer for normal office needs. Landlord shall install, at
its expense an electric meter to the demises Premises. Lessee shall clean
the Premises at its expense and shall pay for all electricity, gas, sewer
charges and water consumed by Lessee on the Premises, such payments to be
made directly to suppliers thereof.
(b) Other Services: Landlord will provide the following services to
the Premises and Building: fire monitoring, window cleaning, landscaping
and landscape maintenance and maintenance to the common areas described in
Paragraph 11. The cost of those services shall be included in Paragraph 8
hereof
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<PAGE>
8. OPERATION AND MAINTENANCE COSTS AND ADDITIONAL RENT:
(a) The costs and expenses of the operation and maintenance of the
Building (hereinafter referred to as "Operation and Maintenance Costs")
shall include, without limitation, the direct and actual cost and expense
to Landlord of the following items:
(1) All wages, salaries and fees of all employees and agents
directly engaged in the management, operation, repair, replacement,
maintenance and security of the Building, including taxes, insurance
and all other employee benefits relating thereto;
(2) All common utilities to the Building including, but not
limited to, water and sewer, electric and irrigation sprinkler use;
(3) All supplies and materials used in the management, leasing,
operation, repair, replacement, maintenance and security of the
Building;
(4) All maintenance and service agreements on equipment
including, without limitation, HVAC, alarm service and window cleaning
for the Building;
(5) All fire (with all risk coverage) and other casualty and
public liability insurance for the Building and Landlord's personal
property and fixtures used in connection therewith;
(6) All "real estate taxes" which, for the purposes of this
Article, shall mean all real property taxes and personal property
taxes, charges and assessments which are levied, assessed upon or
imposed by any governmental authority during any calendar year of the
term hereof with respect to the Building and the land on which the
Building is located and any improvements, including, but not limited
to the GSD Assessment, fixtures and equipment and all other property
of Landlord, real or personal, located in the Building and used in
connection with the operation of the Building and any tax which shall
be levied or assessed in addition to or in lieu of such real or
personal property taxes and any license fees, tax measured by or
imposed upon rents, or other tax or charge upon Landlord's business of
leasing the Building. All such real estate taxes shall be allocated
based on the maximum discount amount. In the event that the tax
statement from the taxing authority does not allocate assessments with
respect to the Building and assessments relating to any other
improvements located upon the land upon which the Building is
situated, Landlord shall make a reasonable determination of the proper
allocation of such assessment based, to the extent possible, upon
records of the assessor. Landlord shall have the right to institute a
tax appeal on behalf of all
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<PAGE>
lessees of the Building, the cost of said appeal shall be borne
pro-rata by Lessee;
(7) All repairs, replacements and general maintenance of the
Building, including, but not limited to, HVAC equipment, roof
maintenance and the upkeep of the lawn, grounds, shrubbery and
landscaping, along with paving maintenance;
(8) All service or maintenance contracts with independent
contractors for the operation, repair, replacement, maintenance or
security of the Building;
(9) All other costs and expenses necessarily and reasonably
incurred by Landlord in the proper operation and maintenance of the
Building, provided, however, that the following shall be excluded from
the term "Operation and Maintenance Costs" (i) expenses for any
capital improvements made to Land or Building, except those capital
expenses for improvements which result in savings of labor or other
costs or which may be required by governmental authority shall be
included and the cost of such improvements amortized over the useful
life of the improvements; (ii) expenses for repairs or other work
occasioned by fire, wind storm or other insured casualty; (iii)
expenses incurred in leasing or procuring new lessees (e.g. for lease
commissions, advertising expenses and expenses of renovating space for
new lessees); (iv) legal expenses in enforcing the term of any lease;
(v) interest or amortization payments on any mortgage or mortgages;
(vi) depreciation; and (vii) Landlord's administrative expense and
amounts chargeable to other lessees.
(b) During each calendar year or portion thereof included in the
original term of this Lease and any renewal thereof, Lessee shall pay
Landlord as additional rent, Lessee's percentage of all Operation and
Maintenance Costs. "Percentages" shall be defined as the ratio that the
gross square feet of the Premises bears to the gross square feet of the
rentable area in the Building, which "percentage" is agreed to be 10%
(3,200/29,340). It is understood that Landlord shall cause such services
described in Paragraph 8(a) above to be performed for the Building and that
Landlord shall receive bills from such employees and contractors for work
specifically performed on the Building, which bills shall represent a
proper allocation of any work done for the Building as compared with other
work that such employees or contractors may perform for any properties
owned by Landlord in the areas adjacent to and surrounding the Building.
Lessee shall have the right to review all such bills and calculations of
Landlord as to any allocations thereof Nothing herein shall be construed to
require Lessee to pay expenses incurred for repair and/or replacement of
items warranted by Landlord in this Lease.
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<PAGE>
(c) During December of each calendar year, or as soon thereafter as
practicable, Landlord shall give Lessee written notice of its estimate of
any amounts payable under Subparagraph 8(b) above for the ensuing calendar
year on or before the first day of each month during the calendar year,
Lessee shall pay to Landlord one-twelfth (1/12) of such estimated amounts,
provided that if such notice is not given in December, Lessee shall
continue to pay on the basis of the then applicable rental until the month
after such notice is given. If any time or times it appears to Landlord
that the amounts payable under Subparagraph 8(b) above for the current
calendar year will vary from its estimate by more than five percent (5%),
Landlord shall, by notice to Lessee, revise its estimate for such year, and
subsequent payments by Lessee for such year will be based upon such revised
estimate.
(d) Within ninety (90) days after the close of each calendar year, or
as soon after such ninety (90) day period as practicable, Landlord shall
deliver to Lessee a statement of the adjustments to be made pursuant to
Subparagraph 8(b) above. If, on the basis of such statement, Lessee owes an
amount that is less than the estimated payments for such calendar years
previously made by Lessee, Landlord shall refund such excess to Lessee
within thirty (30) days. If on the basis of such statement, Lessee owes an
amount that is more than the estimated payments for such calendar year
previously made by Lessee, Lessee shall pay the deficiency to Landlord
within thirty (30) days after delivery of statement. In no event, however,
shall the monthly rent paid by Lessee be less than the Minimum Rent set
forth in Paragraph 5 hereof Lessee shall have the right to review all
documentation substantiating any increases including, but not limited to,
real estate tax bills, insurance bills and common utility charges.
(e) The additional rent due under the terms and conditions of this
Paragraph shall, except as provided for by law, be payable by Lessee
without any setoff or deduction and shall be prorated as aforesaid during
the first and last calendar years of the Lease term or any renewal thereof
(f) In the event Landlord constructs additional improvements at the
Building which increases the assessment or gross square footage during the
term of this Lease, Lessee's percentage of Operation and Maintenance Costs
shall be equitably adjusted.
(g) Notwithstanding anything in the above to the contrary, annual
increases in Operation and Maintenance Costs shall be limited to 5%.
Landlord's failure to increase the Operation and Maintenance Costs for one
(1) year shall not be deemed to be a waiver of its rights to said increase.
All rights shall be cumulative, for example: if Landlord does not increase
Operation and Maintenance Costs in year two, they will have the
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<PAGE>
right to increase the Operation and Maintenance Costs by 10% in year three.
9. LATE PAYMENT: In the event that the Minimum Rent and Operation and
Maintenance Costs shall not be paid when due or any payments required to be paid
by Lessee under the provisions hereof are not paid within ten (10) days after
notice from Landlord, Lessee shall, upon demand, pay a late charge to Landlord
in the amount of six percent (6%) of the overdue amount and such late charge
shall be deemed "rent" for all purposes under this Lease.
10. USE OF PREMISES:
(a) LESSEE MAY NOT UTILIZE OR STORE ANY HAZARDOUS MATERIALS ON THE
PREMISES, unless, prior to the commencement of this Lease, Lessee presents
to Landlord a notarized affidavit stating Lessee's SIC number together with
a detailed list of all hazardous materials to be used or stored on the
Premises and, provided further, that Lessee is not in violation of
Paragraph 20(a) and/or 20(b). Lessee shall use and occupy the Premises for
general office space. Lessee represents and warrants that Lessee's SIC
(Standard Industrial Classification) number is . as designated in the
Standard Classification Manual prepared by the Office of Management and
Budget. Lessee shall not use or occupy the Premises for any other purpose
or business without prior written consent of the Landlord.
(b) HAZARDOUS MATERIALS: The term "Hazardous Materials", as used in
this Lease, shall include, without limitation, flammables, explosives,
radioactive materials, asbestos, polychlorinated biphenyls (PCBS),
chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminates, hazardous wastes, toxic substances or related materials,
petroleum and petroleum products and substances declared to be hazardous or
toxic under any law or regulation now or hereafter enacted or promulgated
by any governmental authority.
I. Lessee Restorations: Lessee shall not cause or permit to
occur: (a) any violation of any federal, state or local law, ordinance
or regulation now or hereafter enacted, related to environmental
conditions on, under or about the Premises or arising from Lessee's
use or occupancy of the Premises, including, but not limited to, soil
and ground water conditions; or (b) the use, generation, release,
manufacture, refining, production, processing, storage or disposal of
any Hazardous Material without Landlord's prior written consent, which
consent may be withdrawn, conditioned or modified by Landlord in its
sole and absolute discretion in order to insure compliance with all
applicable Laws (hereinafter defined), as such Laws may be enacted or
amended from time to time.
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<PAGE>
II. Environmental Cleanup: (a) Lessee shall, at Lessee's own
expense, comply with all laws regulating the use, generation, storage,
transportation or disposal of Hazardous Materials (the "Law"); (b)
Lessee shall, at Lessee's own expense, make all submissions to,
provide all information required by and comply with all requirements
of all governmental authorities (the "Authorities") under the Laws;
(c) should any Authority or any third party demand a cleanup plan be
prepared or undertaken because of any deposit, spill, discharge or
other release of Hazardous Materials that occurs during the term of
this Lease and which are caused by Lessee, its employees, agents or
invitees, at or from the Premises or which arises at any time from
Lessee's actions or inactions, Lessee shall at Lessee's own expense,
prepare and submit the required plans and all related bonds and other
financial assurances and Lessee shall carry out all such cleanup
plans; (d) Lessee shall promptly provide all information regarding the
use, generation, storage, transportation or disposal of Hazardous
Materials required by Landlord. If Lessee fails to fulfill any duty
imposed under this Paragraph 10(b) within thirty (30) days following
its request, Landlord may proceed with such efforts and in such case,
Lessee shall cooperate with Landlord in order to prepare all documents
Landlord deems necessary or appropriate to determine the applicability
of the Laws to the Premises and Lessee's use thereof and for
compliance therewith, and Lessee shall execute all documents promptly
upon Landlord's request and any expenses incurred by Landlord shall be
payable by Lessee as Additional Rent. No such action by Landlord and
no attempt made by Landlord to mitigate damages under any Law shall
constitute a waiver of any Lessee's obligations under this Paragraph
10(b); and (e) Lessee's obligations and liabilities under Paragraph
10(b) shall survive the expiration of this Lease,
III. Notwithstanding the above, Lessee shall not be responsible
for any deposit, spill, discharge or other release of Hazardous
Material caused by a third party that is not an employee, agent or
invitee of Lessee.
11. COMMON AREAS: All parking areas, driveways, alleys, public corridors,
fire escapes and other areas, facilities and improvements provided by Landlord
for the general use in common of Lessee and other lessees, their employees,
agents, invitees and licensees, shall at all times be subject to the exclusive
control and management of Landlord, and Landlord shall have the right from time
to time to establish, modify and enforce reasonable rules and regulations with
respect to all such areas, facilities and improvements. Landlord warrants that
adequate parking and unimpeded access to the Building and Premises will be
maintained during the lease term.
12. SIGNS: Lessee shall not display, inscribe, print, paint, maintain or
affix on any place in or about the Premises or the Property any sign, notice,
legend, direction, figure or
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advertisement, except on the doors of the Premises and Building Directory and
then only such name(s) and matter and in such color, size, style, place and
materials as shall first have been approved in writing by Landlord, such
approval not to be unreasonably withheld. Landlord agrees that all lessees in
the Building shall be subject to the same restrictions.
13. ALTERATIONS AND IMPROVEMENTS, REMOVAL:
(a) Lessee shall not make any major alterations, improvements or
additions to the Premises or attach any fixtures or equipment thereto
without the Landlord's prior written consent, which approval shall not be
unreasonably withheld. All alterations, interior decorations, improvements
or additions made to the Premises or the attachment of any fixtures or
equipment thereto shall be performed at Lessee's sole cost and expense by
Landlord or, at Landlord's sole option, by Lessee. All alterations,
improvements, additions or fixtures, whether installed before or after the
execution of this Lease, shall remain upon the Premises at the expiration
or sooner termination of this Lease and become the property of Landlord,
unless Landlord shall, prior to the termination of this Lease, have given
written notice to Lessee to remove the same. In the event that Landlord
requests such removal and Lessee fails to remove same and repair any damage
caused thereby on or before said expiration date, Lessee agrees to
reimburse and pay Landlord for the cost of removing same and repairing any
damage to the Premises caused by said removal, except for damage caused by
negligence of Landlord, or its agents, workmen or employees.
(b) In doing any such work of installation, removal, alteration or
relocation, Lessee shall use due care to cause as little damage or injury
as possible to the Premises or the Building and to repair all damage or
injury that may occur to the Premises or the Building in connection with
such work. Lessee agrees in doing any such work in or about the Premises to
use its best efforts to engage only such labor as will not conflict with or
cause strikes or other labor disturbances among the building service
employees of the Landlord. Any contractors employed by Lessee for such
installations shall carry workman's compensation insurance, public
liability insurance and property damage insurance in amounts, form and
content and with companies satisfactory to Landlord. Prior to the
commencement by Lessee of any work as set forth in this Paragraph, Lessee
must obtain, at its sole cost and expense, all necessary permits,
authorizations and licenses required by the various government authorities
having Jurisdiction over the Premises.
14. MECHANIC'S LIEN: Lessee shall agree not to allow any Mechanic's Lien to
be filed against the Premises for any construction of other work on or about the
Premises performed or to be performed at Lessee's request. Notwithstanding the
foregoing, if any mechanic's or other lien shall be filed against
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the Premises or the Building purporting to be for labor or materials furnished
or to be furnished at the request of Lessee, then Lessee shall, at its own
expense, cause such lien to be discharged or stayed of record by payment, bond
or otherwise, within thirty (30) days after filing thereof. If Lessee shall fail
to commence actions to cause such lien to be discharged or stayed by payment,
bond or otherwise within thirty (30) days after filing thereof. Lessee shall
indemnify and hold Landlord harmless against any and all claims, costs, damages,
liabilities and expenses (including attorney's fees) which may be brought or
imposed against or incurred by Landlord by reason of any such lien or its
discharge.
15. CONDITION OF PREMISES: Lessee acknowledges and agrees that, except as
expressly set forth in this Lease, there have been no representations or
warranties made by or on behalf of Landlord with respect to the Premises or the
Building. Landlord warrants that: (i) it is the fee simple owner of the Premises
and has the full right and authority to enter into this Lease; and (ii) existing
locaL state and federal laws, statutes, ordinances and regulations permit Lessee
to use the Premises for the intended uses. The taking of possession of the
Premises by Lessee shall conclusively establish that the Premises and the
Building were at such time in satisfactory condition, order and repair, subject
to any Punch List Items to be provided to Landlord by Lessee in writing within
ten (10) days of taking possession.
16. ASSIGNMENT AND SUBLETTING:
(a) Subject to the terms of this Paragraph, Lessee shall have the
right to assign or hypothecate this Lease. A corporate Lessee may, without
consent of the Landlord, assign this Lease to its parent subsidiary or
purchaser of substantially all of Lessee's assets, provided that the
assignee assumes, in full, the obligations under this Lease.
(b) If, at any time or from time to time during the term of this
Lease, Lessee desires to assign the Lease or to sublet all or part of the
Premises, Lessee shall give notice to Landlord of such intent. Landlord
shall have the option, exercisable by notice given to Lessee within twenty
(20) days after receipt of Lessee's notice, of re-acquiring the portion of
the Premises proposed to be assigned or sublet and terminating the Lease
with respect thereto. If the Landlord does not exercise such option, Lessee
shall, upon obtaining written consent of Landlord, which consent shall not
be unreasonably withheld, be free to assign the Lease or sublet such space
to a third party subject to the following conditions:
(1) In Landlord's sole option, the Sublessee or Assignee is
financially responsible and that the use of the demised Premises by
Sublessee or Assignee is the same or similar to that of the Lessee;
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(2) Landlord may exercise its option set forth above at any time
prior to the execution of a sublease agreement to which Landlord has
given its consent in writing;
(3) No sublease shall be valid and no Sublessee shall take
possession of the premises subleased until an executed counterpart of
such sublease has been delivered to Landlord;
(4) No Sublessee shall have a night to further sublet, and
(5) Any sums or other economic consideration received by Lessee
as a result of such subletting (except rental or other payments
received which are attributable to the amortization of the cost of
leasehold improvements, other than building standard lessee
improvements made to the sublet portion of the Premises by Lessee for
Sublessee), whether denominated rentals under the Sublease or
otherwise, which exceed in the aggregate the total sums which Lessee
is obligated to pay Landlord under this Lease (pro-rated to reflect
obligations allocable to that portion of the Premises subject to such
sublease) shall be divided equally with Landlord as additional rent
under this Lease without affecting or reducing any other obligation of
Lessee hereunder.
(c) Regardless of Landlord's consent, no subletting or assignment
shall release Lessee of Lessee's obligations or alter the primary liability
of Lessee to pay the rental and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rental by Landlord from
any other person shall not be deemed to be a waiver by Landlord of any
provision hereof In the event of default by any assignee of Lessee or any
successor of Lessee in the performance of any of the terms hereof, Landlord
may proceed directly against Lessee without the necessity of exhausting
remedies against such assignee or successor. Landlord may consent to
subsequent assignment or subletting of this Lease or amendments or
modifications to this Lease with assignees of Lessee provided that Landlord
notifies Lessee or any successor of Lessee and obtains its or their
consents thereto, and such action shall not relieve Lessee of liability
under this Lease.
17. ACCESS TO PREMISES: Landlord, its employees and agents shall have the
right, upon receipt of written approval from Lessee to enter the Premises at any
time in case of an emergency for the purpose of examining or inspecting the
same, showing the same to mortgagees or lessees of the Building, as Landlord may
deem necessary or desirable, provided, however, Landlord shall proceed in a
manner to minimize the disruption of Lessee's business.
18. REPAIRS:
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(a) Landlord shall keep the exterior, foundations, structure, roof,
all common areas (including parking and driveway), HVAC, plumbing and
electrical systems located on the exterior of the building in good order
and repair, subject to the reimbursement as Operation and Maintenance Costs
pursuant to Paragraph 8, provided, however, that Lessee shall maintain the
plumbing, heating, air conditioning and electrical systems which are
physically located within the confines of the Premises, provided that the
systems are properly installed and operating at the time of possession by
Lessee. Lessee shall replace/repair all broken glass, door windows, that is
caused by Lessee, its employees, agents or invitees.
(b) Except as Landlord is obligated for repairs as provided
hereinabove, Lessee shall make, at its sole cost and expense, all repairs
necessary to maintain the Premises and shall keep the Premises and the
fixtures therein in neat and orderly condition. If Lessee refuses or
neglects to make such repairs or fails to diligently prosecute the same to
completion after written notice from Landlord of the need therefor,
Landlord may make such repairs at the expense of Lessee and such expense,
along with a ten percent (10%) service charge, shall be collectible as
additional rent.
(c) Except as results from the negligent acts or omissions of
Landlord, Landlord shall not be liable by reason of any injury to or
interference with Lessee's business arising from the making of any repairs,
alterations, additions or improvements to the Premises or Building or to
any appurtenances or equipment therein. Landlord shall interfere as little
as reasonably practicable with the conduct of Lessee's business. There
shall be no abatement of rent because of such repairs, alterations,
additions or improvements.
(d) In the event of an emergency, Landlord may enter the Premises to
make any and all repairs necessary to preserve and protect the Premises,
and the costs and expense of such repairs shall be paid as provided in this
Lease.
19. INDEMNIFICATION AND LIABILITY INSURANCE:
(a) Except for the negligence or intentional acts of Landlord, Lessee
shall indemnify, hold harmless and defend Landlord from and against any and
all costs, expenses (including reasonable counsel fees), liabilities,
losses, damages, suits, actions, fines, penalties, claims or demands of any
kind connected with, and Landlord shall not be liable to Lessee on account
of (i) any failure by Lessee to perform any of the agreements, terms,
covenants or conditions of this Lease required to be performed by Lessee;
(ii) any failure by Lessee to comply with any statutes, ordinances,
regulations or orders of any governmental authority; or (111) any accident,
death, or personal injury or damage to or losses or theft of property which
shall
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occur in or about the Premises occasioned wholly or in part by reason of any act
or omission of Lessee, its agents, contractors or employees.
(b) During the term of this Lease or any renewal thereof, Lessee shall
obtain and promptly pay all premiums for general public liability insurance
against claims for personal injury, death or property damage occurring
upon, in or about the Premises, with minimum limits of $1,000,000.00 on
account of bodily injuries to or death of one person and $1,000,000.00 on
account of bodily injuries to or death of more than one person as a result
of any one accident or disaster, and $100,000.00 on account of damage to
property (or in an amount of not less than $1,000,000.00 combined single
limit for bodily injury and property damage), and all such policies and
renewals thereof shall name the Landlord as additional insured. All
policies of insurance shall provide that: (i) no material change or
cancellation of said policies shall be made without ten (10) days prior
written notice to Landlord and Lessee; (ii) any loss shall be payable
notwithstanding any intentional act or negligence of Lessee or Landlord
which might otherwise result in the forfeiture of said insurance; and (iii)
the insurance company issuing the same shall have no right of subrogation
against Landlord, their agents, servants and/or employees. On or before the
Commencement Date of the term of this Lease and thereafter, not less than
fifteen (15) days prior to the expiration dates of said policy or policies,
Lessee shall provide copies of policies or certificates of insurance
evidencing coverage required by this Lease. All the insurance required
under this Lease shall be issued by insurance companies authorized to do
business in the State of Florida with a financial rating of at least an
"A+" as rated in the most recent edition of Best's Insurance Reports and in
business for the past five (5) years. The aforesaid insurance limits may be
reasonably increased from time to time by Landlord.
(c) Lessee and Landlord, respectively, hereby release each other from
any and all liability or responsibility to the other for all claims or
anyone claiming by, through or under it or them by way of subrogation or
otherwise for any loss or damage to property covered by the Florida
Standard Form of Fire Insurance Policy with extended coverage endorsement,
whether or not such insurance is maintained by the other party.
(d) Landlord agrees to maintain adequate fire and extended coverage
including liability insurance on the Building during the term of this Lease
and said policy shall provide that the insurance company issuing the same
shall have no fight of subrogation against Lessee. In the event that
Landlord's insurance premium is increased as a result of providing this
coverage, Lessee shall be responsible to pay the additional premium.
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(e) Except if caused by Landlord, its employees, agents or invitees
and to the extent permitted by law, Lessee shall indemnify Landlord and
save it harmless and, at Landlord's option, defend it from and against any
and all claims, actions, damages, liabilities and expenses, including
attorney's and other professional fees, in connection with loss of life,
personal injury and/or damage to property arising from or out of the
occupancy or use by Lessee of the Premises or any part thereof or any other
part of the Building, occasioned wholly or in part by any act or omission
of Lessee, its officers, agents, employees, invitees or licensees.
(f) Except if caused by Landlord, its employees, agents or invitees or
failure of Landlord to diligently proceed to correct cause, Lessee agrees
that there shall be no rent abatement if Lessee is unable to use the
Premises for any reason whatsoever, including the lack of utilities and/or
damage to the Premises. Lessee agrees to purchase and maintain adequate
insurance, including business interruption insurance to cover all such
occurrences and the insurance company agrees to waive any rights of
subrogation against Landlord, their agents, servants and/or employees.
20. NEGATIVE COVENANTS OF LESSEE:
(a) Lessee agrees that it will not do or suffer to be done, any act,
matter or thing objectionable to the fire insurance companies whereby the
fire insurance or any other insurance now in force or hereafter to be
placed on the Premises or Building, shall become void or suspended or
whereby the same shall be rated as a more hazardous risk than at the date
when Lessee receives possession hereunder. In case of a breach of this
covenant, in addition to all other remedies of Landlord hereunder, Lessee
agrees to pay to Landlord, as additional rent, any and all increases in
premiums on insurance carried by Landlord on the Premises or any part
thereof, or on the Building of which the Premises may be a part, caused in
any way by the occupancy of Lessee.
(b) Lessee will not store or discharge any toxic, radioactive or other
hazardous substances or wastes on or adjacent to the Premises or utilize
the Premises or any adjacent lands for the generation, manufacture,
refining, transportation, treatment, storage, handling or disposal of any
such substances or wastes in violation of ISRA or any other laws, rules,
regulations or procedures of any federal or state environmental regulatory
body or agency.
21. FIRE OR OTHER CASUALTY:
(a) If the Premises are damaged by fire or other casualty, the damages
shall be repaired by and at the expense of Landlord to at least as good
condition as that which existed
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immediately prior to such damage. Landlord agrees to repair such damage
within a reasonable period of time after receipt from Lessee of written
notice of such damage, subject to any delays caused by acts of God, labor
strikes or other events beyond Landlord's control. Unless caused by Lessee,
its agents, employees or invitees, Minimum Rent shall abate for the period
of time in excess of thirty (30) days that Lessee is unable to use the
Premises. Landlord shall not be liable for any inconvenience or annoyance
to Lessee or injury to the business of Lessee in any way from such damage
or the repair thereof Lessee acknowledges notice that: (i) Landlord shall
not obtain insurance of any kind on Lessee's furniture or furnishings,
equipment, fixtures, alterations, improvements and additions; (ii) it is
Lessee's obligation to obtain such insurance at Lessee's sole cost and
expense; and (iii) Landlord shall not be obligated to repair any damage
thereto or replace the same.
(b) If the Premises, in the reasonable opinion of Landlord, are: (i)
rendered substantially untenantable by reason of such fire or other
casualty; or (ii) twenty percent (20%) or more of the Premises is damaged
by said fire or other casualty and less than six (6) months would remain in
the Lease term or any renewal thereof upon completion of the repairs or
reconstruction, Landlord shall have the right, to be exercised by notice in
writing delivered to Lessee within thirty (30) days from and after said
occurrence, to elect not to reconstruct the Premises, and in such event
this Lease and the tenancy hereby created shall cease as of the date of
said occurrence, the rent to be adjusted as of said date.
(c) If more than fifty percent (50%) of the Building shall be
substantially damaged by fire or other casualty, regardless of whether or
not the Premises were damaged by such occurrence, Landlord shall have the
right, to be exercised by notice in writing delivered to Lessee within
thirty (30) days from and after said occurrence, to terminate this Lease,
and in such event this Lease and the tenancy hereby created shall cease as
of the date of said termination, unless terminated as of the date of said
occurrence in accordance with Paragraph 21 (b) hereof, the rent to be
adjusted as of the date of such termination.
(d) If the Premises are substantially damaged in that Landlord is
unable to restore the Premises for Lessee's occupancy within 180 days,
Lessee shall have the option, to be exercised by notice in writing
delivered to Landlord within thirty (30) days after said occurrence, to
elect to terminate this Lease, and in such event this Lease and the tenancy
hereby created shall cease as of the date of said termination.
22. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT: This Lease is subject
and subordinate to any first mortgages now or thereafter affecting or covering
the Premises and all or any part
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of the Building. Notwithstanding the aforesaid subordination, in the event of
the foreclosure of any such mortgage; (a) this Lease shall not terminate; and
(b) the peaceful possession of Lessee shall not be disturbed, provided that
Lessee is not in default under any of the terms and conditions of this Lease.
Lessee agrees to attorn to and to recognize the mortgagee or the purchaser at
foreclosure sale as Lessee's landlord for the balance of the term of this Lease.
Lessee hereby agrees, however, that such mortgagee or the purchaser at
foreclosure sale shall not be: (i) liable for any act or omission of Landlord;
(ii) subject to any offsets or defenses which Lessee might have against
Landlord; (iii) bound by any rent or additional rent which Lessee may have paid
to Landlord for more than the current month; or (iv) bound by any amendment or
modification of this Lease made without its consent. The aforesaid
subordination, non-disturbance and attornment provisions shall be
self-operative, however, Lessee agrees to promptly execute any other agreement
submitted by Landlord in confirmation or acknowledgment of same.
23. CONDEMNATION:
(a) If the whole of the Premises shall be condemned or taken either
permanently or temporarily for any public or quasi-public use or purpose
under any statute or by right of eminent domain or by private purchase in
lieu thereof, then, in that event, the term of this Lease shall cease and
terminate from the date when possession is taken thereunder pursuant to
such proceeding or purchase. The rent shall be adjusted as of the time of
such termination and any rent paid for a period thereafter shall be
refunded. In the event only a portion of the Premises or a portion of the
Building containing same shall be so taken (even though the Premises may
not have been affected by the taking of some other portion of the Building
containing same), Landlord may elect to terminate this Lease from the date
when possession is taken thereunder pursuant to such proceeding or purchase
or Landlord may elect to repair and restore, at its own expense, the
portion not taken, and thereafter rent shall be reduced proportionately to
the portion of the Premises taken.
(b) In the event of any total or partial taking of the Premises or the
Building, Landlord shall be entitled to receive the entire award in any
such proceeding, and Lessee hereby assigns any and all right, title and
interest of Lessee now or hereafter arising in or to any such award or any
part thereof and hereby waives all rights against Landlord and the
condemning authority, except that Lessee shall have the right to claim and
prove in any such proceeding and to receive any award which may be made to
Lessee, if any, specifically for damages for loss of good will, movable
trade fixtures, equipment and moving expenses.
(c) To the extent that the provisions (a) and (b) conflict with
Florida law, Florida law will apply.
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24. ESTOPPEL CERTIFICATE: Lessee shall, at any time and from time to time
within ten (10) days after written request by Landlord, deliver to Landlord a
statement in writing duly executed by Lessee, certifying: (i) that this Lease is
in full force and effect without modification or amendment (or, if there have
been any modifications or amendments, that this Lease is in full force and
effect as modified as amended and setting forth the modifications and
amendments); (ii) the dates to which annual basic rental and additional rent
have been paid; and (iii) that to the knowledge of Lessee, no default exists
under this Lease or specifying each such default; it being the intention and
agreement of Landlord and Lessee that any such statement by Lessee may be relied
upon a prospective purchaser or a prospective or current mortgagee of the
Building or by others in any matter affecting the Premises.
25. DEFAULT: The occurrence of any of the following shall constitute a
material default and breach of this Lease by Lessee:
(a) A failure by Lessee to pay, when due, any installment of rent
hereunder or any such other sum herein required to be paid by Lessee where
such failure continues for ten (10) days after written notice thereof from
Landlord to Lessee;
(b) A failure by Lessee to observe and perform any other provisions or
covenants of this Lease to be observed or performed by Lessee, where such
failure continues for thirty (30) days after written notice thereof from
Landlord to Lessee, provided, however, that if the nature of the default is
such that the same cannot reasonably be cured within such thirty (30) day
period, commence such cure and thereafter diligently prosecute the same to
completion;
(c) The filing of a petition by or against Lessee for adjudication as
a bankrupt or insolvent or for its reorganization or for the appointment
pursuant to any locaL state or federal bankruptcy or insolvency law of a
receiver or trustee of Lessee's property; or an assignment by Lessee for
the benefit of creditors; or the taking possession of the property of
Lessee by any local, state or federal possession of the property of Lessee
by any local, state or federal governmental officer or agency or
court-appointed official for the dissolution or liquidation of Lessee or
for the operating, either temporarily or permanently, of Lessee's business,
provided, however, that if any such action is commenced against Lessee, the
same shall not constitute a default if Lessee causes the same to be
dismissed within sixty (60) days after the filing of same,
26. REMEDIES: Upon the occurrence of any such event of default as set forth
above, Landlord shall notify Lessee in writing which shall include a specific
description of the default, a reference to the specific provision of the Lease
and
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shall be provided a reasonable time within which the Lessee can cure a default.
In the event Lessee falls to cure, Landlord may;
(a) Landlord may cure for the account of Lessee any such default of
Lessee and immediately recover as additional rent any expenditures made,
including reasonable attorney's fees and costs of suit and the amount of
any obligations incurred in connection therewith, plus interest at prime
plus two percent (2%) per annum from the date of any such expenditure,
(b) Subject to Landlord's obligation to mitigate its damages, Landlord
may accelerate all rent and additional rent due for the balance of the term
of this Lease and declare the same to be immediately due and payable;
(c) Subject to Landlord's obligation to mitigate its damages, in
determining the amount of any future payment due to Landlord on account of
increase in Operation and Maintenance Costs, Landlord may make such
determination based upon the amount of Operation and Maintenance Costs for
the Premises that are subject to this Lease for the full year immediately
prior to such default. If the Premises had Operation and Maintenance Costs
for less than one (1) full year prior to default, Landlord may make such
determination based upon the average monthly Operation and Maintenance
Costs for the less than one (1) year period;
(d) Landlord, at its option, may serve notice upon Lessee that this
Lease and the then unexpired term hereof shall cease and expire and become
absolutely void on the date specified in such notice, without any right on
the part of Lessee to save the forfeiture by payment of any sum and,
thereupon and at the expiration of the time limit of such notice, this
Lease and the term hereof granted, as well as the fight, title and interest
of Lessee hereunder, shall wholly cease and expire and become void in the
same manner and with the same force and effect (except as to Lessee's
liability) as if the date fixed in such notice were the date herein
established for expiration of the term of the Lease. Thereupon, Lessee
shall immediately quit and surrender to Landlord the Premises, and Landlord
may enter into and repossess the Premises by summary proceedings, detainer,
ejectment or otherwise, and remove all occupants thereof and property
therein, at Landlord's option, without being liable to indictment,
prosecution or liability and obligations under this Lease, whether or not
the Premises shall relet; except as otherwise provided by law;
(e) Landlord may, at any time after the occurrence of any event of
default, re-enter and repossess the Premises and any part thereof and any
attempt in its own name, as agent for Lessee if the Lease not be terminated
or on its own behalf if the Lease be terminated, to relet all or any part
of such Premises for and upon such terms and to such person, firms or
corporations and for such period or periods as Landlord, in its sole
discretion, shall
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determine, including the term beyond the termination of this Lease; and
Landlord shall not be required to accept any lessee offered by Lessee or
observe any instruction given by Lessee about such re-letting. Landlord
must use its best efforts to mitigate damages in connection with any
re-letting. For the purpose of such re-letting, Landlord may decorate or
make repairs, changes, alterations or additions in or to the Premises to
the extent deemed desirable or convenient by Landlord; and the cost of such
decoration, repairs, changes, alterations or additions shall be charged to
and be payable by Lessee as additional rent hereunder, as well as any
reasonable brokerage and legal fees expended by Landlord; and any sums
collected by Landlord from any new lessee obtained on account of Lessee
shall be credited against the balance of rent due hereunder as aforesaid.
Lessee shall pay to Landlord monthly on the days when the rent would have
been payable under this Lease, the amount due hereunder, less the amount
obtained by Landlord from such new lessee;
(f) Landlord shall have the right of injunction, in the event of a
breach or threatened breach by Lessee of any of the agreements, conditions,
covenants or terms hereof to restrain the same and the fight to invoke any
remedy allowed by law or in equity, whether or not other remedies,
indemnity or reimbursements are herein provided. The fights and remedies
given to Landlord in this Lease are distinct, separate and cumulative
remedies and any one of them, whether or not exercised by Landlord, shall
be deemed to be in exclusion of any of the others;
(g) In an action by Landlord to collect unpaid amounts owed by Lessee
(whether accelerated or otherwise) or any action brought against Landlord
by Lessee, the prevailing party shall be entitled to receive reasonable
attorney's fees and costs.
27. REQUIREMENTS OF STRICT PERFORMANCE: Except as otherwise provided by
law, the failure or delay on the part of either party to enforce or exercise at
any time any of the provisions, fights or remedies in this Lease shall in no way
be construed to be a waiver thereof, nor in any way affect the validity of this
Lease or any part hereof, or the right of the party to thereafter enforce each
and every such provision, right or remedy. No waiver of any breach of this Lease
shall be held to be a waiver of any other or subsequent breach. The receipt by
Landlord of rent at a time when the rent is in default under this Lease shall
not be construed as a waiver of such default. The receipt by Landlord of a
lesser amount than the rent due shall not be construed to be other than a
payment on account of the rent then due, nor shall any statement of Lessee's
check or any letter accompanying Lessee's check be deemed an accord and
satisfaction, and Landlord may accept such payment without prejudice to
Landlord's fight to recover the balance of the rent due or to pursue any other
remedies provided in this Lease. No act or thing done by Landlord
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or Landlord's agents or employees during the term of this Lease shall be deemed
an acceptance of a surrender of the Premises, and no agreement to accept such a
surrender shall be valid unless in writing and signed by Landlord.
28. SURRENDER OF PREMISES - HOLDING OVER:
(a) Unless extended by renewal, this Lease shall terminate and Lessee
shall deliver up and surrender possession of the Premises on the last day
of the term hereof and Lessee waives the fight to any notice of termination
of this Lease. Lessee shall provide Landlord with its forwarding address;
(b) Lessee covenants that, upon the expiration or sooner termination
of this Lease, unless extended by renewal, it shall deliver up and
surrender possession of the Premises in the same condition as of the
commencement of the Lease, reasonable wear and tear excepted, in which
Lessee has agreed to keep the same during the continuance of this Lease and
in accordance with the terms thereof,
(c) Upon the failure of Lessee to surrender possession of the Premises
upon the expiration or sooner termination of this Lease, unless extended by
renewal, Lessee shall pay to Landlord, as liquidated damages, an amount
equal to twice the rent and additional rent required to be paid under this
Lease as applied to any period in which Lessee shall remain in possession
after the expiration or sooner termination of this Lease.
29. NOTICES: All notices, consents, requests, instructions, approvals
and/or communications provided herein shall be validly given, made or served if
in writing and delivered personally as proved by receipt signed by an authorized
representative or receipt by an express mail company or delivery service signed
by an authorized representative or by registered or certified mail, proved by an
executed return receipt, postage paid, signed by an authorized representative
addressed as follows:
To Landlord:
CAMBRIDGE MANAGEMENT ASSOCIATES
840 N. Lenola Road - Unit I
Moorestown, NJ 08057
With a copy to:
R. Scott Price, Esq.
PRICE, PASSIDOMO & SIKET
Gray Oaks Building 2640
Golden Gate Parkway - Suite 315
Naples, FL 33942
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To Lessee at:
BE FIRST INTERNET CORPORATION
12751 Westlinks Drive - Unit 3
Ft. Myers, FL 33913
With a copy to:
Mr. Robert Brahms
BE FIRST INTERNET CORPORATION
121 W. 27th Street - Suite 903
New York, NY 10001
30. WARRANTIES OF LESSEE AND AGENT: Each party warrants to the other that
they dealt and negotiated solely and only with the other party for the Lease and
with no other broker, firm, company or person except CB Richard Ellis and ReMax
Realty Group . Each party (for good and valuable consideration) shall indemnify
and hold the other harmless from and against any and all claims, suits,
proceedings, damages, obligations, liabilities, counsel fees, costs, losses,
expenses, orders and judgments imposed upon, incurred by or asserted against the
other party by reason of the falsity or error of its own aforesaid warranty.
Landlord shall be solely responsible for all commissions due to CB Richard Ellis
and ReMax Realty Group.
31. FORCE MAJEURE: Landlord shall be excused for the period of any delay in
the performance of any obligations hereunder when prevented from so doing
because of causes beyond Landlord's control, which shall include, without
limitation, all labor disputes, inability to obtain any materials or services,
civil commotion or acts of God.
32. LANDLORD'S OBLIGATIONS: Landlord's obligations hereunder shall be
binding upon Landlord only for a period of time that Landlord is in ownership of
the Premises and, upon termination of that ownership, Lessee, except as to any
obligations which have then matured, shall look solely to Landlord's successor
in interest in the Premises for the satisfaction of each and every obligation of
Landlord hereunder.
33. LANDLORD'S LIABILITY:
(a) Provided not caused by Landlord, its employees, agents or invitees
or failure of Landlord to diligently proceed to correct cause, Landlord
shall incur no liability to Lessee in the event that any utility becomes
unavailable from any source of supply or for any other reason;
(b) Lessee waives any rights of claim against Landlord on account of
any loss or damage to Lessee's property, the Premises or its contents,
including, but not limited to: (i) loss caused by the condition of the
Premises or Building, the
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condition or operation of or defects in any equipment, machinery or utility
systems located therein or the act or omission of any person or persons,
except loss caused solely and directly by or due to the gross negligence or
intentional acts of Landlord, its authorized employees or agents; (il)
theft, mysterious disappearance or loss of any property of the Premises or
Building; and (ill) any interference or disturbance by third parties,
including, without limitation, other lessees;
(c) Provided not caused by Landlord, its employees, agents or invitees
or failure of Landlord to diligently proceed to correct cause, Landlord
shall not be in default hereunder or liable for any damages directly or
indirectly resulting from, nor shall the rent herein reserved be abated by
reason of (i) the installation, use or interruption of use of any equipment
in connection with the furnishings of any of the foregoing services; (ii)
failure to furnish or delay in furnishing any such services; or (iii) the
limitation, curtailment, rationing or restriction on use of water,
electricity, gas or any other form of energy serving the Premises or the
Building;
(d) Provided not caused by Landlord, its employees, agents or invitees
or failure of Landlord to diligently proceed to correct cause, Landlord
shall not be responsible or liable to Lessee, or to those claiming by,
through or under Lessee, for any loss or damage which may be occasioned by
or through the acts or omissions of persons occupying any other part of the
Building, or for any loss or damage resulting to Lessee, or those claiming
by, through or under Lessee, or its or their property, from the breaking,
bursting, stoppage or leaking of electrical cable and wires, or water, gas,
sewer or steam pipes. To the maximum extent permitted by law, Lessee agrees
to use and occupy the Premises, and to use such other portions of the
Building as Lessee is herein given the right to use, at Lessee's own risk.
34. SUCCESSORS: The prospective rights and obligations provided in this
Lease shall inure to the benefit of the parties hereto, their legal
representatives, heirs, successors and assigns, provided, however, that no
rights shall inure to the benefit of any successors of Lessee unless Landlord's
written consent for the transfer to such successor has first been obtained as
provided for in Paragraph 16 hereof
35. GOVERNING LAWS: This Lease shall be construed, governed and enforced in
accordance with the laws of the State of Florida.
36. SEVERABILITY: If any provision of this Lease shall be held to be
invalid, void or unenforceable, the remaining provisions hereof shall in no way
be affected or impaired and such remaining provisions shall remain in full force
and effect.
37. CAPTIONS: Any headings preceding the text of several paragraphs and
subparagraphs hereof are inserted solely for the
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convenience of reference and shall not constitute a part of this Lease, nor
shall they affect its meaning, construction or effect.
38. GENDER: As used in this Lease, the word "person" shall mean and
include, where appropriate, an individual, corporation, partnership or other
entity; the plural shall be substituted for the singular and the singular for
the plural, where appropriate; and words of any gender shall mean to include any
other gender.
39. EXECUTION: This Lease shall become effective when it has been signed by
a duly authorized officer or representative of each of the parties and delivered
to the other party.
40. EXHIBITS: Attached to this Lease and made a part hereof are Exhibits
"A", "B" and "C".
41. ENTIRE AGREEMENT: This Lease, including Exhibits and any Rider hereto,
contains all the agreements, conditions, understanding, representations and
warranties made between the parties hereto with respect to the subject matter
hereof and may not be modified orally or in any manner other than by an
agreement in writing signed by both parties hereto or their respective in
interest.
42. CORPORATE AUTHORITY:
(a) If Lessee is a corporation, each individual executing this Lease
on behalf of said corporation represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said corporation
in accordance with the duly adopted resolution of the Board of Directors of
said corporation or in accordance with the by-laws of said corporation and
that this Lease is binding upon said corporation in accordance with its
items.
(b) The individual executing this Lease on behalf of this Partnership
represents and warrants that he is duly authorized to execute and deliver
this Lease on behalf of said Partnership in accordance with the Partnership
Agreement and that this Lease is binding upon said Partnership in
accordance with its items.
43. RULES AND REGULATIONS: Lessee and Lessee's visitors shall comply with
the Rules and Regulations, with respect to the Real Property, which are set
forth in Exhibit "C" annexed to this Lease and expressly made a part hereof
Landlord shall have the right to make reasonable amendments thereto from time to
time for the safety, care and cleanliness of the Real Property, the preservation
of good order therein and the general convenience of all the lessees and Lessee
shall comply with such amended Rules and Regulations, after twenty (20) days
written notice from Landlord. All such amendments shall apply to all lessees in
the Building and will not materially interfere with the use and
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enjoyment of the Premises by Lessee. No amendment to the rules and regulations
shall contradict or limit the fights granted to the Lessee or reduce or waive
the Landlord's duties to the Lessee. The Lease terms will always take precedence
over any conflicting rules and regulations and amendments thereto.
44. BUILDING AND COMMON AREA PROVISIONS: Landlord represents and warrants
that the Premises, Building and Common Area currently comply with all applicable
federal, state, county and other law and recorded covenants and restrictions and
Landlord has the duty to assure that the Building and Common Area continue to
comply with all applicable federal, state, county and other law and recorded
covenants and restrictions, including the duty to comply with present and future
ADA requirements.
45. OPTION TO RENEW: Provided Lessee is not then in default hereunder,
Lessee has the option to renew this Lease for a further period of five (5) years
(hereinafter referred to as "First Option") commencing on October 1, 2002 and
terminating on September 30, 2007. The minimum rent payable during the first
year of such extended term shall be the total of a) $31,200.00 plus b) an amount
computed by multiplying the percentage increase of CPI as provided by the
Southeast Regional Office of the Bureau of Labor Statistics for All Items for
South All Urban Consumers for March 1, 1999 over the same index for February 28,
2001, times the sum of $31,200.00. The aforesaid percentage increase shall be
determined by first obtaining the difference, if any, between the former and
latter indices, and then dividing such difference by the latter index. Such
rental shall be payable in equal, consecutive monthly installments. In no event
shall such minimum rent be less than $31,200.00. In the event the Consumer Price
Index is discontinued, it is agreed that the index taking its place shall be
used. The Minimum Rent shall be adjusted annually after the first year of the
First Option by the CPI.
The said option may be exercised to extend the term hereon one (1) time
only. Except as expressly provided in this Clause, upon Lessee's exercise of
this option, all of the terms and conditions of this Lease shall apply during
the extended term.
Lessee shall exercise this option by giving Landlord written notice of its
intention to do so by certified mail, return receipt requested, on or before
46. FIRST RIGHT OF REFUSAL FOR ADJACENT SPACE: Provided that Lessee is not
in default of any of the terms of this Lease, Lessee shall have the first right
of refusal to lease the adjacent space known as Unit 2 or Unit 4. Prior to
entering into a Lease with a third party, Landlord will provide Lessee with
written notice of its intent to lease the adjacent premises and Lessee shall
have the option, to be exercised within ten (10) days of receipt of notice from
Landlord, to lease the premises according to the same terms and conditions. In
the event that
-24-
<PAGE>
Lessee does not exercise this option within the ten (10) day period, this right
of refusal shall expire and Landlord shall be free to enter into an agreement to
lease the adjacent space to the third party.
47. RIGHT OF SETOFF/LANDLORD DEFAULT: In the event that Landlord defaults
on its obligations to maintain or make repairs to the Premises, where such
default continues after thirty (30) days written notice, Lessee shall have the
right to proceed to correct, repair or maintain and shall deduct the cost from
the Minimum Rent due hereunder.
48. RIGHT TO RELOCATE: Provided that Lessee is not in default of this
Lease, Lessee shall have the night to terminate this Lease in the event that it
enters into a separate agreement to lease larger space in another building owned
by Landlord or its affiliates. The new Lease must be for a minimum of three (3)
years.
IN WITNESS WHEREOF, the parties have duly executed this Lease in
counterparts the day and year first above written.
WITNESS: LANDLORD:
/s/ John McGarvey
- ------------------------ ---------------------------------
John S. McGarvey,
Managing Partner
CAMBRIDGE MANAGEMENT ASSOCIATES
Date: 7/6/99
---------------------------
ATTEST: LESSEE:
/s/ Robert Brahms
- ------------------------ ---------------------------------
BE FIRST INTERNET CORP., Lessee
By: Robert Brahms
Title: CEO
Date: 6/30/99
---------------------------
-25-
[LOGO FOR MICA.NET]
Contract
August 17, 1999
This agreement between the Michigan Internet Communication Association (MICA)
and Befirst.com Inc. (Customer) is a one-year contract for Internet Services as
described below for a twelve-month period beginning on the date of installation
of service. Price below is for Internet service only and does not include
telephone company circuit fees. Invoices for Internet service will be sent
quarterly in advance of services rendered. Customer agrees to pay invoices on or
before the due date. Equipment and installation fees as quoted separately must
be paid in advance of installation of service.
<TABLE>
<CAPTION>
MICA.net Customer Start-up Billed
Location Location Description Installation Per/ Month Quarterly
Costs Charge
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Southfield, MI Southfield, MI DS3 Hub Service @ (base cost) 9 $ 16,000. $ 48,000
Mbps-- 40 Mbps burst
Southfield, MI Startup fee: Hardware-- 100 MB $31,000. +
Fast Ethernet Router Interface/ $10,000. +
Router Processor Interface brd., $14,000. +
Watchguard Firewall, DLT Tape $7,000. +
Dry. Resiliency IP software
Total
$51,000.00
</TABLE>
Additional bandwidth above the initial 9 Mbps base cost, in 1 Mbps increments
will be billed at an additional $600.00 extra per month.
By signing below, client agrees to the terms and conditions of the Client
Service agreement on the reverse side of this document.
/s/ Norman J. Estigoy 8-18-99 /s/ Craig Pisaris- /s/ Courtney
- --------------------------------------- Henderson Jones
Norman J. Estigoy Date -----------------------------------
CEO Customer Signature Date
Michigan Internet
Craig A. Pisaris / Courtney
-Henderson Jones
-----------------------------------
Print Name
President-CFO / Chairman
-----------------------------------
Title
BeFirst.com, Inc.
-----------------------------------
Company Name
12751 Westlines Dr.
-----------------------------------
Address
Ft. Myers, FL 33913
-----------------------------------
City, State, Zip
Michigan Internet 21863 Melrose Ave, Southfield, MI 48076
ph: (248) 355-1438 / fx: (248) 355-1488 / www.micanet / [email protected]
<PAGE>
TERMS AND CONDITIONS
The following terms and conditions govern the Michigan Internet Communication
Association Ltd.'s ("MICA") provision of network services ("Services") to the
company or individual ("Customer") as described on the Client Service Agreement.
The Term "Services" is limited to the equipment, facilities, programming or
software provided by MICA to facilitate MICA Services but does not include
special access lines that may be utilized with MICA Services, or any equipment,
facilities, programming or software at the Customer site. Specifically, MICA
Services includes only that portion of connections on MICA-side of the
telecommunications provider's demarcation. In the case of Hub Services, the
complete connection to the Customer computer system is included. Hub Services
are defined as network services to Customer's computer systems co-located at
MICA facility receiving Internet services. If Services are, or become subject
to, a tariff filed with the Federal Communications Commission or any other
regulatory institution ("Tariff"), the terms and conditions of such Tariff,
including rates, shall govern Customer's use of the Services. Customer shall be
responsible for all connection and local access charges incurred by MICA which
apply to the Connection and if MICA is providing Customer the local loop,
Customer will he billed by MICA for such amounts. If MICA in providing the local
loop, the WAN port on Customer's router is the demarcation point. If Customer is
providing its own local loop, the demarcation point is considered to be the port
on MICA's router. Customer acknowledges that is has received a Product
Specification Sheet relating to the Connection. Also, Customer recognizes that
this agreement does not include equipment.
1. TERM. The initial Term begins on the first day of the month following MICA's
installation of MICA-side equipment or facilities and Internet service
established between MICA and customer routing equipment. The Term for Services
("Term") will be 3 years. After initial Term all Internet services shall
automatically renew for one month Terms unless Customer or MICA notifies the
other by thirty (30) days written notice that it does not wish to renew.
2. RATES. Rates are as set forth on Client Service Agreement Contract ("Order").
MICA will provide thirty (30) days written notice of any change in base prices.
Customer is responsible for service fees according to the new base prices for
Customer services installed based on the most recent Service Order(s). Billing
shall commence on the date the Connection is activated. Customer will be
invoiced quarterly for all amounts due and owing to MICA. All payments are due
within 30 days after the date of such invoice.
3. PAYMENT. Customer agrees to pay all charges incurred. Upon receipt of MICA
invoice Charges shall be due on the first day of each calendar quarter for that
quarter's (three months) service whether or not an invoice is received. Payment
shall be made in U.S. Dollars. Interest charges of 1 3/4 percent per month or
the highest rate permitted by law will accrue daily on all amounts not paid
within thirty (30) days of the date due. Customer will be deemed to be in
default hereunder if payment is not received within 30 days after the date of
such invoice, and in addition, all Customer services will be disconnected
without notice if any amounts are not paid within thirty (30) days of the date
due. Customer will pay all sales and use taxes, as well as duties or levies, on
Services. Customer's Services will not be initiated until Customer has paid
current Customer fees, Services startup fees, and the fees for the first month
of Services. If Customer wishes to cancel a Service Order before the Service is
initiated, the Customer must provide notice to MICA in writing with return
receipt, and such notice must be received by MICA prior to Service initiation.
When a Customer cancels before initiation, the first month Service fee will be
refunded but the startup fee will only be refunded when a new Service Order from
any other Customer utilizes the equipment purchased with said startup fees.
Because of the difficulties and inconvenience in attempting to establish the
loss, if Customer breaches this Client Service Agreement with respect to any
term of this agreement or terminates this contract early, MICA reserves the
right, in addition to any other remedies which maybe available to it, to
terminate this agreement and the services provided to Customer hereunder. In
addition, upon the occurrence of any breach hereunder, 75% of the cumulative
total of the balance on this agreement shall become due and payable as of that
date as liquidated damages and not as a penalty. Customer acknowledges that the
amounts payable pursuant to the preceding sentence are equitable compensation to
MICA, and are intended to reasonably compensate MICA for the losses which are
occasioned by Customer's failure to honor its obligations hereunder and that the
exact amount of damages is difficult or impractical to establish.
4. TERMINATION. MICA with (30) days prior written notice may terminate this
service agreement at any time.
5. RIGHTS AND OBLIGATIONS OF CUSTOMER.
A. Customer shall at its own expense provide all necessary preparations required
to comply with MICA's installation and maintenance specifications, and shall be
responsible for the costs of relocation of any equipment or telecommunications
circuits once Services are initiated. This includes a circuit from a location of
Customer's choice to MICA router (for all Services except Hub Services), circuit
termination and packet switching equipment to connect Customer systems or
networks to Services. For Hub Services, Customer shall provide the computer
system to locate at MICA facility.
B. Customer shall provide information related to Services as requested by MICA
to troubleshoot Services.
C. Customer shall not nor shall it permit or assist others to use Services for
any purpose other than that for which they are intended.
D. Customer shall not nor shall it permit or assist others to abuse or
fraudulently use Services, including but not limited to the following:
1. Obtaining or attempting to obtain service by any fraudulent means or device
with intent to avoid payment;
2. Accessing, altering, or destroying any information of another MICA Customer
by any fraudulent means or device, or attempting so do so; or
3. Using Services so as to interfere with the use of MICA network by other
Customers or authorized users, intentionally or not; or in violation of the law
or in aid of any unlawful act.
E. Customer acknowledges that MICA's network may only be used for lawful
purposes. MICA reserves the right to, from time to time, monitor Customer's
activity. The transmission of any material in violation of any United States or
State regulations is prohibited. This includes, but is not limited to,
copyrighted material, material legally judged to be threatening or obscene,
material protected by trade secret or material that is otherwise deemed to be
proprietary or judged by MICA to be inappropriate or improper such as
unsolicited bulk e-mail messages. MICA has zero tolerance for unsolicited bulk
e-mail messages and reserves the right to terminate the Connection in the event
that MICA becomes aware that Customer, or persons making use of Customer's
services or using the MICA network for the distribution of unsolicited bulk
e-mail messages.
F. Customer acknowledges that MICA offers Customer access to the Internet.
Customer hereby acknowledges that the Internet is not owned, operated, managed
by or in any way affiliated with MICA or any of its affiliates, and that it is a
separate network of computers, independent of MICA. Customer's use of the
Internet is solely at Customer's own risk and is subject to all applicable
local, state, national and international laws and regulations. Access to the
Internet is dependent on numerous factors, technologies and systems, many of
which are beyond MICA's authority and control.
G. Customer acknowledges that access to other networks connected to MICA's
network must comply with the rules appropriate for that other network. MICA
exercises no control whatsoever over the content of information passing through
its network.
6. EQUIPMENT OR SOFTWARE NOT PROVIDED BY MICA.
A. MICA shall not be responsible for the installation, operation or maintenance
of equipment or software not provided by MICA; nor shall MICA be responsible for
the transmission or reception of information by equipment or software not
provided by MICA.
B. Customer shall be responsible for the use and compatibility of equipment or
software not provided by MICA. In the event that Customer uses equipment or
software not provided by MICA that impairs the Customer's use of Services,
Customer shall nonetheless be liable for payment for Services. Upon notice from
MICA that the equipment or software not provided by MICA is causing or is likely
to cause hazard, interference or service obstruction, Customer shall eliminate
the likelihood of hazard, interference or service obstruction. Customer shall if
necessary pay MICA to troubleshoot difficulties caused by equipment or software
not provided by MICA. MICA will notify Customer by telephone before any such
charges are incurred.
C. MICA shall not be responsible if any changes in Services cause equipment or
hardware not provided by MICA to become obsolete, require modification or
alteration, or otherwise affect performance of equipment or hardware not
provided by MICA.
D. MICA includes this terms and conditions so that MICA can control the
performance of MICA network on an end-to-end basis and protect MICA network.
MICA's intent is to manage the router on a Communication basis with Customer for
leased line based services. This paragraph does not apply so dialup or Hub
Services.
1. MICA reserves the right to allow or refuse the make, model and/or software
revision of Customer provided router to be used as the gateway to MICA.
2. The Customer will set the initial configuration of the Customer's router
interface into MICA network as provided by MICA.
3. Customer must permit MICA to access the router's SNMP variables, and Customer
must, at MICA's request, permit one or more MICA network management systems to
be the recipient of SNMP TRAP messages.
4 Customer must offer MICA read/write access to the router's configuration
tables. Either Customer or MICA can administer the access controls (i.e., login
and password) to the router's configuration editor. MICA will only modify that
part of the router's configuration that controls the interface into MICA
network.
7. RIGHTS AND OBLIGATIONS OF MICA.
A. MICA shall install, operate and maintain Services. MICA shall not be
responsible for cabling that connects equipment not provided by MICA to MICA
Services.
B. MICA warrants that Services will be in good working order and will conform to
MICA's service specifications upon the date installed. The foregoing warranties
are in lieu of all other warranties, express or implied, including but not
limited to the implied warranties of merchantability and fitness for a
particular purpose.
For Web Hosting services, MICA will provide reasonable and industry acceptable
network security measures to help protect appropriate customer data files, with
respect to MICA web hosting services.
C. Customer's sole remedy for performance or non-performance of Services
pursuant to MICA's service specifications shall be repair or replacement of
Services.
D. MICA shall not be liable, either in contract or in tort, for protection from
unauthorized access of Customer's transmission facilities or Customer premise
equipment; or for unauthorized access to or alteration, theft or destruction of
Customer's data files, programs, procedure or information through accident,
fraudulent means or devices, or any other method, even should such access occur
as a result of MICA's negligence.
E. MICA shall not be liable for claims or damages caused by Customer's fault,
negligence or failure to perform Customer's responsibilities; claims against
Customer by any other party; any act or omission of any other party furnishing
services; or installation or removal of equipment furnished by any service
provider, except where caused by the gross negligence of MICA.
F. MICA shall not be liable for damages to Customer equipment caused by the
negligence or willful acts of MICA's officers, employees, agents or contractors
for loss through theft or vandalism of Customer equipment on MICA's premises,
and for damages caused by the use of Customer equipment or supplies .
G. For any other claim, Customer's damages, if any, shall be limited to those
actually proven as directly attributable to MICA, subject to the following
limitation: MICA will not be liable under any circumstances for any lost profits
or other consequential damages, even if MICA has been advised of the possibility
of such damages to Customer for any cause whatsoever, regardless of the form of
action, and whether in contract or in tort, including negligence, shall be
limited to the lesser of $100,000 or the monthly charges paid for Services from
the date damages were incurred, but in no event more than twelve (12) month's
charges for the Services that cause the damages.
H. Upon default by Customer, MICA may terminate Services and retake possession
of Services (before, during or after action to recover sums hereunder), retain
all payments made hereunder, and recover charges and costs owed by Customer as
well as any other damages MICA may have sustained because of Customer's default.
"Default" shall mean where Customer becomes subject of a voluntary or
involuntary bankruptcy, insolvency, reorganization or liquidation proceeding;
makes an assignment for the benefit of creditors; admits in writing its
inability to pay debts when due; or fails within ten (10) days after written
notice to remedy any breach of this Agreement.
I. MICA may interrupt Customer Services immediately after an attempt so notify
Customer by telephone at the telephone number of the technical contact specified
on the Service Order in any event where MICA Technical Review Committee has
determined Customer is in breach of paragraph 5 subparagraph B of this
Agreement. In the event such action is taken by MICA, Customer Services will be
reinstated when MICA's Technical Review Committee determines the condition has
been remedied by Customer. This paragraph takes precedence over paragraph 7
sub-paragraph G.
J. MICA MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED
TO, THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, THIS INCLUDES
LOSS OF DATA RESULTING FROM DELAYS, NONDELIVERIES, MISSED DELIVERIES, OR SERVICE
INTERRUPTION HOWEVER CAUSED. USE OF ANY INFORMATION OBTAINED BY MICA'S NETWORK
IS AT CUSTOMER'S OWN RISK. MICA SPECIFICALLY DISCLAIMS ANY RESPONSIBILITY FOR
THE ACCURACY OR QUALITY OF INFORMATION OBTAINED THROUGH ITS SERVICES.
K. Customer understands that routine maintenance and periodic system repairs,
upgrades and reconfigurations may result in temporary impairment or interruption
in service. As a result, MICA does not guarantee continuous or uninterrupted
service and reserves the right from time to time to temporarily reduce or
suspend service without notice.
8. INDEMNITIES. MICA its affiliates, officers, directors, licensees, licensers,
will be indemnified and saved harmless by the Customer from and against all
loss, liability, damage and expense, including reasonable attorney's fees,
caused by:
1. Negligent acts or omissions of officers, employees, agents or contractors of
Customer that arise out of or are caused by the construction, installation,
maintenance, presence, or use or removal of systems, channels, terminal
equipment or software not provided by MICA that are connected to MICA Services
and that result in claims and demands for damages to property or for injury or
death to persons including payments made under any Worker's Compensation Law or
under any plan for employee's disability or death benefits;
2. Claims for liable, slander, invasion of privacy or infringement of copyright,
and invasion and/or alteration of private records or data arising from any
information, data or message transmitted over the network by Customer.
3. Claims for infringement of patents arising from the use of equipment and
software, apparatus and systems not provided by MICA in connection with
Services.
9. GENERAL.
A. Customer shall not assign or transfer the Order without the prior written
consent of MICA. MICA may, however, assign this Agreement to its parent company
or an affiliate with thirty (30) days notice. No Customer is allowed to resell
or redistribute Internet services provided by MICA including but not limited to
the following services; dial-in asynchronous modem connections, leased line, and
hub services. Retransmission of Internet connection services through microwave
and radio waves for reselling is prohibited. MICA may permit Customer to provide
Internet services to third parties only under an exclusive written agreement
between MICA and Customer.
B. MICA will not be responsible for performance of its obligations hereunder
where delayed or hindered by war, riots, embargoes, strikes, or other concealed
acts of workmen (whether of MICA or others), casualties, accidents or other
occurrences beyond MICA's control. MICA shall notify Customer in the event of
any of the foregoing occurrences. Should such occurrence continue for more than
sixty (60) days, MICA or Customer may cancel the Order for the affected Services
with no further liability.
C. The provision of Services by MICA is subject to MICA's continuing approval of
Customer's creditworthiness. Customer shall furnish financial information as
MICA may from time to time request to determine Customer's credit-worthiness.
D. Any legal action arising out of failure, malfunction or defect in Services
shall be brought within one (1) year of the occurrence or is deemed waived. Any
and all actions shall be brought in the appropriate court system in the State of
Michigan.
E. This Agreement may not be modified except by written amendment by the
parties. No agent, employee or representative of MICA or Customer has authority
to bind the parties to any representation or warranty unless such is
specifically included in this Agreement, the Order, or written amendments
thereto.
F. Any notice required to be given hereunder shall be in writing and shall be
deemed to have been delivered when deposited in the United States Mail,
registered or certified mail, return receipt requested with adequate postage
affixed and addressed to the person set forth in the signature block hereto or
to such other address as either party may provide to the other in accordance
with the provisions hereof. Notices may be sent to the administrative address of
record for the Customer. Notice so MICA shall be to:
Michigan Internet Communication Association, Ltd.
P.O. Box 2133, Southfield, MI 41037
Attention: Contract Administration
G. All users of Customer services are responsible for ensuring their use
complies with any policies in effect which may apply to their use. Further,
users of Customer services are responsible for determining which policies affect
their specific use. This may include but is not limited to the National Science
Foundation Appropriate Use Policy.
H. Customer is responsible for assessing its own need for property, casualty,
and liability insurance and shall obtain such insurance as it sees fit. Customer
shall bear the risk of loss to its own equipment and agrees to so make any
claims against the others for any property loss.
I. This Agreement shall be governed by the laws of the State of Michigan.
J. Should any part or portion of the Agreement be found invalid, the balance of
the provisions shall remain unaffected and shall be enforceable.
K. It is understood and agreed by the parties hereto that this instrument in
conjunction with the Customer Agreement constitutes the entire agreement between
the parties. Each party hereby specifically advises the other that any
representations inconsistent with the terms and conditions contained herein made
by any officer, agent or employee are wholly unauthorized and specifically
repudiated.
L. It is understood and agreed by the parties hereto that this instrument in
conjunction with the Customer Agreement constitutes the entire agreement between
the parties. Each party hereby specifically advises the other that any
representations inconsistent with the terms and conditions contained herein made
by any officer, agent or employee are wholly unauthorized and specifically
repudiated. The parties have entered into this Agreement as of the date
indicated on the first page front.
M. Neither party shall disclose any of the terms and conditions of this
agreement without the prior written notice of the other, provided, however, in
any of its sales and marketing materials MICA may refer to Customer as its
Customer.
N. This agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original for all purposes hereof. This agreement
contains the entire agreement of the parties hereto and with respect to the
matters covered hereby and supersedes any other prior or simultaneous agreement
related to such matters.
Michigan Internet Page 2 of 2
BeFirst.com
1999 Stock Incentive Plan
Section 1. Purposes; Definitions.
The purpose of this Plan is to enable the Company to offer to its key
employees and to key employees of its Subsidiaries and other persons who are
expected to contribute to the success of the Company, long term
performance-based stock and/or other equity interests in the Company, thereby
enhancing their ability to attract, retain and reward such key employees or
other persons, and to increase the mutuality of interest between those employees
or other persons and the stockholders of the Company.
For purposes of this Plan, the following terms shall be defined as set
forth below:
(a) "Board" means the Board of Directors of BeFirst.com
(b) "Cause" shall have the meaning ascribed thereto in Section 5(b)(ix)
below.
(c) "Change of Control" shall have the meaning ascribed thereto in Section
9 below.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
(e) "Committee" means the Stock Incentive Committee of the Board or any
other committee of the Board which the Board may designate.
(f) "Company" means BeFirst.com, a corporation organized under the laws of
the State of Nevada.
(g) "Deferred Stock" means Stock to be received, under an award made
pursuant to Section 7 below, at the end of a specified deferral
period.
(h) "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan.
(i) "Early Retirement" means retirement from active employment with the
Company or any Parent or Subsidiary prior to age 65, with the approval
of the Board or the Committee, for purposes of one or more award(s)
under this Plan.
<PAGE>
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
as in effect from time to time.
(k) "Fair Market Value" of a share of Stock means, as of any given date:
(i) if the Stock is listed on a national securities exchange or quoted
on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), the last sale price of a share of Stock
on the last preceding day on which the Common Stock was traded, as
reported by such exchange or NASDAQ, or on a composite tape reflecting
transactions on such exchange or by NASDAQ, as the case may be; (ii)
if the Stock is not listed on a national securities exchange or quoted
on the NASDAQ, but is traded in the over-the- counter market, the
average of the high bid and asked prices for a share of Stock on the
last preceding day for which such quotations are reported by the
National Quotation Bureau, Inc.; and (iii) if the fair market value of
a share of Stock cannot be determined pursuant to clause (i) or (ii)
above, such price as the Board of Directors or the Committee, as the
case may be, shall determine, which determination shall be conclusive
as to the Fair Market Value of the Stock.
(l) "Incentive Stock Option" means any Stock Option which is intended to
be and is designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
(m) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(n) "Normal Retirement" means retirement from active employment with the
Company or any Subsidiary on or after age 65.
(o) "Other Stock-Based Award" means an award under Section 8 below that is
valued in whole or in part by reference to, or is otherwise based upon
Stock.
(p) "Parent" means any present or future parent of the Company, as such
term is defined in Section 424(e) of the Code, or any successor
thereto.
(q) "Performance Objectives" means performance objectives adopted by the
Committee pursuant to the Plan for key employees who have received
awards under the Plan. With respect to any award to a key employee who
is, or is determined by the Committee to be likely to become a
"covered employee" within the meaning of Section 162(m) of the Code,
the Performance Objectives shall be limited to specified levels of
growth in or peer company comparisons based upon (i) appreciation in
the price of Stock plus reinvested dividends over a specified period
of time, (ii) return on assets or (iii) book value per share, as the
Committee may determine, and the attainment of such Performance
Objectives shall not be deemed to have occurred until certified by the
-2-
<PAGE>
Committee. Except in the case of a covered employee, if the Committee
determines that a change in business, operations, corporate structure
or capital structure of the Company, or the manner in which it
conducts it business, or other events or circumstances under the
Performance Objectives to be unsuitable, the Committee may modify such
Performance Objectives or the related minimum acceptable level of
achievement, in whole or in part, as the Committee deems appropriate.
(r) "Plan" means this BeFirst.com 1999 Stock Incentive Plan, as
hereinafter amended from time to time.
(s) "Restricted Stock" means Stock, received under an award made pursuant
to Section 6 below, that is subject to restrictions imposed pursuant
to said Section 6.
(t) "Retirement" means Normal Retirement or Early Retirement.
(u) "Rule 16b-3" means Rule 16b-3 of the General Rules and Regulations
under the Exchange Act, as in effect from time to time, and any
successor thereto.
(v) "Section 162(m)" means Section 162(m) of the Code, as in effect from
time to time, and any successor thereto.
(w) "Securities Act" means the Securities Act of 1933, as amended, as in
effect from time to time.
(x) "Stock" means the Common Stock of the Company, par value $.001 per
share.
(y) "Stock Option" or "Option" means any option to purchase shares of
Stock which is granted pursuant to the Plan.
(z) "Subsidiary" means any present or future (A) subsidiary corporation of
the Company, as such term is defined in Section 424(f) of the Code, or
(B) unincorporated business entity in which the Company owns, directly
or indirectly, 50% or more of the voting rights, capital or profits.
Section 2. Administration.
The Plan shall be administered by the Board, or at its discretion, the
Committee, the membership of which shall consist solely of two or more members
of the Board, each of whom shall serve at the pleasure of the Board and shall be
a "Non-Employee Director," as defined in Rule 16b-3, and an "outside director,"
as defined in Section 162(m) of the Code, and shall be at all times constituted
so as not to adversely affect the compliance of the Plan
-3-
<PAGE>
with the requirements of Rule 16b-3 or with the requirements of any other
applicable law, rule or regulation.
The Board or the Committee, as the case may be, shall have the authority to
grant, pursuant to the terms of the Plan, to officers and other key employees or
other persons eligible under Section 4 below: (i) Stock Options, (ii) Restricted
Stock, (iii) Deferred Stock, and/or (iv) Other Stock-Based Awards.
For purposes of illustration and not of limitation, the Board or the
Committee, as the case may be, shall have the authority (subject to the express
provisions of this Plan):
(i) to select the officers and other key employees of the Company or any
Parent or Subsidiary and other persons to whom Stock Options,
Restricted Stock, Deferred Stock and/or Other Stock-Based Awards may
be from time to time granted hereunder;
(ii) to determine the Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock, Deferred Stock and/or Other Stock-Based Awards, or
any combination thereof, if any, to be granted hereunder to one or
more eligible persons;
(iii) to determine the number of shares of Stock to be covered by each
award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any award granted hereunder (including, but not
limited to, share price, any restrictions or limitations, and any
vesting acceleration, exercisability and/or forfeiture provisions);
(v) to determine the terms and conditions under which awards granted
hereunder are to operate on a tandem basis and/or in conjunction with
or apart from other awards made by the Company or any Parent or
Subsidiary outside of this Plan;
(vi) to determine the extent and circumstances under which Stock and other
amounts payable with respect to an award hereunder shall be deferred;
and
(vii) to substitute (A) new Stock Options for previously granted Stock
Options, including previously granted Stock Options which have higher
option exercise prices and/or containing other less favorable terms,
and (B) new awards of any other type for previously granted awards of
the same type, including previously granted awards which contain less
favorable terms.
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Subject to Section 10 hereof, The Board or the Committee, as the case may
be, shall have the authority to (i) adopt, alter and repeal such administrative
rules, guidelines and practices governing this Plan as it shall, from time to
time, deem advisable, (ii) interpret the terms and provisions of this Plan and
any award issued under this Plan (and to determine the form and substance of all
agreements relating thereto), and (iii) to otherwise supervise the
administration of the Plan.
Subject to the express provisions of the Plan, all decisions made by the
Board or the Committee, as the case may be, pursuant to the provisions of the
Plan shall be made in the Board or the Committee's sole and absolute discretion
and shall be final and binding upon all persons, including the Company, its
Parent and Subsidiaries and the Plan participants.
Section 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for distribution
under this Plan shall be 1,000,000 shares. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares.
If any shares of Stock that have been optioned cease to be subject to a
Stock Option for any reason, or if any shares of Stock that are subject to any
Restricted Stock award, Deferred Stock award or Other Stock-Based Award are
forfeited or any such award otherwise terminates without the issuance of such
shares, such shares shall again be available for distribution under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, extraordinary distribution with
respect to the Stock or other change in corporate structure affecting the Stock,
such substitutions or adjustments shall be made in the (A) aggregate number and
kind of shares reserved for issuance under this Plan, (B) number, kind and
exercise price of shares of Stock subject to outstanding Options granted under
this Plan, and (C) number, kind, purchase price and/or appreciation base of
shares of Stock subject to other outstanding awards granted under this Plan, as
may be determined to be appropriate by the Board or the Committee, as the case
may be, in its sole discretion, in order to prevent dilution or enlargement of
rights; provided, however, that the number of shares subject to any award shall
always be a whole number. Such adjusted exercise price shall also be used to
determine the amount which is payable to the optionee upon the exercise by the
Board or the Committee, as the case may be, of the alternative settlement right
which is set forth in Section 5(b)(xi) below.
Subject to the provisions of the immediately preceding paragraph, the
maximum numbers of shares subject to Options, Restricted Stock awards, Deferred
Stock awards, and other Stock-Based awards to any employee who is employed by
the Company or any Parent or Subsidiary on the last day of any taxable year of
the Company, shall be 600,000 shares during the term of the Plan.
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Section 4. Eligibility.
Officers and other key employees of the Company or any Parent or Subsidiary
(but excluding any person whose eligibility would adversely affect the
compliance of the Plan with the requirements of Rule 16b-3) who are at the time
of the grant of an award under this Plan employed by the Company or any Parent
or Subsidiary and who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company or any Parent or
Subsidiary, are eligible to be granted Options and awards under this Plan. In
addition, Non-Qualified Stock Options and other awards may be granted under the
Plan to any person, including, but not limited to, independent agents,
consultants and attorneys who the Board or the Committee, as the case may be,
believes has contributed or will contribute to the success of the Company.
Eligibility under the Plan shall be determined by the Board or the Committee, as
the case may be.
The grants of Restricted Stock, Deferred Stock and Other Stock-Based Awards
under this Plan shall be earned by a participant on the basis of the Company's
financial performance over the period or periods for which the grants were
awarded on the basis of pre-established performance goals determined by the
Board or the Committee, as the case may be, in its sole discretion. The
performance measurement criteria used for such grants shall be limited to one or
more of: earnings per share, return on stockholders' equity, return on assets,
growth in earnings, growth in sales revenue, and stockholder returns. Such
criteria may be measured by the Company's results or the Company's performance
as measured against a group of comparable companies selected by the Committee.
In applying such criteria, earnings may be calculated based on the exclusion of
discontinued operations and extraordinary items. The Board or the Committee, as
the case may be, may, in its sole discretion, include additional conditions and
restrictions in the agreement entered into in connection with awards under this
Plan.
Section 5. Stock Options.
(a) Grant and Exercise. Stock Options granted under this Plan may be of
two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock
Options. Any Stock Option granted under this Plan shall contain such
terms as the Board or the Committee, as the case may be, may from time
to time approve. The Board or the Committee, as the case may be, shall
have the authority to grant to any optionee Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options, and they
may be granted alone or in addition to other awards granted under this
Plan. To the extent that any Stock Option is not designated as an
Incentive Stock Option or does not qualify as an Incentive Stock
Option, it shall constitute a Non-Qualified Stock Option. The grant of
an Option shall be deemed to have occurred on the date on which the
Board or the Committee, as the case may be, by resolution, designates
an individual as
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a grantee thereof, and determines the number of shares of Stock
subject to, and the terms and conditions of, said Option.
Anything in this Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options or any agreement providing
for Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify this Plan under Section 422 of the
Code, or, without the consent of the Optionee(s) affected, to
disqualify any Incentive Stock Option under Section 422.
(b) Terms and Conditions. Stock Options granted under this Plan shall be
subject to the following terms and conditions:
(i) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Board or the
Committee, as the case may be, at the time of grant but shall be
not less than 100% (110% in the case of an Incentive Stock Option
granted to an optionee ("10% Stockholder") who, at the time of
grant, owns Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or its
Parent, if any, or its Subsidiaries) of the Fair Market Value of
the Stock at the time of grant.
(ii) Option Term. The term of each Stock Option shall be fixed by the
Board or the Committee, as the case may be, but no Incentive
Stock Option shall be exercisable more than ten years (five
years, in the case of an Incentive Stock Option granted to a 10%
Stockholder) after the date on which the Option is granted.
(iii) Exercisability. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be
determined by the Board or the Committee, as the case may be, at
the time of grant; provided, however, that except as otherwise
provided in this Section 5 and Section 9 below, unless waived by
the Board or the Committee, as the case may be, at or after the
time of grant, no Stock Option shall be exercisable prior to the
first anniversary date of the grant of the Option. If the Board
or the Committee, as the case may be, provides, in its
discretion, that any Stock Option is exercisable only in
installments, the Board or the Committee, as the case may be, may
waive such installment exercise provisions at any time at or
after the time of grant in whole or in part, based upon such
factors as the Board or the Committee, as the case may be, shall
determine.
(iv) Method of Exercise. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time
during the
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option period by giving written notice of exercise to the Company
specifying the number of shares of Stock to be purchased. Such
notice shall be accompanied by payment in full of the purchase
price which shall be in cash unless otherwise provided in this
clause (iv) or in Section 5(b)(xi) below or, unless otherwise
provided in the Stock Option agreement referred to in Section
5(b)(xii) below, in whole shares of Stock which are already owned
by the holder of the Option or unless otherwise provided in the
Stock Option agreement referred to in Section 5(b)(xii) below,
partly in cash and partly in such Stock. Cash payments shall be
made by wire transfer, certified or bank check or personal check,
in each case payable to the order of the Company; provided,
however, that the Company shall not be required to deliver
certificates for shares of Stock with respect to which an Option
is exercised until the Company has confirmed the receipt of good
and available funds in payment of the purchase price thereof.
Payments in the form of Stock (which shall be valued at the Fair
Market Value of a share of Stock on the date of exercise) shall
be made by delivery of stock certificates in negotiable form
which are effective to transfer good and valid title thereto to
the Company, free of any liens or encumbrances. In addition to
the foregoing, payment of the exercise price may be made by
delivery to the Company by the optionee of an executed exercise
form, together with irrevocable instructions to a broker-dealer
to sell or margin a sufficient portion of the shares covered by
the option and deliver the sale or margin loan proceeds directly
to the Company. Except as otherwise expressly provided in this
Plan, no Option which is granted to a person who is at the time
of grant an employee of the Company or a Subsidiary or Parent of
the Company may be exercised at any time unless the holder
thereof is then an employee of the Company or of a Parent or a
Subsidiary. The holder of an Option shall have none of the rights
of a stockholder with respect to the shares subject to the Option
until the optionee has given written notice of exercise, has paid
in full for those shares of Stock and, if requested by the Board
or Committee, as the case may be, has given the representation
described in Section 12(a) below.
(v) Transferability; Exercisability. No Stock Option shall be
transferable by the optionee other than by will or by the laws of
descent and distribution; provided, however, that a Non-Qualified
Stock Option shall be transferable pursuant to a qualified
domestic relations order, and except as may be otherwise required
with respect to a Non- Qualified Option pursuant to a qualified
domestic relations order, all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee or his or
her guardian or legal representative.
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(vi) Termination by Reason of Death. Subject to Section 5(b)(x) below,
if an optionee's employment by the Company or any Parent or
Subsidiary terminates by reason of death, any Stock Option held
by such optionee may thereafter be exercised, to the extent then
exercisable or on such accelerated basis as the Board or
Committee, as the case may be, may determine at or after the time
of grant, for a period of one year (or such other period as the
Board or the Committee, as the case may be, may specify at or
after the time of grant) from the date of death or until the
expiration of the stated term of such Stock Option, whichever
period is the shorter.
(vii) Termination by Reason of Disability. Subject to Section 5(b)(x)
below, if an optionee's employment by the Company or any
Subsidiary terminates by reason of Disability, any Stock Option
held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Board or the
Committee, as the case may be, may determine at or after the time
of grant, for a period of three years (or such other period as
the Board or the Committee, as the case may be, may specify at or
after the time of grant) from the date of such termination of
employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however,
that if the optionee dies within such three-year period (or such
other period as the Board or the Committee, as the case may be,
shall specify at or after the time of grant), any unexercised
Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time
of death for a period of one year from the date of death or until
the expiration of the stated term of such Stock Option, whichever
period is the shorter.
(viii) Termination by Reason of Retirement. Subject to Section 5(b)(x)
below, if an optionee's employment by the Company or any Parent
or Subsidiary terminates by reason of Normal Retirement, any
Stock Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Board or the
Committee, as the case may be, may determine at or after the time
of grant, for a period of three years (or such other period as
the Board or the Committee, as the case may be, may specify at or
after the time of grant) from the date of such termination of
employment or the expiration of the stated terms of such Stock
Option, whichever period is the shorter; provided, however, that
if the optionee dies within such three-year period (or such other
period as the Board or the Committee, as the case may be, shall
specify at or after the time of grant), any unexercised Stock
Option held by such optionee shall thereafter be exercisable to
the extent to which it
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was exercisable at the time of death for a period of one year
from the date of death or until the expiration of the stated
terms of such Stock Option, whichever period is the shorter. If
an optionee's employment with the Company or any Parent or
Subsidiary terminates by reason of Early Retirement, the Stock
Option shall thereupon terminate; provided, however, that if the
Board or the Committee, as the case may be, so approves at the
time of Early Retirement, any Stock Option held by the optionee
may thereafter be exercised by the optionee as provided above in
connection with termination of employment by reason of Normal
Retirement.
(ix) Other Termination. Subject to the provisions of Section 12(g)
below and unless otherwise determined by the Committee at or
after the time of grant, if an optionee's employment by the
Company or any Parent or Subsidiary terminates for any reason
other than death, Disability or Retirement, the Stock Option
shall thereupon automatically terminate, except that if the
optionee is involuntarily terminated by the Company or any Parent
or a Subsidiary without Cause (as hereinafter defined), such
Stock Option may be exercised for a period of six months from the
date of such termination or until the expiration of the stated
terms of such Stock Option, whichever period is the shorter. For
purposes of this Plan, "Cause" shall mean (1) the conviction of
the optionee of a felony under Federal law or the law of the
state in which such action occurred, (2) dishonesty by the
optionee in the course of fulfilling his or her employment
duties, or (3) the willful and deliberate failure on the part of
the optionee to perform his or her employment duties in any
material respect. In addition, with respect to an option granted
to an employee of the Company, a Parent or a Subsidiary, for
purposes of this Plan, "Cause" shall also include any definition
of "Cause" contained in any employment agreement between the
optionee and the Company, Parent or Subsidiary, as the case may
be.
(x) Additional Incentive Stock Option Limitation. In the case of an
Incentive Stock Option, the aggregate Fair Market Value of Stock
(determined at the time of grant of the Option) with respect to
which Incentive Stock Options are exercisable for the first time
by an optionee during any calendar year (under all such plans of
optionee's employer corporation and its Parent, if any, and
Subsidiaries) shall not exceed $100,000.
(xi) Alternative Settlement of Option. Upon the receipt of written
notice of exercise, the Board or the Committee, as the case may
be, may elect to settle all or part of any Stock Option by paying
to the optionees an amount, in cash or Stock (valued at Fair
Market Value on the date of exercise), equal to the excess of the
Fair Market Value of one share of
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Stock, on the date of exercise over the Option exercise price,
multiplied by the number of shares of Stock with respect to which
the optionee proposes to exercise the Option. Any such
settlements which relate to Options which are held by optionees
who are subject to Section 16(b) of the Exchange Act shall comply
with the "window period" provisions of Rule 16b-3, to the extent
applicable and with such other conditions as the Board or
Committee may impose. No such discretion may be exercised unless
the option agreement permits the payment of the purchase price in
that manner.
(xii) Stock Option Agreement. Each grant of a Stock Option shall be
confirmed by, and shall be subject to the terms of, an agreement
executed by the Company and the participant.
Section 6. Restricted Stock.
(a) Grant and Exercise. Shares of Restricted Stock may be issued either
alone or in addition to or in tandem with other awards granted under
this Plan. The Board or the Committee, as the case may be, shall
determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares
to be awarded, the price (if any) to be paid by the recipient, the
time or times within which such awards may be subject to forfeiture
(the "Restriction Period"), the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the
awards. The Board or the Committee, as the case may be, may condition
the grant of Restricted Stock upon the attainment of specified
Performance Objectives or such other factors as the Board or the
Committee, as the case may be, may determine.
(b) Terms and Conditions. Each Restricted Stock award shall be subject to
the following terms and conditions:
(i) Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the holder
to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted
Stock and any securities constituting Retained Distributions (as
defined below) shall bear a restrictive legend to the effect that
ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant
thereto, are subject to the restrictions, terms and conditions
provided in this Plan and the Restricted Stock agreement referred
to in Section 6(b)(iv) below. Such certificates shall be
deposited by the holder with the Company, together with stock
powers or other instruments of assignment, endorsed in blank,
which will permit transfer to the Company of all or any portion
of the Restricted Stock
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and any securities constituting Retained Distributions that shall
be forfeited or that shall not become vested in accordance with
this Plan and the applicable Restricted Stock agreement.
(ii) Restricted Stock shall constitute issued and outstanding shares
of Common Stock for all corporate purposes, and the issuance
thereof shall be made for at least the minimum consideration (if
necessary) to permit the shares of Restricted Stock to be deemed
to be fully paid and nonassessable. The holder will have the
right to vote such Restricted Stock, to receive and retain all
regular cash dividends and other cash equivalent distributions as
the Board may in its sole discretion designate, pay or distribute
on such Restricted Stock and to exercise all other rights, powers
and privileges of a holder of Stock with respect to such
Restricted Stock, with the exceptions that (A) the holder will
not be entitled to delivery of the stock certificate or
certificates representing such Restricted Stock until the
Restriction Period shall have expired and unless all other
vesting requirements with respect thereto shall have been
fulfilled; (B) the Company will retain custody of the stock
certificate or certificates representing the Restricted Stock
during the Restriction Period; (C) other than regular cash
dividends and other cash equivalent distribution as the Board may
in its sole discretion designate, pay or distribute, the Company
will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted
Stock (and such Retained Distributions will be subject to the
same restrictions, terms and conditions as are applicable to the
Restricted Stock) until such time, if ever, as the Restricted
Stock with respect to which such Retained Distributions shall
have been made, paid or declared shall have become vested and
with respect to which the Restriction Period shall have expired;
(D) the holder may not sell, assign, transfer, pledge, exchange,
encumber or dispose of the Restricted Stock or any Retained
Distributions during the Restriction Period; and (E) a breach of
any of the restrictions, terms or conditions contained in this
Plan or the Restricted Stock agreement referred to in Section
6(b)(iv) below, or otherwise established by the Committee with
respect to any Restricted Stock and Retained Distributions will
cause a forfeiture of such Restricted Stock and any Retained
Distributions with respect thereto.
(iii) Upon the expiration of the Restriction Period with respect to
each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (A) all or part of
such Restricted Stock shall become vested in accordance with the
terms of the Restricted Stock agreement referred to in Section
6(b)(iv) below, and (B) any Retained Distributions with respect
to such Restricted Stock shall become vested to the extent that
the Restricted Stock related
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thereto shall have become vested. Any such Restricted Stock and
Retained Distributions that do not vest shall be forfeited to the
Company and the holder shall not thereafter have any rights with
respect to such Restricted Stock and Retained Distributions that
shall have been so forfeited.
(iv) Each Restricted Stock award shall be confirmed by, and shall be
subject to the terms of, an agreement executed by the Company and
the participant.
Section 7. Deferred Stock.
(a) Grant and Exercise. Deferred Stock may be awarded either alone or in
addition to or in tandem with other awards granted under the Plan. The
Board or the Committee, as the case may be, shall determine the
eligible persons to whom and the time or times at which Deferred Stock
shall be awarded, the number of shares of Deferred Stock to be awarded
to any person, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the Deferred
Stock will be deferred, and all the other terms and conditions of the
awards. The Board or the Committee, as the case may be, may condition
the grant of the Deferred Stock upon the attainment of specified
Performance Objectives or such other factors or criteria as the Board
or the Committee, as the case may be, shall determine.
(b) Terms and Conditions. Each Deferred Stock award shall be subject to
the following terms and conditions:
(i) Subject to the provisions of this Plan and Deferred Stock
agreement referred to in Section 7(b)(vii) below, Deferred Stock
awards may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Deferral Period. At the
expiration of the Deferral Period (or the Additional Deferral
Period referred to in Section 7(b)(vi) below, where applicable),
share certificates shall be delivered to the participant, or his
legal representative, in a number equal to the shares of Stock
covered by the Deferred Stock award.
(ii) As determined by the Committee at the time of award, amounts
equal to any dividends declared during the Deferral Period (or
the Additional Deferral Period referred to in Section 7(b)(vi)
below, where applicable) with respect to the number of shares
covered by a Deferred Stock award may be paid to the participant
currently or deferred and deemed to be reinvested in additional
Deferred Stock.
(iii) Subject to the provisions of the Deferred Stock agreement
referred to in Section 7(b)(vii) below and this Section 7 and
Section 12(g) below,
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upon termination of participant's employment with the Company or
any Subsidiary for any reason during the Deferral Period (or the
Additional Deferral Period referred to in Section 7(b)(vi) below,
where applicable) for a given award, the Deferred Stock in
question will vest or be fortified in accordance with the terms
and conditions established by the Board or the Committee, as the
case may be, at the time of grant.
(iv) The Board or the Committee, as the case may be, may, after grant,
accelerate the vesting of all or any part of any Deferred Stock
award and/or waive the deferral limitations for all or any part
of a Deferred Stock award.
(v) In the event of hardship or other special circumstances of a
participant whose employment with the Company or any Parent or
Subsidiary is involuntarily terminated (other than for Cause),
the Board or the Committee, as the case may be, may waive in
whole or in part any or all of the remaining deferral limitations
imposed hereunder or pursuant to the Deferred Stock agreement
referred to in Section 7(b)(vii) below with respect to any or all
of the participant's Deferred Stock.
(vi) A participant may request to, and the Board or the Committee, as
the case may be, may at any time, defer the receipt of an award
(or an installment of an award) for an additional specified
period or until a specified period or until a specified event
(the "Additional deferral Period"). Subject to any exceptions
adopted by the Board or the Committee, as the case may be, such
request must be made at least one year prior to expiration of the
Deferral Period for such Deferred Stock award (or such
installment).
(vii) Each Deferred Stock award shall be confirmed by, and shall be
subject to the terms of, an agreement executed by the Company and
the participant.
Section 8. Other Stock-Based Awards.
(a) Grant and Exercise. Other Stock-Based Awards, which may include
performance shares and shares valued by reference to the performance
of the Company or any Subsidiary, may be granted either alone or in
addition to or in tandem with Stock Options, Restricted Stock or
Deferred Stock. The Board or the Committee, as the case may be, shall
determine the eligible persons to whom, and the time or times at
which, such awards shall be made, the number of shares of Stock to be
awarded pursuant to such awards, and all other terms and conditions of
the awards. The Board or the Committee, as the case may be, may also
provide for the grant of Stock under such awards upon
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the attainment of specified Performance Objectives and/or completion
of a specified performance period.
(b) Terms and Conditions. Each Other Stock-Based Award shall be subject to
the following terms and conditions:
(i) Shares of Stock subject to an Other Stock-Based may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to
the date on which the shares are issued, or, if later, the date
on which any applicable restriction or period of deferral lapses.
(ii) The recipient of Other Stock-Based Award shall be entitled to
receive, currently or on a deferred basis, dividends or dividend
equivalents with respect to the number of shares covered by the
award, as determined by the Board or the Committee, as the case
may be, at the time of the award. The Board or the Committee, as
the case may be, may provide that such amounts (if any) shall be
deemed to have been reinvested in additional Stock.
(iii) Any Other Stock-Based Award and any Stock covered by any Other
Stock-Based Award shall vest or be forfeited to the extent so
provided in the award agreement referred to in Section 8(b)(v)
below, as determined by the Board or the Committee, as the case
may be.
(iv) In the event of the participant's Retirement, Disability or
death, or in case of special circumstances, the Board or the
Committee, as the case may be, may waive in whole or in part any
or all of the limitations imposed hereunder (if any) with respect
to any or all of an Other Stock-Based Award.
(v) Each Other Stock-Based Award shall be confirmed by, and shall be
subject to the terms of, an agreement executed by the Company and
by the participant.
Section 9. Change of Control Provisions.
(a) A "Change of Control" shall be deemed to have occurred on the tenth day
after:
(i) any individual, entity or group (as defined in Section 13(d)(3)
of the Exchange Act), becomes, directly or indirectly, the
beneficial owner (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 25% of the then outstanding
shares of the Company's capital stock entitled to vote generally
in the election of directors of the Company; or
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(ii) the commencement of, or the first public announcement of the
intention of any individual, firm, corporation or other entity or
of any group (as defined in Section 13(d)(3) of the Exchange Act)
to commence, a tender or exchange offer subject to Section
14(d)(1) of the Exchange Act for any class of the Company's
capital stock; or
(iii) the stockholders of the Company approve (A) a definitive
agreement for the merger or other business combination of the
Company with or into another corporation pursuant to which the
stockholders of the Company immediately prior to the transaction
do not own, immediately after the transaction, more than 50% of
the voting power of the corporation that survives, or (B) a
definitive agreement for the sale, exchange or other disposition
of all or substantially all of the assets of the Company, or (C)
any plan or proposal for the liquidation or dissolution of the
Company;
provided, however, that a "Change of Control" shall not be deemed
to have taken place if beneficial ownership is acquired (A)
directly from the Company, other than an acquisition by virtue of
the exercise or conversion of another security unless the
security so converted or exercised was itself acquired directly
from the Company, or (B) by, or a tender or exchange offer is
commenced or announced by, the Company, any profit-sharing,
employee ownership or other employee benefit plan sponsored or
maintained by the Company; or any trustee of or fiduciary with
respect to any such plan when acting in such capacity.
(b) In the event of a "Change of Control" as defined in Section 9(a)
above, awards granted under this Plan shall be subject to the
following provisions, unless the provisions of this Section 9 are
suspended or terminated by the Board prior to the occurrence of such a
"Change of Control":
(i) all outstanding Stock Options which have been outstanding for at
least six months shall become exercisable in full, whether or not
otherwise exercisable at such time, and any such Stock Option
shall remain exercisable in full thereafter until it expires
pursuant to its terms; and
(ii) all restrictions and deferral limitations contained in Restricted
Stock awards, Deferred Stock awards and Other Stock-Based Awards
granted under the Plan shall lapse.
Section 10. Amendments and Termination.
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<PAGE>
The Board may at any time, and from time to time, amend any of the
provisions of this Plan, and may at any time suspend or terminate the Plan;
provided, however, that no such amendment shall be effective unless and until it
has been duly approved by the holders of the outstanding shares of Stock if the
failure to obtain such approval would adversely affect the compliance of the
Plan with the requirements of Rule 16b-3, Section 162(m) or any other applicable
law, rule or regulation. The Board or the Committee, as the case may be, may
amend the terms of any Stock Option or other award theretofore granted under the
Plan; provided, however, that subject to Section 3 above, no such amendment may
be made by the Board or the Committee, as the case may be, which in any material
respect impairs the rights of the optionee or participant without the optionee's
or participant's consent, except for such amendments which are made to cause
this Plan to qualify for the exemption provided by Rule 16b-3 or to be in
compliance with the provisions of Section 162(m).
Section 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those creditor of
the Company.
Section 12. General Provisions.
(a) The Board or the Committee, as the case may be, may require each
person acquiring shares of Stock Option or other award under this Plan
to represent to and agree with the Company in writing that the
optionee or participant is acquiring the shares for investment without
a view towards the distribution thereof.
All certificates for shares of Stock delivered under this Plan shall
be subject to such stop transfer orders and other restrictions as the
Board or the Committee, as the case may be, may deem to be advisable
in order to assure compliance with the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock
exchange or association upon which the Stock is then listed or quoted,
any applicable Federal or state securities law, and any applicable
corporate law, and the Board or the Committee, as the case may be, may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in the Plan shall prevent the Board from adopting
such other or additional incentive arrangements as it may deem
desirable, including, but not limited to, the granting of stock
options and the awarding of stock and cash otherwise than under this
Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
-17-
<PAGE>
(c) Nothing contained in this Plan or in any award hereunder shall be
deemed to confer upon any employee of the Company or any Parent or
Subsidiary any right to continued employment with the Company or any
Parent or Subsidiary, nor shall it interfere in any way with the right
of the Company or any Parent or Subsidiary to terminate the employment
of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includable
in the gross income of the participant for Federal income tax purposes
with respect to any Option or other award under this Plan, the
participant shall pay to the Company, or make arrangements
satisfactory to the Board or the Committee, as the case may be,
regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such
amount. If permitted by the Board or the Committee, as the case may
be, tax withholding or payment obligations may be settled with Stock,
including Stock that is part of the award that gives rise to the
withholding requirement. The obligations of the Company under this
Plan shall be conditional upon such payment or arrangements, and the
Company and any Subsidiary shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment of any kind
otherwise due to the participant from the Company or any Parent or
Subsidiary.
(e) This Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
Delaware (without regard to choice of law provisions).
(f) Any Stock Option granted or other award made under this Plan shall not
be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or any Parent or Subsidiary and shall
not affect any benefits under any other benefit plan now or
subsequently in effect under which the availability or amount of
benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).
(g) A leave of absence, unless otherwise determined by the Committee prior
to the commencement thereof, shall not be considered a termination of
employment. Any Stock Option granted or awards made under this Plan
shall not be affected by any change of employment, so long as the
holder continues to be an employee of the Company or any Parent or
Subsidiary.
(h) Except as otherwise expressly provided in this Plan, no right or
benefit under this Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbranced or
charged, and any attempt to alienate, sell, assign, hypothecate,
pledge, exchange, transfer, encumber or charge the same
-18-
<PAGE>
shall be void. No right or benefit hereunder shall in any manner be
subject to the debts, contracts or liabilities of the person entitled
to such benefit.
(i) The obligations of the Company with respect to all Stock Options and
awards under this Plan shall be subject to (A) all applicable laws,
rules and regulations, and such approvals by any governmental agencies
as may be required, including, without limitation, the effectiveness
of a registration statement under the Securities Act, and (B) the
rules and regulations of any securities exchange or association on
which the Stock may be listed or quoted.
(j) It is the intention of the Company that this Plan complies with the
requirements of Rule 16b-3, Section 162(m) and all other applicable
laws, rules and regulations, and any ambiguities or inconsistencies in
the construction of any of the provisions of this Plan shall be
interpreted to give effect to such intention. If any of the terms or
provisions of this Plan conflict with the requirements of Rule 16b-3,
or with the requirements of Section 162(m) or any other applicable
law, rule or regulation, and with respect to Incentive Stock Options
under Section 422 of the Code, then such terms or provisions shall be
deemed inoperative to the extent they so conflict. With respect to
Incentive Stock Options, if this Plan does not contain any provision
required to be included herein under Section 422 of the Code. such
provision shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out at length
herein.
(k) The Board or the Committee, as the case may be, may terminate any
Stock Option or other award made under this Plan if a written
agreement relating thereto is not executed and returned to the Company
within 30 days after such agreement has been delivered to the optionee
or participant for his or her execution.
(l) The grant of awards pursuant to this Plan shall not in any way effect
the right or power of the Company to make reclassifications,
reorganizations or other changes of or to its capital or business
structure or to merge, consolidate, liquidate, sell or otherwise
dispose of all or any part of its business or assets.
Section 13. Effective Date of Plan.
The Plan shall be effective as of the date of the approval and adoption
thereof at a meeting of the stockholders of the Company.
Section 14. Term of Plan.
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<PAGE>
This Plan shall terminate on the tenth anniversary of its effective date,
and no Stock Option, Restricted Stock Award, Deferred Stock award or Other
Stock-Based Award shall be granted pursuant to this Plan after said date. Awards
granted on or prior to such date may extend beyond that date.
-20-
BEFIRST.COM
INCENTIVE STOCK OPTION
AGREEMENT
AGREEMENT made as of the ____ day of ____, 1999 (the "Grant Date") by and
between BEFIRST.COM, a New York corporation, having its office and principal
place of business located at 121 West 27th Street, Suite 903, New York, New York
10001 (the "Corporation") and __________ residing at ______________________ (the
"Holder").
W I T N E S S E T H:
WHEREAS, on Grant Date, the Corporation authorized the grant to the Holder
of an option to purchase an aggregate of ________ shares of the authorized but
unissued Common Stock of the Corporation, $.001 par value (the "Stock"),
pursuant to the Corporation's 1999 Stock Option Plan (the "Plan"), conditioned
upon the Holder's acceptance thereof upon the terms and conditions set forth in
this Agreement; and
WHEREAS, the Holder desires to acquire said option on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions herein contained, the parties hereto agree as follows:
1. Subject to the terms and conditions of the Plan, a copy of which is
annexed hereto, made a part hereof and the receipt thereof acknowledged by the
Holder, the Corporation hereby grants to the Holder as a matter of separate
agreement and not in lieu of salary, or any other compensation for services, the
right and
<PAGE>
option (hereinafter called the "Option"), to purchase all or any part of an
aggregate of _________ shares of Stock on the terms and conditions herein set
forth.
2. This Option shall be deemed to be an incentive stock option.
3. The purchase price of each share of Stock subject to this Option shall
be $______.
4. This Option shall be exercisable in whole or in part at any time or from
time to time for a period terminating at the close of business five (5) years
from the Date of Grant.
5. The purchase price of the shares of Stock as to which the Option is
exercised shall be paid in full at the time of exercise by (a) cash or check or
(b) in shares of Common Stock of the Corporation already owned by the Holder as
provided in Paragraph 5(b)(iv) of the Plan. The Holder shall not have any of the
rights of a stockholder with respect to the Stock covered by the Option until
the date of the issuance of a stock certificate to him for such shares of Stock.
6. (a) The Option shall be exercisable during the five (5) year period
commencing from the Date of Grant and terminating on the close of business on
June 16, 2004 (the "Exercise Period").
(b) The Holder is an employee of the Corporation and must remain in the
continuous employ of the Corporation for one year from the Date of Grant in
order to exercise any part of the Option.
(c) Except as provided in Paragraph 6(e) below, this Option and the rights
and privileges conferred hereby may not be
-2-
<PAGE>
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this Option or any right or privilege conferred hereby,
contrary to the provisions hereof, or upon the levy of any attachment or similar
process on the rights and privileges conferred hereby, this Option and the
rights and privileges conferred hereby shall immediately become null and void.
(d) In the event the Holder's employment by the Corporation or any of its
subsidiaries is terminated (for any reason other than death, disability or
discharge for cause, as defined in the Plan) any Option granted to him or
unexercised portion thereof which was otherwise exercisable on the date of
termination of employment shall terminate unless, such Option, to the extent
exercisable at termination, is exercised within the earlier of six (6) months
after the Holder ceases to be an employee or the date of expiration of the
Option. If the Holder's employment is terminated for cause, as defined in the
Plan, any Option or unexercised portion thereof granted to him shall terminate
and be of no further force and effect from the date of discharge.
(e) Upon the death of the Holder, any Option granted to him or the
unexercised portion thereof, which was otherwise exercisable on his date of
death, shall terminate unless such Option to the extent exercisable at death is
exercised by the executor or administrator of his estate, within the earlier of
one
-3-
<PAGE>
(1) year following the Holder's death or the date of the expiration of the
Option.
(f) In the event the Holder's employment by the Corporation or any of its
subsidiaries is terminated due to disability of the Holder (as defined in the
Plan), any Option granted to him or unexercised portion thereof which was
otherwise exercisable on the date of termination of employment shall terminate
unless, such option, to the extent exercisable at termination, is exercised
within the earlier of three (3) years after the Holder ceases to be an employee
on the date of expiration of the Option.
(g) The Corporation shall be obligated to sell and issue Stock pursuant to
this Option and the Plan and in accordance with the terms thereof but not before
the Stock with respect to which the Option is being exercised is effectively
registered or the sale thereof is exempt from registration under the Securities
Act of 1933, as amended (the "Act"), in the opinion of counsel for the
Corporation.
(h) The Board of Directors of the Corporation or the Corporation's Stock
Option Committee, as the case may be, may require, as a condition to the sale of
Stock on the exercise of any Option, that the person exercising such Option give
to the Corporation such documents including such appropriate investment
representations as may be required by counsel for the Corporation and such
additional agreements and documents as the Board of Directors or the Committee,
as the case may be, shall determine to be in the best interests of the
Corporation.
-4-
<PAGE>
7. (a) If the outstanding shares of Stock of the Corporation are increased,
decreased, changed into or exchanged for a different number or kind of stock or
securities of the Corporation or stock of a different par value or without par
value, through reorganization, recapitalization, reclassification, stock
dividend, stock split, amendment to the Corporation's Certificate of
Incorporation or reverse stock split, an appropriate and proportionate
adjustment shall be made in the maximum number and/or kind of securities
allocated to this Option, without change in the aggregate purchase price
applicable to the unexercised portion of the outstanding Options, but with a
corresponding adjustment in the price for each share of Stock or other unit of
any security covered by this Option.
(b) Upon the effective date of the dissolution or liquidation of the
Corporation, or of a reorganization, merger or consolidation of the Corporation
with one or more corporations in which the Corporation will not survive as an
independent, publicly owned corporation, or of a transfer of substantially all
the property or more than eighty percent (80%) of the then outstanding shares of
Stock of the Corporation to another corporation, any Option granted hereunder
shall terminate unless provision be made in writing in connection with such
transaction for the continuance of the Plan and for the assumption of the Option
granted, or the substitution for the Options of new options covering the shares
of a successor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to number and kind of stock and prices, in which event the Plan
and the Option theretofore granted or the
-5-
<PAGE>
new options substituted therefor, shall continue in the manner and under the
terms so provided. In the event of such dissolution, liquidation,
reorganization, merger, consolidation, transfer of assets or transfer of Stock,
and if provision is not made in such transaction for the continuance of the Plan
and for the assumption of this Option theretofore granted or the substitution
for each Option of new options covering the shares of a successor corporation or
a parent or subsidiary thereof, then the Holder shall be entitled, prior to the
effective date of any such transaction, to purchase the full number of shares of
Stock under the Option which he would otherwise have been entitled to purchase
during the remaining term of such Option. Upon the first purchase of shares of
Stock pursuant to a tender offer or exchange offer, other than by the
Corporation, for all or any part of the Stock, the Holder shall be entitled,
prior to the termination date of any such tender offer, to purchase the full
number of shares of Stock under this Option which he otherwise would have been
entitled to purchase during the remaining term of such Option.
(c) Adjustments under this paragraph shall be made by the Board of
Directors, whose determination as to what adjustments shall be made, and the
extent thereof, shall be final binding and conclusive. No fractional shares of
Stock shall be issued under the Plan or any such adjustment.
8. Anything in this Agreement to the contrary notwithstanding, the Holder
hereby agrees that he shall not sell, transfer by any means or otherwise dispose
of the Stock acquired by him upon exercise of the Option hereunder without
registration
-6-
<PAGE>
under the Act, or in the event that they are not so registered, unless (a) an
exemption from the Act is available thereunder and (b) the Holder has furnished
the Corporation with notice of such proposed transfer, and the Corporation's
legal counsel, in its reasonable opinion, shall deem such proposed transfer to
be so exempt, or the Holder has furnished the Corporation with notice of such
proposed transfer, together with an opinion of counsel reasonably satisfactory
to the Corporation's legal counsel, that in such counsel's opinion such proposed
transfer shall be so exempt.
9. (a) The Corporation may place stop transfer orders with its transfer
agent against the transfer of the shares of Stock issuable under the Option as
prohibited by Paragraph 8 hereof in the absence of registration under the Act or
an exemption therefrom provided herein.
(b) The certificates evidencing shares of Stock to be issued upon the
exercise of the Option may bear the following legends:
"The shares represented by this certificate have
been acquired for investment and have not been
registered under the Securities Act of 1933, as
amended. The shares may not be sold or transferred
in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have
been acquired pursuant to an option agreement
dated as of June 17, 1999, a copy of which is on
file with the Corporation, and may not be
transferred, pledged or disposed of except in
accordance with the terms and conditions thereof."
10. Subject to the terms and conditions of this Agreement, the Option may
be exercised with respect to all or any portion of
-7-
<PAGE>
the Stock subject hereto at any time and from time to time to the extent
determined under Section 6 hereof, by the delivery to the Corporation, at its
principal place of business of (a) the written Notice of Exercise in the form
attached hereto as Exhibit A, which is incorporated herein by reference,
specifying the number of shares of Stock with respect to which the Option is
being exercised and signed by the person exercising the Option as provided
herein, and (b) payment of the purchase price. Subject to the provisions of the
Plan, the Corporation shall issue and deliver a certificate or certificates
representing said Stock as soon as practicable after the notice and payment is
so received. The certificate or certificates for the Stock as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option, and shall be delivered as aforesaid
to or upon written order of the person or persons exercising the Option. In the
event the Option is being exercised pursuant to the Plan by any person or
persons other than the Holder, the notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option.
11. In the event of a conflict between the provisions of the Plan and the
provisions of this Agreement, the provisions of the Plan shall in all respects
be controlling.
12. All offers, acceptances, notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid to the
-8-
<PAGE>
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Same shall be
deemed given hereunder when so delivered or received, as the case may be.
13. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other or
subsequent breach.
14. This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof.
15. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and to the extent not prohibited herein, their respective heirs,
successors and assigns and representatives. Nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto
and as provided above, their respective heirs, successors, assigns and
representatives any rights, remedies, obligations or liabilities.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
BEFIRST.COM
By:__________________________
Name:
Title:
-----------------------------
, Holder
-9-
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE OF
BEFIRST.COM INCENTIVE STOCK OPTION
TO PURCHASE COMMON STOCK OF
BEFIRST.COM
Name __________________________
Address _______________________
_______________________________
Date __________________________
BeFirst.com
121 West 27th Street, Suite 903
New York, NY 10001
Attention: President
Re: Exercise of BeFirst.com
Stock Option
Gentlemen:
Subject to acceptance hereof in writing by BeFirst.com (the "Company")
pursuant to the provisions of the BeFirst.com 1999 Stock Option Plan, I hereby
elect to exercise options granted to me to purchase ________ shares of $.001 par
value Common Stock of the Company under the BeFirst.com Incentive Stock Option
Agreement dated as of _______________ (the "Agreement"), at $____ per share
(subject to adjustment as provided in the Agreement).
Enclosed is either (i) a certified check (or bank cashier's check) for
$_________ for the full purchase price payable to the order of Suprema
Specialties, Inc. or (ii) certificates representing _________ shares of Common
Stock of the Company.
As soon as the Stock Certificate is registered in my name, please deliver
it to me at the above address.
I hereby represent, warrant, covenant and agree with the Company as
follows:
The shares of the Common Stock being acquired by me will be acquired
for my own account without the participation of any other person, with the
intent of holding the Common Stock for investment and without the intent of
participating, directly or indirectly, in a distribution of the Common
Stock and not with a view to, or for resale in connection with, any
distribution of the Common Stock, nor am I aware of the existence of any
distribution of the Common Stock;
I am not acquiring the Common Stock based upon any representation,
oral or written, by any person with respect to
<PAGE>
the future value of, or income from, the Common Stock but rather upon an
independent examination and judgment as to the prospects of the Company;
The Common Stock was not offered to me by means of publicly
disseminated advertisements or sales literature, nor am I aware of any
offers made to other persons by such means;
I am able to bear the economic risks of the investment in the Common
Stock, including the risk of a complete loss of my investment therein;
I understand and agree that the Common Stock will be issued and sold
to me without registration under any state law relating to the registration
of securities for sale, and will be issued and sold in reliance on the
exemptions from registration under the Securities Act of 1933, as amended
(the "1933 Act"), provided by Sections 3(b) and/or 4(2) thereof and the
rules and regulations promulgated thereunder;
The Common Stock cannot be offered for sale, sold or transferred by me
other than pursuant to an effective registration under the 1933 Act or in a
transaction otherwise in compliance with the 1933 Act and evidence
satisfactory to the Company of compliance with the applicable securities
laws of other jurisdictions. The Company shall be entitled to rely upon an
opinion of counsel satisfactory to it with respect to compliance with the
above laws;
The Company will be under no obligation to register the Common Stock
or to comply with any exemption available for sale of the Common Stock
without registration, and the information or conditions necessary to permit
routine sales of securities of the Company under Rule 144 of the 1933 Act
may not be available with respect to any proposed sale of the Common Stock.
The Company is under no obligation to act in any manner so as to make Rule
144 available with respect to the Common Stock;
I have and have had complete access to and the opportunity to review
and make copies of all material documents related to the business of the
Company. I have examined such of these documents as I wished and am
familiar with the business and affairs of the Company. I realize that the
purchase of the Common Stock is a speculative investment and that any
possible profit therefrom is uncertain;
I have had the opportunity to ask questions of and receive answers
from the Company and any person acting on its behalf and to obtain all
material information reasonably available with respect to the Company and
its affairs. I have received all information and data with respect to the
Company which I have requested and which I have deemed relevant in
-2-
<PAGE>
connection with the evaluation of the merits and risks of my investment in
the Company;
I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of the purchase of the
Shares hereunder and I am able to bear the economic risks of such purchase;
and
The agreements, representations, warranties and covenants made by me
herein extend to and apply to all of the Common Stock of the Company issued
to me pursuant to this Option. Acceptance by me of the certificate
representing such Common Stock shall constitute a confirmation by the
undersigned Optionee that all such agreements, representations, warranties
and covenants made herein shall be true and correct at such time.
I understand that the certificates representing such shares of Common
Stock being purchased by me in accordance with this notice shall bear a
legend referring to the foregoing covenants, representations and warranties
and restrictions on transfer, and I agree that a legend to that effect may
be placed on any certificate which may be issued to me as a substitute for
the certificates being acquired by me in accordance with this notice.
Very truly yours,
-----------------------
- --------------------------------------------------------------------------------
AGREED TO AND ACCEPTED:
BEFIRST.COM
By: _______________________________
Title: ____________________________
Number of Shares
Exercised: ________________________
Number of Shares
Remaining: ________________________ Date: __________________
-3-
BEFIRST.COM
NON-QUALIFIED STOCK OPTION
AGREEMENT
AGREEMENT made as of the ___ day of _____, 1999 (the "Grant Date") by and
between BEFIRST.COM, a Nevada corporation, having its office and principal place
of business located at 121 West 27th Street, New York, NY 10001 (the
"Corporation") and ______________ residing at __________________ (the "Holder").
W I T N E S S E T H:
WHEREAS, on the Grant Date, the Corporation authorized the grant to the
Holder of an option to purchase an aggregate of _____ shares of the authorized
but unissued Common Stock of the Corporation, $.001 par value (the "Stock"),
pursuant to the Corporation's 1999 Stock Incentive Plan (the "Plan"),
conditioned upon the Holder's acceptance thereof upon the terms and conditions
set forth in this Agreement; and
WHEREAS, the Holder desires to acquire said option on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions herein contained and for other good and valuable consideration, the
parties hereto agree as follows:
1. The Corporation hereby grants to the Holder as a matter of separate
agreement and not in lieu of salary, or any other compensation for services, the
right and option (hereinafter called the "Option"), to purchase all or any part
of an aggregate of _____ shares of Stock on the terms and conditions herein set
forth and in
<PAGE>
the Plan, which is incorporated by reference herein. The Holder acknowledges
receipt of a copy of the Plan.
2. This Option shall be deemed to be a non-qualified stock option.
3. The purchase price ("Purchase Price") of each share of Stock subject to
this Option shall be $_____, subject to adjustment as provided in section 7
hereof.
4. This Option shall be exercisable in whole or in part at any time or from
time to time for a period commencing on the first anniversary of the Grant Date
and terminating at the close of business on June 16, 2004 (the "Exercise
Period").
5. The Purchase Price of the shares of Stock as to which the Option is
exercised shall be paid in full at the time of exercise by cash or check payable
to the order of the Corporation. The Holder shall not have any of the rights of
a stockholder with respect to the Stock covered by the Option until the date of
the issuance of a stock certificate to Holder for such shares of Stock.
6. (a) Except as provided in paragraph 6(b), this Option and the rights and
privileges conferred hereby may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this Option or any
right or privilege conferred hereby, contrary to the provisions hereof, or upon
the levy of any attachment or similar process on the rights and privileges
conferred hereby, this Option
-2-
<PAGE>
and the rights and privileges conferred hereby shall immediately become null and
void.
(b) Upon the death of the Holder, any Option granted to him or the
unexercised portion thereof, which was otherwise exercisable on his date of
death, shall terminate unless such Option to the extent exercisable at death is
exercised by the executor or administrator of his estate, within the earlier of
six (6) months following the Holder's death or the date of the expiration of the
Option.
(c) The Corporation shall be obligated to sell and issue Stock pursuant to
this Option and the Plan and in accordance with the terms thereof but not before
the Stock with respect to which the Option is being exercised is effectively
registered or the sale thereof is exempt from registration under the Securities
Act of 1933, as amended (the "Act"), in the opinion of counsel for the
Corporation.
(d) The Board of Directors of the Corporation or the Corporation's Stock
Incentive Committee (the "Committee"), as the case may be, may require, as a
condition to the sale of Stock on the exercise of any Option, that the person
exercising such Option give to the Corporation such documents including such
appropriate investment representations as may be required by counsel for the
Corporation and such additional agreements and documents as the Board of
Directors or the Committee, as the case may be, shall determine to be in the
best interests of the Corporation.
7. (a) If the outstanding shares of Stock of the Corporation are increased,
decreased, changed into or exchanged for
-3-
<PAGE>
a different number or kind of stock or securities of the Corporation or stock of
a different par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split, forward or
reverse stock split or otherwise, an appropriate and proportionate adjustment
shall be made in the maximum number and/or kind of securities allocated to this
Option, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding Options, but with a corresponding
adjustment in the price for each share of Stock or other unit of any security
covered by this Option.
(b) Adjustments under this section 7 or any other adjustment in the terms
of this Agreement made in accordance with the terms of the Plan as a result of a
merger, consolidation, sale of substantially all of the Corporation's assets or
similar transaction affecting the Corporation as specified in section 3 of the
Plan, shall be made by the Board of Directors, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final binding and
conclusive. No fractional shares of Stock shall be issued under the Plan or any
such adjustment.
8. Anything in this Agreement to the contrary notwithstanding, the Holder
hereby agrees that he shall not sell, transfer by any means or otherwise dispose
of the Stock acquired by him upon exercise of the Option hereunder without
registration under the Act, or in the event that they are not so registered,
unless (a) an exemption from the Act is available thereunder and (b) the Holder
has furnished the Corporation with notice of such
-4-
<PAGE>
proposed transfer, and the Corporation's legal counsel, in its opinion, shall
deem such proposed transfer to be so exempt, or the Holder has furnished the
Corporation with notice of such proposed transfer, together with an opinion of
counsel reasonably satisfactory to the Corporation or its legal counsel, that in
such counsel's opinion such proposed transfer shall be so exempt.
9. (a) The Corporation may place stop transfer orders with its transfer
agent against the transfer of the Stock issuable under the Option in the absence
of registration of the Stock under the Act.
(b) The certificates evidencing shares of Stock to be issued upon the
exercise of the Option may bear the following or substantially similar legends :
"The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
"The shares represented by this certificate have been acquired
pursuant to an option agreement dated as of June 17, 1999, a copy of
which is on file with the Corporation, and may not be transferred,
pledged or disposed of except in accordance with the terms and
conditions thereof."
10. Subject to the terms and conditions of this Agreement, the Option may
be exercised with respect to all or any portion of the Stock subject hereto at
any time and from time to time to the extent determined under Section 6 hereof,
by the delivery to the Corporation, at its principal place of business of (a)
the written Notice of Exercise in the form attached hereto as Exhibit A, which
-5-
<PAGE>
is incorporated herein by reference, specifying the number of shares of Stock
with respect to which the Option is being exercised and signed by the person
exercising the Option as provided herein, (b) payment of the Purchase Price and
(c) payment of any withholding tax that the Corporation may be required to
withhold as a result of exercises of the Option by the Holder. Subject to the
provisions of the Plan, the Corporation shall issue and deliver a certificate or
certificates representing said Stock as soon as practicable after the notice and
payment is so received. The certificate or certificates for the Stock as to
which the Option shall have been so exercised shall be registered in the name of
the person or persons so exercising the Option, and shall be delivered as
aforesaid to or upon written order of the person or persons exercising the
Option. In the event the Option is being exercised pursuant to the Plan by any
person or persons other than the Holder, the notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
11. In the event of a conflict between the provisions of the Plan and the
provisions of this Agreement, the provisions of the Plan shall in all respects
be controlling.
12. All offers, acceptances, notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid to the parties at their respective addresses set forth herein,
or to such other address as either shall have specified by notice in writing
-6-
<PAGE>
to the other. Same shall be deemed given hereunder when so delivered or
received, as the case may be.
13. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other or
subsequent breach.
14. This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof.
15. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and to the extent not prohibited herein, their respective heirs,
successors and assigns and representatives. Nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto
and as provided above, their respective heirs, successors, assigns and
representatives any rights, remedies, obligations or liabilities.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
BEFIRST.COM
By:__________________________
Name:
Title:
_____________________________
, Holder
-7-
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE OF
BEFIRST.COM NON-QUALIFIED STOCK OPTION
TO PURCHASE COMMON STOCK OF
BEFIRST.COM
Name __________________________
Address _______________________
_______________________________
Date __________________________
BeFirst.com
121 West 27th Street
New York, NY 10001
Attention: President
Re: Exercise of BeFirst.com
Stock Option
---------------------------
Gentlemen:
Subject to acceptance hereof in writing by BeFirst.com (the "Company")
pursuant to the provisions of the BeFirst.com 1999 Stock Option Plan, I hereby
elect to exercise options granted to me to purchase ________ shares of $.001 par
value common stock of the Company (the "Common Stock") under the BeFirst.com
Non-Qualified Stock Option Agreement dated as of June 17, 1999 (the
"Agreement"), at $2.00 per share (subject to adjustment as provided in the
Agreement).
Enclosed is a check in the amount of $_________, representing the full
purchase price, payable to the order of BeFirst.com. If applicable, I have also
enclosed a check payable to BeFirst.com representing payment of applicable
withholding taxes.
As soon as the Stock Certificate is registered in my name, please deliver
it to me at the above address.
Unless the issuance of the shares of Common Stock being purchased by me
pursuant to the Agreement are subject to an effective registration statement
under the Securities Act of 1933 (the "Act"), I hereby represent, warrant,
covenant and agree with the Company as follows:
The shares of the Common Stock being acquired by me will be acquired
for my own account for investment and without the intent of participating,
directly or indirectly, in a distribution of the Common Stock and not with
a view to, or for resale in connection with, any distribution of the Common
Stock, nor am I aware of the existence of any distribution of the Common
Stock;
<PAGE>
I am not acquiring the Common Stock based upon any representation,
oral or written, by any person with respect to the future value of, or
income from, the Common Stock but rather upon an independent examination
and judgment as to the prospects of the Company;
The Common Stock was not offered to me by means of publicly
disseminated advertisements or sales literature, nor am I aware of any
offers made to other persons by such means;
I am able to bear the economic risks of the investment in the Common
Stock, including the risk of a complete loss of my investment therein;
I understand and agree that the Common Stock will be issued and sold
to me without registration under any state law relating to the registration
of securities for sale, and will be issued and sold in reliance on the
exemptions from registration under the Act provided by Sections 3(b) and/or
4(2) thereof and the rules and regulations promulgated thereunder;
The Common Stock cannot be offered for sale, sold or transferred by me
other than pursuant to an effective registration under the Act or in a
transaction otherwise in compliance with the Act and evidence satisfactory
to the Company of compliance with the applicable securities laws of other
jurisdictions. The Company shall be entitled to rely upon an opinion of
counsel satisfactory to it with respect to compliance with the above laws;
The Company will be under no obligation to register the Common Stock
or to comply with any exemption available for sale of the Common Stock
without registration, and the information or conditions necessary to permit
routine sales of securities of the Company under Rule 144 of the Act may
not be available with respect to any proposed sale of the Common Stock. The
Company is under no obligation to act in any manner so as to make Rule 144
available with respect to the Common Stock;
I have and have had complete access to and the opportunity to review
and make copies of all material documents related to the business of the
Company. I have examined such of these documents as I wished and am
familiar with the business and affairs of the Company. I realize that the
purchase of the Common Stock is a speculative investment, that any possible
profit therefrom is uncertain and that I may lose my entire investment;
I have had the opportunity to ask questions of and receive answers
from the Company and any person acting on its behalf and to obtain all
material information reasonably
-2-
<PAGE>
available with respect to the Company and its affairs. I have received all
information and data with respect to the Company which I have requested and
which I have deemed relevant in connection with the evaluation of the
merits and risks of my investment in the Company;
I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of the purchase of the
shares of Common Stock hereunder and I am able to bear the economic risks
of such purchase; and
The agreements, representations, warranties and covenants made by me
herein extend to and apply to all of the Common Stock of the Company issued
to me pursuant to the Option of which this exhibit forms a part. Acceptance
by me of the certificate representing such Common Stock shall constitute a
confirmation by the undersigned that all such agreements, representations,
warranties and covenants made herein by the undersigned shall be true and
correct at such time.
I understand that the certificates representing the shares of Common
Stock being purchased by me in accordance with this notice shall bear a
legend referring to the foregoing covenants, representations and warranties
and restrictions on transfer, and I agree that a legend to that effect may
be placed on any certificate which may be issued to me as a substitute for
the certificates being acquired by me in accordance with this notice.
Very truly yours,
___________________________
- -----------------------------------------------------------------
AGREED TO AND ACCEPTED:
BEFIRST.COM
By: _______________________________
Title: ____________________________
Number of Shares
Exercised: ________________________
Number of Shares
Remaining: ________________________ Date: ___________________
-3-
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,442,545
<SECURITIES> 0
<RECEIVABLES> 78,421
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,521,166
<PP&E> 18,026
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,539,192
<CURRENT-LIABILITIES> 153,787
<BONDS> 0
0
0
<COMMON> 12,500,000
<OTHER-SE> 2,372,905
<TOTAL-LIABILITY-AND-EQUITY> 2,539,192
<SALES> 0
<TOTAL-REVENUES> 217,504
<CGS> 56,444
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 399,594
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (238,534)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
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