<PAGE> 1
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY , 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
I.T. TECHNOLOGY, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
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DELAWARE 5961 98-0200077
(STATE OR JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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34-36 PUNT ROAD
WINDSOR 3181
MELBOURNE, VICTORIA AUSTRALIA
(011) 613 9533-7800
(ADDRESS AND TELEPHONE NUMBER OF
PRINCIPAL EXECUTIVE OFFICES
AND PRINCIPAL PLACE OF BUSINESS)
LEVI MOCHKIN, CHIEF EXECUTIVE OFFICER
I.T. TECHNOLOGY, INC.
34-36 PUNT ROAD
WINDSOR 3181
MELBOURNE, VICTORIA
AUSTRALIA
(011) 613 9533-7800
(NAME, ADDRESS AND TELEPHONE NUMBER
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
BARRY L. BURTEN, ESQ.
ROBERT E. BRAUN, ESQ.
JEFFER, MANGELS, BUTLER & MARMARO LLP
2121 AVENUE OF THE STARS, 10TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 203-8080
FAX (310) 203-0567
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same Offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) REGISTRATION FEE
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Common Stock, par value $.001
per share................... 5,000,000(2) $5.00 $25,000,000 $6,600.00
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2) Includes the reoffer and resale of 500,000 shares of Common Stock held by
Instanz Nominees Pty. Ltd.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
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I.T. TECHNOLOGY, INC.
CROSS REFERENCE SHEET FOR PROSPECTUS UNDER FORM SB-2
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FORM SB-2 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
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1. Front of Registration Statement and Outside Outside Front Cover Page; Cross Reference Sheet;
Front Cover of Prospectus Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside front and Outside Back Cover Pages
Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page; Risk Factors; Underwriting
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Inside Front Cover Page; Underwriting
9. Legal Proceedings Business -- Legal Proceedings
10. Directors, Executive Officers Promoters and Management
Control Person
11. Security Ownership of Certain Beneficial Owners Principal Shareholders; Management
and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Position on Management -- Limitation of Liability;
Indemnification for Securities Act Liabilities Underwriting; Management -- Indemnification of
Officers and Directors
15. Organization within Last Five Years Business
16. Description of Business Business
17. Certain Relationships and Related Transactions Certain Relationships and Related Transactions
18. Market for Common Equity and Related Shareholder Risk Factors; Dividend Policy; Description of
Matters Securities; Shares Eligible for Future Sale
19. Executive Compensation Management -- Executive Compensation
20. Financial Statements Financial Statements
21. Changes in and Disagreements with Accountants on Not Applicable
Accounting and Financial Disclosure
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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED FEBRUARY , 2000
PROSPECTUS
UP TO 5,000,000 SHARES
[LOGO]
I.T. TECHNOLOGY, INC.
COMMON STOCK
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This Prospectus covers the offer of 5,000,000 shares of common stock (the
"Shares") of I.T. Technology, Inc. (the "Company") in an initial public offering
of which 4,500,000 Shares are being offered by the Company and the balance of
500,000 Shares by Instanz Nominees Pty. Ltd. ("Instanz") (collectively, the
"Offering"). Helen Abeles, a director of the Company is an affiliate of Instanz.
We must raise a minimum of $5,000,000, or sell at least 1,000,000 Shares, in
order for this Offering to be effective. The offering price of the Shares is
$5.00 per share.
Through a qualified market maker, we have applied to have our common stock,
$.001 par value per share (the "Common Stock"), approved for quotation on the
NASDAQ SmallCap Market under the symbol " ." Prior to this Offering there
has not been a public market for our Common Stock, and we cannot be sure that an
active and liquid trading market for our Common Stock will develop, or that
investors will be able to sell their shares at or above the purchase price.
For information on how to subscribe, call ( ) and ask for a
representative. Sale of our Common Stock will only be made in
connection with this Prospectus.
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MINIMUM MAXIMUM PROCEEDS TO PROCEEDS TO
SHARES SHARES PRICE TO SELLING US US
OFFERED(1)(2) OFFERED(1)(2) PUBLIC COMMISSIONS (MINIMUM) (MAXIMUM)
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I.T. Technology, Inc........ 1,000,000 4,500,000 $ 5.00 $ $
--------- --------- ----------- -------- ---- ----
Instanz Nominees Pty.
Ltd....................... 0 500,000 $ 5.00 $ $
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1,000,000 5,000,000 $25,000,000 $ $
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(1) We are offering these Shares on a "best efforts, minimum-maximum basis."
Unless at least 1,000,000 Shares are sold, we will not sell any Shares. All
proceeds received for the Offering will be deposited in an escrow account
with Comerica Bank (the "Escrow Account"), and will not be released unless
at least 1,000,000 Shares are sold on or before , 2000 (which may
be extended to , 2000 at our option). If we do not sell at least
1,000,000 Shares that time, we will return the investment, with interest.
(2) Pursuant to the terms of an agreement between the Company and Instanz, the
initial $5,000,000 of proceeds from the sale of Shares in this Offering
shall be allocated to the Company, the next $2,500,000 shall be allocated to
Instanz and the balance of the proceeds of up to $17,500,000 shall be
allocated to the Company.
SEE "RISK FACTORS" ON PAGES 4 TO 11 FOR FACTORS THAT YOU SHOULD CONSIDER
BEFORE INVESTING IN THE SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
We have engaged as underwriter to assist in the distribution
of the Shares, on a best efforts basis. If necessary, will manage
the selected broker-dealers to assist in selling the Shares.
We must receive an original stock order form together with full payment of
$5.00 per share for all Shares for which subscription is made, at
by 4:00 p.m., Los Angeles time, on , 2000. Subscription funds will be
placed in an Escrow Account with Comerica Bank-California and will earn interest
from the date of receipt until completion or termination of the Offering. In the
event that the minimum number of Shares required to be sold for the closing of
this Offering or 1,000,000 Shares at $ 5.00 per share are not sold on or before
120 days after the effective date of this Offering (which may be extended until
150 days after the effective date of this Offering at the Company's sole
discretion), the Offering will be terminated and all subscription funds held in
the Escrow Account will be returned to investors with interest. In the event of
an oversubscription, the shares of Common Stock will be allocated pro rata among
the subscribers in this Offering, based on the amount of their respective
subscriptions. The minimum purchase is 100 Shares. The purchase limitations
described herein are subject to increase or decrease at our sole discretion.
UNDERWRITER
, 2000.
<PAGE> 4
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission, or SEC, a
registration statement on Form SB-2 under the Securities Act of 1933, as
amended, or the Securities Act, for the shares of our Common Stock being offered
by this Prospectus. This Prospectus does not contain all of the information set
forth in the registration statement and the exhibits. For further information
about the Company and the Common Stock being offered, see the registration
statement and the exhibits thereto. Statements contained in this Prospectus
regarding the contents of any contract or any other document to which reference
is made are not necessarily complete, and, in each instance where a copy of a
contract or other document has been filed as an exhibit to the registration
statement, reference is made to the copy so filed, each of those statements
being qualified in all respects by that reference. A copy of the registration
statement and the exhibits may be inspected without charge at the SEC's offices
at Judiciary Plaza, 450 Fifth Street, Washington, D.C. 20549, and copies of all
or any part of the registration statement may be obtained from the Public
Reference Room of the SEC, Washington, D.C. 20549 upon the payment of the fees
prescribed by the SEC. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a
web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as us, that file
electronically with the SEC. As a result of this Offering, we will become
subject to the information and reporting requirements of the Securities Exchange
Act of 1934, as amended, or the Exchange Act, and we will file periodic reports,
proxy statements and other information with the SEC. We intend to furnish our
stockholders with annual reports containing audited financial statements and
with quarterly reports for the first three quarters of each year containing
unaudited interim financial information.
No dealer, salesman or any other person has been authorized to give any
information which is not contained in this Prospectus or to make any
representation in connection with this Offering other than those which are
contained in the Prospectus, and if given or made, such information or
representation must not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities which are offered hereby to any person in
any jurisdiction where such offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale hereunder shall under any circumstances
create any implications that there has been no change in the affairs of the
Company or the facts which are herein set forth since the date hereof.
CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER ALLOTMENT, ENTERING STABILIZATION BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN
PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE OTC BULLETIN BOARD
IN ACCORDANCE WITH RULE 103 OF REGULATION M OF THE SECURITIES ACT.
i
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary..........................................
Risk Factors................................................
Forward-Looking Statements..................................
Use of Proceeds.............................................
Dividend Policy.............................................
Dilution....................................................
Capitalization..............................................
Selected Financial Data.....................................
Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................
Business....................................................
Management..................................................
Principal and Selling Shareholders..........................
Certain Transactions........................................
Description of Capital Stock................................
Shares Eligible for Future Sale.............................
Underwriting................................................
Legal Matters...............................................
Experts.....................................................
Additional Information......................................
Index to Financial Statements............................... F-1
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ii
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Prospectus.
This summary does not contain all of the information that you should consider
before investing in our Common Stock. You should read the entire Prospectus
carefully, especially the risks of investing in our Common Stock discussed under
"Risk Factors."
THE COMPANY
I.T. Technology, Inc. is a Delaware corporation formed on February 2, 1999
for the purpose of engaging in businesses related to the Internet, e-commerce
and technology, directly and through acquiring a majority interest in Internet
related and other technology companies. To date, the Company has acquired
interests in Stampville.Com Inc., a New York corporation ("Stampville").
Stampville, incorporated in 1999, and which is in the process of developing its
web-site at www.stampville.com, intends to specialize in the wholesale and
Internet sale of philatelic memorabilia, including stamps and other
collectibles. Stampville has commenced limited operations through the launch of
two micro-sites, www.beegeesstamps.com and www.sheldonstamps.com at their
Web-site. Stampville intends to launch its core Web-site plus additional
micro-sites during the first six months of 2000. See "Research and
Development -- Stampville -- Current Development Status." The Company is also
actively seeking to identify other potential investments and acquisitions in the
United States and abroad, although there can be no assurance that the Company
will come to terms with or engage in a transaction with any such entity.
References hereinafter to the "Company", "we" or "our" include I.T. Technology,
Pty. Ltd. and Stampville unless the context indicates otherwise.
Subject to the amount of proceeds raised by the Company in this Offering
and the amount thereof which is actually invested in Stampville, the proposed
business activities described herein may classify the Company as a "blank check"
or "blind pool" entity. Many states have enacted statutes, rules, and
regulations limiting the sale of securities of "blank check" companies in their
respective jurisdictions.
THERE CAN BE NO ASSURANCES GIVEN THAT THE COMPANY WILL BE ABLE TO
SUCCESSFULLY LOCATE ANY ADDITIONAL ACQUISITION TARGET(S) OR CONSUMMATE ANY
ADDITIONAL ACQUISITION(S). STATUTES, REGULATIONS, RULES AND THE POSITIONS OF
REGULATORY AUTHORITIES HAVE BEEN BECOMING MORE ADVERSE AND RESTRICTIVE TOWARD
SUCH ACQUISITIONS AND TOWARD "BLIND POOL" ENTITIES SUCH AS THE COMPANY.
1
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THE OFFERING
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SHARES OF COMMON STOCK OFFERED IN THIS
PROSPECTUS
MINIMUM .................................... 1,000,000 shares(1)(2)
MAXIMUM..................................... 5,000,000 shares(2)(3)(5)
TOTAL SHARES OF COMMON STOCK TO BE OUTSTANDING
AFTER THE OFFERING
MINIMUM..................................... 17,500,000 shares(1)(2)(4)
MAXIMUM..................................... 21,000,000 shares(2)(4)(5)
USE OF PROCEEDS BY THE COMPANY(5)(6).......... 1. $6,250,000 to finance acquisition of a majority
interest in Stampville;
2. approximately $3,000,000 for working capital and
other general purposes;
3. approximately $463,000 will be used to payoff the
balance due on the building housing the Company's
executive offices located in Melbourne, Australia;
and
4. the remaining proceeds to finance other Internet
or e-commerce acquisitions or ventures by the
Company.
PROPOSED NASDAQ SMALLCAP SYMBOL............... [ ]
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(1) This Offering will be consummated with the sale of no less than 1,000,000
Shares of Common Stock (the "Minimum Subscription").
(2) [Does not include up to Shares that underwriters may purchase
from us if they exercise their over allotment option in full.]
(3) Includes the reoffer and resale of up to 500,000 Shares by Instanz which
will occur after the Minimum Subscription is sold.
(4) Does not include the issuance of an additional 350,000 shares of Common
Stock by the Company which is contingent upon the Company raising the
Additional Stampville Investment. See "Compensation of Officers and
Directors -- Employment Agreements -- Consulting Agreement with Mendel
Mochkin."
(5) Assumes sale of all 5,000,000 Shares of Common Stock being offered.
(6) In the event the Minimum Subscription is sold, the initial $ 1,250,000 of
proceeds would be invested in Stampville, the next $1,500,000 would be
utilized to fund the Company's working capital requirements and, the
remaining balance to finance other e-commerce or Internet acquisitions
or ventures and/or additional investments in Stampville.
Unless otherwise indicated, all information in this Prospectus assumes (1)
no exercise of the over allotment option granted to the underwriters, and (2) an
initial public offering price of $5.00 per share.
RISK FACTORS
INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK AND COULD
RESULT IN A LOSS OF YOUR ENTIRE INVESTMENT. SEE "RISK FACTORS" FOR A DISCUSSION
OF VARIOUS RISKS ASSOCIATED WITH AN INVESTMENT IN OUR COMMON STOCK.
2
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SUMMARY CONSOLIDATED FINANCIAL, PRO FORMA
AND OPERATING DATA
The summary information set forth below is derived from and should be read
in conjunction with the financial statements of the Company, including the notes
thereto, appearing elsewhere in this Prospectus.
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FEBRUARY 2, 1999 (INCEPTION)
THROUGH SEPTEMBER 30, 1999
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PRO FORMA(1)
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ACTUAL MINIMUM MAXIMUM
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SELECTED STATEMENT OF OPERATIONS DATA:
Revenues............................................ $ -- $ -- $ --
Net loss............................................ $ (107,708) $ (127,199) $(2,826,250)
Net loss per share.................................. $ (.01) $ (0.01) $ (0.13)
Weighted average number of shares outstanding....... 10,157,292 17,500,000 21,350,000
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SEPTEMBER 30, 1999
--------------------------
(000S)
PRO FORMA(1)
-----------------
ACTUAL MINIMUM MAXIMUM
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SELECTED BALANCE SHEET DATA:
Working capital............................................. $ 91 $5,031 $24,668
Total assets................................................ 1,121 8,562 29,709
Total liabilities........................................... 598 598 145
Accumulated deficit......................................... (108) (108) (1,853)
Stockholders' equity........................................ $ 524 $7,964 $25,741
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(1) Gives effect to the sale of the Common Stock offered hereby and the
application of the estimated net proceeds therefrom. See "Use of Proceeds"
and "Pro Forma Financial Statements."
3
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RISK FACTORS
An investment in our Common Stock involves a high degree of risk. You
should consider carefully the following information about these risks before
buying shares of Common Stock. The risks described below are not the only ones
facing our Company. Additional risks may impair our business operations. If any
of the following risks occur, our business, results of operations or financial
condition could be adversely affected. In that case, the trading price of our
Common Stock could decline, and you may lose all or part of your investment. You
should also refer to the other information contained in this Prospectus,
including our financial statements and the notes to those statements.
RISKS RELATED TO OUR BUSINESS
NO OPERATING HISTORY.
The Company is a recently formed entity without any operating history. In
addition, Stampville is also a recently formed entity and has no operating
history. There can be no assurance that the Company will be able to successfully
operate its proposed business, or that Stampville will be able to execute its
business plan.
DEPENDENCE ON NET PROCEEDS OF THIS OFFERING.
The Company has very limited resources and is dependent on the net proceeds
of this Offering to implement its plan of operation. Although the Company
anticipates that the maximum net proceeds of this Offering will enable it to
fund its acquisition of interests in Stampville, as well as other potential
investments and acquisitions in Australia and the United States, unless at least
$12,250,000 is raised in this Offering, there can be no assurance that the
proceeds from this Offering will be sufficient to finance the Company's business
plans. Included in such proceeds from this Offering will be $2,500,000 from the
sale of shares by a shareholder, Instanz, which will not benefit the Company.
See "Use Of Proceeds." If the Company's plans change, its assumptions prove to
be inaccurate or the capital resources available to the Company otherwise prove
to be insufficient to implement its plan of operation (as a result of
unanticipated expenses, problems, or otherwise), the Company could be required
to seek additional financing or may be required to limit its business
activities. There can be no assurance that the Company will be able to obtain
any additional financing or if any financing is available to the Company it will
be on terms and conditions acceptable to the Company.
CONCENTRATION OF AND RELIANCE ON MANAGEMENT; KEY PERSONNEL.
All decisions with respect to the day-to-day management of the Company will
be made exclusively by Henry Herzog, Levi Mochkin, Jonathan Herzog and certain
other individuals. See "Management." Investors will have no right or power
solely by ownership of Common Stock to take part in the day-to-day management of
the Company. If the minimum subscription is sold, these entities will own over
94% of the outstanding voting rights and Common Stock of the Company.
Accordingly, no person should purchase any shares of Common Stock offered hereby
unless he or she is willing to entrust all aspects of the day-to-day management
of the Company to the board of directors and management. There can be no
assurance that the Company's board of directors and officers will be able to
operate or manage the Company's business successfully or that the Company will
be able to achieve profitable operations. If Messrs. Henry Herzog, Levi Mochkin
or Jonathan Herzog are unable to perform for any reason, including without
limitation from death or disability, that could seriously adversely affect the
Company. The Company does not maintain key man or other insurance to protect
against the foregoing risks. In addition, the Company's management and Directors
have no prior experience in operating Internet or e-commerce companies and have
very limited experience in "blind pool" or "blank check" companies.
4
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COMPETITION FOR EMPLOYEES.
The success of Internet ventures depends on the availability of highly
skilled employees with technical, management, marketing, sales, product
development and other specialized training for which competition is intense, and
there can be no assurance that the Company, Stampville or any other entity in
which the Company invests or acquires will be successful in attracting and
retaining such personnel. In particular, the Company's emphasis on
Internet-related entities will result in a relatively small and highly
sought-after base of employees upon which it will be dependent. There can also
be no assurance that employees will not leave the Company or Stampville or
compete against the Company or Stampville. The Company's or Stampville's failure
to attract additional qualified employees or to retain the services of key
personnel could materially adversely affect the Company's or Stampville's
business, operating results and financial condition. See "Management."
CONCENTRATION OF SHARE OWNERSHIP.
Members of the Company's management, together with affiliates of members of
management, and Instanz, whose affiliate, Helen Abeles, is a director of the
Company, collectively own all of the outstanding Common Stock and the voting
rights of the Company. If all 5,000,000 Shares being offered hereby are sold,
the foregoing entities will own collectively approximately 75% of the
outstanding Common Stock and voting rights of the Company. Accordingly, the
current officers and directors will have the voting power required to elect at
least a majority of the directors and to approve other matters requiring
approval by the shareholders of the Company in the foreseeable future. Certain
members of the Company's board of directors are members of the Company's
management. See "Management" and "Capitalization and Stock Ownership."
POTENTIAL ADVERSE IMPACT OF ADDITIONAL STOCK.
The board of directors could, without shareholder approval, issue Common
Stock, preferred stock, options, warrants or other securities, including both
debt and equity securities, with voting and other rights that could adversely
affect the voting rights of the holders of the Common Stock and could have
certain anti-takeover effects.
RISKS RELATED TO THE INDUSTRY/INTERNET
OUR SUCCESS DEPENDS ON THE INTERNET'S ABILITY TO ACCOMMODATE GROWTH IN
E-COMMERCE.
The use of the Internet for retrieving, sharing and transferring
information among businesses, buyers, suppliers and partners has only recently
begun to develop. If the Internet is not able to accommodate growth in
e-commerce, our business would suffer. The recent growth in the use of the
Internet has caused frequent periods of performance degradation and
interruption. Our ability to sustain and improve our services is limited, in
part, by the speed and reliability of the networks operated by third parties.
Consequently, the emergence and growth of the market for our services is
dependent on improvements being made to the Internet infrastructure to alleviate
overloading and congestion.
WE ARE DEPENDENT UPON THE GROWTH OF THE INTERNET AS A MEANS OF COMMERCE.
If the e-commerce market does not grow or grows more slowly than expected,
our business will suffer. The possible slow adoption of the Internet as a means
of commerce by businesses may harm our prospects. A number of factors could
prevent the acceptance and growth of e-commerce, including the following:
- e-commerce is at an early stage and buyers may be unwilling to shift
their traditional purchasing to online purchasing;
- businesses may not be able to implement e-commerce applications on these
networks;
5
<PAGE> 11
- increased government regulation or taxation may adversely affect the
viability of e-commerce;
- insufficient availability of telecommunication services or changes in
telecommunication services may result in slower response times; and
- adverse publicity and consumer concern about the reliability, cost, ease
of access, quality of services, capacity, performance and security of
e-commerce transactions could discourage its acceptance and growth.
Even if the Internet is widely adopted as a means of commerce, the adoption
of our network for procurement, particularly by companies that have relied on
traditional means of procurement, will require broad acceptance of the new
approach. In addition, companies that have already invested substantial
resources in traditional methods of procurement, or in-house e-commerce
solutions, may be reluctant to adopt our e-commerce solution.
SECURITY RISKS OF ELECTRONIC COMMERCE MAY DETER USE OF OUR PRODUCTS AND
SERVICES.
A fundamental requirement to conduct e-commerce is the secure transmission
of information over public networks. If purchasers are not confident in the
security of e-commerce, they may not effect transactions on our e-marketplaces
which would severely harm our business. We cannot be certain that advances in
computer capabilities, new discoveries in the field of cryptography, or other
developments will not result in the compromise or breach of the algorithms which
protect content and transactions on our e-marketplaces or proprietary
information in our databases. Anyone who is able to circumvent our security
measures could misappropriate proprietary, confidential information, place false
orders or cause interruptions in our operations. We may be required to incur
significant costs to protect against security breaches or to alleviate problems
caused by breaches. Further, a well-publicized compromise of security (whether
relating to our business or to other Internet businesses) could deter people
from using the Internet to conduct transactions that involve transmitting
confidential information. This risk has been emphasized by a well publicized
attack commonly referred to as a "denial of service attack" on some of the most
well known Internet services and providers. Our failure to prevent security
breaches, or well-publicized security breaches affecting the Internet in general
could adversely affect our business.
GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES COULD IMPAIR THE GROWTH OF THE
INTERNET AND DECREASE DEMAND FOR OUR SERVICES AND INCREASE OUR COST OF DOING
BUSINESS.
The laws governing Internet transactions remain largely unsettled, even in
areas where there has been some legislative action. The adoption or modification
of laws or regulations relating to the Internet could increase our costs and
administrative burdens. It may take years to determine whether and how existing
laws such as those governing intellectual property, privacy, libel, consumer
protection and taxation apply to the Internet.
Laws and regulations directly applicable to communications or commerce over
the Internet are becoming more prevalent. We must comply with new regulations in
the United States and other countries where we conduct business. The growth and
development of the e-commerce market may prompt calls for more stringent laws
governing consumer protection and the taxation of e-commerce. Noncompliance with
any newly adopted laws and regulations could expose us to significant
liabilities.
We currently hold various Internet Web addresses relating to our business.
If we are not able to prevent third parties from acquiring Web addresses that
are similar to our addresses, third parties could acquire similar domain names
which could create confusion and divert traffic to other web sites away from our
e-marketplaces hereby adversely affecting our business. The acquisition and
maintenance of Web addresses is generally regulated by governmental agencies and
their designees. The regulation of Web addresses in the United States and in
foreign countries is subject to change. As a result, we may not be able to
acquire or maintain relevant Web addresses in all countries where we conduct
business. Furthermore, the relationship between regulations governing such
addresses and laws protecting proprietary rights is unclear.
6
<PAGE> 12
RISKS RELATING TO THE INDUSTRY AND NATURE OF UNIDENTIFIED ACQUISITION TARGETS
GENERAL
Part of the Company's business strategy includes the acquisition of
additional business ventures within the Internet, electronic commerce and
technology industries. Except for Stampville, the Company has not selected any
particular acquisition target or venture ("Target") in which to concentrate its
acquisition efforts. Except for Stampville, the directors and executive officers
of the Company have had no definitive contacts or discussions with any entity or
representatives of any entity regarding the consummation of an acquisition.
Accordingly, there is no basis to evaluate the possible merits or risks of a
Target or the particular industry in which the Company may ultimately operate,
and therefore risks of a currently unascertainable nature may arise when a
specific Target and industry is chosen. For example, to the extent that the
Company effects an acquisition with a financially unstable company or an entity
in its early stage of development or growth (including entities without
established records of revenues or income), the Company will become subject to
numerous risks inherent in the business and operations of financially unstable
and early stage or potential emerging growth companies. In addition, to the
extent that the Company effects an acquisition with an entity in an industry
characterized by a high level of risk, the Company will become subject to the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes certain industries which experience rapid growth.
Although management will endeavor to evaluate the risks inherent in a particular
Target or industry, there can be no assurance that the Company will properly
ascertain or assess all such risks.
SCARCITY OF AND COMPETITION FOR ACQUISITION OPPORTUNITIES MAY HINDER THE
IDENTIFICATION OF A TARGET AND THE CONSUMMATION OF AN ACQUISITION
The Company expects to encounter intense competition from other entities
having business objectives similar to those of the Company. Many of these
entities, including venture capital partnerships and corporations, other blind
pool companies, large industrial and financial institutions, small business
investment companies, "incubators" and wealthy individuals, are well-established
and have extensive experience in connection with identifying and effecting
acquisitions directly or through affiliates. Many of these competitors possess
greater financial, technical, human and other resources than the Company and
there can be no assurance that the Company will have the ability to compete
successfully. The Company's financial resources will be limited in comparison to
those of many of its competitors. This inherent competitive limitation may
compel the Company to select certain less attractive acquisition prospects.
There can be no assurance that such prospects will permit the Company to achieve
its stated business objectives.
SUCCESS OF THE COMPANY'S BUSINESS PLAN DEPENDS IN LARGE PART UPON THE
CONSUMMATION OF ADDITIONAL ACQUISITIONS OR NEW VENTURES
The success of the Company's proposed plan of operation will depend to a
great extent on locating and consummating an acquisition of one or more Targets.
Subsequent to any acquisition, the Company's success will depend greatly on the
operations, financial condition, and management of the identified Target.
Management may also acquire companies or assets that do not have an established
operating history. If the Company completes one or more acquisitions, the
success of the Company's operations may be dependent upon management of the
acquired entities together with numerous other factors beyond the Company's
control.
THE COMPANY MAY BE SUBJECT TO UNCERTAINTY IN THE COMPETITIVE ENVIRONMENT OF A
TARGET
If the Company succeeds in effecting an acquisition, the Company will, in
all likelihood, become subject to intense competition from competitors of the
Target. In particular, certain industries which experience rapid growth
frequently attract an increasingly larger number of competitors, including
competitors with greater financial, marketing, technical, human and other
resources than the initial competitors in the industry. The degree of
competition characterizing the industry of any prospective
7
<PAGE> 13
Target cannot presently be ascertained. There can be no assurance that,
subsequent to a consummation of an acquisition, the Company will have the
resources to compete effectively in the business of the Target, especially to
the extent that the Target is in a highly competitive area of commerce or
Internet business.
PROBABLE LACK OF BUSINESS DIVERSIFICATION DUE TO LIMITED RESOURCES LIMITS THE
PROSPECTS FOR THE COMPANY'S SUCCESS
Even after the completion of this Offering, the Company will have limited
resources; accordingly, the Company in all likelihood, will have the ability to
effect only a few significant acquisitions. Accordingly, the prospects for the
Company's success will be entirely dependent upon the future performance of a
few businesses. Unlike certain entities which have the resources to consummate
several acquisitions or entities operating in multiple industries or multiple
segments of a single industry, it is highly likely that the Company will not
have the resources to diversify its operations or benefit from the possible
spreading of risks or offsetting of losses. The Company's probable lack of
diversification may subject the Company to numerous economic, competitive and
regulatory developments, any or all of which may have a material adverse impact
upon the particular industry in which the Company may operate subsequent to the
consummation of an acquisition. The prospects for the Company's success may
become dependent upon the development or market acceptance of a single or
limited number of products, processes or services. Accordingly, notwithstanding
the possibility of capital investment in and management assistance to any Target
by the Company, there can be no assurance that such Target(s) will prove to be
commercially viable.
THE COMPANY MAY PURSUE AN ACQUISITION WITH A TARGET OPERATING OUTSIDE THE UNITED
STATES: SPECIAL ADDITIONAL RISKS RELATING TO DOING BUSINESS IN A FOREIGN COUNTRY
The Company may effectuate an acquisition with a Target whose business
operations, headquarters, place of formation or primary place of business are
located in Australia and in other locations outside the United States. In such
event, the Company may face the significant additional risks associated with
doing business in that country. In addition to potential language barriers,
different presentations of financial information, different business practices,
and other cultural differences and barriers that may make it difficult to
evaluate such a Target, ongoing business risks result from the internal
political situation, uncertain legal systems and applications of law, prejudice
against foreigners, corrupt practices, uncertain economic policies and potential
political and economic instability that may be exacerbated in various foreign
countries.
RISKS RELATED TO THIS OFFERING
YOU WILL EXPERIENCE IMMEDIATE DILUTION WITH RESPECT TO YOUR SHARES. WE MAY NEED
ADDITIONAL CAPITAL AND RAISING ADDITIONAL CAPITAL MAY DILUTE EXISTING
STOCKHOLDERS.
In the event of the Minimum Subscription, you will incur immediate and
substantial dilution of $4.54 per share in the net tangible book value of your
shares as a result of this Offering. Assuming the sale of all of the 4,500,000
Shares of Common Stock being offered in this Prospectus by the Company, you will
incur immediate and substantial dilution of $3.80 per share in the net tangible
book value of your shares as a result of this Offering. See "Dilution."
Historically, we have financed our business and operations through the sale
of equity.
In the event we reach only the Minimum Subscription, the Company will have
only approximately $1,250,000 committed for investment in Stampville, an
additional amount of approximately $ for investment in other Targets
and/or additional investments in Stampville and approximately 12 months' working
capital. In such event it will need significant additional financing to complete
its required investment in Stampville in order to continue to retain its 50.1%
ownership and to accomplish its business plan and/or consummate or fund its
additional Targets. These additional financings may result in significant
additional dilution to existing shareholders. Assuming the sale of all 4,500,000
Shares being offered by the Company in this Prospectus, we believe that the net
proceeds from this Offering will enable
8
<PAGE> 14
us to maintain our current and planned operations for approximately 24 months.
After that, we may need to raise additional funds. If our capital requirements
vary materially from those currently planned, we may require additional
financing sooner than anticipated. Such financing may not be available in
sufficient amounts or on terms acceptable to us, or at all, and will dilute the
existing stockholders' equity interest in the Company.
OUR STOCK HAS NOT BEEN PUBLICLY TRADED BEFORE THIS OFFERING AND OUR STOCK PRICE
MAY BE VOLATILE.
Our Common Stock has not been publicly traded, and an active trading market
may not develop or be sustained after this Offering. The potential that an
active trading market does not develop or cannot be sustained will be
exacerbated if the amount of Shares sold are at or about the Minimum
Subscription. We and the representatives of the underwriters have determined the
initial public offering price. The price at which our Common Stock will trade
after this Offering is likely to be highly volatile and may fluctuate
substantially due to factors such as:
- actual or anticipated fluctuations in our results of operations;
- changes in or failure by us to meet securities analysts' expectations;
- announcements of technological innovations;
- introduction of new services by us or our competitors;
- developments with respect to intellectual property rights;
- conditions and trends in the Internet and other technology industries;
- impact of additional acquisitions;
- the terms of any new financings which may be dilutive; and
- general market conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices for the
common stocks of technology companies, particularly Internet companies. These
broad market fluctuations may result in a material decline in the market price
of our Common Stock. In the past, following periods of volatility in the market
price of a particular company's securities, securities class action litigation
has often been brought against that company. We may become involved in this type
of litigation in the future. Litigation is often expensive and diverts
management's attention and resources which is needed to successfully run our
business.
NO FIRM COMMITMENT TO PURCHASE SHARES.
There is no commitment to purchase all or any part of the Shares being
offered. The Shares are offered on a "best efforts, all or none" basis in a
minimum Offering of 1,000,000 Shares and an additional 4,000,000 Shares on a
"best efforts" basis for an aggregate of 5,000,000 Shares representing the
maximum Offering. If 1,000,000 Shares are not sold prior to , 2000,
which is 120 days from date of this Prospectus, or thereafter in the Company's
sole discretion on ,2000, which is 150 days from the date of this
Offering, all funds received from subscriptions will be promptly returned in
full, with interest thereon, to the subscribers and no shares will be sold.
During the stated Offering period, subscriptions are irrevocable and subscribers
will not have the opportunity to have their funds returned. It is therefore
possible that subscribers will not have the use of, or earn interest on, their
funds for up to five months. If no material developments occur, subscribers will
receive no further written information about the Company or the status of the
Offering during that period.
SHARES ELIGIBLE FOR FUTURE SALE BY OUR EXISTING STOCKHOLDERS MAY ADVERSELY
AFFECT OUR STOCK PRICE.
The market price of our Common Stock could drop due to the sales of a large
number of shares of our Common Stock or the perception that such sales could
occur. These factors could also make it more difficult to raise funds through
future offerings of Common Stock.
After this Offering, if all the 5,000,000 Shares are sold, 21,000,000
shares of Common Stock will be outstanding (17,500,000 if the minimum of
1,000,000 Shares are sold), excluding shares issuable to Mendel Mochkin. Of
these shares, the 5,000,000
9
<PAGE> 15
Shares sold in this Offering (1,000,000 Shares if only the minimum is sold) will
be freely tradable without restrictions under the Securities Act, except for any
shares purchased by our "affiliates," as defined in Rule 144 under the
Securities Act. Our officers and directors and all stockholders have entered
into lock-up agreements pursuant to which they have agreed not to offer or sell
any shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of . These individuals
or entities may request that consider an early release from their
lock-up agreement. may, at any time and without notice, grant an
early release for shares subject to these lock-up agreements. Upon expiration of
this 180-day lock-up period, the shares owned by these persons prior to
completion of this Offering may be sold into the public market without
registration under the Securities Act in compliance with the volume limitations
and other applicable restrictions of Rule 144 under the Securities Act. In
addition, the holders of 99.1% of the Company's currently outstanding shares
have agreed not to sell any of their shares, other than the sale of 500,000
Shares by Instanz in this Offering or through a registration statement, without
the consent of each of the other current shareholders. In addition, during a
period commencing 180 days after the effective date of this Offering and ending
no later than three years after the effective date of this Offering, Instanz
shall have the right to demand that the Company file a registration statement
covering the reoffer and resale by Instanz of any of its 500,000 Shares offered
through this Prospectus which are not sold in this Offering. This shareholder
agreement will lapse upon the sale of the 500,000 Shares in this Offering or the
termination of Instanz's registration rights. For a further description of
Instanz' rights see "Certain Transactions." After the date of this Prospectus,
we intend to file a registration statement under the Securities Act to register
all shares of Common Stock issuable upon the exercise of outstanding stock
options and reserved for issuance under our stock option plans. This
registration statement is expected to become effective immediately upon filing,
and subject to the vesting requirements and exercise of the related options (as
well as the terms of the lock-up agreements), shares covered by this
registration statement will be eligible for sale in the public markets. See
"Shares Eligible for Future Sale."
OUR ARTICLES OF INCORPORATION AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS
WHICH COULD DELAY OR PREVENT A CHANGE IN CONTROL AND COULD ALSO LIMIT THE MARKET
PRICE OF YOUR STOCK.
Our Certificate of Incorporation and Bylaws contain provisions that could
delay or prevent a change in control. These provisions could limit the price
that investors might be willing to pay in the future for shares of our Common
Stock. Some of these provisions:
- authorize the issuance of preferred stock which can be created and issued
by the board of directors without prior stockholder approval, commonly
referred to as "blank check" preferred stock, with rights senior to those
of Common Stock; and
- establish advance notice requirements for submitting nominations for
election to the board of directors and for proposing matters that can be
acted upon by stockholders at a meeting.
In addition, certain provisions of Delaware law make it more difficult for
a third party to acquire us. Some of these provisions:
- establish a supermajority stockholder voting requirement to approve an
acquisition by a third party of a controlling interest; and
- impose time restrictions or require additional approvals for an
acquisition of us by an interested stockholder.
These provisions could also limit the price that investors might be willing
to pay in the future for shares of our Common Stock. See "Description of Capital
Stock" for additional discussion of these provisions.
OUR STOCKHOLDERS MAY HAVE DIFFICULTY IN RECOVERING MONETARY DAMAGES FROM
DIRECTORS.
Our Certificate of Incorporation contains a provision which may eliminate
personal liability of our directors for monetary damages to be paid to us and
our stockholders for some breaches of fiduciary
10
<PAGE> 16
duties. As a result of this provision, our stockholders may be unable to recover
monetary damages against our directors for their actions that constitute
breaches of fiduciary duties, negligence or gross negligence. Including this
provision in our Certificate of Incorporation may also reduce the likelihood of
derivative litigation against our directors and may discourage lawsuits against
our directors for breach of their duty of care even though some stockholder
claims might have been successful and benefited stockholders.
FUTURE GROWTH OF OUR OPERATIONS MAY MAKE ADDITIONAL CAPITAL OR FINANCING
NECESSARY.
In the event we reach only the Minimum Subscription, the Company will have
only approximately $1,250,000 committed for investment in Stampville, an
additional amount of approximately $ for investment in other Targets
and/or additional investments in Stampville and will have approximately 12
months working capital. In such event it will need significant additional
financing to complete its required investment in Stampville in order to continue
to retain its 50.1% ownership and to accomplish its business plan and/or
consummate or fund its additional Targets. These additional financings may
result in significant additional dilution to existing shareholders. Assuming the
sale of all 4,500,000 Shares being offered by the Company in this Prospectus, we
believe that the net proceeds from this Offering will enable us to maintain our
current and planned operations for approximately 24 months. After that, we may
need to raise additional funds in order to:
- Finance unanticipated working capital requirements.
- Develop or enhance existing services or products.
- Fund costs associated with strategic marketing alliances.
- Respond to competitive pressures.
- Acquire complementary businesses, technologies, content or products.
If our capital requirements vary materially from those currently planned,
we may require additional financing sooner than anticipated. Such financing may
not be available in sufficient amounts or on terms acceptable to us, or at all,
and may be dilutive to existing stockholders.
We cannot be certain that we will be able to obtain funds on favorable
terms, if at all. If we decide to raise funds by issuing additional equity
securities, purchasers in this Offering may experience additional dilution.
Issuance of additional equity securities may also involve granting preferences
or privileges ranking senior to those purchasers in this Offering. If we cannot
obtain sufficient funds, we may not be able to grow our operations, take
advantage of future business opportunities or respond to technological
developments or competitive pressures. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
WE DO NOT INTEND TO PAY DIVIDENDS.
We have never paid dividends on our Common Stock. We do not intend to pay
dividends and purchasers should not expect to receive dividends on our Common
Stock for the foreseeable future. See "Dividend Policy."
WARNING REGARDING OUR USE OF FORWARD-LOOKING STATEMENTS.
This Prospectus contains forward-looking statements which relate to
possible future events, our future performance and our future operations. In
some cases, you can identify forward-looking statements by our use of words such
as "may," "will," "should," "anticipates," "believes," "expects," "plans,"
"future," "intends," "could," "estimate," "predict," "potential" or "continue,"
the negative of these terms or other similar expressions. These forward-looking
statements are only our predictions. Our actual results could and likely will
differ materially from these forward-looking statements for many reasons,
including the risks described above and appearing elsewhere in this Prospectus.
We cannot guarantee future results, levels of activity, performance or
achievements. We are under no duty to update any of the forward-looking
statements after the date of this Prospectus to conform them to actual results
or to changes in our expectations.
11
<PAGE> 17
USE OF PROCEEDS
We estimate that the maximum net proceeds to us from the sale of the
5,000,000 Shares of Common Stock offered by this Prospectus, excluding the
Shares being sold on the account of Instanz, will be approximately
[$ million], and the minimum net proceeds to be approximately [$
million]. This estimate is based on an assumed initial public offering price of
$5.00 per share, and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses that we will pay. Pursuant to an
agreement with Instanz, the initial $5,000,000 of proceeds from the sale of
Common Stock in the Offering will be allocated to the Company, the next
$2,500,000 of proceeds to Instanz and the remaining proceeds of up to
$17,500,000 to the Company. Assuming that all 4,500,000 Shares being offered by
the Company are sold in this Offering, we intend to use the proceeds from this
Offering as follows:
- Approximately $6,250,000 will be invested in Stampville in connection
with the Company's purchase of 50.1% of Stampville's capital stock. See
"Business -- Acquisition of Equity Interest in Stampville."
- Approximately $3,000,000 of the net proceeds for general corporate
purposes, including working capital.
- In the event the maximum subscription occurs approximately $463,000 will
be used to payoff the balance due on the building housing the Company's
executive offices located in Melbourne, Australia.
- The remaining net proceeds or approximately $ , ,000 of the
net proceeds from the Offering will be used to purchase equity interests
in or to develop other Internet companies or ventures.
In the event the Company receives at least $10,000,000 from the sale of its
Common Stock in the Offering, it has agreed to go forward with an investment in
Stampville of $5,000,000 within thirty (30) days of its receipt of these funds
from the Offering and an investment of an additional $1,250,000 on or before
December 8, 2001. Depending on how much additional proceeds it receives from
this Offering, it will retain no less than $1,500,000 for working capital
purposes and invest the remainder in and/or other Internet companies. Pending
use, the net proceeds will be invested in short-term investment-grade
instruments, certificates of deposit or direct or guaranteed obligations of the
United States government.
If the Company only receives the Minimum Subscription, the initial
$1,250,000 of proceeds would be invested in Stampville, the next $1,500,000
would be utilized to fund the Company's working capital requirements and, the
remaining balance to finance other e-commerce or Internet acquisitions or
ventures and/or additional investments in Stampville.
DIVIDEND POLICY
We have never paid cash dividends on our Common Stock and do not anticipate
paying any cash dividends in the foreseeable future. We intend to retain any
future earnings, if any, to repay existing debt, if any, and to finance the
growth and expansion of our business.
12
<PAGE> 18
CAPITALIZATION AND STOCK OWNERSHIP
The board of directors of the Company has authorized the issuance of
125,000,000 shares of capital stock, of which 25,000,000 shares are preferred
stock and 100,000,000 shares are Common Stock. In connection with this Offering,
the board of directors has authorized the issuance of up to 4,500,000 Shares to
be issued to the investors.
The following table sets forth as of September 30, 1999, (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the Company
adjusted to give effect to the sale of the minimum offering of 1,000,000 Shares
and maximum offering of 5,000,000 Shares of Common Stock offered herein at the
initial public offering price of $5.00 per share and the application of the
estimated proceeds therefrom, and (iii) in the event the maximum subscription is
obtained, the issuance of 1,600,000 stock options granted to C. Jonathan Malamud
as partial consideration for a 50.1% equity interest in Stampville. This table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and notes thereto appearing elsewhere in this document.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
--------------------------
PRO FORMA
-----------------
ACTUAL MINIMUM MAXIMUM
------ ------- -------
<S> <C> <C> <C>
Notes payable -- long term(1)............................... $ 457 $ 457 $ -
Stockholders equity
Preferred Stock, par value $.001; authorized 25,000,000
shares;
no shares issued and outstanding actual and pro forma
minimum and maximum.................................... 0 0 0
Common Stock, par value $.001; authorized 100,000,000
shares, issued and outstanding 14,000,000 shares
actual; and 17,500,000 minimum shares outstanding pro
forma and 21,350,000 maximum shares outstanding
pro forma(2)........................................... 14 18 21
Additional paid in capital.................................. 618 8,054 26,173
Deficit accumulated during the development stage............ (108) (108) (453)
----- ------ -------
Total stockholders' equity........................ $ 524 $7,964 $25,741
===== ====== =======
Total capitalization.............................. $ 981 $8,421 $25,741
===== ====== =======
</TABLE>
PRO FORMA ADJUSTMENTS:
(1) See notes to Consolidated Financial Statements.
(2) Based on the number of shares outstanding as of September 30, 1999. If only
the Minimum Subscription occurs, the pro forma adjustments exclude (1)
issuance of 350,000 shares of restricted Common Stock to be transferred at
the closing of the Offering to Mendel Mochkin for consulting services; and
(2) the 1,600,000 stock options granted to C. Jonathan Malumud as partial
consideration for a 50.1% equity interest in Stampville.
13
<PAGE> 19
STAMPVILLE
Upon the consummation of the transactions contemplated by the Stock
Purchase Agreement, dated June 18, 1999, as subsequently amended pursuant to the
Amendment to Stock Purchase Agreement dated December 8, 1999 (the "Amended
Purchase Agreement") (collectively, the "Stock Purchase Agreement"), the Company
will hold 50.1% of the capital stock of Stampville on a fully diluted basis;
provided, that the Company's ownership could be reduced to the lesser of (a)
27.5% of the outstanding shares of Stampville's common stock, or (b) the total
amount invested by the Company pursuant to the Stock Purchase Agreement divided
by 100,000 if the Company fails to make certain investments in Stampville. "See
Business -- Acquisition of Equity Interest in Stampville." The Company's
ownership in Stampville could also be reduced by up to 1% if certain conditions
are met obligating the Company to transfer shares of Stampville's stock to Mr.
Mendel Mochkin. See "Business -- Acquisition of Equity Interest in Stampville"
and "Compensation of Directors and Officers".
14
<PAGE> 20
PRO FORMA FINANCIAL STATEMENTS
The following unaudited Pro Forma Balance Sheets as of September 30, 1999
and unaudited Pro Forma Statements of Operations from February 2, 1999
(inception) through September 30, 1999 give effect to the acquisition of an
equity interest in Stampville assuming that the Minimum or Maximum Subscriptions
are sold. In the event the Minimum Subscription is sold, the Pro Forma Financial
Statements assumes that the Company's ownership is reduced to 27.5% of the
outstanding shares of Stampville. The pro forma information is based on the
historical consolidated financial statements of the Company giving effect to the
transaction using the purchase method of accounting and the assumptions and
adjustments described in the accompanying notes to the unaudited Pro Forma
Financial Statements. The unaudited Pro Forma Statement of Operations gives
effect to the acquisition as if it occurred at the beginning of the period
(February 2, 1999). The unaudited Pro Forma Balance Sheet gives effect to the
acquisition as of September 30, 1999.
The unaudited pro forma statements have been prepared by the management of
the Company based upon audited financial statements of the Company and
Stampville, which are included elsewhere herein. These pro forma statements may
not be indicative of the results that actually would have occurred if the
acquisition was completed on February 2, 1999, or September 30, 1999. The
unaudited pro forma statements should be read in conjunction with the audited
financial statements and related notes of the Company and Stampville.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(ASSUMES MINIMUM SUBSCRIPTION)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------- ----------- -------------
<S> <C> <C> <C>
INCOME AND (EXPENSES)
Legal and professional fees....................... $ (67,336) $ (67,336)
Salary expense.................................... (25,000) (25,000)
Interest expense.................................. (5,504) (5,504)
Travel and entertainment.......................... (3,783) (3,783)
Equity investment in net loss of Stampville....... (4,331) (19,491)(1) (23,822)
Foreign currency transaction gain................. 15,858 15,858
Other income...................................... 3,760 3,760
Other............................................. (21,372) (21,372)
----------- ---------- -----------
Net loss....................................... $ (107,708) $ (19,491) $ (127,199)
=========== ========== ===========
Basic loss per common share.................. $ (0.01) $ (0.01)
=========== ===========
Diluted loss per common share................ $ (0.01) $ (0.01)
=========== ===========
Weighted average shares outstanding.......... 10,157,292 17,500,000(2)
=========== ===========
</TABLE>
- ---------------
(1) Adjustment to record the Company's 27.5 percent Minimum Subscription share
of Stampville's net loss from operations under the equity method of
accounting.
(2) Assumes that all shares have been outstanding since the beginning of the
period.
15
<PAGE> 21
UNAUDITED PRO FORMA BALANCE SHEET
(ASSUMES MINIMUM SUBSCRIPTION)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------- ----------- -------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash............................................ $ 172,682 $ 2,498,750(1) $ 5,171,432
(2,500,000)(3)
5,000,000(2)
Deferred offering costs......................... 59,147 (58,306)(1) 841
---------- ----------- -----------
Total current assets.................... 231,829 4,940,444 5,172,273
Property and equipment, net....................... 643,938 643,938
Investment in Stampville.com, Inc................. 245,669 2,500,000(3) 2,745,669
---------- ----------- -----------
Total assets............................ $1,121,436 $ 7,440,444 $ 8,561,880
========== =========== ===========
CURRENT LIABILITIES
Accounts payable................................ $ 50,206 50,206
Accrued expenses................................ 25,000 29,035
Notes payable -- current portion................ 65,300 65,300
---------- ----------- -----------
Total current liabilities............... 140,506 -- 140,506
Notes payable -- long term........................ 457,098 457,098
STOCKHOLDERS' EQUITY
Preferred stock, par value $.001 par value
authorized 25,000,000 shares, no shares
issued and outstanding actual and pro
forma........................................ -- --
Common stock, par value $.001 par value;
authorized 100,000,000 shares, 14,000,000
shares issued and outstanding actual and
17,500,000 shares issued and outstanding pro
forma........................................ 14,000 2,500(1) 17,500
1,000(2)
Additional paid-in-capital...................... 617,540 2,437,944(1) 8,054,484
4,999,000(2)
Deficit accumulated during the development
stage........................................ (107,708) (107,708)
---------- ----------- -----------
Total Stockholders' Equity.............. 523,832 7,440,444 7,964,276
---------- ----------- -----------
Total Liabilities and Stockholders'
Equity................................ $1,121,436 $ 7,440,444 $ 8,561,880
========== =========== ===========
</TABLE>
(See Accompanying Notes to Pro Forma Balance Sheet).
16
<PAGE> 22
UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS
(1) Issuance of 2,500,000 shares of Common Stock to Instanz Nominees Pty.
Ltd. on October 26, 1999, less $58,306 in offering costs and $1,250 in escrow
fees in a private placement transaction.
(2) Raising of the Minimum Subscription of 1,000,000 shares of Common Stock
effected through this Offering at $5.00 per share, less estimated Offering costs
of $_______.
(3) To record the Company's purchase of a 27.5% equity interest in
Stampville for additional consideration of $2,500,000 of which $1,250,000 was
paid subsequent to September 30, 1999 and the balance is intended to be paid
from the Offering proceeds. See "Business -- Acquisition of Equity Interest in
Stampville."
17
<PAGE> 23
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
(ASSUMES MAXIMUM SUBSCRIPTION)
<TABLE>
<CAPTION>
IT TECHNOLOGY STAMPVILLE.COM PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS CONSOLIDATED
------------------ ------------------ ----------- ---------------
<S> <C> <C> <C> <C>
INCOME AND (EXPENSES)
Legal and professional fees.... $ (67,336) $(16,849) $ (350,000)(1) $ (434,185)
Salary expense................. (25,000) (52,361) (77,361)
Interest expense............... (5,504) -- (5,504)
Travel and entertainment....... (3,783) (3,000) (6,783)
Equity in the net loss of
Stampville................... (4,331) -- 4,331 (2) --
Foreign currency transaction
gain......................... 15,858 -- 15,858
Other income................... 3,760 -- 3,760
Other.......................... (21,372) (14,416) (35,788)
Goodwill....................... -- -- (929,478)(3) (929,478)
Minority interest in
Stampville................... -- -- 43,226 (2) 43,226
----------- -------- ----------- ------------
Net loss..................... $ (107,708) $(86,626) $(1,231,921) $(1,426,255)
=========== ======== =========== ============
Basic loss per common share.... $ (0.01) $ (0.07)
=========== ===========
Diluted loss per common
share........................ $ (0.01) $ (0.07)
=========== ===========
Weighted average shares
outstanding.................. 10,157,292 7,350,000(4) 21,350,000(4)
=========== =========== ===========
</TABLE>
- ---------------
(1) Recognition of compensation expense of $350,000 related to the issuance of
350,000 shares of restricted Common Stock to Mendel Mochkin for consulting
services rendered. Mendel Mochkin's consulting services include the hiring
of Stampville personnel, development of its operations and other business
infrastructure matters. The restricted shares were valued using the October
1999 private placement price of $1.00 per share.
(2) Adjustment to remove the Company's share of Stampville's loss from
operations recorded while under the equity method of accounting. The
adjustment of $43,226 represents the 49.9 percent minority interest share in
the net loss from operations of Stampville.
(3) Amortization of goodwill of $4,182,650, which is being amortized on a
straight-line basis over a useful life of 36 months.
(4) Assumes that all shares have been outstanding since the beginning of the
period.
18
<PAGE> 24
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(ASSUMES MAXIMUM SUBSCRIPTION)
<TABLE>
<CAPTION>
IT TECHNOLOGY STAMPVILLE PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT CONSOLIDATED
------------------ ------------------ ----------- ---------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash....................... $ 172,682 $ 97,279 $ 2,498,750(1) $24,811,613
22,500,000(2)
Inventory.................. 487 (457,098)(2) 487
Deferred offering costs.... 59,147 (58,306)(1) 841
---------- -------- ----------- -----------
Total current
assets........... 231,829 97,766 24,483,346 24,812,941
Property and equipment,
net........................ 643,938 17,643 661,581
Investment in Stampville..... 245,669 (245,669)(4) --
Capitalized software costs... 52,000 52,000
Intangible assets............ 4,182,650(4) 4,182,650
---------- -------- ----------- -----------
Total assets....... $1,121,436 $167,409 $28,420,327 $29,709,172
========== ======== =========== ===========
CURRENT LIABILITIES
Accounts payable........... $ 50,206 50,206
Accrued expenses........... 25,000 4,035 29,035
Notes payable -- current
portion................. 65,300 65,300
---------- -------- ----------- -----------
Total current liabilities.... 140,506 4,035 -- 144,541
Notes payable -- long term... 457,098 (457,098)(2) --
Minority interest in
Stampville................. 3,824,024(4) 3,824,024
STOCKHOLDERS' EQUITY
Preferred stock, par value
$0.001.................. -- --
Common stock, par value
$0.001.................. 14,000 2,500(1) 21,350
4,500(2)
350(3)
Additional
paid-in-capital......... 617,540 250,000 2,437,944(1) 26,172,634
22,495,500(2)
349,650(3)
272,000(4)
(250,000)(4)
Deficit accumulated during
the development stage... (107,708) (86,626) (350,000)(3) (453,377)
4,331(4)
86,626(4)
---------- -------- ----------- -----------
Total Stockholders'
Equity........... 523,832 163,374 25,053,401 25,740,607
---------- -------- ----------- -----------
Total Liabilities
and
Stockholders' Equity... $1,121,436 $167,409 $28,420,327 $29,709,172
========== ======== =========== ===========
</TABLE>
(See accompanying notes to Pro Forma Consolidated Balance Sheet)
19
<PAGE> 25
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS
(1) Issuance of 2,500,000 shares of Common Stock to Instanz Nominees Pty. Ltd.
on October 26, 1999, less $58,306 in offering costs and $1,250 in escrow
fees in a private placement transaction.
(2) Raising of the maximum subscription of 4,500,000 shares at $5.00
($22,500,000) through this offering, excluding the Shares being offered by
Instanz for sale therein. In addition, the repayment of the note payable of
$457,098 as of September 30, 1999 is included.
(3) Recognition of compensation expense related to the issuance of 350,000
shares of restricted Common Stock to Mendel Mochkin for consulting services
rendered. The restricted shares were valued using the October 1999 private
placement price of $1.00 per share.
(4) To record the Company's purchase of 50.1% equity investment in Stampville
for aggregate consideration of $7,750,000 in cash payable to Stampville, of
which $250,000 was paid as of September 30, 1999, and 1,600,000 stock
options granted to the principal stockholder of Stampville. The stock
options were valued at a fair value of $0.17 per option, using the minimum
value method. The following table summarizes the net assets acquired:
<TABLE>
<S> <C>
Cash consideration given:
Cash paid to Stampville as of September 30, 1999 $ 250,000
Cash paid subsequent to September 30, 1999 and
prior to this offering 1,250,000
Cash payable from this offering 6,250,000
----------
Total consideration given $7,750,000
==========
Company's share of the cash given $3,867,250
Stock options granted 272,000
----------
Purchase price of 50.1 percent interest in Stampville 4,139,250
Less net deficit acquired 43,400
----------
Intangible assets $4,182,650
==========
</TABLE>
As the Company contributed the entire amount of Stampville's Common Stock as
of September 30, 1999, the net deficit excludes the $250,000 paid as of that
date.
20
<PAGE> 26
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of February , 2000, there were 16,500,000 shares of Common Stock which
are deemed to be beneficially owned and outstanding. These shares are set forth
in the following table. These 16,500,000 shares are restricted securities and
are subject to Rule 144 of the Securities Act. They will become eligible for
sale under Rule 144 following expiration of the applicable holding period.
Except for up to 3,400,000 shares which are subject to currently outstanding
agreements or options granted to Mendel Mochkin, Robert Petty and C. Jonathan
Malamud, as further described below, the shares of Common Stock which are
currently deemed to be beneficially owned and the 4,500,000 Shares which may be
issued in connection with this Offering, the Company does not have any
outstanding commitments to issue Common Stock.
BENEFICIAL OWNERSHIP OF COMMON STOCK
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME OF SHAREHOLDER OF COMMON STOCK HELD(1) CLASS
------------------- ----------------------- ----------
<S> <C> <C>
Ledger Technologies Pty. Ltd.(2)
Levi Mochkin(2)........................................... 6,300,000 38.18%
Instanz Nominees Pty. Ltd.(3)
Helen Abeles(3)........................................... 3,700,000 22.42%
Riccalo Pty. Ltd.(4)
Henry Herzog(4)........................................... 2,000,000 12.12%
Eurolink International Pty. Ltd.(5)
Jonathan Herzog(5)........................................ 2,000,000 12.12%
Atcor Aus. Pty. Ltd.(6)
Farrel Meltzer(6)......................................... 750,000 4.54%
Tilbia Nominees Pty. Ltd.(7)
Anthony Davis(7).......................................... 1,600,000 9.10%
Mendel Mochkin(8)........................................... 150,000 0.91%
----------
Total Outstanding Shares.................................... 16,500,000
==========
</TABLE>
- ---------------
(1) Pursuant to the rules promulgated by the SEC, all shares underlying options
which were exercisable on February , 2000 or which become exercisable
within 60 days, held by a described person are deemed to be "beneficially"
owned. The SEC rules further require that every person who has or shares the
power to vote or to dispose of shares of Common Stock are deemed to be the
"beneficial" owner of all of the shares of Common Stock over which any such
sole or shared power exists.
(2) Lisa Mochkin, spouse of Levi Mochkin, a director and Chief Executive Officer
of the Company, is a director of Ledger Technologies Pty. Ltd. Levi Mochkin
is an affiliate of Ledger Technologies Pty. Ltd. and may be deemed to be a
beneficial owner of the shares held by Ledger Technologies Pty. Ltd. Lisa
Mochkin is the daughter of Henry Herzog and the sister of Jonathan Herzog.
(3) Helen Abeles, a director, is an affiliate of Instanz. Ms. Abeles exercises
shared investment and voting power over these shares and may be deemed to be
a beneficial owner thereof.
(4) Henry Herzog, a director and President of the Company and father of Jonathan
Herzog and father-in-law of Levi Mochkin, is a director of Riccalo Pty. Ltd.
Mr. Herzog exercises shared investment and voting power over these shares
and may be deemed to be a beneficial owner thereof.
(5) Jonathan Herzog, a director, Secretary and Chief Financial Officer of the
Company and son of Henry Herzog, is a director of Eurolink International
Pty. Ltd. Mr. Herzog exercises shared investment and voting power over these
shares and may be deemed to be a beneficial owner thereof.
(6) Wendy Meltzer, spouse of Farrel Meltzer, a director of the Company, is a
director of Atcor Aus. Pty. Ltd. Mr. Meltzer is an affiliate of Atcor Aus.
Pty. Ltd. and may be deemed to be a beneficial owner of the shares held by
Atcor Aus. Pty. Ltd.
21
<PAGE> 27
(7) Tilbia Nominees Pty. Ltd. holds shares of Common Stock for Anthony Davis and
his affiliates. Mr. Davis exercises shared investment and voting power over
these shares and may be deemed to be the beneficial owner thereof.
(8) Mendel Mochkin is the brother of Levi Mochkin. Does not include the
additional 350,000 shares of Common Stock which is contingent upon the
Company completing the Additional Stampville Investment. See "Compensation
of Officers and Directors" and "Compensation of Officers and Directors --
Employment Agreements -- Consulting Agreement with Mendel Mochkin."
The preceding table of beneficial ownership does not include options to
purchase 1,600,000 shares of Common Stock which have been granted to C. Jonathan
Malamud. These shares will only become exercisable in the event the Company
makes an additional payment of $5,000,000 to Stampville above the "Stage One
Investment," as such term is defined the Stock Purchase Agreement, or raises at
least $10,000,000 in this Offering, and then only in installments commencing two
years after such date. The beneficial ownership table also does not include
1,450,000 shares subject to options granted to Robert Petty ("Petty Options").
Petty Options, representing an aggregate of 950,000 shares of Common Stock, will
be exercisable at $1.00 per share and Petty Options representing 500,000 shares
will be exercisable at $2.00 per share, such shares shall become vested and
exercisable upon the Company reaching certain levels of market capitalization
and the occurrence of certain other events. For further information on the Petty
Options, see "Compensation of Officers and Directors -- Employment Agreements --
Consulting Agreement with Petty Consulting, Inc. for the Services of Robert
Petty."
22
<PAGE> 28
DILUTION
Purchasers of Common Stock in this Offering will experience immediate and
substantial dilution in the net tangible book value of the Common Stock from the
initial public offering price. Net tangible book value per share represents the
amount of our total tangible assets and proceeds from the sale of 2,500,000
shares to Instanz at $1.00 per share is reduced by the amount of our total
liabilities, divided by the number of shares of Common Stock outstanding, as
adjusted. As of September 30, 1999, the net tangible book value of the Company
was approximately $3,024,000 or $0.18 per share.
As of September 30, 1999, our pro forma net tangible book value, as
adjusted for the sale of the minimum and maximum shares offered in this Offering
and the application of the net proceeds (at the initial public offering price of
$5.00 per share and prior to deducting the estimated Offering expenses) was
$0.46 and $1.22, respectively. For the maximum subscription, this represents an
immediate increase of $1.03 per share to existing stockholders and an immediate
and substantial dilution of $3.78 per share to new investors purchasing Common
Stock in this Offering. If only a the Minimum Subscription was sold, new
investors purchasing Common Stock in this Offering would experience an immediate
and substantial dilution of $4.54 per share, while existing stockholders,
including Instanz, would have an immediate increase of $0.28 per share. The
following tables illustrate this per share dilution:
ASSUMES MINIMUM SUBSCRIPTION
<TABLE>
<S> <C> <C>
Initial public offering price............................... $5.00
Net tangible book value as of September 30, 1999............ $0.18
Increase attributable to new investors...................... $0.28
-----
Pro forma net tangible book value after the Offering........ $0.46
-----
Dilution in net tangible book value to new investors........ $4.54
=====
</TABLE>
ASSUMES MAXIMUM SUBSCRIPTION
<TABLE>
<S> <C> <C>
Initial public offering price............................... $5.00
Net tangible book value as of September 30, 1999............ $0.18
Increase attributable to new investors...................... $1.03
-----
Pro forma net tangible book value after the Offering........ $1.22
-----
Dilution in net tangible book value to new investors(1)..... $3.78
=====
</TABLE>
<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE
-------------------- --------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders(2).................. 16,500,000 78% $ 3,158,750 12% $ .19
New investors............................. 4,500,000 22% $22,500,000 88% $5.00
---------- ---- ----------- ---- -----
Total........................... 21,000,000 100% $25,658,750 100% $1.22
========== =========== =====
</TABLE>
- ---------------
(1) Excludes the 350,000 shares issuable to Mendel Mochkin for consulting
services upon the closing of an initial public offering.
(2) Includes the 2,500,000 shares of Common Stock sold to Instanz subsequent to
September 30, 1999.
23
<PAGE> 29
The foregoing table is based on the sale of the maximum of 5,000,000
Shares. If only the minimum 1,000,000 Shares were sold, the table would read as
follows:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- -------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing shareholders(1).................. 16,500,000 94.29% $3,158,750 38.72% $ .19
New investors............................. 1,000,000 5.71% $5,000,000 61.28% $5.00
---------- ------ ---------- ------ -----
Total........................... 17,500,000 100% $8,158,750 100% $ .46
========== ========== =====
</TABLE>
(1) Includes the 2,500,000 shares sold to Instanz subsequent to
September 30, 1999.
As of September 30, 1999, there were no outstanding options to purchase the
Company's Common Stock. Subsequent to September 30, 1999, the Company granted
options to purchase a total of 3,050,000 shares of Common Stock at a weighted
average exercise price of approximately $1.30 per share. None of these options
are currently exercisable. These options include options to purchase 1,600,000
shares of the Company's Common Stock which have been granted to C. Jonathan
Malamud (the "Malamud Options"). For a further discussion of the Malamud Options
see "Option Grants in Last Fiscal Year." The remaining options consist of the
Petty Options to purchase 1,450,000 shares. For further information on the Petty
Options see "Compensation of Officers and Directors -- Employment Agreements --
Consulting Agreement with Petty Consulting Inc. for the Services of Robert
Petty."
If these options are exercised in the future it will be further dilutive to
investors who purchase shares at the initial public offering price. Options
available for grant under our stock option plans may be granted at exercise
prices less than the market value of Common Stock on the grant date. If we grant
options below fair market value it could be dilutive to investors who purchase
shares at the initial public offering price.
24
<PAGE> 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and the notes to those statements that appear elsewhere in this
Prospectus. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ from
those discussed in the forward-looking statements. Factors that could cause or
contribute to any differences include, but are not limited to, those discussed
below and elsewhere in this Prospectus, particularly in "Risk Factors."
OVERVIEW AND PLAN OF OPERATIONS
The Company was formed in February 1999 and is in the early stage of
development. The Company is engaged in Internet, e-commerce and other technology
businesses. The Company adds and expects to add value to operating companies
through active ongoing management infrastructure, support, funding, and
expertise.
The Company's goal is to identify entities that have high growth potential
and can benefit from the commercial and financial expertise of the Company and
its personnel. It assists in the development and recruitment of key management
to support accelerated financial and operational growth and enhanced efficiency.
The Company's practice is to emphasize relationships in which its resources can
enhance the creative and technological skills of its partners.
In mid-1999, the Company signed an agreement with Stampville, a
newly-formed company. Stampville is being developed to become a global center
for stamp products and services. The Company has assisted the founders of
Stampville in developing this enterprise, recruiting key management and
implementing systems to advance its development and prepare it for its full
launch later this year. In December 1999, Stampville became a 50.1% owned
subsidiary of the Company. To date, the Company has invested $1,500,000 in
Stampville and at this stage, upon the completion of the Company raising a
minimum of $10,000,000 through the initial public offering, anticipates
contributing up to an additional $6,250,000 million to Stampville.
Stampville plans to use that portion of the Offering proceeds which it will
receive to continue to develop a portal community Website for the collectable
postage stamp community that will service a wide range of areas surrounding the
stamp market. Stampville expects to expand beyond hobbyists and collectors to
the art, entertainment and other targeted specialty markets and to develop a
wholesale distribution channel for sale of its products as well.
Beyond the Company's development of Stampville, it is continually reviewing
and considering e-commerce and other related enterprises and ventures, but has
not made any commitments at this stage.
The Company does not have any meaningful revenues, and will not generate
any meaningful revenues until after the Company implements its strategic plan
and attracts and retains a significant number of e-commerce and related
businesses. The Company does not anticipate generating any revenue of
significance until several months following the consummation of this Offering,
if at all. For the period from February 2, 1999 (inception) to September 30,
1999, the Company incurred a cumulative net loss of approximately $108,000. The
Company anticipates that it will continue to incur significant losses until, at
the earliest, the Company generates sufficient revenues to offset the
substantial up-front expenditures and operating costs associated with
establishing, attracting and retaining a significant business base. There can be
no assurance that the Company will be able to attract and retain a sufficient
number of e-commerce businesses to generate meaningful revenues or achieve
profitable operations.
Depending upon the level of its business activity, the Company anticipates
that it will use a portion of the proceeds of this Offering to hire several
additional employees over the next twelve months to market the Company's
services to potential businesses and develop the infrastructure of Stampville.
25
<PAGE> 31
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements have been to fund its initial
investment in Stampville. Additional capital will be needed to complete the
purchase of Stampville and pursue other business opportunities, as well as to
fund its working capital requirements, including legal and professional
expenses. To date, the Company has financed its capital requirements through the
issuance of equity securities and issuance of long-term debt.
At September 30, 1999, the Company had working capital of $91,323. Prior to
September 30, 1999, the Company issued 14,000,000 shares of Common Stock to
various entities that are affiliates of certain officers of the Company and
received cash proceeds of $651,250 and services of $7,500.
In October 1999, the Company consummated a private placement pursuant to
which it issued 2,500,000 shares of Common Stock and received proceeds of
$2,500,000. The proceeds were used primarily to finance further investment in
Stampville, and pay legal and professional fees and expenses in connection with
this Offering.
In July 1999, the Company entered into an agreement to purchase a building
in exchange for cash and a note payable of approximately $595,000. Such
indebtedness bears interest at the rate of 7.25% per annum and is repayable in
July 2001. The Company will use a portion of the proceeds of this Offering to
repay such indebtedness.
The capital requirements relating to implementation of the Company's
business plan will be significant. During the twelve months following the
consummation of this Offering, the Company intends to finance the acquisition of
a majority interest in Stampville, finance or acquire interests in other
Internet or e-commerce enterprises and meet its own working capital needs. Other
than as described above, as of the date of this Prospectus, the Company has no
material commitments for capital expenditures.
The Company is dependent on the proceeds of this Offering or other
financing in order to fully implement its proposed plan of operation. Based on
currently proposed plans and assumptions relating to the implementation of its
business plans in the event the Company sells all of its shares offered in this
Offering, it will retain approximately $3,000,000 which will be sufficient to
satisfy its contemplated working capital requirements for approximately two
years following the consummation of this Offering. In addition, the Company
would retain approximately $ for investment, acquisition and
development of the Internet and e-commerce ventures. In the event the Company
raises approximately $10,000,000 in this Offering, it would retain approximately
$1,500,000 which would be sufficient to fund its working capital requirement for
approximately one year following this Offering. In such event, the Company would
have sufficient funds to complete its contemplated investment in Stampville but
would need to raise additional capital to invest in, acquire and develop other
Internet or e-commerce ventures. If the Company raises only the Minimum
Subscription, the initial $1,250,000 of proceeds would be invested in
Stampville, the next $1,500,000 would be utilized to fund the Company's working
capital requirements and, the remaining $ to finance other e-commerce or
Internet acquisitions or ventures and/or additional investments in Stampville.
In the event that the Company's plans change, its assumptions change or prove to
be inaccurate or if the proceeds of this Offering prove to be insufficient to
implement its business plans, the Company would be required to seek additional
financing sooner than currently anticipated. There can be no assurance that the
proceeds in this Offering will be sufficient to permit the Company to implement
its proposed business plan or that any assumptions relating to the
implementation of such plan will prove to be accurate. To the extent that the
proceeds of this Offering are not sufficient to enable the Company to generate
meaningful revenues or achieve profitable operations, the inability to obtain
additional financing will have a material adverse effect on the Company. There
can be no assurance that any such financing will be available to the Company on
commercially reasonable terms, or at all.
RECENT DEVELOPMENTS
Subsequent to September 30, 1999, a number of developments occurred which
had a significant impact on the operations and results of the Company, including
the following:
The Company commenced a private placement of 2,500,000 shares of the
Company's Common Stock for $1.00 per share, which was completed October 26,
1999.
26
<PAGE> 32
On December 8, 1999, the Company entered into an amendment of its original
agreement to acquire an interest in Stampville, pursuant to which the Company
agreed to accelerate and increase its investment in Stampville to an aggregate
amount of up to $7,750,000 in exchange for an immediate 50.1% interest in
Stampville. The Company's 50.1% interest may be reduced in the event the Company
does not complete its funding of the $7,750,000 in Stampville. The Company's
ownership interest in Stampville may also be reduced in the event the Company
arranges for third party financing in lieu of its direct investment in
Stampville. See "Business -- Acquisition of Equity Interest in Stampville."
INFLATION
The Company has not been materially affected by inflation in the United
States. While the Company does not anticipate inflation affecting the Company's
operations, increases in labor and supplies could impact the Company's ability
to compete.
YEAR 2000 COMPLIANCE AND COSTS
As has been widely reported, there is worldwide concern that Year 2000
technology problems may materially and adversely impact a variety of businesses,
local, national and global economies. While relatively few disruptions were
reported on and after December 31, 1999, concerns remain that there will be a
delayed effect to computer users. The Company, as a newly formed entity, has
acquired computer hardware and software which is Year 2000 compliant, and does
not expect future expenses associated with ongoing compliance to be material to
the Company's financial position or future results of operations, although there
can be no assurance that presently unforeseen computer programming difficulties
will not arise.
It is possible that the Company's future performance may be adversely
impacted by payment and financial difficulties experienced by customers, and by
shipping, fulfillment and accounting difficulties experienced by vendors, which
are related to computer malfunctions. This is particularly the case as the
Company seeks to effect acquisitions, as it currently plans to do. The Company
believes that it can establish and maintain sufficient resources, including cash
reserves to maintain operations during delays in payments or supplies of
inventories. However, the Company is aware that extended difficulties by larger
vendors or customers may have a significant impact; however, it is unable, at
this time, to anticipate the extent of any such impact, were it to occur. An
adverse impact on such customers due to the Year 2000 issue or similar computer
malfunctions could also have a material adverse effect on the Company's
business, financial condition and results of operations.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, as amended, "Accounting
for Derivative Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards requiring that all derivative instruments
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. This Statement will become applicable to the Company in January
2001.
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BUSINESS
THE COMPANY
The Company is a Delaware corporation created for the purpose of engaging
in Internet, e-commerce and technology businesses, directly and through
acquisitions of equity in Internet related and other technology companies. The
Company's wholly-owned subsidiary, I.T. Technology Pty. Ltd. furthers the
Company's operations in Australia and owns the Company's executive offices.
The Company actively seeks investments in and acquisitions of entities with
unique opportunities in the Internet, e-commerce and technology-related areas.
The Company, through its executive officers and directors, identifies companies
which have high growth potential and which can benefit from the commercial and
financial expertise of the Company and its personnel. The Company emphasizes
relationships in which its resources can enhance the creative and technological
skills of its partners, and is open to a variety of potential relationships,
including joint ventures and strategic alliances.
Pursuant to an agreement entered into in June 1999 and amended in December
1999, the Company has acquired 50.1% of the equity of Stampville, a corporation
specializing in the business of selling collectible stamps and other memorabilia
through the Internet and on a wholesale basis to large chain stores and small
businesses, and on a retail basis to the general public and collectors. The
Company's 50.1% interest may be reduced in the event the Company does not
complete its funding of the $7,750,000 in Stampville. The Company's ownership
interest in Stampville may also be reduced in the event the Company arranges for
third party financing in lieu of its direct investment in Stampville. See
"Business -- Acquisition of Equity Interest in Stampville." As of February 14,
2000, the Company has invested $1,500,000 in Stampville.
The Company intends to identify other potential Internet or e-commerce
businesses to acquire or invest in, in addition to Stampville; however, the
Company has not at this time entered into substantive negotiations with any such
potential Targets and there can be no assurance that the Company will be able to
successfully locate other investment or acquisition candidates or ventures or if
located successfully, negotiate a transaction with such targeted entities. See
"Risk Factors."
INDUSTRY BACKGROUND
The Internet
The Internet is a global web of over 50,000 computer networks, the first of
which were developed over 25 years ago. The Internet was originally installed
using UNIX-based computers, a development of AT&T, a telephone company, which
had very sophisticated communications capabilities for its time. At first,
although the Internet served the objectives of the United States Department of
Defense, it was looked upon by others as awkward due to its arcane commands and
inaccessibility to persons without specific technical training. This hampered
its growth for a considerable period of time.
A key breakthrough to the accessibility of the Internet occurred with the
development of the communications transport protocol "TCP/IP," which made it
possible for each Internet computer to pass on packets of information to
different types of computers without using a switchboard. Using TCP/IP, any
computer can link onto the Internet and the conglomeration of networks for a
cost that is fundamentally lower than, and structured differently from, the cost
of linking onto stand-alone networks.
Communication on the Internet occurs primarily between a client and a
server, or so-called host computers. The client computer initiates a request for
information or other activity and the server computer responds to, or serves,
that request. Furthermore, server computers run specialized software
specifically designed to provide a variety of services to client computers.
Notably, many host computers operate as mail servers or file servers that enable
the downloading or transferring of files. The Internet has historically been
used by academic institutions, defense contractors and government agencies
primarily for remote access to host computers and for sending and receiving
electronic-mail and has traditionally been subsidized by the United States
Federal Government. As an increasing number of commercial entities
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have come to rely on the Internet for business communications and commerce, the
level of federal subsidies has significantly diminished and funding for the
Internet infrastructure and backbone operations has shifted primarily to the
private sector and end users. In addition, according to industry market
research, as far back as October 1994 the number of commercial domains on the
Internet surpassed the number of educational domains.
World Wide Web
Much of the recent growth in Internet use by businesses and individuals has
been driven by the emergence of a network of servers and information available
on the Internet called the World Wide Web (the "Web"). The Web, based on a
client/server model and a set of standards for information access and
navigation, can be accessed using software that allows non-technical users to
exploit the capabilities of the Internet. The Web enables users to find,
retrieve and link information on the Internet in a consistent manner which
renders the underlying complexities transparent to the user. Electronic
documents are published on Web servers in a common format described by Hyper
Text Mark-up Language ("HTML"), which is a series of tags or codes added to a
text document to format a document or add links to other documents. Web client
software can retrieve these documents across the Internet by making requests
using a standard protocol called HyperText Transfer Protocol ("HTTP"). Browsers
and HTML are an essential part of the success of the Internet and the continuing
growth in the number of users. Browsers allow a user to wander around the
Internet with relative ease while HTML allows the exhibitor of a Web page to
navigate to either some other page at that particular Web site or to a relevant
page at another Web site. The introduction of commercial Web pages introduced a
new and substantial opportunity for users of the Internet.
The proliferation of Web users has created significant demand for software
to enable Internet servers and private servers on corporate networks to function
as Web sites, which are used by content providers to offer their products and
services on the Internet and to publish confidential company information to
employees inside the enterprise.
E-commerce
E-commerce provides companies with the opportunity to serve a rapidly
growing market as consumers increasingly accept the Internet as an alternative
shopping vehicle. Growth in Internet usage has been fueled by a number of
factors, including the large and growing number of personal computers in the
workplace and home, advances in the performance and speed of personal computers
and modems, improvements in network infrastructure, easier and cheaper access to
the Internet and increased awareness of the Internet among businesses and
consumers. The increasing functionality, accessibility and overall usage of the
Internet and online services have made the Internet an attractive commercial
medium. The Internet and other online services are evolving into a unique sales
and marketing channel, just as retail stores, mail-order catalogues and
television shopping evolved. Companies operating online can interact directly
with customers by frequently adjusting their featured selections, editorial
insights, shopping interfaces, pricing and visual presentations. The minimal
cost to publish on the Web, the ability to reach and serve a large and global
group of customers electronically from a central location and the potential for
personalized low-cost customer interaction provide additional economic benefits
for online operators.
The Internet also provides e-commerce companies with an opportunity to
serve a global market. Online operators have the potential to build large common
global customer bases quickly and to achieve superior economic returns over the
long term. International Data Corporation ("IDC"), an information technology
market research and consulting firm, estimated that the number of people
accessing the Internet had reached approximately 100 million by the end of 1998
and predicted that this number will reach 320 million by 2002. According to IDC,
revenues through the purchase of goods and services over the Internet in the
United States will reach approximately $250 billion in 2002. IDC has also
reported that approximately 13% of all United States households were online in
1996, which figure increased to 20% by early 1998. IDC estimates that the number
of Internet users buying goods and services on the Internet worldwide will
exceed 128 million by 2002, as compared to 18 million in 1997, with the amount
of
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commerce conducted over the Internet exceeding $400 billion by 2002. In
addition, IDC estimates that worldwide Internet services revenues increased by
71% in 1998 to reach $7.8 billion and has forecasted that such revenues will
surpass $78 billion by 2003. IDC has also reported that the United States
accounted for more than 50% of worldwide Internet services spending at $4.6
billion in 1998. IDC has also estimated that corporate spending in the United
States in the area of Internet-based products and services will increase from
$85 billion in 1999 to over $203 billion by 2002.
BUSINESS STRATEGY
The Company -- Operational Strategy
In addition to its investments in Stampville, the Company intends to
utilize the remaining proceeds from this Offering, future income received from
such companies and proceeds from other debt or equity financings to acquire
other Internet or e-commerce related businesses or to invest in Internet related
projects or ventures that appear to have viable commercial prospects. By
investing funds in exchange for equity in these Internet related businesses or
"Targets," the Company will in most cases seek to either acquire a majority of
the capital stock of the Targets or in certain circumstances to control the
Targets from the management level. The Company may also make small investments
in entities without seeking a majority interest, where this may be either of
strategic significance to the Company or circumstances warrant a relatively
smaller involvement.
Stampville -- Operational Strategy
Stampville plans to develop a "portal community" Web site for the
collectable postage stamps community and for hosting philatelic services to
dealers, collectors, and hobbyists. Stampville believes that doing so would fill
a gap in the stamp-collecting marketplace by establishing an online stamp
network for stamp collectors. Stampville intends to design its services to
satisfy a wide variety of consumers ranging from the casual collector to the
dedicated stamp connoisseur through a comprehensive Web site. The Web site will
merge the traditional hobby of stamp collecting with the technological
advantages of the Internet. Stampville's online stamp community will provide
information, both directly and through links, and make it possible to assemble
an entire stamp collection online. In addition, Stampville plans to make
available philatelists through its Web site to afford personal attention to
customers through e-mail or telephone.
Following the general formats of a number of commercial Web sites,
Stampville anticipates that its Web site will produce revenue through sales,
advertising, and services to the philatelic community. Strategic alliances with
established philatelic businesses will provide initial merchandise, content and
subject matter support. The Web site will establish additional business links
with dealers, buyers, sellers, philatelic service providers, and other
electronic commerce entities. Initial traffic to the Web site will be generated
both through on-line and traditional advertising and the availability of framed
philatelic art.
The Company believes the Internet is an ideal medium for selling thematic
and non-thematic collectibles. The natural and worldwide appeal of stamp
collecting and stamp art is particularly conducive to electronic commerce. By
offering high resolution graphic images of products with completely searchable
databases and expert staff assistance, Stampville hopes to become a preeminent
portal Web site.
Stampville also plans to engage in wholesale and bulk sales of framed stamp
art in support of Stampville's Internet operations. Stampville believes there is
significant opportunity to generate sales through bulk and wholesale sales to
both large national department and specialty stores, as well as gift shops
(including gift and sundry shops located at hotels), small vendors and other
potential vendors.
Stampville has entered into a three year Supplier's Agreement with
Inter-Governmental Philatelic Corporation ("IGPC"), one of the world's largest
suppliers and dealers of philatelic stamps. IGPC represents approximately
seventy postal administrations throughout the world in matters relating to the
design, production and marketing of their postage stamps. IGPC also markets
their stamps to collectors. Pursuant to its agreement with Stampville, IGPC has
agreed to supply Stampville with stamps that IGPC has made available for public
sale at the lowest pricing structure available to other dealers. In addition,
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IGPC has agreed to extend a $2 million line of credit to Stampville for the
purchase of its stamps. The agreement with IGPC also provides that IGPC will
provide content for Stampville's Web site. Unless terminated at the end of the
initial term by either party, the IGPC Agreement automatically will extend for
an additional two year period. IGPC's President is Sam Malamud, the father of C.
Jonathan Malamud, a director, President and Vice President of Marketing of
Stampville, and the father-in-law of David Eli Popack, director, Secretary and
Director of Dealer Relations of Stampville. Stampville's agreement with IGPC
will allow Stampville to purchase stamp sheets directly from IGPC. Stampville
anticipates that IGPC will be a significant supplier of stamps to it and will
allow Stampville to offer a wide array of stamps at competitive prices.
Stampville is also in the process of seeking to establish an on-demand purchase
system with IGPC, which, if implemented, will reduce Stampville's need to
maintain substantial inventory of the products offered by IGPC, expedite
fulfillment of orders and reduce Stampville's costs of sale.
Prospects of Stampville
Stampville has chosen to engage in the Internet sale and distribution of
stamps and collectibles because of its belief that the worldwide, multi-million
dollar stamp industry is fragmented and highly inefficient. Stampville believes
there are few worldwide dealers of any size and that most such dealers
specialize in a narrow segment of the stamp collecting business. Stampville has
also observed that individual valuable items and entire collections are
generally sold at auctions, and that retail prices vary from area to area, which
inconsistency, Stampville believes, is due to lack of information and supply
dislocation.
Linns Stamp News, the largest publication in the industry, has done annual
market surveys since 1992. The latest survey for 1998 indicates the following:
- The total United States market for stamps is $791 million.
- Numbers for the rest of the world are hard to come by. Nevertheless it is
known that in countries such as Germany, the United Kingdom, China and
Japan stamp collecting is much more popular than in the United States.
- Of Linn's readers, 43% had Internet access and 23% had made purchases of
stamps via the Internet.
- 33% of the collectors responding to the survey had a net worth of
$500,000 or more and 34% had household incomes of $75,000 or more.
Stampville believes that these conditions make it possible for a firm
providing sales and information through the Internet to provide a valuable
service which will result in meaningful results.
Acquisitions of Additional Businesses or Establishment of Ventures
In addition to the operations of Stampville, the Company plans to seek,
investigate, and if such investigation warrants, consummate an acquisition with
one or more Targets or establish or develop e-commerce Internet or other
ventures. At this time, the Company has no definitive plan, proposal, agreement,
understanding, or arrangement to acquire any specific business or company other
than its arrangements with Stampville. While the Company seeks opportunities in
Internet, e-commerce and technology based businesses, the Company will not
restrict its search to any specific business, industry, or geographical
location, and may participate in business ventures of virtually any kind or
nature. Discussion of this proposed plan of operation and acquisitions under
this caption and throughout this Prospectus is purposefully general and is not
meant to restrict the Company's virtually unlimited discretion to search for and
enter into potential business opportunities.
The Company may seek an acquisition with an entity which only recently
commenced operations, or a developing company in need of additional funds to
expand into new products or markets or seeking to develop a new product or
service, or an established business which may be experiencing financial or
operating difficulties and needs additional capital which is perceived to be
easier to raise by a public
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company. In some instances, an acquisition may involve acquiring a corporation
which does not need substantial additional cash but which desires to establish a
public trading market for its Common Stock. The Company may purchase assets and
establish wholly-owned subsidiaries in various businesses or purchase existing
businesses as subsidiaries.
Selecting a Target will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in some industries,
and shortages of available capital, management believes that there are numerous
entities seeking the benefits of a publicly-traded corporation. Such perceived
benefits of a publicly traded corporation may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes) for all stockholders,
and other items. Potential Targets may exist in many different businesses or
market niches and at various stages of development, all of which will make the
task of comparative investigation and analysis of such Targets extremely
difficult and complex.
The Company may not have sufficient capital with which to provide the
owners of Targets significant cash or other assets. Management believes the
Company may offer owners of Targets the opportunity to acquire an ownership
interest in a public company at substantially less cost than is required to
conduct an initial public offering. Nevertheless, the Company has not conducted
market research and is not aware of statistical data that would support the
perceived benefits of an acquisition transaction for the owners of a Target.
The Company will not restrict its search for any specific kind of Target,
and may acquire an entity which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer.
Selection and Evaluation of Targets
Management of the Company will have complete discretion and flexibility in
identifying and selecting a prospective Target. In connection with its
evaluation of a prospective Target, management anticipates that it will conduct
a due diligence review which will encompass, among other things, meeting with
incumbent management and inspection of facilities, as well as a review of
financial, legal and other information which will be made available to the
Company.
Under the Federal securities laws, public companies must furnish
stockholders certain information about significant acquisitions, which
information may require audited financial statements for an acquired company
with respect to one or more fiscal years, depending upon the relative size of
the acquisition. Consequently, the Company will only be able to effect an
acquisition with a prospective Target that has available audited financial
statements or has financial statements which can be audited.
The time and costs required to select and evaluate a Target (including
conducting a due diligence review) and to structure and consummate the
acquisition (including negotiating relevant agreements and preparing requisite
documents for filing pursuant to applicable securities laws and corporation
laws) cannot presently be ascertained with any degree of certainty. While no
current steps have been taken nor agreements reached, the Company may engage
consultants and other third parties providing goods and services, including
assistance in the identification and evaluation of potential Targets. These
consultants or third parties may be paid in cash, stock, options or other
securities of the Company, and the consultants or third parties may be placement
agents or their affiliates.
The Company will seek potential Targets from all known sources and
anticipates that various prospective Targets will be brought to its attention
from various nonaffiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers, other members of the financial
community and affiliated sources, including, possibly, the Company's executive
officers, directors and their affiliates.
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While the Company has not yet ascertained how, if at all, it will advertise and
promote itself, the Company may elect to publish advertisements in financial or
trade publications seeking potential business acquisitions. While the Company
does not presently anticipate engaging the services of professional firms that
specialize in finding business acquisitions on any formal basis, the Company may
engage such firms in the future, in which event the Company may pay a finder's
fee or other compensation.
In analyzing prospective Targets, management may consider, among other
factors, such matters as:
(1) the extent to which the Targets provide complementary services or
technology or is otherwise synergistic with the Company's operations;
(2) the available technical, financial and managerial resources;
(3) working capital and other financial requirements;
(4) history of operation, if any;
(5) prospects for the future;
(6) present and expected competition;
(7) the quality and experience of management services which may be
available and the depth of that management;
(8) the potential for further research, development or exploration;
(9) specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company;
(10) the potential for growth or expansion;
(11) the potential for profit;
(12) the perceived public recognition or acceptance of products,
services or trades; and
(13) name identification.
Acquisition opportunities in which the Company may participate will present
certain risks, many of which cannot be adequately identified prior to selecting
a specific opportunity. The Company's stockholders must, therefore, depend on
the Company's management to identify and evaluate such risks. The investigation
of specific acquisition opportunities and the negotiation, drafting and
execution of relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and substantial costs for
accountants, attorneys and others. If a decision is made not to participate in a
specific acquisition opportunity the cost therefore incurred in the related
investigation would not be recoverable. Furthermore, even if an agreement is
reached for the participation in a specific acquisition opportunity, the failure
to consummate that transaction may result in the loss of the Company of the
related costs incurred.
There can be no assurance that the Company will find any suitable Targets
or ventures.
Structuring and Financing of an Acquisition
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of acquisitions. The Company will
evaluate the possible tax consequences of any prospective acquisition and will
endeavor to structure an acquisition so as to achieve the most favorable tax
treatment to the Company, the Target and their respective stockholders while
still accomplishing the Company's strategic objectives. There can be no
assurance that the Internal Revenue Service or relevant state tax authorities
will ultimately assent to the Company's tax treatment of a particular
consummated acquisition. To the extent the Internal Revenue Service or any
relevant state tax authorities ultimately prevail in recharacterizing the tax
treatment of an acquisition, there may be adverse tax consequences to the
Company, the Target and their respective stockholders. Tax considerations as
well as other relevant factors will be evaluated in determining the precise
structure of a particular acquisition.
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The Company may utilize available cash and equity securities in effecting
an acquisition. The Company may have to effect reverse stock splits prior to
certain potential acquisitions. To the extent that such additional shares are
issued, dilution to the interests of a Company's stockholders will occur.
Additionally, a change in control of the Company may occur which may affect,
among other things, the Company's ability to utilize net operating loss, if any.
There currently are no limitations on the Company's ability to borrow funds
to effect an acquisition. However, the Company's limited resources and lack of
operating history may make it difficult to borrow funds. The amount and nature
of any borrowings by the Company will depend on numerous considerations,
including the Company's capital requirements, potential lenders' evaluation of
the Company's ability to meet debt service on borrowings and the then prevailing
conditions in the financial markets, as well as general economic conditions. The
Company has no arrangements with any bank or financial institution to secure
additional financing and there can be no assurance that such arrangements if
required or otherwise sought, would be available on terms commercially
acceptable or otherwise in the best interests of the Company. The inability of
the Company to borrow funds required to effect or facilitate an acquisition, or
to provide funds for an additional infusion of capital into a Target, may have a
material adverse effect on the Company's financial condition and future
prospects, including the ability to effect any future acquisition. To the extent
that debt financing ultimately proves to be available, any borrowings may
subject the Company to various risks traditionally associated with indebtedness,
including the risks of interest rate fluctuations and insufficiency of cash flow
to pay principal and interest. Furthermore, a Target may have already incurred
debt financing and, therefore, all the risks inherent thereto.
Acquisition of Equity Interest in Stampville
The Company holds approximately 50.1% interest in Stampville pursuant to
the Stock Purchase Agreement.
Under the Purchase Agreement, Stampville agreed to issue to the Company an
equity interest of 25% in exchange for payment by the Company of up to
$5,000,000, payable in installments. Pursuant to the Amended Purchase Agreement,
the Company accelerated and increased the payment of the consideration up to
$7,750,000 in exchange for an immediate 50.1% equity interest in Stampville. As
of February 14, 2000, the Company had invested $1,500,000 in Stampville.
The Company has agreed that if it raises $10,000,000 in this Offering, it
will complete the purchase of its 50.1% interest in Stampville through the
payment to Stampville of $5,000,000 within thirty (30) days of its receipt of
the funds from the Offering (the "Additional Payment") and an additional
$1,250,000 on or before December 8, 2001 (the "Remaining Stage Two
Consideration"). If the Company does not raise $10,000,000 in this Offering it
will consider other alternatives for the funding of Stampville. If the Company
fails to make or arrange for the Additional Payment or the Remaining Stage Two
Consideration in full, the Company has agreed to surrender such number of shares
of Common Stock of Stampville so that, upon such surrender, the Company shall
hold a percentage of the outstanding shares of Common Stock equal to the lesser
of (a) 27.5% of the outstanding shares of Common Stock of Stampville, or (b) the
total amount invested by the Company pursuant to the Stock Purchase Agreement
divided by $100,000. Thus, if the Company invests an aggregate of $2,500,000 in
Stampville and does not make or arrange for the Additional Payment, the
Company's percentage investment in Stampville shall be 25%. If the Company
arranges for the Additional Payment, rather than provide the Additional Payment
itself, the equity interest of the Company in Stampville shall be reduced by the
amount required by the party providing the Additional Payment, provided,
however, that the Company's equity interest shall not be reduced below 27.5%,
without a pro rata reduction in the ownership interest of all the other
shareholders of Stampville other than the Company. The Company's interest in
Stampville may also be reduced by up to one percent (1%) pursuant to its
consulting agreement with Mendel Mochkin if the Company consummates its
investment in Stampville. See "Compensation of Directors and Officers."
In connection with its investment in Stampville, the Company and all of the
other shareholders of Stampville entered into a Shareholders Agreement (the
"Shareholders Agreement"). The Shareholders
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Agreement, among other things, restricts the ability of the shareholders of
Stampville to transfer their interests in Stampville; grants Stampville and each
shareholder of Stampville a right of first refusal with respect to any potential
sale of shares in Stampville; provides that each shareholder's interest in
Stampville shall be subject to purchase by the Company and/or the shareholders
of Stampville upon the occurrence of certain events; and grants to each
shareholder a right of co-sale upon a proposed transfer of shares. In addition,
the Company is entitled to appoint to the board of directors of Stampville such
additional nominees selected by the Company so that at all times half of the
members of the board of directors of Stampville shall consist of individuals
nominated by the Company. The Company's nominees serving on the Stampville board
of directors are Levi Mochkin and . The Company is also entitled
to designate an individual to serve as the chief operating officer, or such
other position as the board of directors of Stampville may designate. The
Company has designated Robert Petty as Stampville's Acting Chief Executive and
Financial Officer. The Company's arrangement with Stampville provides that Mr.
Petty shall work predominantly for Stampville out of Stampville's offices, but
may retain a title with and serve in a concurrent position with the Company as
Vice President -- Business Development. If the Company fails to make or arrange
for the Additional Payment or the Remaining Stage Two Payment, the Company's
management rights shall be limited to designating one individual to the board of
directors of Stampville and the approval of the Company's designated director
shall be required for certain significant corporate transactions. Under any
circumstances, the Company's right to any preferential board and management
representation will terminate by no later than June 18, 2002.
COMPETITION
I.T. Technology
The Company is, and will continue for the indeterminate future to be, an
insignificant participant in the Internet and e-commerce business. The Company
expects to encounter intense competition from other entities having business
objectives similar to those of the Company with respect to the acquisition of
additional Targets. Many of these entities, including venture capital
partnerships and corporations, other blind pool companies, large industrial and
financial institutions, small business investment companies, "incubators" and
wealthy individuals, are well-established and have extensive experience in
connection with identifying and effecting acquisitions directly or through
affiliates. Many of these competitors possess far greater financial, technical,
human and other resources than the Company and there can be no assurance that
the Company will have the ability to compete successfully. The Company's
financial resources will be limited in comparison to those of many of its
competitors. This inherent competitive limitation may compel the Company to
select certain less attractive prospects. There can be no assurance that such
prospects will permit the Company to achieve its stated business objectives.
Stampville
All aspects of the Internet market are new, rapidly evolving and intensely
competitive, and we expect competition to intensify in the future. Barriers to
entry are low, and current and new competitors can easily launch new Web sites,
e-commerce concerns, portals and other competitive alternatives at a relatively
low cost using commercially available software. Our present competitors include
companies that have equal access to expertise in computer and Internet
technology such as "Stampfinder.com" and other online stamp collecting and gift
art Internet sites, as well as Internet directories, search engine providers,
shareware archives, content sites and entities that attempt to or establish
online "communities." Stampville also will compete with a number of other
traditional companies, such as stamp, gift and hobby shops. Other major
companies have the financial and technical ability to compete aggressively in
the stamp collecting market on the Internet. Many, if not all, of these
companies have longer operating histories, larger customer bases, greater brand
recognition in other businesses and Internet markets and significantly greater
financial, marketing, technical and other resources than we have. Competitive
pressures created by any one of these companies, or by our competitors
collectively, could have material adverse effect on our business, results of
operations and financial condition, and we can give no assurance that we will be
able to compete successfully against current and future competitors.
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In addition, other major nationally-known companies have the capability to
include a stamp collecting content to their existing well known Web sites, to
market stamp collecting Web sites through strong distribution channels and to
package their stamp collecting Web site with other popular Web sites. To the
extent that a significant online market develops for stamp collecting, we
anticipate that companies and Internet companies will develop competitive Web
sites. All of these companies would be better known than we are, and they have
significantly greater resources. In addition, competitive services in the stamp
collecting marketplace may be under development by major Internet companies of
which we are unaware.
We believe that the market for consumers made available through the
Internet is growing due to an increasing use of the Internet as a venue for sale
and purchase of, among other things, consumer goods.
Stampville's products would clearly fall under the consumer goods category.
Stampville believes that its business strategy sets it apart from most Internet
companies which target consumer users. Stampville also believes that the ease of
use, speed, reliability and scaleability of its Web site will attract users
worldwide.
INTELLECTUAL PROPERTY
All of the Company's and Stampville's software was acquired from third
parties. Neither the Company nor Stampville has registered copyrights on any
software. We rely upon confidentiality agreements signed by our employees.
Stampville applied on August 13, 1999 with the United States Patent & Trademark
Office for registration of "Stampville.Com" and three designs, combined with
words, letters and/or numbers as trade and service marks. Stampville has
received preliminary comments from the United States Patent and Trademark
Office regarding the application and is in the process of responding to those
comments.
ENVIRONMENTAL MATTERS
The Company believes it is in material compliance with all relevant
federal, state, and local environmental regulations and does not expect to incur
any significant costs to maintain compliance with such regulations in the
foreseeable future.
EMPLOYEES AND LABOR RELATIONS
The Company, through its Australian subsidiary, I.T. Technology Pty. Ltd.,
employed one full-time employee and two part time employees, including one
officer on February 4, 2000. On February 4, 2000, Stampville employed 15
full-time employees (including consultants working for Stampville), including 5
executive officers. In addition, Stampville has entered into a one-year
consulting agreement with Petty Consulting, Inc. for the services of Robert
Petty as Acting Chief Executive and Financial Officer and initially for the
services of Jennifer Christopher as Vice President -- Human Resources, and for
the services of Douglas Wu as a financial consultant. None of the Company's nor
Stampville's employees are represented by a labor union, and we believe that
relations with the Company's and Stampville's employees are good. In the event
the Company raises at least $10,000,000 in the Offering, it intends to hire
additional executives on a full time basis at least one of whom will be located
in the United States.
PROPERTIES
The Company has entered into an agreement to purchase its executive
offices, located at 34-36 Punt Road, Windsor 3181, Melbourne, Victoria, through
its wholly-owned subsidiary, I.T. Technology Pty. Ltd. The office consists of a
newly-built stand-alone office and showroom with on-site parking and
approximately 540 square meters of office and showroom space. The purchase price
of these premises is $900,000 (Australia), or approximately $595,000 (US), of
which $200,000 (Australia), or approximately $132,000 (US) was paid in cash and
the remainder was financed through a loan with the seller secured by the
property bearing interest at the rate of 7.25% per annum, with interest payments
only due monthly and a single balloon payment of $704,000 (Australia), or
approximately $463,000 (US) is due on July 9, 2001. Pursuant to the terms of the
purchase agreement the owner will register the title to the property in I.T.
Technology Pty. Ltd. upon payment in full of the balance due on the loan. If the
Company raises
36
<PAGE> 42
$22,500,000 through the sale of all of its Shares in this Offering it will
pay off this loan. Stampville's offices are located at 456 Fifth Avenue, Suite
200, Brooklyn, N.Y. 11215. Stampville's telephone and facsimile numbers are
(718) 369-8881 and (718) 369-6270, respectively.
LEGAL PROCEEDINGS
From time to time, we may be involved in litigation relating to claims
arising out of our operations in the normal course of business. We are not party
to any material legal proceeding.
RESEARCH AND DEVELOPMENT
STAMPVILLE -- CURRENT DEVELOPMENT STATUS
As of February 1, 2000, Stampville had launched two separate "micro" Web
sites, www.beegeesstamps.com and www.sheldonstamps.com. Each of the sites allow
a user to view and purchase stamp-related products which relate to the subject
matter of the Web site.
Stampville is currently finalizing the development of its core Web site and
additional "micro" Web sites which it expects to launch during the first half of
2000. Stampville plans the following key components to the core Web site:
- a display of 10,000 stamps available for sale, together with detailed
descriptions of each stamp;
- topical forums and chat rooms facilitating discussions with collectors
with similar interests;
- a news and events section displaying current information, news and
stories relating to stamps and philatelic-related matters;
- a specialty page displaying new issues of stamps released globally by
country postal services; and
- a calendar of events which will publicize events of interest to stamp
collectors.
In addition, Stampville is considering the following enhancements for
future versions of its core Web site:
- an auction room;
- classified advertisements; and
- "micro" sites dedicated to specific topics, themes and stamp issues.
GOVERNMENTAL MATTERS
Except for usual and customary business and tax licenses and permits, and
the licenses and permits described elsewhere herein, no governmental approval is
required for the principal products/services of Company, nor does Company know
of any existing or probable governmental regulations affecting Company's
activities.
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<PAGE> 43
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The Company's board of directors consists of six directors and Stampville's
board of directors consists of four directors, all of whom are elected for
one-year terms at each annual meeting of stockholders. The executive officers
are elected annually by the board of directors, however, they may be removed
from office at any time by our board of directors.
I.T. Technology, Inc.
The following table sets forth, as of February , 2000, the name, age and
position within the Company of each of our executive officers and directors. The
background of each of the individuals identified in the table is described
following the table.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Levi Mochkin.................... 38 Chairman of the Board, Chief Executive Officer and
Director
Henry Herzog.................... 58 President and Director
Farrel Meltzer.................. 34 Director
Jonathan Herzog................. 28 Secretary, Chief Financial Officer and Director
Anthony Davis................... 40 Director
Helen Abeles.................... 45 Director
Robert Petty.................... 35 Vice President -- Business Development of the Company
and Acting Chief Executive and Financial Officer of
Stampville
</TABLE>
HENRY HERZOG
Mr. Henry Herzog headed up a restructuring and reorganization of Bayou
International (NASDAQ OTCBB "BAYU") and served as President and Chief Executive
Officer of that company from May 1986 to March 1988. From March 1988 through
June 1999, he served as Vice President of Bayou International (now Baynet Ltd.).
He has over thirty-five years business experience. He was responsible for the
reorganization of the Kingsway Group, which was to become known as Australia
Wide Industries, Ltd. From 1983 to 1988, Mr. Herzog served as a director of
Australia Wide, which has recently been renamed Autogen Limited, a company
listed on the Australian Stock Exchange (ASX symbol "AGT"), and also served as a
director of numerous other publicly listed companies during this period. Over
the past five years he has been employed as a consultant by Sujol Nominees Pty.
Ltd., which is involved in hotel management, consulting and investment. Mr.
Henry Herzog is the father of Jonathan Herzog and father-in-law of Levi Mochkin.
FARREL A. MELTZER
Mr. Farrel Meltzer is a Senior Executive with the ANZ Banking Group
(February 1997 through present). ANZ is one of Australia's four major banks with
assets in excess of $150 billion (Australia), or approximately $97 billion
(United States). Farrel Meltzer is currently the head of its Private Banking
operations throughout Australia. ANZ Private Bank is Australia's leading Private
Bank. Prior to joining ANZ, from 1996 to 1997, Mr. Meltzer served as acting
Chief Executive Officer of Atcor S.A., a South African education and training
group, which is now a member of the publicly listed Acumen Holdings Group on
the Johannesburg Stock Exchange.
Between 1994 and 1996, Mr. Meltzer was Assistant General Manager of the
Private and Professional Banking division of the Mercantile Lisbon Banking Group
in South Africa, prior to which he spent a number of years in Audit, Tax &
Corporate Advisory with Grant Thornton LLP and Pannell Kerr Forster in
Johannesburg, South Africa.
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<PAGE> 44
He has a Bachelor of Commerce and a Bachelor of Accounting (cum laude) from
the University of the Witwaterstand, Johannesburg and a Diploma in Advanced
Banking (cum laude) from Rand Afrikaans University, Johannesburg.
Mr. Meltzer was one of a team of five individuals who established one of
South Africa's first private university campuses, where he was Finance Director
and Dean of the Faculty of Commerce. This is now part of the publicly listed
EDUCOR Group with a market capitalization of approximately $350 million. In
December 1998, Mr. Meltzer was selected by the Business Review Weekly as one of
Australia's future business leaders.
LEVI MOCHKIN
Mr. Levi Mochkin is known in both the Australian stock brokerage industry
and in the wider business community. Mr. Mochkin has thirteen years business
experience. For over ten years, Mr. Mochkin has been an executive director and
key leader of the Ledger Holdings Pty. Ltd. Group, located in Melbourne,
Australia. During this period, the Ledger Holdings Pty. Ltd. Group has been
engaged in equity and capital market activities including many highly complex
corporate transactions and fund raisings. From 1995 to 1999, Ledger was
contracted to Bell Securities Limited and was instrumental in the development of
Bell's stock brokerage business. In late 1997, Bell through Mochkin and his
Ledger Group acted on behalf of one of Australia's largest gold mining
companies, Great Central Mines Limited, and carried out two simultaneous
on-market takeover bids on the Australian Stock Exchange, worth a combined total
value of $330 million (Australia). Mr. Levi Mochkin is the son-in-law of Mr.
Henry Herzog, the brother-in-law of Jonathan Herzog and the brother of Mr.
Mendel Mochkin, who has been engaged by the Company to provide certain services
relating to Stampville. See "Compensation of Directors and Officers -Employment
Agreements -- Consulting Agreement with Mendel Mochkin."
JONATHAN HERZOG
Mr. Jonathan Herzog is a founding director of the Company and has served as
its Chief Financial Officer since February 1999. Between 1995 and 1999, Mr.
Herzog was a securities dealer and consultant with the Ledger Holdings Group at
Bell Securities Limited, a member of the Australian Stock Exchange. He has been
actively involved in the Australian financial markets for over ten years. He
attended the Rothberg School at Hebrew University in Jerusalem in 1991. Mr.
Herzog is a Fellow of the Australian Institute of Company Directors since 1993,
and holds a Bachelor of Economics Degree from Monash University in Melbourne,
Australia. Mr. Jonathan Herzog is the son of Henry Herzog and the brother-in-
law of Levi Mochkin.
ANTHONY L. DAVIS
Mr. Anthony Davis has occupied senior roles in institutional equity sales
for nearly 15 years, covering all major international financial centers. Since
February 1998, he has been an institutional dealer with Burdett, Buckeridge and
Young in Melbourne, Australia and prior to this, he occupied a similar position
at ABN AMRO. From 1985 to 1989, Mr. Davis served as a director of Institutional
Equity Sales at McIntosh Securities both in London and Australia. From 1989
through September 1996, he was a director of Prudential Bache Securities in
Australia and was the Global Manager of Australian equity sales, managing the
institutional desks of Melbourne, Sydney, London, New York and Paris. During
this time he also served as a member of Prudential's Executive Management
Committee. Between September 1996 and 1997, Mr. Davis was the joint head of
Prudential's Equity Capital Markets Division in Melbourne. Mr. Davis holds a
Bachelor of Commerce Degree from the University of Canterbury, New Zealand and a
Graduate Diploma in Applied Finance from the Securities Institute of Australia.
HELEN ABELES
For more than five years Ms. Abeles has been a private investor. She is
currently a major shareholder in JGL Investments Pty. Ltd., one of Australia's
largest private companies. She actively participates in the
39
<PAGE> 45
management of a number of subsidiary companies of JGL Investments Pty. Ltd. Ms.
Abeles is a director, major shareholder and board member in a number of other
private companies. She invests in both domestic and offshore equity markets. She
also provides venture capital funding for small to medium size enterprises. Ms.
Abeles is also an advisor on equity investments to the trustees of the JGL
Investments Pty. staff superannuation plan. Ms. Abeles holds a Bachelor of
Science Degree from the Melbourne University, Australia.
ROBERT PETTY
Robert Petty has an extensive background in management and operations
across the following industries: manufacturing, retail and Internet e-commerce.
Since October 1999, he has been engaged by the Company and its subsidiaries as a
consultant in various capacities. He has served as Vice President -- Business
Development for the Company since January 2000 and Acting Chief Executive and
Chief Financial Officer of Stampville since January 2000. Prior to consulting
for the Company, Robert Petty, from December 1997 to March 1999, was engaged in
a number of capacities by Telstra Corp., one of the world's largest
telecommunications companies where he was the senior Business Development
Manager responsible for the company's electronic business solution products as
well as the Manager of Electronic Business Services on a global scale,
responsible for marketing and strategizing Telstra Corp.'s global product roll
out of e-commerce products. In the role of Manager of Electronic Business
Services, Robert Petty worked with some of the world's leading technology and
Internet e-commerce companies, such as IBM, Hewlett Packard, Intelilsys, Web
Methods, Motorola and many others. Previously, from 1995 through 1998, Mr. Petty
was employed with Brashs Pty. Ltd., a large Australian consumer electronics and
music retailer, in a number of capacities, most recently as the national Product
Merchandiser, responsible for product selection and purchasing, marketing,
merchandising, budgeting and general business planning for the departments of
computers, home office and mobile phone departments nationally.
Mr. Petty holds a CBS in Accounting from Swinburne University of
Technology.
BOARD COMMITTEES
The Company's board of directors met (or acted through unanimous written
consent) 13 times during fiscal 1999. All members attended at least 75% of the
board of director meetings during 1999. The Company currently has no Board
committees. On the effective date of this Offering, the board of directors will
have two committees: a Compensation Committee and an Audit Committee. The Audit
Committee will consist of two members, Anthony Davis and Farrel Meltzer. The
Compensation Committee will consist of two members and
. Since both Committees will be established during the Company's
fiscal year ended December 31, 2000, they did not meet in the Company's fiscal
year ended December 31, 1999.
40
<PAGE> 46
Stampville
The following table sets forth, as of February , 2000, the name, age and
position within Stampville of each of its executive officers and directors. The
background of each of the individuals identified in the table is described
following the table.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
C. Jonathan Malamud....................... 26 Director, President and Vice President of
Marketing
David Eli Popack.......................... 24 Director and Director of Dealer Relations
Levi Mochkin.............................. 38 Director and Chairman of the Board
ITT Designee..............................
Robert Petty.............................. 35 Acting Chief Executive and Financial
Officer
Jennifer Christopher...................... 29 Vice President of Human Resources
Steven Komito............................. 42 Project Manager
</TABLE>
C. JONATHAN MALAMUD
Mr. Malamud is the founder of Stampville and has served as its President
since June 1999. Since December 1999 he has also served as Stampville's Vice
President Marketing. Previously, he was Manager of the Telemarketing Division of
Sports Stamps Collectible Association located in New York, New York from July
1998 to April 1999. From May 1995 to February 1998, he was Philatellic Show and
Exhibit Coordinator for IGPC. Prior to joining IGPC, he served as Campaign
Manager for a mayoral candidate of the City of Beverly Hills, California. Mr. C.
Jonathan Malamud also worked briefly in 1998 as a securities trader for
Precision Edge Securities Company located in New York, New York. Mr. C. Jonathan
Malamud is the son of Sam Malamud, the President and a major shareholder of IGPC
and the brother-in-law of David Eli Popack.
DAVID ELI POPACK
Mr. Popack has served as director, Secretary and Director of Dealer
Relations at Stampville since June 1999. Prior to co-founding Stampville in June
1999, Mr. Popack was the personal assistant to the President of
Inter-Continental Trade and Finance Corporation, Toronto, Canada from September
1997 to May 1998. Previously, he studied Philosophy and Judaic Law at Rabbinical
College in Sydney Australia and completed his Rabbinical studies receiving a
Masters and Rabbinical ordination at the Rabbinical College of Canada in
September 1997. Mr. Popack also served in the summer Peace Corps in Shanghai,
China in 1996. Mr. Popack is the son-in-law of Sam Malamud the President and a
major shareholder of IGPC and the brother-in-law of C. Jonathan Malamud.
ROBERT PETTY
For biographical information see "Management -- Executive Officers and
Directors -- I.T. Technology, Inc."
JENNIFER CHRISTOPHER
Ms. Christopher joined Stampville as Vice President -- Human Resources in
January 2000. Previously, she was an Executive Recruiter at Olsten Corporation,
a New York based executive search firm from March 1999 to January 2000. Ms.
Christopher was an Account Executive at Schenker International (Italian
Division) from June 1997 to August 1998 where she managed all ocean and air
traffic from Italy to the United States. From August 1998 to March 1999, she was
an Account Executive at Volt Services Group, a division of Volt Information
Services where she was responsible for generating new clients for their
temporary staffing division. Previously, Ms. Christopher was Business Manager at
Chanel, Inc. (Cosmetic Division) from 1995 to 1997. She was also Sales Manager
at Limited, Inc. where she trained and developed over 100 employees and managed
over $10 million in sales from 1993 to 1995.
41
<PAGE> 47
STEVEN KOMITO
Mr. Komito joined Stampville as Information Technology Project Manager in
January 2000. He has been employed for the last 12 years as an Information
Technology professional. Prior to joining Stampville, Mr. Komito was a Technical
Consultant with Infra -- Structures, Inc. His responsibilities were integrating
server management systems, large screen display devices, wall controllers, and
sound systems with Infra structure's line of command and control consoles. He
reviewed new technology and products, wrote white papers comparing the features
and limitations of currently available equipment, and selected clients such as
United States Special Operations Command Center (USSCOM), Nextlink. From 1998 to
1999, Mr. Komito was employed by C-C-C USA, INC. as Senior Project Manager where
he managed all aspects of project management related to CCC Group's product line
of Server Management, and information delivery systems. From 1993 to 1998 Mr.
Komito was a Technical Manager with Dataform Business Systems, where he provided
hands on technical support and troubleshooting of all types of hardware,
software and network related problems.
COMPENSATION OF DIRECTORS AND OFFICERS
Effective as of December 6, 1999, the Company agreed to pay Jonathan
Herzog, its Chief Financial Officer and Secretary, an annual salary of $80,000
retroactive to November 1, 1999 and also agreed to pay to Robert Petty's
consulting company $12,000 per annum for the services of Robert Petty as Vice
President -- Business Development of the Company. In addition, Mr. Petty was
granted options to purchase up to 1,450,000 shares of the Company's stock. Petty
Options representing an aggregate of 950,000 shares will become exercisable at
$1.00 per share. Petty Options representing 500,000 shares will be exercisable
at $2.00 per share. Portions of the Petty Options vest and become exercisable
upon the Company reaching certain levels of market capitalization or the
occurrence of certain other events. For further information on the Petty Options
see "Compensation of Directors and Officers -- Employment Agreements --
Consulting Agreement with Petty Consulting, Inc. for the Services of Robert
Petty." Except as set forth above, the Company has not made any payments to its
officers or directors, other than reimbursing an aggregate of approximately
$65,000 of loans from an affiliate of Levi Mochkin to the Company and business
expenses primarily incurred after September 30, 1999, which have not exceeded
approximately $50,000. The Company may, subject to the financial condition and
resources of the Company, compensate its other senior officers or directors.
Stampville has entered into a one year consulting agreement with Petty
Consulting Inc. ("Petty Consulting") for the services of Robert Petty as Acting
Chief Executive and Financial Officer and initially for the services of Jennifer
Christopher as Vice President -- Human Resources and Douglas Wu as financial
consultant (the "Petty Consulting Agreement"). The Petty Consulting Agreement
provides for the payment of an aggregate amount of approximately $27,000 per
month by Stampville to Petty Consulting for the services of Mr. Petty, Mr. Wu
and Ms. Christopher. Under the Petty Consulting Agreement, Stampville has agreed
to reimburse Petty for certain relocation and legal expenses in connection with
his move from Australia to New York. These expenses are currently estimated to
be approximately $30,000. Mr. Wu, who will be providing Stampville with
strategic and financial advisory services, has over 15 years experience in
private equity/venture investing at firms such as Dillon Read & Co., Inc., Peers
& Co. and Rothschild Emerging Markets (an affiliate of Rothschild Inc.).
Stampville has employed C. Jonathan Malamud, a director and Vice President --
Marketing, at an annual salary of $40,000. Mr. Malamud is also the beneficial
owner of 33.26% of Stampville's common stock. Stampville has employed David Eli
Popack, a director of Stampville and its Director of Dealer Relations at an
annual salary of $40,000. Mr. Popack is also the beneficial owner of 16.64% of
Stampville's common stock. Steven Komito, Stampville's Project Manager is
employed at an annual salary of $85,000.
During the period ended September 30, 1999 no executive officer or director
received a salary at the Company. The Company has accrued a salary expense for
this period of $25,000 for services rendered on its behalf by certain
affiliates.
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<PAGE> 48
CERTAIN TRANSACTIONS
On October 26, 1999, the Company raised $2,500,000 in a private placement
through the sale of 2,500,000 shares of its Common Stock to Instanz. At the same
time Instanz acquired an additional 1,200,000 shares of Common Stock from Ledger
Technologies Pty. Ltd. for an aggregate amount of $12,000. Helen Abeles, who was
subsequently named to the Company's board of directors, is an affiliate of
Instanz. In connection with its purchase of the Company's shares, the Company
agreed to allow Instanz to offer to sell 500,000 Shares in this Offering;
provided that such Shares are offered and sold only after the Company has
received net proceeds of $5,000,000 from this Offering. In addition, to the
extent that Instanz is unable to receive at least $2,500,000 from the sale of
Shares in this Offering, the Company agreed to grant it registration rights to
sell a sufficient amount of shares to cover such short fall. If applicable, the
registration period shall commence 120 days after the effective date of this
registration statement and will expire on the first to occur of three years from
the effective date or when Instanz is able to otherwise sell such amount of
shares under Rule 144 promulgated under the Securities Act. Until such
registration right period terminates, Instanz and all of the other 10% or
greater holders of the Company's Common Stock and the Company's directors have
agreed not to sell any of their shares without the consent of the other 10%
holders and directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Not Applicable.
OPTION GRANTS IN LAST FISCAL YEAR
The Company was formed in 1999 and accordingly, did not grant any options
prior to its most recently concluded fiscal year. The following table sets forth
certain information with respect to stock options granted to each of the named
executive officers in the fiscal year ended December 31, 1999. The figures
representing percentages of total options granted to employees in the last
fiscal year are based on an aggregate of 1,600,000 options granted during the
fiscal year ended December 31, 1999, to the Company's employees, including the
named executive officers.
Also shown below is the potential realizable value over the term of the
option. In accordance with the rules of the SEC, we have based our calculation
of the potential realizable value on the term of the option at its time of
grant, and we have assumed that:
- the value of our stock at the assumed initial public offering price
appreciates at the indicated annual rate compounded annually for the
entire term of the option; and
- the option is exercised and sold on the last day of its term for the
appreciated stock price.
These amounts are based on 5% and 10% assumed rates of appreciation, as
established by the SEC, are not intended to forecast future appreciation,
if any, of our Common Stock. Actual gains, if any, on stock option
exercises will be dependent on the future performance of the Common Stock.
<TABLE>
<CAPTION>
APPRECIATED APPRECIATED
OPTIONEE DATE OF GRANT NUMBER OF SHARES EXERCISE PRICE VALUE AT 5% VALUE AT 10%
-------- ------------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Jonathan Malamud.............. 12/8/99 1,600,000(2) $1.25 $8,210,252 $10,884,080
</TABLE>
- ---------------
(1) Assumes an initial stock price of $5.00 per share.
(2) These options shall only become exercisable in the event the Company raises
at least $10,000,000 in this Offering or invests an additional $5,000,000
in Stampville above the "Stage One Investment," as such term is defined in
the Stock Purchase Agreement. In such event, the options will be exercisable
in increments of 20% per annum commencing two years after they initially
become exercisable. The Malamud options will have a five year term
commencing on the date the initial installment becomes exercisable.
43
<PAGE> 49
EMPLOYMENT AGREEMENTS
CONSULTING AGREEMENT WITH MENDEL MOCHKIN
The Company has entered into a Consulting Agreement with Mendel Mochkin
pursuant to which the Company has agreed to compensate Mendel Mochkin with
shares of the Company's stock, in part subject to the completion of all stages
of the Company's investment in Stampville. The Company has issued 150,000 shares
of its Common Stock to Mendel Mochkin and has agreed to issue up to an
additional 350,000 shares of its Common Stock to Mendel Mochkin, if the Company
raises no less than $10 million in this Offering or invests in or arranges for
additional financing in Stampville in an amount such that the Company retains no
less than 27.5% of the equity of Stampville (the "Additional Stampville
Investment"). The exact amount of the additional shares of Common Stock it may
issue to Mendel Mochkin will depend on the ultimate dollar amount of the
Additional Stampville Investment. In addition, the Company has agreed to
transfer to Mendel Mochkin the equity interests (without beneficial ownership)
of up to one percent (1%) in Stampville. See "Business -- Acquisition of Equity
Interest in Stampville." Mendel Mochkin is the brother of Levi Mochkin, a
director and Chief Executive Officer of the Company.
CONSULTING AGREEMENT WITH PETTY CONSULTING, INC. FOR THE SERVICES OF ROBERT
PETTY
On January 17, 2000, the Company entered into a one-year Consulting
Agreement with Petty Consulting, Inc. pursuant to which Robert Petty agreed to
provide consulting services with annual compensation payable to his consulting
corporation in the amount of $12,000, to be paid in accordance with the
Company's general compensation practices.
Robert Petty was granted options to purchase up to a total of 1,450,000
shares of Common Stock ("Petty Options") upon the execution of the Consulting
Agreement (the "Grant Date"). The Stock Options vest upon the occurrence of the
following events (the "Vesting Date"), no Petty Options may vest after the
termination of Robert Petty's employment or consulting arrangement with the
Company:
1. Two Hundred Fifty Thousand (250,000) Petty Options shall vest upon the
Company reaching a market capitalization of One Hundred Fifty Million
Dollars ($150,000,000) for thirty (30) consecutive business days within
three years of the Grant Date ("First Capitalization Option");
2. Three Hundred Fifty Thousand (350,000) Petty Options shall vest upon the
Corporation reaching a market capitalization of Three Hundred Million
Dollars ($300,000,000) for sixty (60) consecutive business days within
three years of the Grant Date ("Second Capitalization Option");
3. One Hundred Seventy-Five Thousand (175,000) Petty Options shall vest
upon the successful sale of equity securities of one of the Company's
subsidiaries (other than Stampville) in an initial public offering
through the means of a registration statement which has been declared
effective by the SEC within three years of the Grant Date, or the sale
of all or any portion of the shares or assets of such subsidiary for no
less than $50,000,000 ("Subsidiary IPO Option");
4. One Hundred Seventy-Five Thousand (175,000) Petty Options shall vest
upon the successful sale of equity securities of Stampville in an
initial public offering through the means of a registration statement
which has been declared effective by the SEC within three years of the
Grant Date ("Stampville IPO Option"); and
5. Five Hundred Thousand (500,000) Petty Options shall vest upon the
Company reaching a market capitalization of Seven Hundred Million
Dollars ($700,000,000) for sixty (60) consecutive business days within
three years of the Grant Date ("Third Capitalization Option").
The term of the Petty Options is the lesser of (i) two years from the
Vesting Date, (ii) five years from the Grant Date, or (iii) 30 days after the
termination of Robert Petty's employment or consulting arrangement for the
Company. The First Capitalization Option, the Second Capitalization Option, the
Stampville IPO Option and the Subsidiary IPO Option, each have an exercise price
of $1.00 per option share. The Third Capitalization Option has an exercise price
of $2.00 per option share.
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<PAGE> 50
2000 STOCK OPTION PLAN
The Company's board of directors have authorized the issuance of up to
1,650,000 shares of Common Stock in connection with the grant of Options
pursuant to the Company's 2000 Stock Option Plan (the "2000 Stock Option Plan).
The 2000 Stock Option Plan shall become effective on the effective date of the
Registration Statement with respect to this Offering. Options may be granted
under the Stock Option Plan to officers, directors, employees and consultants of
the Company and its subsidiaries. To date the Company has not granted any
options under the 2000 Stock Option Plan.
1999 PRIVATE PLACEMENTS
In October 26, 1999, the Company consummated the sale, in a private
placement, of 2,500,000 shares of Common Stock for $1.00 per share to Instanz,
for which the Company received proceeds of $2,500,000. A portion of the proceeds
from this sale was used to complete a portion of the Company's investment in
Stampville. See "Certain Transactions" and "Business -- Acquisition of Equity
Interest in Stampville."
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of February , 2000, and as adjusted
to reflect the sale of the shares of Common Stock offered under this Prospectus
by: (1) each person who we know owns beneficially more than 5% of our Common
Stock, (2) each of our directors individually, (3) each of our executive
officers individually and (4) all of our executive officers and directors as a
group.
Unless otherwise indicated, to our knowledge, all persons listed below have
sole voting and investment power with respect to their shares of Common Stock.
Shares of Common Stock that an individual or group has the right to acquire
within 60 days of February , 2000 pursuant to the exercise of options are
deemed to be outstanding for the purpose of computing the percentage ownership
of such person or group, but are not deemed outstanding for the purpose of
calculating the percentage owned by any other person listed.
Beneficial Ownership Of Common Stock
<TABLE>
<CAPTION>
ASSUMES MINIMUM ASSUMES MAXIMUM
SUBSCRIPTION SUBSCRIPTION
----------------------- -----------------------
NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
NAME OF SHAREHOLDER SHARES(1) OF CLASS SHARES(1) OF CLASS
------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Ledger Technologies Pty. Ltd.(2)
Levi Mochkin(2)............................... 6,300,000 36.00% 6,300,000 29.51%
Instanz Nominees Pty. Ltd.(3)
Helen Abeles(3)............................... 3,700,000 21.14% 3,200,000 14.99%
Riccalo Pty. Ltd.(4)
Henry Herzog(4)............................... 2,000,000 11.43% 2,000,000 9.37%
Eurolink International Pty. Ltd.(5)
Jonathan Herzog(5)............................ 2,000,000 11.43% 2,000,000 9.37%
AtcorAus. Pty. Ltd.(6)
Farrel Meltzer(6)............................. 750,000 4.29% 750,000 3.51%
Tilbia Nominees Pty. Ltd.(7)
Anthony Davis(7).............................. 1,600,000 7.49% 1,600,000 9.14%
Robert Petty(8)................................. -0- -0- -0-
All Directors and Officers as a Group (7
Persons)...................................... 16,350,000 96.90% 15,850,000 93.43%
</TABLE>
- ---------------
(1) Pursuant to the rules promulgated by the SEC, all shares underlying options
which were exercisable on February , 2000 or which become exercisable
within 60 days, held by a described person are
45
<PAGE> 51
deemed to be "beneficially" owned. The SEC rules further require that every
person who has or shares the power to vote or to dispose of shares of Common
Stock are deemed to be the "beneficial" owner of all of the shares of Common
Stock over which any such sole or shared power exists.
(2) Lisa Mochkin, spouse of Levi Mochkin, a director and Chief Executive Officer
of the Company, is a director of Ledger Technologies Pty. Ltd. Levi Mochkin
is an affiliate of Ledger Technologies Pty. Ltd. and may be deemed to be a
beneficial owner of the shares held by Ledger Technologies Pty. Ltd. Lisa
Mochkin is the daughter of Henry Herzog and the sister of Jonathan Herzog.
(3) Helen Abeles, a director, is an affiliate of Instanz. Ms. Abeles exercises
shared investment and voting power over these shares and may be deemed to be
a beneficial owner thereof.
(4) Henry Herzog, a director and President of the Company and father of Jonathan
Herzog and father-in-law of Levi Mochkin, is a director of Riccalo Pty. Ltd.
Mr. Herzog exercises shared investment and voting power over these shares
and may be deemed to be a beneficial owner thereof.
(5) Jonathan Herzog, a director, Secretary and Chief Financial Officer of the
Company and son of Henry Herzog, is a director of Eurolink International
Pty. Ltd. Mr. Herzog exercises shared investment and voting power over these
shares and may be deemed to be a beneficial owner thereof.
(6) Wendy Meltzer, spouse of Farrel Meltzer, a director of the Company, is a
director of Atcor Aus. Pty. Ltd. Mr. Meltzer is an affiliate of Atcor Aus.
Pty. Ltd. and may be deemed to be a beneficial owner of the shares held by
Atcor Aus. Pty. Ltd.
(7) Tilbia Nominees Pty. Ltd. holds shares of Common Stock for Anthony Davis and
his affiliates. Mr. Davis exercises shared investment and voting power over
these shares and may be deemed to be the beneficial owner thereof.
(8) Does not include 1,450,000 shares subject to options granted to Robert
Petty. For further information on the Petty Options. See "Compensation of
Officers and Directors -- Employment Agreements -- Consulting Agreement with
Petty Consulting Inc. for the Services of Robert Petty."
The preceding table of beneficial ownership also does not include options
to purchase 1,600,000 shares of the Company's Common Stock which have been
granted to C. Jonathan Malamud. These shares will only become exercisable in the
event the Company makes the Additional Payment of $5,000,000 to Stampville
above the "Stage One Investment," as such term is defined in the Stock Purchase
Agreement, or raises at least $10,000,000 in the Offering, and then only in
installments commencing two years after such date.
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<PAGE> 52
DESCRIPTION OF CAPITAL STOCK
I.T. TECHNOLOGY
General
The Company's Certificate of Incorporation authorizes the Company to issue
one hundred million (100,000,000) shares of Common Stock and twenty-five million
(25,000,000) shares of preferred stock. The board of directors has the authority
to divide the preferred stock into one or more series and has broad authority to
determine the relative rights and preferences of the shares within each series,
including voting rights. Prior to this Offering, the board of directors has
authorized the issuance of up to 16,500,000 shares of Common Stock in accordance
with the holdings specified in the chart above. See "Principal Shareholders."
The board of directors has also authorized the issuance of (i) up to 350,000
shares of Common Stock to Mendel Mochkin, in consideration of services rendered
in connection with the Stampville acquisition; (ii) up to 1,600,000 shares
relating to options granted to C. Jonathan Malamud; (iii) up to 1,450,000 shares
relating to options granted to Petty Consulting Inc.; (iv) up to 4,500,000
Shares pursuant to this Offering; and (v) up to 1,650,000 shares pursuant to the
2000 Stock Option Plan. No other shares of Common Stock will be issued prior to
the issuance of the Common Stock in connection with this Offering.
Dividends
Holders of Common Stock will be entitled to receive, when, as and if
declared by the board of directors out of legally available funds, cash
dividends. The Common Stock will not have priority as to dividends over any
other series or class of the Company's stock that ranks senior as to dividends
to the Common Stock.
Voting Rights
Holders of Common Stock shall have the right to one vote per share upon all
matters presented for the vote of holders of the Common Stock.
STAMPVILLE
As of January 31, 2000, the capitalization of Stampville consists of
100,000 common shares, each with a par value of $0.01. As of the date of this
Prospectus, 50,100 common shares are held by the Company, 16,634 shares are
beneficially held by David Eli Popack and 33,266 shares beneficially by C.
Jonathan Malamud. The Company's interest in Stampville is subject to reduction
if it does not complete its planned investment in Stampville. See "Business --
Acquisition of Equity Interest in Stampville."
ANTI-TAKEOVER EFFECTS OF VARIOUS PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE
OF INCORPORATION AND BYLAWS
Upon the closing of this Offering, we will be subject to the provisions of
Section 203 of the Delaware General Corporation Law. Subject to specific
exceptions, Section 203 prohibits a publicly-held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless:
- the transaction in which such stockholder became an "interested
stockholder" is approved by the board of directors prior to the date the
"interested stockholder" attained that status;
- upon consummation of the transaction that resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding those shares owned by persons
who are directors and also officers); or
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<PAGE> 53
- on or subsequent to the date, the "business combination" is approved by
the board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the "interested
stockholder."
"Business combinations" include mergers, acquisitions, asset sales and
other transactions resulting in a financial benefit to the "interested
stockholder." Subject to various exceptions, an "interested stockholder" is a
person who, together with his or her affiliates and associates, owns, or within
three years did own, 15% or more of the corporation's voting stock. The
restrictions in this statute could prohibit or delay the accomplishment of
mergers or other takeover or change-in-control attempts with respect to the
Company and, therefore, may discourage attempts to acquire us.
In addition, various provisions of our Certificate of Incorporation and
Bylaws, which are summarized in the following paragraphs, may be deemed to have
an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the market price
for the shares held by stockholders.
Cumulative Voting
Our Certificate of Incorporation expressly denies stockholders the right to
cumulate votes in the election of directors.
Stockholder Action; Special Meeting of Stockholders
Our Certificate of Incorporation limits stockholder actions to resolutions
passed at annual or special meetings of stockholders; it prohibits stockholders
the from acting by written consent. Additionally, our bylaws provides that
special meetings of our stockholders may be called only by the board of
directors or a committee of the board of directors which has been duly
designated and authorized by the board of directors.
Limitations On Liability and Indemnification of Directors and Officers
The Delaware General Corporation Law authorizes corporations to limit or
eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breaches of directors' applicable duties.
Our Certificate of Incorporation includes a provision that eliminates the
personal liability of our directors for monetary damages for actions taken as a
director, except for liability:
- for any breach of the director's duty of loyalty to us or our
stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; and
- for any transaction from which the director derived an improper personal
benefit.
Our Certificate of Incorporation also includes the following provisions
regarding indemnification of our directors and officers:
- we must indemnify our directors and officers to the fullest extent
permitted by Delaware law, subject to very limited exceptions;
- we may indemnify our other employees and agents to the same extent that
we indemnify our directors and officers; and
- we must advance expenses, as incurred, to our directors and officers in
connection with legal proceedings to the fullest extent permitted by
Delaware law, subject to very limited exceptions.
Prior to the closing of this Offering, the Company intends to supplement
its existing directors' and officers' insurance to provide indemnification for
certain securities matters. We believe that these
48
<PAGE> 54
indemnification provisions in our Certificate of Incorporation and insurance are
necessary to attract and retain qualified directors and executive officers.
The limitation of liability and indemnification provisions in our
Certificate of Incorporation may discourage stockholders from bringing a lawsuit
against directors for breach of their fiduciary duty. These provisions may also
have the effect of reducing the likelihood of derivative litigation against
directors and officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder's
investment may be adversely affected to the extent we pay the costs of
settlement and damage awards against directors and officers pursuant to these
indemnification provisions.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees for which indemnification is sought. We are
unaware of any threatened litigation that may result in claims for
indemnification.
Authorized but Unissued Shares
The authorized but unissued shares of Common Stock and preferred stock are
available for future issuance without stockholder approval. We may use these
additional shares for a variety of corporate purposes, including future public
offerings to raise additional capital, corporate acquisitions and employee
benefit plans. The existence of authorized but unissued shares of Common Stock
and preferred stock could render more difficult or discourage an attempt to
obtain control of the Company by means of a proxy contest, tender offer, merger
or otherwise.
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority in interest of the shares entitled to vote on any
matter is required to amend a corporation's Certificate of Incorporation or
Bylaws, unless a corporation's Certificate of Incorporation or Bylaws, as the
case may be, requires a greater percentage. Following the Offering, our
executive officers and directors on their own, as the beneficial owners of
approximately 75% of the voting power of the outstanding Common Stock on a
fully-diluted basis, will be able to cause us to amend our Certificate of
Incorporation and Bylaws.
SELLING SHAREHOLDERS
An aggregate of 500,000 Shares of Common Stock may be offered for resale by
the following Selling Shareholders. These Shares of Common Stock include shares
issued to the Selling Shareholder pursuant to a private placement of shares
consummated on October 26, 1999.
Except for the sale of 1,200,000 shares of Common Stock transferred by
Ledger to Instanz in connection with Instanz's purchase of 2,500,000 shares of
Common Stock from the Company on October 26, 1999, in a private placement and as
set forth below, there are no material relationships between any of the Selling
Shareholders and the Company or any of its predecessors or affiliates, nor have
any such material relationships existed within the past three years.
<TABLE>
<CAPTION>
NUMBER OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES
NUMBER OF SHARES OF COMMON STOCK OF COMMON STOCK OF COMMON STOCK
OF COMMON STOCK COVERED BY AFTER OFFERING AFTER OFFERING
SELLING SHAREHOLDER BENEFICIALLY OWNED THIS PROSPECTUS (MINIMUM SOLD) (MAXIMUM SOLD)
------------------- ------------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Instanz Nominee Pty. Ltd.(1)..... 3,700,000 500,000 3,700,000 3,200,000
</TABLE>
- ---------------
(1) Helen Abeles, a director, is an affiliate of Instanz. Ms. Abeles exercises
shared investment and voting power over these shares and may be deemed to be
a beneficial owner thereof.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our Common Stock is American Stock
Transfer and Trust Company. Its address is 40 Wall, New York, NY 10005, and its
telephone number at that location is (212) 936-5100.
49
<PAGE> 55
NASDAQ STOCK MARKET LISTING
We have applied to have our Common Stock quoted on the NASDAQ SmallCap
Market under the trading symbol " ."
REGISTRATION RIGHTS
After this Offering, Instanz, currently the holder of 3,700,000 shares of
Common Stock, will be entitled to registration rights to the extent that Instanz
is unable to receive at least $2,500,000 from the sale of its Shares in this
Offering. In such event, the Company has agreed to grant to Instanz registration
rights to sell a sufficient amount of shares to cover such short fall (the
"Unsold Shares"). In addition, Instanz may also require us to "piggy-back" or
include its Unsold Shares in future registration statements that we file. Upon
registration, the Unsold Shares will be freely tradable in the public market
without restriction.
If applicable, the registration period shall commence 120 days after the
date the registration statement relating to this Prospectus becomes effective
and will expire on the first to occur of three years from the effective date of
this Offering or when Instanz is able to otherwise sell such amount of shares
under Rule 144 promulgated under the Securities Act. Except for the Unsold
Shares, until such registration right period terminates Instanz and all of the
other 10% or greater holders of the Company's Common Stock and the Company's
directors have agreed not to sell any other shares without the consent of the
other 10% holders and directors.
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<PAGE> 56
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, we will have 21,000,000 shares of Common
Stock outstanding assuming no exercise of the underwriters' over-allotment
option or outstanding options. Of this amount, the 5,000,000 Shares offered by
this Prospectus will be available for immediate sale in the public market as of
the date of this Prospectus. Assuming all of the 500,000 Shares being offered
for sale by Instanz in the Offering are sold, approximately 12,800,000
additional shares will be available for sale in the public market following the
expiration of 180-day lock-up agreements with the representatives of our
underwriters. All of such shares will be subject to compliance with the volume
and other limitations of Rule 144.
<TABLE>
<CAPTION>
APPROXIMATE SHARES APPROXIMATE SHARES
DAYS AFTER THE DATE ELIGIBLE FOR FUTURE ELIGIBLE FOR FUTURE SALE
OF THIS PROSPECTUS SALES (MAXIMUM SOLD) (MINIMUM SOLD) COMMENT
------------------- -------------------- ------------------------ -----------------------------------
<S> <C> <C> <C>
Upon Effectiveness... 5,000,000 1,000,000 Freely tradable shares sold in
Offering
180 days............. 12,800,000 12,800,000 Lock-up released; shares saleable
under Rule 144
[October 26, 2000] 3,200,000 3,700,000 Shares saleable under Rule 144
</TABLE>
In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares for at least one year is entitled to sell within any
three-month period commencing 90 days after the date of this Prospectus a number
of shares that does not exceed the greater of (a) 1% of the then outstanding
shares of Common Stock (approximately 210,000 shares immediately after the
Offering) or (b) the average weekly trading volume during the four calendar
weeks preceding the sale, subject to the filing of a Form 144 with respect to
the sale. A person who is not deemed to have been an affiliate of the Company at
any time during the 90 days immediately preceding the sale and who has
beneficially owned his or her shares for at least two years is entitled to sell
these shares under Rule 144(k) without regard to the limitations described
above. Persons deemed to be affiliates must always sell under Rule 144, even
after the applicable holding periods have been satisfied.
We are unable to estimate the number of shares that will be sold under Rule
144, since this will depend on the market price for our Common Stock, the
personal circumstances of the sellers and other factors. Prior to the Offering,
there has been no public market for the Common Stock, and there can be no
assurance that a significant public market for the Common Stock will develop or
be sustained after the Offering. Any future sale of substantial amounts of the
Common Stock in the open market may adversely affect the market price of the
Common Stock offered by this Prospectus.
All of our shareholders have agreed that they will not sell any Common
Stock without the prior written consent of for a period of 180
days from the date of this Prospectus. We have also agreed not to issue any
shares during the lock-up period without the consent of except
that we may, without this consent, grant options and sell shares under our stock
incentive and purchase plans although the shares may not be resold into the
public market during the lock-up period.
As of the effective date of this Offering, the Company has agreed to grant
options to purchase an aggregate of 3,050,000 shares of Common Stock to C.
Jonathan Malamud and Robert Petty. The board of directors has also approved the
2000 Stock Option Plan which provides for the issuance of options to purchase up
to 1,650,000 shares of the Common Stock. We intend to file a registration
statement on Form S-8 under the Securities Act shortly after the completion of
the Offering to register 2,700,000 Shares which are issuable upon the exercise
of options by Messrs. Malamud and Petty, plus 1,650,000 shares issuable under
the 2000 Option Plan, which will permit the resale of these shares in the public
market without restriction after the lock-up period expires.
In addition, Instanz has both "demand" and "piggyback" registration rights,
to the extent that the sale of the shares offered by it in this Offering does
not generate proceeds to it of at least $2,500,000 with respect to a sufficient
amount of shares necessary 500,000 Shares of Common Stock. See "Registration
Rights". Registration of these securities under the Securities Act would result
in these shares becoming freely tradable without restriction under the
Securities Act provided their shares were not purchased by any of our
affiliates.
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<PAGE> 57
UNDERWRITING
The underwriters named below, acting through their representatives,
, , and , have
severally agreed with us, subject to the terms and conditions of the
underwriting agreement, to sell on our behalf on a "best effort basis" the
number of shares of Common Stock indicated opposite their names below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
Total....................................................... 5,000,000
=========
</TABLE>
We have been advised that the underwriters propose to offer the shares of
Common Stock to the public at the public offering price located on the cover
page of this Prospectus and to dealers at that price less a concession of not in
excess of $ per share, of which $ may be re-allowed to other
dealers. After the initial public offering, the public offering price,
concession and reallowance to dealers may be reduced by the representatives. No
reduction in this price will change the amount of proceeds to be received by us
as indicated on the cover page of this Prospectus.
OVER-ALLOTMENT OPTION
We have granted to the underwriters an option, exercisable during the
30-day period after the date of this Prospectus, to purchase up to
additional shares of Common Stock at the same price per share as
we will receive for the 5,000,000 Shares that the underwriters have agreed to
purchase. To the extent that the underwriters exercise this option, each of the
underwriters will have a firm commitment to purchase approximately the same
percentage of additional shares that the number of shares of Common Stock to be
purchased by it shown in the above table represents as a percentage of the
5,000,000 Shares offered by this Prospectus. If purchased, the additional shares
will be sold by the underwriters on the same terms as those on which the
5,000,000 Shares are being sold. We will be obligated, under this option, to
sell shares to the extent the option is exercised. The underwriters may exercise
the option only to cover over-allotments made in connection with the sale of the
5,000,000 Shares of Common Stock offered by this Prospectus.
The following table shows the per share and total underwriting discounts
and commissions to be paid by us to the underwriters. This information is
presented assuming either no exercise or full exercise by the underwriter of
their over-allotment option.
<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------
<S> <C> <C> <C>
Public offering price.................................. $-- $ -- $ --
Underwriting discounts and commissions................. $-- $ -- $ --
Proceeds, before expenses, to us....................... $-- $ -- $ --
</TABLE>
The expenses of the Offering are estimated at $ and are payable
entirely by us. expects to deliver the shares of Common Stock to
purchasers on , 2000.
Indemnity
The underwriting agreement contains covenants of indemnity among the
underwriters and us against certain civil liabilities, including liabilities
under the Securities Act and liabilities arising from breaches of representation
and warranties contained in the underwriting agreement.
Future Sales
Each of our executive officers, directors and other significant
stockholders of record has agreed with the representatives, for a period of 180
days after the date of this Prospectus, not to offer to sell, contract to sell
or otherwise sell, dispose of, loan, pledge or grant any rights with respect to
any shares of Common
52
<PAGE> 58
Stock, any options or warrants to purchase any shares of Common Stock, or any
securities convertible into or exchangeable for shares of Common Stock owned as
of the date of this Prospectus or acquired directly from us by these holders or
with respect to which they have or may acquire the power of disposition, without
the prior written consent of . However, may, in
its sole discretion and at any time without notice, release all or any portion
of the securities subject to lock-up agreements. There are no agreements between
the representatives and any of our stockholders providing consent by the
representatives to the sale of shares prior to the expiration of the 180-day
lock-up period. In addition, we have generally agreed that, during the 180-day
lock-up period, we will not, without the prior written consent of
, (a) consent to the disposition of any shares held by
stockholders prior to the expiration of the 180-day lock-up period or (b) issue,
sell, contract to sell or otherwise dispose of, any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock, or any securities
convertible into, exercisable for or exchangeable for shares of Common Stock,
other than our sale of shares in the Offering, our issuance of Common Stock upon
the exercise of currently outstanding options and warrants, and our issuance of
incentive awards under our stock incentive plans. See "Shares Eligible for
Future Sale."
Directed Shares
We have requested that the underwriters reserve up to
percent of the Shares of Common Stock for sale at the initial public offering
price to directors, officers, employees and other individuals designated by the
Company. All of our directors, executive officers and five percent (5%) or
greater stockholders have received allocations in the directed share program.
The number of shares reserved for these persons ranges from to
Shares.
The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.
No Prior Public Market
Prior to this Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock
offered by this Prospectus has been determined through negotiations between us
and the representatives. Among the factors considered in these negotiations were
prevailing market conditions, our financial information, market valuations of
other companies that we and the representatives believe to be comparable to us,
estimates of our business potential, the present state of our development and
other factors deemed relevant.
Stabilization
The representatives have advised us that, under Regulation M under the
Securities Exchange Act, some participants in the Offering may engage in
transactions, including stabilizing bids, syndicate covering transactions or the
imposition of penalty bids, that may have the effect of stabilizing or
maintaining the market price of the Common Stock at a level above that which
might otherwise prevail in the open market. A "stabilizing bid" is a bid for or
the purchase of the Common Stock on behalf of the underwriters for the purpose
of fixing or maintaining the price of the Common Stock. A "syndicate covering
transaction" is the bid for or purchase of the Common Stock on behalf of the
underwriters to reduce a short position incurred by the underwriters in
connection with the Offering. A "penalty bid" is an arrangement permitting the
representatives to reclaim the selling concession otherwise accruing to an
underwriter or syndicate member in connection with the Offering if the Common
Stock originally sold by
53
<PAGE> 59
the underwriter or syndicate member is purchased by the representatives in a
syndicate covering transaction and has therefore not been effectively placed by
the underwriter or syndicate member. The representatives have advised us that
these transactions may be effected on the Nasdaq SmallCap Market or otherwise
and, if commenced, may be discontinued at any time.
LEGAL MATTERS
The validity of the shares of Common Stock offered by this Prospectus will
be passed upon for us by Jeffer, Mangels, Butler & Marmaro LLP, Los Angeles,
California.
EXPERTS
The financial statements of the Company and Stampville as of September 30,
1999, have been included herein and in the registration statement in reliance
upon the report of Grant Thornton LLP, independent certified public accountants,
appearing elsewhere herein and upon the authority of said firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a Registration
Statement on Form SB-2, including exhibits, schedules and amendments to that
registration statement, under the Securities Act with respect to the shares of
Common Stock to be sold in this Offering. This Prospectus does not contain all
the information included in our Registration Statement. For further information
with respect to us and the shares of Common Stock to be sold in this Offering,
we refer you to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete, and in each instance we refer you to
the copy of that contract, agreement or other document to the extent filed as an
exhibit to the Registration Statement.
You may read and copy all or any portion of the Registration Statement or
any other information we file at the Securities and Exchange Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the Securities and Exchange Commission. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the operation
of the public reference room. Our Securities and Exchange Commission filings,
including the Registration Statement, are also available to you over the
Internet on the Securities and Exchange Commission's web site located at
http://www.sec.gov. As a result of this Offering, we will become subject to the
information and reporting requirements of the Exchange Act and, in accordance
with the Exchange Act, we will file periodic reports, proxy statements and other
information with the Securities and Exchange Commission. Upon approval of the
Common Stock for quotation on the Nasdaq SmallCap Market those reports, proxy
statements and other information may also be inspected at the offices of [Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006. We intend to furnish
our stockholders with annual reports containing audited financial statements
and with quarterly reports for the first three quarters of each fiscal year
containing unaudited interim financial information.
54
<PAGE> 60
February 11, 2000
IT Tech FS99
CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
I.T. TECHNOLOGY, INC.
(a development stage enterprise)
September 30, 1999
<PAGE> 61
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
I.T. Technology, Inc.
We have audited the accompanying consolidated balance sheet of I.T. Technology,
Inc. (the "Company") (a development stage enterprise) as of September 30, 1999,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for the period from February 2, 1999 (inception) through September
30, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the consolidated financial position of I.T.
Technology, Inc. as of September 30, 1999, and the consolidated results of its
operations and its consolidated cash flows for the period from February 2, 1999
(inception) through September 30, 1999, in conformity with generally accepted
accounting principles.
Los Angeles, California
December 30, 1999 (except for Note H,
as to which the date is January 17, 2000)
<PAGE> 62
I.T. Technology, Inc.
(a development stage enterprise)
CONSOLIDATED BALANCE SHEET
September 30, 1999
ASSETS
<TABLE>
<S> <C>
CURRENT ASSET
Cash $ 172,682
Deferred offering costs 59,147
-----------
Total current assets 231,829
PROPERTY AND EQUIPMENT, net 643,938
INVESTMENT IN STAMPVILLE.COM INC 245,669
-----------
Total assets $ 1,121,436
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 50,206
Accrued expenses 25,000
Notes payable - current portion 65,300
-----------
Total current liabilities 140,506
NOTES PAYABLE, less current portion 457,098
STOCKHOLDERS' EQUITY
Preferred stock, par value $.001; authorized 25,000,000 shares,
no shares issued and outstanding -
Common stock, par value $.001; authorized 100,000,000 shares,
issued and outstanding 14,000,000 shares 14,000
Additional paid-in-capital 617,540
Deficit accumulated during the development stage (107,708)
-----------
Total stockholders' equity 523,832
-----------
$ 1,121,436
===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-2
<PAGE> 63
I.T. Technology, Inc.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF OPERATIONS
Period from February 2, 1999 (inception) through September 30, 1999
<TABLE>
<S> <C>
Income and (expenses)
Foreign currency transaction gain $ 15,858
Other income 3,760
Legal and professional fees (67,336)
Salaries (25,000)
Interest (5,504)
Travel and entertainment (3,783)
Equity in loss of Stampville.com, Inc. (4,331)
Other expense (21,372)
------------
NET LOSS $ (107,708)
============
Basic loss per common share $ (0.01)
============
Weighted average shares outstanding $ 10,157,292
============
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
<PAGE> 64
I.T. Technology, Inc.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Period
from February 2, 1999 (inception) through September 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Preferred Stock Common Stock during the
--------------- -------------------------- Additional development
Shares Amount Shares Amount paid-in capital stage Total
------ ------ --------------------------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at (inception)
February 2, 1999 -- $-- -- $ -- $ -- $ -- $ --
Issuance of shares to
founders for cash -- -- 4,000,000 4,000 16,000 -- 20,000
Issuance of shares for cash, net
of $27,210 issuance costs -- -- 9,850,000 9,850 594,190 -- 604,040
Issuance of shares for
services -- -- 150,000 150 7,350 -- 7,500
Net loss -- -- -- -- -- (107,708) (107,708)
--- --- ---------- ---------- ---------- ---------- ----------
Balance at September 30, 1999 -- $-- 14,000,000 $ 14,000 $ 617,540 $ (107,708) $ 523,832
=== === ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE> 65
I.T. Technology, Inc.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS Period from
February 2, 1999 (inception) through September 30, 1999
<TABLE>
<S> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Net loss $(107,708)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 7,170
Equity in losses of Stampville.Com Inc. 4,331
Increase in accounts payable 50,206
Increase in accrued expenses 25,000
Nonmonetary compensation 7,500
---------
Net cash flows used in operating activities (13,501)
---------
Cash flows from investing activities:
Investment in Stampville.Com Inc. (250,000)
Purchase of property and equipment (194,010)
---------
Net cash flows used in investing activities (444,010)
---------
Cash flows from financing activities:
Proceeds from short-term borrowing 65,300
Proceeds from issuance of common stock 624,040
Increase in deferred offering costs (59,147)
---------
Net cash flows provided by financing activities 630,193
---------
Net increase in cash 172,682
Cash at beginning of period --
---------
Cash at end of period $ 172,682
=========
Supplemental disclosures of noncash investing activities:
Property acquired by issuance of note payable $ 457,098
=========
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE> 66
I.T. Technology, Inc.
(a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
NOTE A - COMPANY BACKGROUND AND BUSINESS PLAN
I.T. Technology, Inc. ("ITT") was incorporated on February 2, 1999 to engage
in businesses related to the Internet, e-commerce and technology ventures,
directly and through the acquisition of equity ownership in Internet related
and other technology companies. ITT has a wholly-owned subsidiary, I.T.
Technology Pty. Ltd. (collectively referred to as the "Company"), which
furthers its operations in Australia.
The Company is in the development stage, and its efforts through September
30, 1999 have been principally devoted to organizational activities, raising
capital, acquiring an equity interest in Stampville.Com Inc., acquiring
executive offices in Australia and other development efforts. Management
anticipates incurring substantial additional losses as it pursues its
strategies. Additionally, the Company will require substantial capital to
fund the development and operations of Stampville.Com Inc. (See Note D).
Subsequent to September 30, 1999, the Company successfully completed a
private placement of 2,500,000 shares of common stock for $2,500,000. The
Company intends to meet further capital funding requirements through an
initial public offering ("IPO"). The Company expects that the proceeds of the
IPO will be sufficient to fund its activities and investments. There can be
no assurance that the Company will be able to complete the offering, or make
further investments in Stampville.Com Inc.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Principles of Consolidation
The consolidated financial statements include the accounts of ITT and its
wholly-owned subsidiary. All material intercompany accounts and transactions
have been eliminated.
2. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-6
<PAGE> 67
I.T. Technology, Inc.
(a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
3. Investment in Stampville.Com Inc.
The investment in Stampville.Com Inc. consists of an equity interest and is
accounted for using the equity method because management believes it has the
ability to exercise significant influence over the financial and operating
policies of Stampville.Com Inc.
4. Income Taxes
Deferred income taxes are recorded using enacted tax laws and rates for the
years in which the taxes are expected to be paid. Deferred income taxes are
provided for when there is a temporary difference in recording such items for
financial reporting and income tax reporting. The temporary differences that
give rise to deferred tax assets primarily are depreciation and accrual to
cash adjustments which were reduced by a like amount because of the
uncertainty that the deferred tax assets will not be realized.
5. Foreign Currency
The U.S. dollar is considered to be the functional currency of the subsidiary
and transaction gains and losses are included in the determination of net
loss for the period.
6. Year End
The Company's fiscal year ends on December 31.
7. Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income.
SFAS No. 130, which is effective for fiscal periods beginning after December
15, 1997 and requires restatement of earlier periods presented, establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general purpose financial statements.
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from non-owner sources. The impact of SFAS No. 130 is not
significant to the consolidated financial statements.
8. Deferred Offering Costs
Costs incurred in connection with the Company's private placement (which
closed subsequent to September 30, 1999) and an anticipated public offering
are deferred and will be charged against stockholders' equity upon successful
completion of the respective offering. If either offering is not consummated,
the related deferred offering costs will be charged to expense.
F-7
<PAGE> 68
I.T. Technology, Inc.
(a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999
NOTE C - CAPITALIZATION
1. Preferred Stock
The Company has authorized the issuance of 25,000,000 shares of preferred
stock, par value $.001 per share. The board of directors of the Company has
the right to create one or more series of preferred stock and to determine
the rights, preferences and privileges of any such series.
2. Common Stock
The Company issued 4,000,000 shares of Common Stock to the founders through
controlled companies at a purchase price of $0.005 per share (aggregate of
$20,000).
The Company issued 10,000,000 shares of Common Stock to various companies
that are affiliates of certain officers of the Company at a purchase price of
between $0.05 and $0.125 per share (aggregate of $631,250), excluding stock
offering costs of $27,120.
NOTE D - INVESTMENT IN STAMPVILLE.COM INC.
The Company paid $250,000 cash to acquire approximately a 6% equity interest
in the common stock of Stampville.Com Inc. (a New York corporation formed on
April 14, 1999). Stampville.Com Inc. is newly formed to engage in the
business of selling collectible stamps and other memorabilia on the Internet
and on a wholesale basis to large chain stores and small businesses, and on a
retail basis to the general public. Stampville.Com Inc. is a development
stage enterprise and its activities through September 30, 1999 have been
principally devoted to organizational and development activities. As of
September 30, 1999, the assets of Stampville.Com Inc. consisted principally
of $97,000 in cash and $52,000 in software development costs. Stampville.Com
Inc. entered into an agreement dated December 1, 1999, with the
Inter-Governmental Philatelic Corporation ("IGPC"), of which the president is
a related party to certain officers of Stampville.Com Inc., whereby IGPC will
provide stamp sheets as well as additional services, including website
content, to Stampville.Com Inc.
The agreement with IGPC has a term of three years with an automatic renewal
to extend for an additional two years, unless terminated at the end of the
initial term by either party. In addition, IGPC extended a line of credit not
to exceed $2,000,000 to Stampville.Com Inc. for the purchase and shipping of
stamps from IGPC. Amounts outstanding under the credit line are payable
within 120 days from the date of such credit.
Pursuant to the terms of a Stock Purchase Agreement, the Company had an
option to acquire additional shares of Stampville.Com Inc. common stock at
its sole discretion in various amounts
F-8
<PAGE> 69
I.T. Technology, Inc.
(a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999
NOTE D - INVESTMENT IN STAMPVILLE.COM INC. - Continued
up to an aggregate of $5,000,000 over the next three years. On December 8, 1999,
the Company amended the Stock Purchase Agreement to accelerate the payment terms
contained in the original Stock Purchase Agreement, which would allow the
Company to own 50.1 percent of Stampville.Com Inc.'s Common Stock. The amended
agreement includes payment terms as follows:
1. Cash payment of $500,000 ($250,000 of which has been paid prior to and
$250,000 subsequent to September 30, 1999).
2. Cash payment of $1,000,000 payable within 60 days from the date of the
amended agreement (paid subsequent to September 30, 1999).
3. Eight equal quarterly installments of $156,250 commencing upon the
execution of the amended agreement.
4. The Company agrees to use commercially reasonable efforts to make a
further payment, or otherwise cause a party or parties designated by the
Company to invest an additional $5,000,000 in Stampville.Com Inc. The
additional payment is payable no later than twelve (12) months from the
date of the amended agreement; or alternatively within 30 days following
the closing of an initial public offering "IPO" by the Company, that
raises a minimum amount of $10,000,000.
If the Company fails to make or have made the further payment of $5,000,000
(as noted in point 4 above), its percentage of Common Stock owned would be
reduced to no less than 27.5 percent, as defined in the agreement.
In connection with the amended stock purchase, the Company granted to
individuals nominated by the current shareholders of Stampville.Com Inc.,
other than the Company, options to purchase 1,600,000 shares of the Company's
Common Stock at an exercise price equal to $1.25 per share. Upon completion
of the additional $5,000,000 payment mentioned above, the options become
exercisable commencing two years from the date of grant and then in
increments of 20 percent per annum thereafter.
In addition, the Company has entered into a shareholders agreement with
Stampville.Com Inc. and its shareholders that, among other things, restricts
the ability of the shareholders of Stampville.Com Inc. to transfer their
interests; provides that at least one board of director of Stampville.Com
Inc. be designated by the Company and requires that the Company-designated
director approve of certain significant corporate transactions; and provides
that at least one of the executive officers of Stampville.Com Inc. be an
individual selected by the Company and that the Company representative have
the right to approve certain corporate transactions. The Company's right to
any preferential board and management representation will terminate at the
earlier of the cancellation of the Stock Purchase Agreement or on June 18,
2002.
F-9
<PAGE> 70
I.T. Technology, Inc.
(a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999
NOTE D - INVESTMENT IN STAMPVILLE.COM INC. - Continued
Stampville.Com Inc.'s continuance is dependent on its ability to obtain
funds from the Company pursuant to the Stock Purchase Agreement and its
continued agreement with IGPC. There can be no assurance that the Company or
Stampville.Com Inc. will obtain the financing to develop or to sustain the
operations of Stampville.Com Inc.
The Company has entered into a consulting agreement with an affiliate which
would provide services related to the Company's investment in Stampville.Com
Inc. Pursuant to the agreement, the Company issued 150,000 shares of its
common stock to the affiliate. As a result, the Company recorded compensation
expense of $7,500. Upon the successful completion of an IPO which raises no
less than $10,000,000 of net proceeds or the investment of no less than an
additional $6,250,000 in Stampville.Com Inc., the Company will issue up to
an additional 350,000 shares of its common stock to such affiliate. The
Company's interest in Stampville.Com Inc. may be reduced by up to one
percent (1%) pursuant to its consulting agreement with such affiliate if the
Company consummates its 50.1 percent acquisition of Stampville.Com Inc.
NOTE E - NOTES PAYABLE
Long-term debt is as follows at September 30, 1999:
<TABLE>
<S> <C>
Loan to purchase property on 34-36 Punt Road in Melbourne Australia,
collateralized by the building and bearing interest at a rate of 7.25% per
annum. The loan requires monthly payments of interest with the principal
balance due in July 2001. The loan is guaranteed by a shareholder of
the Company. Pursuant to the terms of the purchase agreement, title to
the property will transfer when the principal balance is paid in full. $457,098
Note payable to Daccar Pty Ltd., an affiliate of the
Company, payable on demand and bearing interest at the
National Australia Bank Ltd. bill rate plus 1.5%. The note
was repaid in November 1999. 65,300
----------
522,398
Less - current portion (65,300)
----------
$457,098
==========
</TABLE>
F-10
<PAGE> 71
I.T. Technology, Inc.
(a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1999
NOTE F - LOSS PER COMMON SHARE
Basic loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding. Common stock equivalents were
excluded from the diluted calculation, as they were antidilutive.
<TABLE>
<CAPTION>
Period from February 2, 1999 (inception)
through
September 30, 1999
----------------------------------------
Weighted-
Average Per share
Net loss Shares Amount
-------- --------- ----------
<S> <C> <C> <C>
Basic loss per share
Net loss available to common
shareholders $107,708 10,157,292 $ 0.01
======== ========== ========
Diluted loss per share
Net loss available to common
shareholders $107,708 10,157,292 0.01
======== ========== ========
</TABLE>
NOTE G - CONCENTRATION OF CREDIT RISK
As of September 30, 1999, the Company maintained primarily all of its cash in
an Australian bank. Subsequent to September 30, 1999, the Company transferred
primarily all of its cash to an American financial institution. The Company
is exposed to credit loss for the amount of cash equivalents in the event of
nonperformance by the financial institution, however; the Company has not
experienced any losses in these accounts and believes it is not exposed to
any significant credit risk on cash equivalents.
NOTE H - SUBSEQUENT EVENT
On October 26, 1999, the Company completed a private placement of 2,500,000
shares of common stock for $1.00 per share net of offering costs of $59,600
in costs.
On November 11, 1999, the Company repaid the Daccar Pty. Ltd. Note payable of
$65,300 plus accrued interest of approximately $1,400.
On January 17, 2000, the Company entered into a one-year consulting agreement
with a Consultant to serve as its Vice President of Business Development.
The Company will pay the Consultant $12,000 per year and has granted the
Consultant 1,450,000 stock options to purchase its common stock at an
exercise price of between $1.00 and $2.00. The options vest at various times
upon the Company reaching certain levels of market capitalization of the
occurrence of certain other events. The term of these options is the lesser
of (i) two years from the vesting date, and (ii) five years from the grant
date.
F-11
<PAGE> 72
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
STAMPVILLE.COM INC.
SEPTEMBER 30, 1999
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......... F-13
FINANCIAL STATEMENTS
BALANCE SHEET............................................. F-14
STATEMENT OF OPERATIONS................................... F-15
STATEMENT OF STOCKHOLDERS' EQUITY......................... F-16
STATEMENT OF CASH FLOWS................................... F-17
NOTES TO FINANCIAL STATEMENTS............................. F-18
</TABLE>
F-12
<PAGE> 73
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Stampville.Com Inc.
We have audited the balance sheet of Stampville.Com Inc. (the "Company")
(a development stage enterprise) as of September 30, 1999, and the related
statements of operations, stockholders' equity, and cash flows for the period
from April 14, 1999 (inception) through September 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly,
in all material respects, the financial position of Stampville.Com Inc. as of
September 30, 1999, and the results of its operations and its cash flows
for the period from April 14, 1999 (inception) through September 30, 1999, in
conformity with generally accepted accounting principles.
Los Angeles, California
December 30, 1999
F-13
<PAGE> 74
STAMPVILLE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash...................................................... $ 97,279
Other assets.............................................. 487
--------
Total current assets.............................. 97,766
EQUIPMENT, net.............................................. 17,643
CAPITALIZED SOFTWARE COSTS.................................. 52,000
--------
Total assets...................................... $167,409
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses.......................................... $ 4,035
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 200 shares, issued
and outstanding 160 shares............................. 250,000
Deficit accumulated during the development stage.......... (86,626)
--------
Total stockholders' equity........................ 163,374
--------
$167,409
========
</TABLE>
The accompanying notes are an integral part of this statement.
F-14
<PAGE> 75
STAMPVILLE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
PERIOD FROM APRIL 14, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Expenses
Salaries.................................................. $52,361
Legal and professional fees............................... 16,849
Rent...................................................... 5,000
Travel and entertainment.................................. 3,000
Other..................................................... 9,416
-------
NET LOSS.......................................... $86,626
=======
</TABLE>
The accompanying notes are an integral part of this statement.
F-15
<PAGE> 76
STAMPVILLE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 14, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK DURING THE
----------------- DEVELOPMENT
SHARES AMOUNT STAGE TOTAL
------ -------- ----------- --------
<S> <C> <C> <C> <C>
Balance at (inception) April 14, 1999.................. -- $ -- $ -- $ --
Issuance of shares to founders......................... 150 -- -- --
Issuance of shares for cash............................ 10 250,000 -- 250,000
Net loss............................................... -- -- (86,626) (86,626)
--- -------- -------- --------
Balance at September 30, 1999.......................... 160 $250,000 $(86,626) $163,374
=== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
F-16
<PAGE> 77
STAMPVILLE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 14, 1999 (INCEPTION) THROUGH SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Net loss.................................................. $ (86,626)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization.......................... 2,023
Increase in other assets............................... (487)
Increase in capitalized software costs................. (52,000)
Increase in accrued expenses........................... 4,035
---------
Net cash flows used in operating activities....... (133,055)
---------
Cash flows from investing activities:
Purchase of equipment -- net cash flows used in
investing activities................................... (19,666)
---------
Cash flows from financing activities:
Proceeds from issuance of common stock -- net cash flows
provided by financing activities....................... 250,000
---------
Net increase in cash.............................. 97,279
Cash at beginning of period................................. --
---------
Cash at end of period....................................... $ 97,279
=========
</TABLE>
The accompanying notes are an integral part of this statement.
F-17
<PAGE> 78
STAMPVILLE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE A -- DESCRIPTION OF BUSINESS
Stampville.Com Inc. (the "Company") was incorporated on April 14, 1999 to
engage in the business of selling collectible stamps and other memorabilia on
the Internet and on a wholesale basis to large chain stores and small
businesses, and on a retail basis to the general public and collectors.
On July 18, 1999, I.T. Technology, Inc. ("ITT") entered into an agreement
to purchase an equity interest of 25% in the Company in exchange for payment of
up to $5,000,000, payable in installments. On December 8, 1999, the agreement
was amended to enable ITT to accelerate and increase the payments up to
$7,750,000 in exchange for an immediate 50.1 percent of the Company's common
stock. If ITT fails to make the payments in full, its ownership would be reduced
to the lesser of 1) 27.5 percent of the Company's common stock, or 2) the total
invested by ITT pursuant to the purchase agreement divided by $100,000.
The Company also entered into a Shareholders Agreement (the "Shareholders
Agreement") with ITT. The Shareholders Agreement, among other things, restricts
the ability of the shareholders of the Company to transfer their interests and
grants a right of first refusal with respect to any potential sale of shares of
the Company. In addition, pursuant to the amended agreement, ITT is entitled to
appoint one-half of the members of the board of directors of the Company. ITT is
also entitled to designate an individual to serve as the chief operating
officer, or such other position as the board of directors of the Company may
designate. Under any circumstances, ITT's right to any preferential board and
management representation will terminate at the earlier of the cancellation of
the Stock Purchase Agreement or on June 18, 2002.
The Company is in the development stage, and its efforts through September
30, 1999 have been principally devoted to the organizational activities. As a
result, the Company has experienced operating losses since its inception. To
finance its strategic plans and development, the Company is highly dependent on
ITT's ability to render the accelerated payment. Subsequent to September 30,
1999, in connection with the stock agreement, the Company received $250,000. ITT
intends to raise the additional required financing through an initial public
offering. There can be no assurance that ITT will be successful with its
offering, or that growth in the Company's revenue will begin or that the Company
or ITT will be able to obtain additional financing to develop or sustain
further investments in or operations of the Company.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. INCOME TAXES
Deferred income taxes are recorded using enacted tax laws and rates for the
years in which the taxes are expected to be paid. Deferred income taxes are
provided for when there is a temporary difference in recording such items for
financial reporting and income tax reporting. The temporary differences that
give rise to deferred tax assets primarily are depreciation and accrual to cash
adjustments which were reduced by a like amount because of the uncertainty that
the deferred tax asset will not be realized.
F-18
<PAGE> 79
STAMPVILLE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3. YEAR END
The Company's fiscal year ends on December 31.
4. CAPITALIZED SOFTWARE COSTS
The Company has deferred and capitalized software cost related to its web
site development. As of September 30, 1999, the website is still under
development. Once the website is complete and has been placed in service, the
capitalized cost will be amortized using the straight line method over the
estimated useful life of two years.
NOTE C -- CAPITALIZATION
The Company issued 150 shares of common stock to the founders at a nominal
purchase price per share.
Through September 1999, the Company issued 10 shares of common stock to ITT
at an aggregate purchase price of $250,000.
NOTE D -- COMMITMENTS
The Company has entered into a supplier's agreement on December 1, 1999
with the Inter-Governmental Philatelic Corporation ("IGPC"), of which the
president is a related party to certain officers of the Company. IGPC, one of
the world's largest suppliers and dealers of philatelic stamps, represents
approximately seventy postal administrations throughout the world in matters
relating to the design, production and marketing of their postage stamps.
Pursuant to its agreement with the Company, IGPC has agreed to supply the
Company with stamps at the lowest pricing structure available to other dealers
and that IGPC makes available for public sale.
The agreement with IGPC has a term of three years with an automatic renewal
to extend for an additional two years unless terminated at the end of the
initial term by either party. In addition, IGPC extended a line of credit not to
exceed $2,000,000 to the Company for the purchase and shipping of stamps from
IGPC. Amounts outstanding under the credit line are payable within 120 days from
the date of such credit.
The Company has also entered into an agreement with Dimension 11 to assist
in the development of its web site including the implementation of an electronic
ordering system for the stamp market. A total of $180,000 was committed to the
first phase of this project of which $130,000 remains to be incurred.
F-19
<PAGE> 80
STAMPVILLE.COM, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
NOTE E -- LEASES
The Company leases office facilities and equipment under non-cancelable
lease arrangements that expire at various dates through November 2001. Rental
commitments for non-cancelable leases are payable as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
Three months to December 31, 1999.................. $ 6,000
2000............................................... 48,000
2001............................................... 44,000
-------
$98,000
=======
</TABLE>
NOTE F -- SUBSEQUENT EVENTS
Subsequent to September 30, 1999, the Company amended its certificate of
incorporation to change and increase the capitalization from 200 shares without
par to 100,000 shares with a $.01 par value.
F-20
<PAGE> 81
- ------------------------------------------------------
- ------------------------------------------------------
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. NEITHER I.T. TECHNOLOGY, INC. NOR ANY UNDERWRITER HAS AUTHORIZED
ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH DIFFERENT OR ADDITIONAL
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER
TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THESE SECURITIES.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE US TO PERMIT A PUBLIC
OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN
ANY OF THESE JURISDICTIONS. PERSONS WHO COME INTO POSSESSION OF THIS PROSPECTUS
IN JURISDICTIONS OUTSIDE THE US AND CANADA ARE REQUIRED TO INFORM THEMSELVES
ABOUT AND TO OBSERVE THE RESTRICTIONS OF THAT JURISDICTION RELATED TO THIS
OFFERING AND THE DISTRIBUTION OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 4
Use of Proceeds....................... 12
Dividend Policy....................... 12
Capitalization........................ 13
Selected Financial Data............... 15
Dilution.............................. 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 25
Business.............................. 28
Management............................ 38
Transactions with Management and
Others.............................. 43
Principal Stockholders................ 45
Description of Capital Stock.......... 47
Selling Shareholders.................. 49
Registration Rights................... 50
Shares Eligible for Future Sale....... 51
Underwriting.......................... 52
Legal Matters......................... 54
Experts............................... 54
Where You Can Find More Information... 54
Index to Financial Statements......... F-1
</TABLE>
------------------------
DEALER PROSPECTUS DELIVERY OBLIGATION:
UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
5,000,000 SHARES
[LOGO]
I.T. TECHNOLOGY, INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
, 2000
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 82
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the expenses to be incurred in connection
with the Offering described in this Registration Statement, all of which will be
paid by the Company. All amounts are estimates, other than the Securities and
Exchange Commission registration fee, the National Association of Securities
Dealers, Inc. fee and the [Nasdaq] listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $
National Association of Securities Dealers, Inc. fee........ $
[Nasdaq] listing fee........................................ $
Accounting fees and expenses................................ $
Legal fees and expenses..................................... $
Director and officer insurance expenses..................... $
Printing and engraving expenses............................. $
Transfer agent and registrar fees and expenses.............. $
Blue Sky fees and expenses (including counsel fees)......... $
Miscellaneous expenses...................................... $
-------
Total............................................. $
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Limitations on liability and indemnification of directors and officers. The
Delaware General Corporation Law authorizes corporations to limit or eliminate
the personal liability of directors to corporations and their stockholders for
monetary damages for breaches of directors' applicable duties. Our certificate
of incorporation includes a provision that eliminates the personal liability of
our directors for monetary damages for actions taken as a director, except for
liability:
- for any breach of the director's duty of loyalty to us or our
stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; and
- for any transaction from which the director derived an improper personal
benefit.
Our certificate of incorporation also includes the following provisions
regarding indemnification of our directors and officers:
- we must indemnify our directors and officers to the fullest extent
permitted by Delaware law, subject to very limited exceptions;
- we may indemnify our other employees and agents to the same extent that
we indemnify our directors and officers; and
- we must advance expenses, as incurred, to our directors and officers in
connection with legal proceedings to the fullest extent permitted by
Delaware law, subject to very limited exceptions.
Prior to the closing of this Offering, the Company intends to amend its
existing directors' and officers' insurance to provide indemnification to
certain securities matters. We believe that these indemnification provisions in
our certificate of incorporation and insurance are necessary to attract and
retain qualified directors and executive officers.
II-1
<PAGE> 83
The limitation of liability and indemnification provisions in our
Certificate of Incorporation may discourage stockholders from bringing a lawsuit
against directors for breach of their fiduciary duty. These provisions may also
have the effect of reducing the likelihood of derivative litigation against
directors and officers, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder's
investment may be adversely affected to the extent we pay the costs of
settlement and damage awards against directors and officers pursuant to these
indemnification provisions.
The Company's Certificate of Incorporation provides that the directors will
not be liable to the Company or to any Stockholder for monetary damages for
breach of fiduciary duty as a director, to the full extent that such limitation
or elimination of liability is permitted under Delaware law.
The Company's Bylaws provide that the Company will indemnify its directors
and officers to the full extent permitted under Delaware law. Pursuant to the
Bylaws and Delaware law, the Company will indemnify each director and officer
against any liability incurred in connection with any action, suit, proceeding
or investigation in which he or she may be involved by reason of serving in such
capacity at the request of the Company.
Each director and officer is also entitled to indemnification against costs
and expenses (including attorneys' fees) incurred in defending or investigating
any action, suit, proceeding or investigation in which he or she may be involved
by reason of serving in such capacity at the request of the Company. The Bylaws
authorize the Company to advance funds to a director or officer for such costs
and expenses (including attorneys' fees) upon receipt of an undertaking in
writing by such director or officer to repay such amounts if it is ultimately
determined that he or she is not entitled to be indemnified. Notwithstanding the
foregoing, no advance shall be made by the Company if a determination is
reasonably and promptly made by the Board by a majority vote of a quorum of
disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs) by independent legal
counsel, that based upon the facts known to the Board or counsel at the time
such determination is made: (i) the director or officer acted in bad faith or
deliberately breached his duty to the Company or its stockholders; and (ii) as a
result of such actions by the director or officer, it is more likely than not
that it will ultimately be determined that such director or officer is not
entitled to indemnification.
The indemnification and advancement of expenses provided by the Bylaws are
not exclusive of any other rights to which a director or officer seeking
indemnification or advancement of expenses may be entitled under the Bylaws, any
agreement or any vote of stockholders or disinterested directors or otherwise.
The indemnification and advancement of expenses provided by the Bylaws continue
as to a person who has ceased to be a director or officer and inure to the
benefit of the heirs, executors and administrators of such a person.
The Company has purchased a directors' and officers' liability insurance
policy insuring directors and officers of the Company against any liability
asserted against such person and incurred by such person in any such capacity,
whether or not the Company would have the power to indemnify such person against
such liability under the Bylaws.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1. Form of Underwriting Agreement.(*)
2. None.
3.1 Certificate of Incorporation of the Company filed February
2, 1999.
3.2 By-laws of the Company dated February 2, 1999.
4. Stock Certificate specimen of the Company.(*)
5. Opinion of Jeffer, Mangels, Butler & Marmaro LLP.(*)
</TABLE>
II-2
<PAGE> 84
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.1(a) Stock Purchase Agreement between the Company and
Stampville.Com Inc. dated June 18, 1999.
10.1(b) Amendment to Stock Purchase Agreement between the Company
and Stampville.Com Inc. dated December 8, 1999.
10.2 Real Property Purchase Agreement between Rococo Holdings
Pty. Ltd. And I.T. Technology Pty. Ltd. Dated July 7, 1999.
10.3(a) Lease Agreement between Stampville.Com Inc. and RDL Realty,
LLC dated June 18, 1999.
10.3(b) Rider to Lease Agreement between Stampville.Com Inc. and RDL
Realty, LLC dated November 28, 1999.
10.4 Suppliers' Agreement between Stampville.Com Inc. and Inter
Governmental Philatelic Corporation dated December 1, 1999.
10.5(a) Consulting Agreement between Robert Petty and the Company
dated January 17, 2000.
10.5(b) Consulting Agreement between Robert Petty and Stampville.Com
Inc. dated January 10, 2000.
10.5(c) Consulting Agreement between Mendel Mochkin and the Company
dated June 18, 1999.
10.6(a) Option Agreement between Robert Petty and I.T. Technology,
Inc. dated January 17, 2000.
10.6(b) Option Agreement between C. Jonathan Malamud and the Company
dated December 8, 1999.
11. Statement regarding computation of per share earnings.(*)
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Grant Thornton LLP
23.3 Consent of Jeffer, Mangels, Butler & Marmaro LLP (included
as part of Exhibit 5).
24. Power of attorney (included on the Signature Page).
27. Financial Data Schedule.
</TABLE>
- ---------------
(*) To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually, or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) (? 230.424(b) of this
Chapter) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate Offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the
II-3
<PAGE> 85
securities offered therein, and the Offering of such securities at that
time shall be deemed to be the initial bona fide Offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.
Insofar as indemnification for liabilities arising from the Securities Act
of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Act shall be deemed to be part of this Registration Statement
as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the Offering of such securities at that time shall be deemed to be
the initial bona fide Offering thereof.
II-4
<PAGE> 86
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Melbourne, Victoria,
AUSTRALIA, on February 14, 2000.
I.T. TECHNOLOGY, INC.
By: /s/ LEVI MOCHKIN
--------------------------------------
Levi Mochkin
Chairman of the Board, Chief
Executive Officer and Director
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Levi Mochkin and Henry Herzog, or either of them, as his or her true and lawful
attorney-in-fact and agent, acting alone, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) and additions to this Registration Statement, any Amendments thereto
and any Registration Statement for the same Offering which is effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, each acting alone, full powers and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all said attorney-in-fact and agent,
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Company in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ HENRY HERZOG Director February 14, 2000
- ------------------------------------------------
Henry Herzog
/s/ LEVI MOCHKIN Chief Executive Officer and February 14, 2000
- ------------------------------------------------ Director
Levi Mochkin
/s/ JONATHAN HERZOG Chief Financial Officer and February 14, 2000
- ------------------------------------------------ Director
Jonathan Herzog
/s/ ANTHONY DAVIS Director February 14, 2000
- ------------------------------------------------
Anthony Davis
/s/ FARREL MELTZER Director February 14, 2000
- ------------------------------------------------
Farrel Meltzer
/s/ HELEN ABELES Director February 14, 2000
- ------------------------------------------------
Helen Abeles
</TABLE>
II-5
<PAGE> 1
EXHIBIT 3.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
-----------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "I.T. TECHNOLOGY, INC.", FILED IN THIS OFFICE ON THE SECOND DAY
OF FEBRUARY, A.D. 1999, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
/s/ EDWARD J. FREEL
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2997302 8100 AUTHENTICATION: 9555341
991042262 DATE: 02-02-99
<PAGE> 2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/02/1999
991042262 - 2997302
CERTIFICATE OF INCORPORATION
OF
I.T. Technology, Inc.
* * * * *
The undersigned incorporator, in order to form a corporation under the
General Corporation Law of the State of Delaware ("DGCL"), certifies as follows:
1. The name of the corporation is: I.T. Technology, Inc.
2. The address of its registered office in the State of Delaware is 15
East North Street, Dover, Delaware 19901, County of Kent. The name of its
registered agent at such address is Paracorp Incorporated.
3. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the DGCL.
4. This Corporation is authorized to issue two classes of shares: Common
and Preferred. The number of Common shares which the corporation is authorized
to issue is one hundred million (100,000,000) each with $.001 per share par
value and the number of Preferred shares which the corporation is authorized to
issue is twenty five million (25,000,000) each with $.001 per share par value,
which preferred stock may be issued in one or more series as may be determined
from time to time by the Board of Directors, each of which series shall be
distinctly designated. The Board of Directors is hereby authorized to fix or
alter the voting rights, designations, powers, preferences and relative and
other special rights, and the qualifications, limitations and restrictions of
any wholly unissued series of preferred stock, and the number of shares of any
such series, and to increase or decrease the number of shares of any such series
subsequent to the issue of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of that series.
5. The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
Tanya Schneider c/o Jeffer, Mangels, Butler & Marmaro, LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
<PAGE> 3
6. The corporation is to have perpetual existence.
7. The business and affairs of the corporation shall be managed by or
under the direction of a Board of Directors. The number of directors which shall
constitute the whole Board of Directors shall be fixed by, or in the manner
provided in, the By-Laws.
8. In furtherance and not in limitation of the power conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the By-Laws of the corporation.
9. Any action required or permitted to be taken by the stockholders of
the corporation shall be effected at a duly called annual meeting or special
meeting of stockholders of the corporation and shall not be effected by consent
in writing by the holders of outstanding stock pursuant to Section 228 of the
DGCL or any other provision of the DGCL. Except as otherwise required by law,
stockholders may not call any special meeting of stockholders and special
meetings of stockholders may only be called by the Board of Directors of the
corporation.
10. Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the By-Laws of the corporation. Elections of directors
need not be by written ballot unless the By-Laws of the corporation shall so
provide.
11. No stockholder of the corporation shall by reason of holding shares
of any class of stock have any cumulative voting right. At all elections of
directors of the corporation, or at elections held under specified
circumstances, each holder of stock or of any class or classes or of a series of
series thereof shall only be entitled to one vote for each share of capital
stock held by such stockholder.
12. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this
2
<PAGE> 4
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and said reorganization shall, if sanctioned by the
court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
13. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived any improper personal benefit.
14. The corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the DGCL, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall insure to the benefit of the heirs,
executors and administrators of such a person.
15. From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article 15.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the DGCL, does make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
2 day of February, 1999.
/s/ Tanya Schneider
------------------------------------
Tanya Schneider, Incorporator
3
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
I.T. TECHNOLOGY, INC.
(a Delaware corporation)
I
OFFICES
SECTION 1.1 Registered Office. The registered office of I.T. Technology,
Inc. (the "Corporation") in the State of Delaware shall be at the office of
Paracorp Incorporated at 15 East North Street, in the City of Dover, County of
Kent, Delaware 19901.
SECTION 1.2 Principal Office. The principal office for the transaction
of the business of the Corporation shall be c/o I.T. Technology Pty. Ltd., 861
High Street, Armadale VIC 3143, Melbourne, Australia. The Board of Directors
(the "Board") is hereby granted full power and authority to change said
principal office from one location to another.
SECTION 1.3 Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 Place of Meetings. Meetings of stockholders shall be held at
such places, within or without the State of Delaware, as may be designated from
time to time by the person or persons calling the respective meeting and
specified in the respective notices or waivers of notice thereof or, if not so
designated, at the principal office of the Corporation.
SECTION 2.2 Annual Meeting. Annual meetings of stockholders for the
purpose of electing directors and for the transaction of such proper business as
may come before such meetings commencing with the year 1999, shall be held on
the last Thursday in June if not a legal holiday, and if a legal holiday, then
on the next secular day following, at 10:00 A.M. or at such other time and date
as may be authorized by resolution of the Board of Directors.
SECTION 2.3 Special Meeting. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called at any time only by the majority of
the Board, the Chairman of the Board, or the President.
SECTION 2.4 Notice of Meeting. Except as otherwise required by law,
written notice of each meeting of the stockholders, whether annual or special,
shall be given to each stockholder entitled to vote at such meeting not less
than ten nor more than sixty days before the date of the meeting. Such notice
shall state the place, date, and hour of the meeting and (a) in the case of a
special meeting, the general nature of the business to be transacted, and that
no other business may be transacted, or (b) in the case of the annual meeting,
those matters which the Board, at the time of the mailing of the notice, intends
to present for action by the stockholders, but subject to the provisions of
applicable law, any proper matter may be presented at the meeting for such
action. The notice of any meeting at which directors are to be elected shall
include the names of nominees intended at the time of the notice to be presented
by management for election.
Notice of a meeting of the stockholders shall be given either
personally, via facsimile, or by first-class mail, or by other means of written
communication, addressed to the stockholder at the address or fax number of such
stockholder appearing on the records of the Corporation or given by the
stockholder to the Corporation for the purpose of notice. Notice by mail shall
be deemed to have been
Exhibit Page C2
<PAGE> 2
given at the time a written notice is deposited in the United States mails,
Postage prepaid. Any other written notice shall be deemed to have been given at
the time it is personally delivered to the recipient or is delivered to a common
carrier for transmission, or actually transmitted by the person giving the
notice by electronic means, to the recipient.
SECTION 2.5 Quorum. The holders of 33 1/3% of the shares of stock
entitled to vote at any meeting of the stockholders of the Corporation, present
in person or represented by proxy, shall constitute a quorum for the transaction
of business thereat or any adjournment thereof, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
SECTION 2.6 Voting.
(a) The stockholders entitled to notice of any meeting or to vote at any
such meeting shall be only persons in whose name shares stand on the stock
records of the Corporation on the record date determined in accordance with
Section 2.7 of this Article.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
the pledgor shall have expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or the proxy of the pledgee, may represent such stock and
vote thereon. Stock having voting power standing of record in the names of two
or more persons, whether fiduciaries, members of a partnership, joint tenants in
common, tenants by entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance with
the provisions of the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the stockholder entitled
thereto in person or by the stockholder's proxy appointed by an instrument in
writing in accordance with Section 2.10 of this Article. The attendance at any
meeting of a stockholder who may theretofore have given a proxy shall not have
the effect of revoking the same unless the stockholder shall in writing so
notify the Secretary of the meeting prior to the voting of the proxy.
(d) At any meeting of the stockholders all matters, except as otherwise
provided in the Certificate of Incorporation, in these Bylaws or by law, shall
be decided by the vote of a majority in voting interest of the stockholders
present in person or by proxy and entitled to vote thereat and thereon, a quorum
being present. The vote at any meeting of the stockholders on any questions need
not be by ballot, unless so directed by the chairman of the meeting. On a vote
by ballot each ballot shall be signed by the stockholder voting, or by his
proxy, if there be such proxy, and each ballot shall state the number of shares
voted.
SECTION 2.7 Record Date. The Board may fix, in advance, a record date
for the
Exhibit Page C3
<PAGE> 3
determination of the stockholders entitled to notice of any meeting or to vote
or entitled to receive payment of any dividend or other distribution, or any
allotment of rights, or to exercise rights in respect of any other lawful
action. The record date so fixed shall be not more than 60 nor less than 10 days
prior to the date of the meeting nor more than 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 of the rights, as the case
may be, notwithstanding any transfer of shares on the books and the Corporation
after the record date. A determination of stockholders shall apply to any
adjournment of the meeting unless the Board fixes a new record date for the
adjourned meeting.
If no record date is fixed by the Board, 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 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. The record date for determining
stockholders for any purpose other than one set forth in this Section 2.7 of
this Article shall be at the close of business on the day on which the Board
adopts the resolution relating thereto, or the sixtieth day prior to the date of
such other action, whichever is later.
SECTION 2.8 Consent of Absentees. The transaction of any meeting of
stockholders, however called and noticed, and wherever held, is 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, signs a written waiver of notice, or a consent to the holding of the
meeting or an approval of the minutes thereof. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Attendance of a person at a meeting shall constitute a
waiver of notice of and presence at 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 required by the Delaware General Corporation law to be
included in the notice but not so included, if such objection is expressly made
at the meeting. 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 may be provided in the Delaware General Corporation
Law.
SECTION 2.9 Action without Meeting. Unless otherwise proscribed by
statute, any action required or permitted to be taken by the stockholders of the
Corporation may not be effected by consent in writing by the holders of the
outstanding stock.
SECTION 2.10 Proxies. Every person entitled to vote shares has the right
to do so either in person or by one or more persons authorized by a written
proxy executed by such stockholder and filed with the Secretary. Any proxy duly
executed is not revoked and continues in full force and effect until revoked by
the person executing it prior to the vote pursuant thereto by a writing
delivered to the Corporation stating that the proxy is revoked or by a
subsequent proxy executed by the person executing the prior proxy and presented
to the meeting, or as to any meeting by attendance at such meeting and voting in
person by the person executing the proxy; provided, however, that no proxy shall
be valid after the expiration of 11 months from the date of its execution unless
otherwise provided in the proxy.
SECTION 2.11 Inspectors of Election. In advance of any meeting of
stockholders, the
Exhibit Page C4
<PAGE> 4
Board may appoint any persons, other than nominees for office, as inspectors of
elections to act at such meetings and any adjournment thereof. If inspectors of
elections are not so appointed or if any person so appointed fails to appear or
refuses to act, the chairman of any such meeting may, and on the request of any
stockholder or stockholder's proxy shall, make such appointment at the meeting.
The number of inspectors shall be either one or three. If appointed at a meeting
on the request of one or more stockholders or proxies, the majority of shares
present shall determine whether one or three inspectors are to be appointed.
The duties of such inspectors shall be as prescribed by the Board and
shall include determining the number of shares outstanding and the voting power
of each; the shares represented at the meeting; the existence of a quorum; the
authenticity, validity, and effect of proxies; receiving votes, ballots, or
consents; hearing and determining all challenges and questions in any way
arising in connection with the right to vote; counting and tabulating all votes
or consents; determining when the polls shall close; determining the result; and
doing such acts as may be proper to conduct the election or vote with fairness
to all stockholders. If there are three inspectors of election, the decision,
act, or certificate of a majority is effective in all respects as the decision,
act, or certificate of all.
SECTION 2.12 Conduct of Meeting. The Chairman of the Board shall preside
as chairman at all meetings of the stockholders. The chairman shall conduct each
such meeting in a businesslike and fair manner, but shall not be obligated to
follow any technical, formal, or parliamentary rules or principles of procedure.
The chairman's rulings on procedural matters shall be conclusive and binding on
all stockholders, unless at the time of a ruling a request for a vote is made to
the stockholders entitled to vote and represented in person or by proxy at the
meeting, in which case the decision of a majority of such shares shall be
conclusive and binding on all stockholders. Without limiting the generality of
the foregoing, the chairman shall have all of the powers usually vested in the
chairman of a meeting of stockholders.
SECTION 2.13 Preparation of Stockholder List. The officer who has charge
of the stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 2.14 Notice of Stockholder Business and Nominations.
(a) Annual Meeting of Stockholders
(i) Nominations of persons for election to the Board of Directors
of the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (A) pursuant to
the Corporation's notice of meeting delivered pursuant to Section 4 of Article
II of these bylaws, (B) by or at the direction of the Chairman of the Board of
Directors, or (C) by any stockholder who is entitled to vote at the meeting, who
complied with the notice procedures set forth in clauses (ii) and (iii) or this
subsection (a) and this bylaw and who was a stockholder of record at the time
such notice is delivered to the Secretary of the Corporation.
(ii) For nominations or other business to be properly brought
before an annual
Exhibit Page C5
<PAGE> 5
meeting by a stockholder pursuant to clause (C) of the foregoing subsection
(a)(i) of this bylaw, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not less than seventy (70) days nor more than ninety (90) days
prior to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced by
more than twenty (20) days or delayed by more than seventy (70) days from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the ninetieth (90th) day prior to such annual meeting and not
later than the close of business on the later of the seventieth (70th) day prior
to such annual meeting or the tenth (10th) day following the day on which public
announcement of the date of such meeting is first made. Such stockholder's
notice shall set forth (A) as to each person who the stockholder proposes to
nominate for election or reelection as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected; (B) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any on whose
behalf the proposal is made, and (C) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (1) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, and (2) the class and number
of shares of the capital stock of the Corporation which are owned beneficially
and of record by such stockholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence of
subsection (a)(ii) of this bylaw to the contrary, in the event that the number
of directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by the
Corporation at least eighty (80) days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this bylaw
shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary of
the Corporation at the principal executive offices of the Corporation not later
than the close of business on the tenth (10th) day following the day on which
such public announcement is first made by the Corporation.
(b) General
Only persons who are nominated in accordance with the procedures set
forth in this bylaw shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
bylaw. Except as otherwise provide by law, the Certificate of Incorporation, or
these bylaws, the chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this bylaw and,
if any proposed nomination or business is not in compliance with this bylaw, to
declare that such defective proposal or nomination shall be disregarded.
III
Exhibit Page C6
<PAGE> 6
DIRECTORS
SECTION 3.1 Powers. Subject to the limitations of the Certificate of
Incorporation or these Bylaws, and the Delaware General Corporation Law relating
to action required to be approved by the stockholders or by the outstanding
shares, the business and affairs of the Corporation shall be managed and all
corporate powers shall be exercised by or under the direction of the Board. The
Board may delegate the management of the day-to-day operation of the business of
the Corporation to a management company or other person provided that the
business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised under the ultimate direction of the Board. Without
prejudice to such general powers, but subject to the same limitations, it is
hereby expressly declared that the Board shall have the following powers in
addition to the other powers enumerated in these Bylaws:
(a) To select and remove all the other officers, agents, and employees
of the Corporation, prescribe the powers and duties for them as may not be
inconsistent with law, or with the Certificate of Incorporation or these Bylaws,
fix their compensation, and require of them security for faithful service.
(b) To conduct, manage, and control the affairs and business of the
Corporation and to make such rules and regulations therefore not inconsistent
with law, or with the Certificate of Incorporation or these Bylaws, as they may
deem best.
(c) To adopt, make, and use a corporate seal, and to prescribe the forms
of certificates of stock, and to alter the form of such seal and of such
certificates from time to time as in their judgement they may deem best.
(d) To authorize the issuance of shares of stock of the corporation from
time to time, upon such terms and for such consideration as may be lawful.
(e) To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefore, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations, or other evidences of debt and securities therefore.
SECTION 3.2 Number of Directors. The number of directors which shall
constitute the whole Board shall be not less than. three (3) nor more than
eleven (11) until changed by a bylaw duly adopted by the stockholders or by the
Board. Directors need not be stockholders. The initial board shall consist of
three (3) directors. Thereafter, within the limits above specified, the number
of directors shall be determined by resolution of the Board.
SECTION 3.3 Vacancies. Any director may resign effective upon giving
written notice to the Chairman of the Board, the President, Secretary, or the
Board, unless the notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a future time, a successor may
be elected to take office when the resignation becomes effective. Vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and shall qualify, unless sooner displaced. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute.
A vacancy or vacancies in the Board shall be deemed to exist in case of
the death, resignation,
Exhibit Page C7
<PAGE> 7
or removal of any director, or if the authorized number of directors is
increased, or if the stockholders fail, at any annual or special meeting of
stockholders at which any director or directors are elected, to elect the full
authorized number of directors to be voted for at that meeting.
The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. Any such election by
written consent other than to fill a vacancy created by removal requires the
consent of a majority of the outstanding shares entitled to vote. If the Board
accepts the resignation of any director tendered to take effect at a future
time, the Board or the stockholders shall have the power to elect a successor to
take office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the effect
of removing any director prior to the expiration of the director's term of
office.
SECTION 3.4 Election and Term of Office. The directors shall be elected
at each annual meeting of stockholders but if any such annual meeting is not
held or the directors are not elected thereat, the directors may be elected at
any special meeting of stockholders held for that purpose. Each director shall
hold office until expiration of the term for which elected and until a successor
has been elected and qualified or until any such director is removed or resigns.
The persons receiving the greatest number of votes, up to the number of
directors to be elected, shall be the directors.
SECTION 3.5 Place of Meeting. Regular or special meetings of the Board
shall be held at any place within or without the State of Delaware which has
been designated from time to time by the Board. In the absence of such
designation, regular meetings shall be held at the principal office of the
Corporation.
SECTION 3.6 Regular Meetings. Immediately following each annual meeting
of stockholders the Board shall hold a regular meeting without call or notice
for the purpose of organization, election of officers, and the transaction of
other business. Other regular meetings of the Board shall be held as specified
by the Board.
SECTION 3.7 Special Meetings. Special meetings of the Board for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or the Secretary or by any two directors.
Special meetings of the Board shall be held upon not less than four
days' written notice or not less than 24 hours' notice given personally or by
telephone, telegraph, telex, or other similar means of communication. Any such
notice shall be addressed or delivered to each director at such director's
address as it is shown upon the records of the Corporation or as may have been
given to the Corporation by the director for the purposes of notice or, if such
address is not shown on such records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held.
Notice by mail shall be deemed to have been given at the time a written
notice is deposited in the United States mails, postage prepaid. Any other
written notice shall be deemed to have been given at the time it is personally
delivered to the recipient or is delivered to a common carrier for transmission,
or actually transmitted by the person giving the notice by electronic means, to
the recipient. Oral notice shall be deemed to have been given at the time it is
communicated, in person or by telephone or wireless, to the recipient or to a
person at the office of the recipient who the person giving the notice has
reason to believe will promptly communicate it to the recipient.
SECTION 3.8 Quorum. Except as may be otherwise specifically provided in
these Bylaws, by
Exhibit Page C8
<PAGE> 8
statute or by the Certificate of Incorporation, at all meetings of the Board a
majority of the authorized number of directors shall constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board. A meeting
at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, if any action taken is approved by
at least a majority of the required quorum for such meetings.
SECTION 3.9 Action by Consent. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
SECTION 3.10 Participation in Meetings by Conference Telephone. Unless
otherwise restricted by the Certificate of Incorporation or these Bylaws,
members of the Board, or any committee designated by the Board, may participate
in a meeting of the Board, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
SECTION 3.11 Waiver of Notice. Notice of a meeting need not be given to
any director who signs a waiver of notice of or a consent to holding of the
meeting or an approval of the minutes thereof, whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such director. All such waivers, consents,
and approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
SECTION 3.12 Adjournment. A majority of the directors present, whether
or not a quorum is present, may adjourn any meeting of directors to another time
and place. If the meeting is adjourned for more than 24 hours, notice of any
adjournment to another time or place shall be given prior to the time of the
adjourned meeting to the directors who were not present at the time of the
adjournment.
SECTION 3.13 Fees and Compensation. Directors and members of committees
may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board; provided
that nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefore.
SECTION 3.14 Rights of Inspection. 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 also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts.
SECTION 3.15 Committees. The Board may appoint one or more committees,
each consisting of two or more directors, and delegate to such committees any of
the authority of the Board except with respect to:
(a) The approval of any action for which the Delaware General
Corporation Law also requires stockholders' approval or approval of the
outstanding shares;
(b) The filling of vacancies on the Board or on any committee;
Exhibit Page C9
<PAGE> 9
(c) The fixing of compensation of the directors for serving on the Board
or on any committee;
(d) The amendment or repeal of bylaws or the adoption of new bylaws;
(e) The amendment or repeal of any resolution of the Board which by its
express terms is not so amendable or repealable;
(f) A distribution to the stockholders of the Corporation except at a
rate or in a periodic amount or within a price range determined by the Board; or
(g) The appointment of other committees of the Board or the members
thereof.
Any such committee must be appointed by resolution adopted by a majority
of the authorized number of directors and may be designated an Executive
Committee or by such other name as the Board shall specify. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent member at any meeting of the committee. The appointment of
members or alternate members of a committee requires the vote of a majority of
the authorized number of directors. The Board shall have the power to prescribe
the manner in which proceedings of any such committee shall be conducted. In the
absence of any such prescription, such committee shall have the power to
prescribe the manner in which its proceedings shall be conducted. Unless the
Board or such committee shall provide, the regular and special meetings of any
such committee shall be governed by the provisions of this Article applicable to
meetings and actions of the Board. Minutes shall be kept of each meeting of each
committee.
SECTION 3.16 Removal of Directors. Unless otherwise restricted by the
Certificate of Incorporation or by law, any director or the entire Board may be
removed at any time, with or without cause, by the affirmative vote of the
stockholders having a majority of the voting power of the Corporation.
SECTION 3.17 Chairman of the Board. The Board shall elect one of the
directors as the Chairman of the Board who shall preside at all meetings of the
Board and all meetings of stockholders and exercise and perform such other
powers and duties as may be from time to time assigned by the Board.
Exhibit Page C1O
<PAGE> 10
IV
OFFICERS
SECTION 4.1 Officers. The officers of the Corporation shall be a
President, a Secretary and a Treasurer. In addition, the Board may also elect a
Chairman of the Board, one or more Vice Presidents, and one or more Assistant
Secretaries and Assistant Treasurers. No officer need be a director of the
Corporation. A person may hold more than one office.
SECTION 4.2 Other Officers. The Board may appoint such other officers as
it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
SECTION 4.3 Election. Each of the officers of the Corporation, except
such officers as may be appointed in accordance with the provisions of Section
4.1, Section 4.2 or Section 4.4 of this Article, shall be chosen annually by the
Board and shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be elected and
qualified.
SECTION 4.4 Removal, Vacancies. Subject to the express provisions of a
contract authorized by the Board, any officer may be removed, either with or
without cause, at any time by the Board or by any officer upon whom such power
of removal may be conferred by the Board. Any vacancy occurring in any office of
the Corporation shall be filled by the Board.
SECTION 4.5 The Chairman of the Board. The Chairman of the Board, if one
is elected, shall not be an officer of the Corporation unless designated as such
by the Board. He shall preside at all meetings of the stockholders and directors
and shall have such other powers and duties as may be prescribed by the Board or
by applicable law. He shall be an ex-officio member of standing committees, if
so provided in the resolutions of the Board appointing the members of such
committees.
SECTION 4.6 The Chief Executive Officer. Subject to such supervisory
powers, if any, as may be given by the Board to the Chairman of the Board, if
there is such an officer, the Chief Executive Officer, subject to the control of
the Board, shall have general supervision, control and management of the
business and affairs of the Corporation, and general charge and supervision of
all officers, agents and employees of the Corporation; shall see that all orders
and resolutions of the Board are carried into effect; in general shall exercise
all powers and perform all duties usually vested in the office of chief
executive officer of a corporation; and shall have such other powers and duties
as may from time to time be assigned to him by the Board or as may be prescribed
by these Bylaws or applicable law. He may execute and deliver in the name of the
Corporation all deeds, mortgages, bonds, contracts and other instruments, except
where required by law or these Bylaws to be otherwise executed and delivered or
when such execution and delivery shall be expressly delegated by him or the
Board to some other officer or agent of the Corporation. In the absence of the
Chairman of the Board, or if there is none, the Chief Executive Officer shall
preside at all meetings of the stockholders and, if he is a director, the Board.
He shall be an ex-officio member of all the standing committees, including the
executive committee, if any. The Board may appoint Co-Chief Executive Officers.
Exhibit Page C11
<PAGE> 11
SECTION 4.7 The President. Subject to such supervisory powers, if any,
as may be given by the Board or these Bylaws to the Chief Executive Officer or
the Chairman of the Board, if there are such officers, the President shall,
subject to the control of the Board, have the powers and duties prescribed for
the President by the Chief Executive Officer or these Bylaws. In the absence of
the Chairman of the Board and the Chief Executive Officer, or if there are none,
the President shall preside at all meetings of the stockholders and, if he is a
director, the Board. If there is no Chief Executive Officer, the President shall
in addition be the Chief Executive Officer of the Corporation and shall have the
powers and duties prescribed in Section 4.6. The President shall be an
ex-officio member of standing committees, if so provided in the resolutions of
the Board appointing the members of such committees.
SECTION 4.8 The Vice Presidents. The Vice Presidents, if any, shall
perform such duties and have such powers as the Board may from time to time
prescribe.
SECTION 4.9 The Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board.
He shall disburse the funds of the Corporation as may be ordered by the
Board, making proper vouchers for such disbursements, and shall render to the
President and the Board, at its regular meetings, or when the Board so requires,
an account of all his transactions as Treasurer and of the financial condition
of the Corporation.
If required by the Board, he shall give the Corporation a bond in such
sum and with such surety or sureties as shall be satisfactory to the Board for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
SECTION 4.10 The Secretary. The Secretary shall attend all meetings of
the Board and all meetings of the stockholders and record all the proceedings of
the meetings of the stockholders and of the Board in a book to be kept for that
purpose and shall perform like duties for the standing and special committees of
the Board when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board, and shall
perform such other duties as may be prescribed by the Board or the President,
under whose supervision he shall act. He shall have custody of the corporate
seal of the Corporation and he shall have authority to affix the same to any
instrument requiring it and, when so affixed, it may be attested by his
signature. The Board may give general authority to any other officer to affix
the seal of the Corporation and to attest the affixing by his signature.
SECTION 4.11 The Assistant Treasurer and Assistant Secretary. The
assistant treasurer and the assistant secretary, if any, shall perform such
duties and have such powers as the Board may from time to time prescribe.
Exhibit Page C12
<PAGE> 12
V
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 5.1. Scope of Indemnification. The corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding to the fullest extent
permitted by Delaware law and the Certificate of Incorporation.
Section 5.2. Advance of Expenses. Costs and expenses (including
attorneys' fees) incurred by or on behalf of a director, officer, employee or
agent in defending or investigating any action, suit, proceeding or
investigation shall be paid by the corporation in advance of the final
disposition of such matter, if such director, officer, employee or agent shall
undertake in writing to repay any such advances in the event that it is
ultimately determined that he is not entitled to indemnification.
Notwithstanding the foregoing, no advance shall be made by the corporation if a
determination is reasonably and promptly made by the Board by a majority vote of
a quorum of disinterested directors, or (if such a quorum is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs) by
independent legal counsel, that based upon the facts known to the Board or
counsel at the time such determination is made, (a) the director, officer,
employee or agent acted in bad faith or deliberately breached his duty to the
corporation or its stockholders, and (b) as a result of such actions by the
director, officer, employee or agent, it is more likely than not that it will
ultimately be determined that such director, officer, employee or agent is not
entitled to indemnification.
Section 5.3. Other Rights and Remedies. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
subsections of this Article shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any bylaws, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office.
Section 5.4. Continuation of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 5.5. Insurance. Upon resolution passed by the board, the
corporation may purchase and maintain insurance on behalf of any person who is
or was an agent of the corporation against any liability asserted against such
person and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Article. The corporation may create a trust fund, grant a security interest or
use other means (including, without limitation, a letter of credit) to ensure
the payment of such sums as may become necessary to effect indemnification as
provided herein.
Section 5.6. Savings Clause. If this Article or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each agent as to expenses,
judgments, fines and amounts paid in settlement with respect to any action,
suit, appeal, proceeding or investigation, whether civil, criminal or
administrative, and whether internal or external, including a grand jury
proceeding and an action or suit brought by or in the right of the corporation,
to the full extent permitted by any applicable portion of this Article that
shall not have been invalidated, or by any other applicable law.
Exhibit Page C13
<PAGE> 13
VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 6.1 Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness payable by the
Corporation shall be signed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the Board. Each such
person or persons shall give such bond, if any, as the Board may require.
SECTION 6.2 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
SECTION 6.3 General and Special Bank Accounts. The Board may from time
to time authorize the opening and keeping of general and special bank accounts
with such banks, trust companies or other depositories as the Board may select
or as may be selected by any officer or officers, assistant or assistants, agent
or agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
VII
SHARES AND THEIR TRANSFER
SECTION 7.1 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
Chairman, Vice Chairman or President or a Vice President, and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Any of or
all of the signatures on the certificates may be a facsimile. In case any
officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any such certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued,
such certificate may nevertheless be issued by the Corporation with the same
effect as though the person who signed such certificate, or whose facsimile
signature shall have been placed thereupon, were such officer, transfer agent or
registrar at the date of issue. A record shall be kept of the respective names
of the persons, firms or corporations owning the shares represented by such
certificates, the number and class of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of cancellation, the
respective dates of cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled, except in cases provided
for in Section 7.4.
Exhibit Page C14
<PAGE> 14
SECTION 7.2 Transfers of Stock. Transfers of shares of stock of the
Corporation shall be made on the books of the Corporation by the registered
holder thereof, or by his attorney thereupon authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or transfer
agent appointed as provided in Section 7.3, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 7.3 Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these Bylaws, concerning the
issue, transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 7.4 Lost, Stolen, Destroyed and Mutilated Certificates. In any
case of loss, theft, destruction or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sum as the Board may direct; provided, however, that a new
certificate may be issued without requiring any bond when, in the judgment of
the Board, it is proper so do to.
SECTION 7.5 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any other
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action. If in any case involving
the determination of stockholders for any purpose other than notice of or voting
at a meeting of stockholders the Board shall not fix such a record date, the
record date for determining stockholders for such purpose shall be the close of
business on the day on which the Board shall adopt the resolution relating
thereto. A determination of stockholders entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of such meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
VIII
MISCELLANEOUS
SECTION 8.1 Seal. The Board shall provide a corporate seal, which shall
be in the form of a circle and shall bear the name of the Corporation and words
and figures showing that the Corporation was incorporated in the State of
Delaware and the year of incorporation.
SECTION 8.2 Waiver of Notices. Whenever notice is required to be given
by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
Exhibit Page C15
<PAGE> 15
SECTION 8.3 Amendments. Subject to the provisions of the Certificate of
Incorporation, these Bylaws and applicable law, these Bylaws or any of them may
be amended or repealed and new Bylaws may be adopted (a) by the Board, by vote
of a majority of the number of directors then in office or (b) by the vote of
the holders of not less than seventy-five percent (75%) of the total voting
power of all outstanding shares of voting stock of the Corporation at an annual
meeting of stockholders, without previous notice, or at any special meeting of
stockholders, provided that notice of such proposed amendment, repeal or
adoption is given in the notice of special meeting. Subject to the provisions of
the Certificate of Incorporation, any Bylaws adopted or amended by the
stockholders may be amended or repealed by the Board or the stockholders.
SECTION 8.4 Voting Stock. Unless otherwise ordered by the Board, the
Chairman of the Board shall have full power and authority on behalf of the
Corporation to attend and to act and vote at any meeting of the stockholders of
any corporation in which the Corporation may hold stock and at any such meeting
shall possess and may exercise any and all rights and powers which are incident
to the ownership of such stock and which as the owner thereof the Corporation
might have possessed and exercised if present. The Board by resolution from time
to time may confer like powers upon any other person or persons.
IX
EMERGENCY PROVISIONS
SECTION 9.1 General. The provisions of this Article shall be operative
only during a national emergency declared by the President of the United States
or the person performing the President's functions, or in the event of a
nuclear, atomic, or other attack on the United States or a disaster making it
impossible or impracticable for the Corporation to conduct its business without
recourse to the provisions of this Article. Said provisions in such event shall
override all other Bylaws of the Corporation in conflict with any provisions of
this Article, and shall remain operative so long as it remains impossible or
impracticable to continue the business of the Corporation otherwise, but
thereafter shall be inoperative; provided that all actions taken in good faith
pursuant to such provisions shall thereafter remain in full force and effect
unless and until revoked by action taken pursuant to the provisions of the
Bylaws other than those contained in this Article.
SECTION 9.2 Unavailable Directors. All directors of the Corporation who
are not available to perform their duties as directors by reason of physical or
mental incapacity or for any other reason or who are unwilling to perform their
duties or whose whereabouts are unknown shall automatically cease to be
directors, with like effect as if such persons had resigned as directors, so
long as such unavailability continues.
SECTION 9.3 Authorized Number of Directors. The authorized number of
directors shall be the number of directors remaining after eliminating those who
have ceased to be directors pursuant to Section 9.2, or the minimum number
required by law, whichever is greater.
SECTION 9.4 Quorum. The number of directors necessary to constitute a
quorum shall be one-third of the authorized number of directors as specified in
Section 9.3, or such other minimum number as, pursuant to the law or lawful
decree then in force, it is possible for the Bylaws of the Corporation to
specify.
Exhibit Page C16
<PAGE> 16
SECTION 9.5 Creation of Emergency Committee. In the event the number of
directors remaining after eliminating those who have ceased to be directors
pursuant to Section 8.2 is less than the minimum number of authorized directors
required by law, then until the appointment of additional directors to make up
such required minimum, all the powers and authorities which the Board could by
law delegate, including all powers and authorities which the Board could
delegate to a committee, shall be automatically vested in an emergency
committee, and the emergency committee shall thereafter manage the affairs of
the Corporation pursuant to such powers and authorities and shall have all such
other powers and authorities as may by law or lawful decree be conferred on any
person or body of persons during a period of emergency.
SECTION 9.6 Constitution of Emergency Committee. The emergency committee
shall consist of all the directors remaining after eliminating those who have
ceased to be directors pursuant to Section 9.2, provided that such remaining
directors are not less than three in number. In the event such remaining
directors are less than three in number, the emergency committee shall consist
of three persons, who shall be the remaining director or directors and either
one or two officers or employees of the Corporation, as the remaining director
or directors may in writing designate. If there is no remaining director, the
emergency committee shall consist of the three most senior officers of the
Corporation who are available to serve, and if and to the extent that officers
are not available, the most senior employees of the Corporation. Seniority shall
be determined in accordance with any designation of seniority in the minutes of
the proceedings of the Board, and in the absence of such designation, shall be
determined by rate of remuneration. In the event that there are no remaining
directors and no officers or employees of the Corporation available, the
emergency committee shall consist of three persons designated in writing by the
stockholder owning the largest number of shares of record as of the date of the
last record date.
SECTION 9.7 Powers of Emergency Committee. The emergency committee, once
appointed, shall govern its own procedures and shall have the power to increase
the number of members thereof beyond the original number, and in the event of a
vacancy or vacancies therein, arising at any time, the remaining member or
members of the emergency committee shall have the power to fill such vacancy or
vacancies. In the event at any time after its appointment all members shall die
or resign or become unavailable to act for any reason whatsoever, a new
emergency committee shall be appointed in accordance with the foregoing
provisions of this Article.
SECTION 9.8 Directors Becoming Available. Any person who has ceased to
be a director pursuant to the provisions of Section 9.2 and who thereafter
becomes available to serve as a director shall automatically become a member of
the emergency committee.
SECTION 9.9 Election of Board of Directors. The emergency committee
shall, as soon after its appointment as is practicable, take all requisite
action to secure the election of a board of directors, and upon election all the
powers and authorities of the emergency committee shall cease.
SECTION 9.10 Termination of Emergency Committee. In the event, after
the appointment of any emergency committee, a sufficient number of persons who
ceased to be directors pursuant to Section 9.2 become available to serve as
directors, so that if they had not ceased to be directors as aforesaid, there
would be enough directors to constitute the minimum number of directors required
by law, then all such persons shall automatically be deemed to be reappointed as
directors and the powers and authorities of the emergency committee shall end.
Exhibit Page C17
<PAGE> 1
EXHIBIT 4
THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES OR BLUE SKY LAWS OF CALIFORNIA OR ANY OTHER STATE AND
MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES OR BLUE SKY LAWS OR IF AN
EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS APPLICABLE
NUMBER INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SHARES
C1 FEBRUARY 2, 1999 7,500,000
I.T. TECHNOLOGY, INC.
100,000,000 SHARES COMMON STOCK 25,000,000 SHARES PREFERRED STOCK
$.001 PAR VALUE EACH $.001 PAR VALUE EACH
THIS CERTIFIES THAT IS THE REGISTERED HOLDER OF SHARES OF
THE COMMON STOCK OF
I.T. TECHNOLOGY, INC.
HEREINAFTER DESIGNATED "THE CORPORATION," TRANSFERABLE ON THE SHARE REGISTER OF
THE CORPORATION UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED OR
ASSIGNED.
This certificate and the shares represented thereby shall be held subject
to all of the provisions of the Certificate of Incorporation and the By-laws of
said Corporation, a copy of each of which is on file at the office of the
Corporation, and made a part hereof as fully as though the provisions of said
Certificate of Incorporation and By-laws were imprinted in full on this
certificate to all of which the holder of this certificate, by acceptance
hereof, assents and agrees to be bound.
Any stockholder may obtain from the principal office of the Corporation,
upon request and without charge, a statement of the number of shares
constituting each class or series of stock and the designation thereof; and a
copy of the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights and the By-laws.
WITNESS THE SEAL OF THE CORPORATION AND THE SIGNATURES OF ITS DULY AUTHORIZED
OFFICERS.
DATED:
_____________________________ _______________________
CHIEF EXECUTIVE OFFICER SECRETARY
<PAGE> 1
EXHIBIT 10.1 (a)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of June
18, 1999, by and between I.T. Technology, Inc., a Delaware corporation, or its
designee ("Purchaser") and Stampville.Com, Inc., a New York corporation (the
"Company").
RECITALS
A. WHEREAS, the Company is a newly formed corporation which has been
incorporated to engage in the business of selling collectible stamps and other
memorabilia on a wholesale basis to large chain stores and small businesses,
and on a retail basis to the general public and collectors;
B. WHEREAS, in addition, as an integral part of its business, the
Company shall establish an Internet web site to promote and sell its
collectible stamps and other memorabilia in the United States and international
markets;
C. WHEREAS, the Inter-Governmental Philatelic Corporation ("IGPC") has
agreed to make available to the Company, for a period of up to two (2) years,
approximately one million (1,000,000) stamps, invoiced at the best possible
prices, of which up to fifty percent (50%) of the unsold portion of which
shall, at the option of the Company, be subject to return to IGPC;
D. WHEREAS, the Purchaser has been incorporated to raise capital for the
acquisition of equity in Internet related and other technology companies;
E. WHEREAS, the Company desires to acquire funding to utilize for the
establishment of a warehouse facility and the development of a web site to
commence its Internet operations and to fund marketing and advertising of its
services and products;
F. WHEREAS, the Purchaser desires to invest funds in the Company in
exchange for equity in the Company; and
G. NOW, THEREFORE, in consideration of the promises and the terms,
provisions, covenants and conditions hereinafter set forth, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
<PAGE> 2
AGREEMENT
1. Definitions. As used in this Agreement, the following terms shall have
the respective meanings set forth below. All capitalized terms used herein and
not defined in this Section 1 shall have the meanings ascribed to such terms
elsewhere in this Agreement.
AAA: as defined in Section 11.13.
Adjusted Common Series Stock Purchase Price: Shall mean the actual
purchase price paid by the Purchaser at the applicable Closing for each share
of Common Series Stock.
Adjusted Operating Profits: shall mean the Operating Profits through the
end of the last completed fiscal period less the aggregate amount of such
operating profits that have been utilized to reduce the purchase price of any
shares of the Series C Common Stock purchased by the Purchaser pursuant to
Section 2.22 below.
Affiliate: of a Person means a Person that directly or indirectly,
through one or more intermediaries, Controls, is Controlled by, or is under
common Control with, the first Person, including, but not limited to, a
subsidiary of the first Person, a Person of which the first Person is a
subsidiary, or another subsidiary of a Person of which the first Person is also
a subsidiary.
Agreement: this Agreement, including the Schedules attached hereto.
Business Day: any day other than a Saturday or Sunday on which banks in
the State of New York are generally open for business.
Capital Stock: shall mean all issued, outstanding or authorized and not
yet issued Common Stock, Common Stock or any other capital stock of the Company.
Company: as defined in the Preamble.
Common Series Stock: shall mean the Series A Common Stock, the Series B
Common Stock and the Series C Common Stock.
Common Stock: shall mean the no par value, common stock of the Company
other than the Common Series Stock.
Contracts: shall mean, collectively, all written contracts, agreements,
instruments, documents, leases, indentures, undertakings or other commercial
obligations.
Disclosure Schedule: shall mean the disclosure schedule and any
amendments thereto to be attached hereto and incorporated herein, delivered by
the Company to the Purchaser in the manner described in Section 4.
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<PAGE> 3
Distribution: shall mean any distribution of Capital Stock, cash or
property to holders of Capital Stock for any reason, including but not limited
to as a result of a dividend, recapitalization, sale of assets or liquidation.
Environmental Laws: shall mean, collectively, the Federal Clean Air Act,
the Federal Clean Water Act, the Federal Resource Conservation and Recovery
Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Toxic Substances Control Act, and any other Laws
otherwise affecting or relating to human health or the environment.
Environmental Materials: shall mean, collectively, any material,
substance, chemical, waste, contaminant or pollutant which is regulated,
listed, defined as or determined to be hazardous, extremely hazardous, toxic,
dangerous, restricted or a nuisance, or otherwise harmful to human health or
the environment, under any Environmental Laws.
Financial Statements: shall mean, collectively, the audited or unaudited
financial statements (including balance sheets and statement of earnings,
stockholder's equity and cash flow) of the Company delivered to the Purchaser
pursuant to the terms of this Agreement.
Fiscal Year: The financial reporting year for the Company, currently
January 1 through December 31.
GAAP: generally accepted accounting principles, consistently applied.
Governmental Approval: any action, consent, approval, authorization,
permit, license, exemption, order or waiver of, registration or filing with, or
report or notice to, any Governmental Authority.
Governmental Authority: shall mean any foreign, federal, state, municipal
or other court, tribunal, department, commission, board or other government
authority or agency or any self-regulatory organization, quasi-governmental
unit, board, bureau, instrumentality, department or commission (including any
court or other tribunal) of any of the foregoing and any arbitrator or other
private tribunal.
Initial Closing Date: shall mean the date upon which the Purchaser makes
the initial purchase of Common Stock pursuant to Section 2.1.1(a) below.
Initial Stage Two Closing Date: shall mean the date upon which the
Purchaser makes the initial Stage Two Consideration payments of Common Stock
pursuant to Section 2.1.2(a) below.
Initial Stage Three Closing Date: shall mean the date upon which the
Purchaser makes the initial Stage three Consideration payments pursuant to
Section 2.1.3(a) below.
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<PAGE> 4
IGPC: shall have the meaning set forth in Recital C.
Laws: shall mean, collectively, all statutes, laws, rules, regulations,
requirements, ordinances, injunctions, writs, decrees and orders of any
Governmental Authority.
Licenses: shall mean, collectively, any licenses, permits, approvals,
certifications, accreditations, notices and other authorizations issued or
promulgated by a Governmental Authority or otherwise.
Lien: shall mean any condition, restriction, assessment, mortgage, pledge,
hypothecation, security interest, title defect, claim, option, lien, charge or
other encumbrance or adverse claim, but excluding any restriction or limitation
on transferability imposed by Law.
Litigation: shall mean all litigation or legal proceedings before any
court or governmental tribunal, or (with respect to any Governmental Authority)
any investigation pending.
Management Group: C. Jonathan Malumud, Eli Popack and Mendel Mochkin (or
such other person as may be specified by Purchaser).
Operating Profits: shall mean the amount, if any, by which the cumulative
amount of revenues or other income received by the Company exceeds cumulative
amount of the costs of goods sold from the incorporation of the Company through
the end of the last completed fiscal period, calculated in accordance with
GAAP, provided, however, cost of goods sold shall exclude all indirect costs
including but not limited to any overhead, selling, general and administrative
charges, taxes, depreciation and interest charges. Costs of goods shall include
the cost of the completed product along with related shipping and handling
costs, to the extent collected by the Company.
Orders: shall mean all decisions, injunctions, writs, guidelines, orders,
arbitrations, awards, judgments, subpoenas, verdicts or decrees entered,
issued, made or rendered by any Governmental Authority.
Ordinary Course: shall mean the ordinary course of the Company's business,
consistent with the past practices of the Company.
Party: any of the parties to this Agreement.
Person: shall mean any natural person, individual, firm, sole
proprietorship, partnership, unincorporated organization, association,
corporation, company, trust association, trust, business trust, joint venture,
Governmental Authority or other entity or group comprised of one or more of the
foregoing.
Proprietary Rights: shall have the meaning set forth in Section 4.20.
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<PAGE> 5
Pro Rata Share: pro rata share shall mean the amount of any Series of
Common Series Stock issued divided by the total amount of all Common Series
Stock issued.
Purchaser: shall have the meaning set forth in the Preamble.
Series A Common Stock: shall mean the twenty (20) shares of Series A
Convertible and Redeemable Common Stock, no stated value of the Company
issuable to the Purchaser pursuant to Section 2.1.1 below. The Series A Common
Stock shall have one vote per share and shall vote along with the Common Stock
on all matters, except (i) any matter which adversely affects the rights of the
any of the holders of Common Series Stock and (ii) for the election of one
director, where the approval of a majority of the outstanding shares of Common
Series Stock. It shall have a liquidation preference of Twenty Five Thousand
Dollars ($25,000) per share out of its pro rata share of twenty percent (20%)
of any Distribution to holders of Capital Stock. The Series A Common Stock
shall automatically be redeemed in the event of any Distribution to holders of
Capital Stock for the following: (i) one share of Common Stock for each share
of Series A Stock redeemed; and (ii) cash in the amount of Twenty Five Thousand
Dollars ($25,000) per share. The cash portion of the Redemption Price shall be
allocated from the Pro Rata Share of (a) twenty percent (20%) of all
Distribution to holders of Capital Stock, plus (b) the Series A Stock's pro
rata interest in the Distributions, which shall be calculated as a fraction,
the numerator of which shall be the number of shares of Series A Stock
outstanding and the denominator shall be the sum of all shares of Common
Stock, Series A Stock, Series B Stock and Series C Stock outstanding.
Notwithstanding the foregoing, if the Purchaser shall have failed to make any
payment described in Section 2.1 of this Agreement, the cash portion of the
Redemption Price shall be allocated from that portion of the Distribution which
is the result of the product of multiplying the total amount of the
Distribution by a fraction, the numerator of which shall be twice the number of
shares of Series A Stock outstanding and the denominator shall be the sum of
all shares of Common Stock, Series A Stock, Series B Stock and Series C Stock
outstanding.
Series B Common Stock: shall mean the twenty (20) shares of Series B
Convertible and Redeemable Common Stock, no stated value of the Company issuable
to the Purchaser pursuant to Section 2.1.2 below. The Series B Common Stock
shall have one vote per share and shall vote along with the Common Stock on all
manners, except any matter which adversely affects the rights of the any of the
holders of Common Series Stock where the approval of a majority of the
outstanding shares of Common Series Stock. It shall have a liquidation
preference of One Hundred and Twelve Thousand Five Hundred Dollars ($112,500)
per share payable out of its Pro Rata Share of twenty percent (20%) of any
Distribution to holders of Capital Stock. The Series B Common Stock shall
automatically be redeemed in the event of any Distribution to holders of Capital
Stock for the following: (i) one share of Common Stock for each share of Series
B Common Stock redeemed; and (ii) cash in the amount of One Hundred and Twelve
Thousand Five Hundred Dollars ($112,500) per share. The cash portion of the
Redemption Price shall be allocated from the Pro Rata Share of (a) twenty
percent (20%) of all Distributions to holders of Capital Stock, plus (b) the
Series B Stock's pro rata interest in the Distributions, which shall be
calculated as a fraction, the numerator of which shall be the number of shares
of Series B Stock outstanding and the denominator shall be the sum of all shares
of Common Stock, Series A Stock,
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Series B Stock and Series C Stock outstanding. Notwithstanding the foregoing,
if the Purchaser shall have failed to make any payment described in Section 2.1
of this Agreement, the cash portion of the Redemption Price shall be allocated
from that portion of the Distribution which is the result of the product of
multiplying the total amount of the Distribution by a fraction, the numerator
of which shall be twice the number of shares of Series B Stock outstanding and
the denominator shall be the sum of all shares of Common Stock, Series A Stock,
Series B Stock and Series C Stock outstanding.
Series C Common Stock: shall mean the ten (10) shares of Series C
Convertible and Redeemable Common Stock, no stated value of the Company issuable
to the Purchaser pursuant to Section 2.1.3 below. The Series C Common Stock
shall have one vote per share and shall vote along with the Common Stock on all
matters, except any matter which adversely affects the rights of any of the
holders of Common Series Stock where the approval of a majority of the
outstanding shares of Common Series Stock. It shall have a liquidation
preference equal to the Adjusted Common Series Stock Purchase Price for the
Series C Common Stock per share payable out of its Pro Rata Share of twenty
percent (20%) of any Distribution to holders of Capital Stock. To the extent
that any shares of Series C Common Stock have not been redeemed in accordance
with the provisions of Section 2.3 below, they shall automatically be redeemed
in the event of any Distribution to holders of Capital Stock for the following:
(i) one share of Common Stock for each share of Series C Common Stock redeemed;
and (ii) cash in the amount of the Adjusted Common Series Stock Purchase Price
per share. The cash portion of the Redemption Price shall be allocated from the
Pro Rata Share of (a) twenty percent (20%) of all Distribution to holders of
Common Stock, plus (b) the Series C Stock's pro rata interest in the
Distributions, which shall be calculated as a fraction, the numerator of which
shall be the number of shares of Series C Stock outstanding and the denominator
shall be the sum of all shares of Common Stock, Series A Stock, Series B Stock
and Series C Stock outstanding. Notwithstanding the foregoing, if the purchaser
shall have failed to make any payment described in Section 2.1 of this
Agreement, the cash portion of the Redemption Price shall be allocated from that
portion of the Distribution which is the result of the product of multiplying
the total amount of the Distribution by a fraction, the numerator of which shall
be twice the number of shares of Series C Stock outstanding and the denominator
shall be the sum of all shares of Common Stock, Series A Stock, Series B Stock
and Series C Stock outstanding.
Software: shall have the meaning set forth in Section 4.21.
Stage One: shall mean a time period commencing on the Initial Closing Date
and terminating eight (8) months thereafter.
Stage One Consideration: shall mean the aggregate sum of Five Hundred
Thousand Dollars ($500,000) payable as set forth in Section 2.1.1 herein.
Stage Two: shall mean a time period commencing upon the last to occur of
both (i) the termination of Stage One and (ii) the completion of a fully
operational Internet web site for the Company and terminating on the expiration
of one year thereafter.
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Stage Two Consideration: shall mean the aggregate sum of Two Million Two
Hundred and Fifty Thousand Dollars ($2,250,000) payable as set forth in section
2.1.2 herein.
Stage Three: shall mean a time period commencing upon the termination of
Stage Two and terminating on the expiration of one year thereafter.
Stage Three Consideration: shall, subject to adjustment as provided in
Section 2.1.4 below, mean the aggregate sum of Two Million Two Hundred Fifty
Thousand Dollars $2,250,000 payable as set forth in Section 2.1.3 herein.
Subsidiaries or, individually, a Subsidiary: shall mean any Person(s) in
which the Company owns stock, other securities or any other ownership interest
(other than ownership of less than five percent (5%) of the stock or securities
of a Person whose shares are listed on a nationally recognized securities
exchange or are traded over-the-counter, and which stock or securities are held
by the Company solely as an investment) and any other investment by the Company
in any Person.
Tax or Taxes: means all net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto imposed
by any Governmental Authority.
Term: shall mean the term of this Agreement, commencing on the Initial
Closing Date and terminating three (3) years thereafter, unless sooner
terminated by the Company pursuant to Section 8 below.
2. Purchase of the Common Series Stock.
2.1 In exchange for payment by Purchaser of Five Million Dollars
($5,000,000), as provided herein, the Company shall issue to the Purchaser up
to twenty (20) shares of Series A Common Stock, twenty (20) shares of Series B
Common Stock and ten (10) shares of Series C Common Stock which in the
aggregate shall equal to twenty five percent (25%) of the Capital Stock on a
fully diluted basis as follows:
2.1.1 Up to twenty (20 shares of Series A Common stock which shall
when issued represent ten percent (10%) of the Capital Stock on a fully-diluted
basis upon payment by Purchaser of the Stage One Consideration, on or before
five (5) months from the Initial Closing Date, as follows:
(a) One Hundred Thousand Dollars ($100,000) on the Initial
Closing Date in exchange for four (4) shares, which shall when issued represent
two percent (2%) of the Capital Stock on a fully-diluted basis;
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(b) Seventy-Five Thousand Dollars ($75,000) thirty
(30) days after the Initial Closing Date in exchange for three (3) shares,
which shall when issued represent one and one-half (1.5%) of the Capital Stock
on a full-diluted basis (the "Second Stage One Closing");
(c) Seventy-Five Thousand Dollars ($75,000) sixty (60)
days after the Initial Closing Date in exchange for three (3) shares,
which shall when issued represent one and one-half (1.5%) of the Capital Stock
on a full-diluted basis (the "Third Stage One Closing");
(d) Seventy-Five Thousand Dollars ($75,000) no later
than ninety (90) days after the Initial Closing Date in exchange for three (3)
shares, which shall when issued represent one and one-half (1.5%) of the Capital
Stock on a full-diluted basis (the "Fourth Stage One Closing");
(e) Seventy-Five Thousand Dollars ($75,000) no later
than one hundred twenty (120) days after the Initial Closing Date in exchange
for three (3) shares, which shall when issued represent one and one-half (1.5%)
of the Capital Stock on a full-diluted basis (the "Fifth Stage One Closing");
(f) One Hundred Thousand Dollars ($100,000) no later
than one hundred fifty (150) days after the Initial Closing Date in exchange for
four (4) shares, which shall when issued represent two percent (2%) of the
Capital Stock on a full-diluted basis (the "Final Stage One Closing");
2.1.2 Subject to and conditioned upon the occurrence of the
Final Stage One Closing, up to twenty (20) shares of Series B Common Stock,
which shall when issued represent ten percent (10%) of the Capital Stock on a
fully-diluted basis so that upon payment by Purchaser of the Stage Two
Consideration, on or before the completion of Stage Two, Purchaser shall hold
twenty percent (20%) of the Capital Stock on a fully-diluted basis, as follows:
(a) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) on or before the commencement of Stage Two, in exchange for
five (5) shares, which shall when issued represent one-half percent (2.5%) of
the Capital Stock on a fully-diluted basis (the "Initial Stage Two Closing");
(b) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) no later than ninety (90) days after the commencement of
Stage Two, in exchange for five (5) shares, which shall when issued represent
two and one-half percent (2.5%) of the Capital Stock on a fully-diluted basis
(the "Second Stage Two Closing");
(c) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) no later than one hundred and eighty (180) days after the
commencement of
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Stage Two, in exchange for five(5) shares, which shall when issued represent
two and one-half percent (2.5%) of the Capital Stock on a fully-diluted basis
(the "Third Stage Two Closing"); and
(d) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) no later than two hundred seventy (270) days after the
commencement of Stage Two, in exchange for five(5) shares, which shall when
issued represent two and one-half percent (2.5%) of the Capital Stock on a
fully-diluted basis (the "Final Stage Two Closing").
2.13. Subject to and conditioned upon the occurrence of the
Final Stage Two Closing, up to ten (10) shares of Series C Common Stock, which
shall when issued represent five percent (5%) of the Capital Stock on a
fully-diluted basis, so that upon payment by Purchaser of the Stage Three
Consideration, subject to adjustment as provided in Section 2.2 below, on or
before the completion of Stage Three, Purchaser shall hold twenty-five percent
(25%) of the Capital Stock on a fully-diluted basis as follows:
(a) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) on or before the commencement of Stage Three, in exchange
for two and one-half (2.5) shares, which shall when issued represent one and
one-quarter percent (1.25%) of the Capital Stock on a fully-diluted basis (the
"Initial Stage Three Closing");
(b) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) no later than ninety (90) days after the commencement of
Stage Three, in exchange for two and one half (2.5) shares, which shall when
issued represent one and one-quarter percent (1.25%) of the Capital Stock on a
fully-diluted basis (the "Second Stage Three Closing");
(c) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) no later than one hundred and eighty (180) days after the
commencement of Stage Three, in exchange for two and one-half (2.5) shares,
which shall when issued represent one and one quarter percent (1.25%) of the
Capital Stock on a fully-diluted basis (the "Third Stage Three Closing"); and
(d) Five Hundred Sixty-Two Thousand Five Hundred
Dollars ($562,500) no later than two hundred and seventy (270) days after the
commencement of Stage Three, in exchange for two and one-half (2.5) shares,
which shall when issued represent one and one-quarter percent (1.25%) of the
Capital Stock on a fully-diluted basis (the "Final Stage Three Closing").
2.2 Adjustment to Stage Three Consideration. The parties hereby
agree that the Stage Three Consideration payable by the Purchaser shall be
reduced on a pro rata basis the Stage Three Consideration payments due in
connection with the Initial Stage Three Closing on a dollar for dollar basis,
up to the full amount of the Stage Three Consideration, based upon the
aggregate amount of Operating Profits, through the last completed fiscal
quarter prior to the Initial Stage Three Closing. The Stage Three Consideration
payable by the Purchaser at any subsequent Stage Three Closing shall be further
reduced by any additional Operating Profits
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earned by the Company through the last completed fiscal quarter prior to the
applicable Stage Three Closing.
2.3 Redemption of Common Series Stock. The Common Series Stock shall
be subject to automatic redemption by the Company upon the occurrence of the
following events, each of which shall be reflected in a Certificate of
Designation or amendment to the Charter of the Company:
2.3.1 Upon the sale of part, but not all, of the Company or
its assets, whether by sale of stock or assets, merger, reorganization or
otherwise, where the transaction would ascribe a value of less than Seventy
Million Dollars ($70,000,000) on the Company as a whole, each share of Common
Series Stock shall be automatically redeemed by the Company in exchange for (a)
one share of Common Stock, the Pro Rata Share of (a) twenty percent (20%) of all
Distributions to holders of Capital Stock, plus (b) the Common Series Stock's
pro rata interest in the Distributions, which shall be calculated as a fraction,
the numerator of which shall be the number of shares of Common Series Stock
outstanding and the denominator shall be the sum of all shares of Common Stock
and Common Series Stock. Notwithstanding the foregoing, if the Purchaser shall
have failed to make any payment described in Section 2.1 of this Agreement, the
cash portion of the Redemption Price shall be allocated from that portion of the
Distribution which is the result of the product of multiplying the total amount
of the Distribution by a fraction, the numerator of which shall be twice the
number of shares of Series A Stock outstanding and the denominator shall be the
sum of all shares of Common Stock, Series A Stock, Series B Stock and Series C
Stock outstanding, such redemption to be effective following the distribution of
the proceeds of the transaction to all of the shareholders of the Company.
2.3.2 Upon the sale of all or substantially all of the
Company or its assets, whether by sale of stock or assets, merger,
reorganization or otherwise, where the transaction would ascribe a value of
Seventy Million Dollar ($70,000,000) or more on the Company as a whole, each
issued and outstanding share of Common Series Stock shall be automatically
redeemed by the Company in exchange for: (a) the Adjusted Common Series Stock
Purchase Price of each such share, and (b) one share of Common Stock; provided,
that each such newly issued shares of Common Stock shall participate in any
dividend, distribution or other payment following such transaction.
2.3.3 At such time as the distributions paid on the Common
Series Stock total one hundred percent of the aggregate Adjusted Common Series
Stock Purchase Price of all the shares of Common Series Stock, each issued and
outstanding share of Common Series Stock shall be automatically redeemed by the
Company in exchange for one share of Common Stock.
2.4 Purchaser's Obligations: Notwithstanding anything to the
contrary contained elsewhere herein, Purchaser's obligations to purchase the
Common Series Stock pursuant to Sections 2.1.1 through 2.1.3 above shall be
limited to four (4) shares of Series A Common Stock on the Initial Closing Date;
provided, however, in the event Purchaser fails to
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purchase in a timely manner of the entire amount of the shares of Common Series
Stock set forth in Sections 2.1.1(b)-2.1.1(f)-2.1.2(d) and 2.1.3(a)-2.1.3(d),
the Company may in its sole discretion, upon thirty (30) days prior written
notice (during which period the Purchaser shall have the right to cure through
the purchase of any delinquent tranche of Common Series Stock), terminate
Purchaser's right to purchase any other shares of Common Series Stock in
accordance with the terms hereof, unless such failure by Purchaser to purchase
any such shares is as a result of the Company's breach of its obligations or
conditions precedent hereunder or any of its representations, warranties or
covenants contained herein.
2.5 Anti-Dilution: The Company's Amended Certificate of Incorporation
shall provide that without the approval of the majority of the outstanding
shares of Common Series Stock, voting separately as a class, the Company shall
not issue or agree to issue any Capital Stock or note or instrument convertible
into or exchangeable for Capital Stock unless the Company adjusts the rights and
privileges of the Common Series Stock so that when issued the Common Series
Stock and/or the Common Stock issuable upon the redemption of the Common Series
Stock will hold no lesser of a percentage of the voting rights, Distributions
and liquidation preference in the Company as set forth in Sections 2.1.1 through
2.3 above. A copy of the form of Amended Certificate in form and substance
acceptable to the Purchaser shall be filed with the office of the Secretary of
State of the State of New York prior to the Initial Closing Date.
3. Use of Proceeds, Budgets and Financial Reports. The Company agrees
that, unless otherwise agreed to in writing by the Purchaser, all proceed paid
to the Company by Purchaser for the purchase of the Common Series Stock pursuant
to section 2 above, shall be used solely for the establishment and business
operations of the Company in accordance with the terms of this Agreement and the
Company's budget as submitted to the Purchaser. The Company agrees to submit its
initial budget for the Company's first fiscal year to the Purchaser's for its
approval prior to the initial Closing Date. The Company shall, no later than
thirty (30) days prior to the announcement of each of the next two years
thereafter, deliver to the Purchaser, budgets for such fiscal years
(collectively, the "Budgets"). The Company agrees to provide the Purchaser with
Financial Statements which have been audited by an independent certified public
accountant acceptable to the Purchaser within ninety (90) days after the end of
each fiscal year for a period commencing with the end of the Purchaser's first
fiscal year terminating upon the occurrence of both the termination of the Term
of this Agreement and Purchaser no longer holding ten percent (10%) of the
Capital Stock of the Company (unless said failure is by reason of the Company's
breach). In addition, the Company agrees to provide the Purchaser with balance
sheets, income statements and cash flow reports on a monthly basis no later than
thirty (30) days after the end of each calendar month for a period of three
years from the Initial Closing Date (the "Monthly Reports").
4. Representations and Warranties of the Company.
4.1 Organization, Qualification and Corporate Power of the Company.
The Company is a corporation duly organized, validly existing and in good
standing under the
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laws of the State of New York, has all requisite corporate power and authority
to own or lease and operate its properties and to carry on its business as
presently conducted, has not filed articles of dissolution and has a perpetual
period of existence. The Company is not qualified, nor required to be
qualified, to transact business, as it is currently being conducted, as a
foreign corporation or organization in any jurisdiction outside of New York.
4.2 Capitalization. The authorized capital stock of the Company consists
of two hundred (200) shares of Capital Stock as follows: one hundred fifty
(150) shares of common stock, no par value per share, all of which shares are
issued and outstanding, and fifty (50) shares of Common Series Stock in three
series, Series A Common Stock, Series B Common Stock and Series C Common Stock,
of which no shares are issued and outstanding. All of the issued and
outstanding shares of capital stock of the Company have been duly authorized,
validly issued and are fully paid and non-assessable. There are no outstanding
options, warrants, convertible securities or other rights to subscribe for or
acquire any capital stock or securities convertible into capital stock of the
Company. All such capital stock has been issued in compliance with applicable
federal and state securities Laws and all pre-emptive rights applicable
thereto, whether by Law or Contract.
4.3 Authorization of Transaction. The Company has full power and
authority to, and has taken all actions necessary to authorize it to, execute
and deliver the Agreement and each of the agreements or documents related
thereto, and to perform its obligations thereunder. This Agreement constitutes
a valid and legally binding obligation of the Company, enforceable in
accordance with the terms and conditions set forth herein, except as limited by
bankruptcy, insolvency and general principles of equity.
4.4 Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, will
(i) violate any provision of the articles of incorporation or bylaws of the
Company, (ii) conflict with or violate any provisions of, or result in the
maturation or acceleration of, any obligations under any Contract, Order,
License or Law to which the Company is subject or to which the Company is a
party; (iii) violate any restriction or limitation, or result in the
termination, or loss of any right (or give any third party the right to cause
such termination or loss), of any kind to which the Company is bound; or (iv)
subject to obtaining the consents contemplated hereby, violate any term or
provision of any statute, law, regulation or rule or any writ, judgment, decree,
injunction, or similar order, or any agreement with any governmental or
regulatory authority applicable to the Company; (v) result in the creation or
imposition of any lien upon any assets or properties of Seller or the Company;
or (vi) require Seller or the Company to obtain any consent, approval, or
action of, or make any filing with or give any notice to, any Person except as
identified on the Disclosure Schedule.
4.5 No Outstanding or Undisclosed Liabilities. The Company has no
outstanding indebtedness or other liabilities (whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued or due or
to become due), except operating expenses
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or liabilities incurred in the Ordinary Course as set forth in Schedule 4.5
attached hereto and made a part hereof.
4.6 Corporate Records. The Company has provided the Purchaser with
access to full and complete copies of the Company's certificate of
incorporation, bylaws, stock record book and the corporate minutes and all
amendments thereto which are correct and complete in all material respects and
accurately reflect all proceedings of the shareholders and directors of the
Company (and all committees thereof). The stock record book of the Company
contains complete and accurate records of the stock ownership of the Company and
the transfer of shares of its capital stock.
4.7 Organizational Documents. Attached to the Disclosure Schedule
shall be true, correct and complete copies of the articles of incorporation and
bylaws and other organizational documents, as amended, of the Company.
4.8 Financial Statements. Attached to the Disclosure Schedule shall
be complete copies of the Financial Statements. Except as set forth in the
Disclosure Schedule: (a) the Company's books and records of accounts are
complete and correct in all material respects and accurately reflect all of the
assets, liabilities, transactions and results of operations of the Company as of
the dates of such records and (b) the Financial Statements have been prepared in
accordance with GAAP or statutory accounting principles, as applicable.
Notwithstanding the foregoing, the Buyer recognizes that the accruals for the
incurred but not yet reported claims set forth in the Financial Statements are
estimates and actual experience may vary from such estimates.
4.9 Subsidiaries. The Company has no Subsidiaries.
4.10 Third Party Consents. No third-party consents, approvals or
authorizations are necessary for the execution and consummation of the
transactions contemplated hereby, nor are any such consents, approvals or
authorizations required in order to enable the Buyer to continue to enjoy the
benefits of any Contract, License or other rights of the Company in accordance
with their existing terms.
4.11 Employment Relationships. The Company currently employs __
employees as set forth in Disclosure Schedule 4.11. With respect to such
employees:
4.11.1 Employment Contracts. The Company has no employment
contracts.
4.11.2 Employee Benefit Plans. All Plans maintained by the
Company on behalf of the Company's employees which are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") comply with ERISA.
4.11.3 Labor Contracts. The Company is not a party to any
collective bargaining agreement or bound to any other Contract with a labor
union. The Company
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has not received written notice of any proceeding regarding the Company with
respect to certification or representation before the National Labor Relations
Board. There is no citation, complaint or charge issued, pending or threatened
in writing by any agency responsible for administering or enforcing Laws
relating to labor relations, employee safety or health, fair labor standards
and equal employment opportunity.
4.12 Licenses. The Company possesses all Licenses as are necessary
for the conduct of its business or operations.
4.13 Material Contracts and Other Descriptions and Lists.
Disclosure Schedule 4.13 shall identify and briefly describe the following:
4.13.1 Contracts. All Contracts to which the Company is a
party.
4.13.2 Non-Compete Covenants. A list of any written
covenants not to compete, and non-solicitation covenants in favor of the
Company, or binding upon or against the Company;
4.13.3 Powers of Attorney. The names of all persons holding
powers of attorney from the Company and a summary statement of the terms
thereof; and
4.13.4 Bonds. A list of performance, bid or completion
bonds, or letters of credit in favor of the Company or binding upon or against
the Company and which will survive the Closing.
Accurate and complete copies of each Contract or document described in
this Section shall be furnished to the Purchaser upon request.
4.14 Real Property. The Company does not now nor has it ever owned
has never owned any real property. Set forth in Disclosure Schedule 4.14 is a
description of all real property leases to which the Company is a party.
4.15 Insurance. The Disclosure Schedule shall list all insurance
policies and the coverages with respect thereto currently in effect for the
Company. The Company is covered by policies of insurance that are commercially
reasonable and sufficient for the conduct of the intended business of the
Company (the "Insurance"). The Insurance is in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
hereof have been paid, and no notice of cancellation or termination has been
received by the Company with respect to any such policy.
4.16 Litigation. Except as shall be set forth on the Disclosure
Schedule, there is no Litigation relating to the Company, its assets,
properties or business, or the transaction contemplated hereby pending or
threatened writing. The Disclosure Schedule shall disclose, with
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respect to each item described thereon, the name or title of the Litigation
(and parties or potential parties thereto), a description of the nature of the
action or claim.
4.17 Taxes. All Tax returns required to be filed with respect to
the Company with any Governmental Authority have been duly and timely filed,
and all such Tax returns are true, correct and complete in all material
respects. The Company (a) has duly and timely paid (or has caused payment to be
made on its behalf pursuant to a consolidated return) all Taxes that are due,
or claimed or asserted by any Governmental Authority to be due, from the
Company for the periods covered by such returns or (b) has duly and fully
provided for such Taxes, in accordance with GAAP, in the books and records of
the Company, including without limitation, in each of the Financial Statements.
There are no waivers or agreements by the Company for the extension of time for
the assessment of Taxes. Except as set forth in the Disclosure Schedule,
neither the Company nor the Shareholder have been advised in writing by any
Governmental Authority that any Tax returns or Tax reports filed by the Company
with any Governmental Authority are currently being audited by the Internal
Revenue Service or other appropriate governmental agency. With respect to any
taxable year for which a waiver or agreement for the extension of time for the
assessment of Taxes has been affected, no issues have been raised affecting
either the Company's liability for Taxes or any item of income, deduction,
credit, basis, gain or loss which could affect the Company's liability for
Taxes directly or indirectly or the present practices of the Company in
reporting and paying Taxes, and no such issues are pending. There are no Liens
with respect to Taxes upon any of the assets or properties of the Company other
than statutory tax Liens for Taxes not yet due. No election under Sections 108,
168, 441, 1017, 1033 or 4977 of the code is in effect with respect to the
Company. The Company is not required to make any adjustment pursuant to Section
481 of the Code by reason of a change in accounting method, and there are no
applications for changes in accounting method pending with any Tax authority.
The Company is not jointly or severally liable for taxes as a result of being a
member of a consolidated group, other than the consolidated group of which
Shareholder or its affiliates are members.
4.18 Compliance with Laws. The Company has not been and is not in
material violation (or with or without notice or lapse of time or both, would
be in material violation) of any term or provision of any law or laws or any
writ, judgment, decree, injunction, or similar order applicable to the Company
or any of its assets or properties which violation would have a material adverse
effect on the Company taken as a whole.
4.19 Environmental Protection. The Company has never utilized,
stored or disposed of any Environmental Materials in any real property leased
or occupied by the Company.
4.20 Proprietary Rights. The Disclosure Schedule contains a true,
accurate and complete list of all of the (a) registrations of trademarks,
service marks or trade names, and all pending applications for any such
registrations, (b) registration of patents and copyrights and all pending
applications therefor, (c) other trademarks, service marks or trade names,
whether or not registered, including, but not limited to, all Software (the
matters in
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clauses (a), (b) and (c) are collectively referred to herein as "Proprietary
Rights"), which are owned or used by the Company. Except as set forth on the
Disclosure Schedule, the use of the Proprietary Rights listed on the Disclosure
Schedule by the Company has not infringed, is not infringing upon and is not
otherwise violating the rights of any Person in or to such Proprietary Rights
or the asserted Proprietary Rights of others, nor has the Company received any
notices or claims that the use of the Proprietary Rights by the Company
infringes upon or otherwise violates any rights of a Person in or to such
Proprietary Rights or the proprietary rights of others. Except as set forth on
the Disclosure Schedule, to the Knowledge of the Company, no Person is
infringing on the Proprietary Rights owned by the Company.
4.21 Year 2000. Except as set forth in the Disclosure Schedule
with respect to non-customized "off the shelf" Software utilized by the
Company, all computer hardware, software, and firmware (collectively,
"Software") utilized by the Company, whether directly or through outsourcing or
other agreements, accurately processes date data (including, but not limited
to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, including leap year calculation. Without
limiting the generality of the foregoing:
4.21.1 The Software will not abnormally end or provide
invalid or incorrect results as a result of date data, specifically including
date data which represents or references different centuries or more than one
century;
4.21.2 The Software has been designed to ensure year 2000
compatibility, including, but not limited to, date data century recognition,
calculations which accommodate same century and multi-century formulas and date
values, and date data interface values that reflect the century;
4.21.3 The Software includes "year 2000 capabilities." For
purposes of this Agreement, "year 2000 capabilities" means the Software:
(a) will manage and manipulate data involving dates,
including single century formulas and multi-century formulas, and will not
cause an abnormally ending scenario within the application or generate
incorrect values or invalid results involving such dates; and
(b) provides that all date-related user interface
functionalities and data fields include the indication of century; and
(c) provides that all date-related interface
functionalities include the indication of century.
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<PAGE> 17
5. Representations and Warranties of the Purchaser.
In order to induce the Company to enter into this Agreement, the
Purchaser makes the following representations and warranties to the Company:
5.1 Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
5.2 Authorization of Transaction. The Purchaser has full power and
authority to, and has taken all actions necessary to authorize it to, execute
and deliver the Agreement and each of the agreements or documents related
thereto, and to perform its obligations thereunder. This Agreement constitutes
a valid and legally binding obligation of the Purchaser, enforceable in
accordance with the terms and conditions set forth herein, except as limited by
bankruptcy, insolvency and general principles of equity.
5.3 Enforceability; Conflicting Obligations. This Agreement and
all other agreements of the Purchaser contemplated hereby are or, upon the
execution thereof, will be the valid and binding obligations of the Purchaser
enforceable against it in accordance with their terms. The execution and
delivery of this Agreement do not, and the consummation of the purchase of the
Common Series Stock will not, conflict with or violate any provision of the
articles of incorporation or bylaws of the Purchaser, nor any provisions of, or
result in the acceleration of, any obligation of the Purchaser which would have
a material adverse effect on the transactions contemplated hereunder.
5.4 Authorization. The Purchaser has all necessary corporate
power and authority to enter into and perform the transactions contemplated
hereby in accordance with the terms and conditions hereof.
5.5 Litigation. There is no litigation, proceeding or any
investigation by any Governmental Authority against the Purchaser or relating
to the transactions contemplated hereby. There is no outstanding Order,
litigation or proceeding to which the Purchaser is a party or subject and which
materially adversely affects Purchaser's business or assets or its ability to
consummate this Agreement or fulfill obligations under this Agreement.
5.6 Third Party Consents. No third-party consents, approvals, or
authorizations are necessary for the execution of and consummation of the
transactions contemplated hereby the lack of which would have a material
adverse effect on the transactions hereby contemplated.
6. Conditions Precedent to the Obligations of Purchaser. Anything to
the contrary contained elsewhere herein notwithstanding.
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<PAGE> 18
6.1 Purchaser's obligations to purchase Series A Common Stock on the
Initial Closing Date shall be subject to and conditioned upon the Company's
satisfaction of the following conditions precedent:
6.1.1 The Company shall have delivered to the Purchaser a
fully-executed Shareholders' Agreement;
6.1.2 The Company shall have delivered to Purchaser a Good Standing
Certificate for the Company certified by the Secretary of State for the State
of New York dated within thirty (30) days of the Initial Closing Date;
6.1.3 The Company shall have delivered to Purchaser a certified copy
of the Amended Certificate as filed with the office of the Secretary of 'State
for the State of New York;
6.1.4 The Company shall have delivered to Purchaser a Certificate
executed by C. Jonathan Malumud certifying that as of the Initial Closing Date,
all of the representations and warranties of the Company contained in the
Agreement are true and correct and that the Company is not in violation of any
of its obligations or covenants contained in this Agreement (the "Officer's
Certificate");
6.1.5 The Company shall have delivered to Purchaser the Initial
Budget pursuant to Section 3 above in form and substance acceptable to the
Purchaser;
6.1.6 The Company shall have delivered to Purchaser within
forty-five (45) days of the date of execution of this Agreement a complete and
extensive business plan prepared by a professional agency reasonably acceptable
to the Purchaser; and
6.1.7 The Company shall not be in violation of any of its
obligations, representations, warranties or covenants under the Agreement.
6.2 The purchase of any of the shares of Series A Common Stock, Series B
Common Stock or Series C Common Stock in any of the Closings set forth in
Sections 2.1.1, 2.1.2 or 2.1.3 above, after the Initial Closing Date, shall be
subject to and conditioned upon satisfaction of the following conditions
precedent, unless waived in writing by Purchaser:
6.2.1 The Company shall have delivered to Purchaser an Officer's
Certificate dated as of the applicable Closing Date;
6.2.2 The Company shall deliver to the Purchaser all Budgets and
monthly Reports required pursuant to Section 3 above; and
6.2.3 The Company shall not be in violation of any of its
obligations, representations, warranties or covenants under the Agreement.
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<PAGE> 19
7. Closing: All Closings with respect to the purchases of Common Series
Stock pursuant to Section 2 above shall be held at the offices of Jeffer,
Mangels, Butler & Marmaro, LLP, 2121 Avenue of the Stars, 10th Floor, Los
Angeles, CA, 90067, at ten o'clock a.m., on the applicable Closing Date or at
such other time and place as the Company and the Purchaser mutually may agree.
If the Initial Closing has not occurred by June 30, 1999, then the Purchaser,
if not then in breach of the Agreement, may upon prior written notice to the
Company terminate this Agreement. If the Closing has not occurred by July 31,
1999, then either the Company or the Purchaser, if not then in breach of the
Agreement, may upon prior written notice to the other party terminate this
Agreement. In the event the Agreement is terminated pursuant to this Section 7,
the Agreement shall be of no further force or effect, except that such
termination pursuant to this Section 7, the Agreement shall be of no further
force or effect, except that such termination shall not relieve any party from
liability for any breach of this Agreement prior to such termination. The
Purchaser shall notify the Company in writing no later than five (5) business
days prior to the proposed Closing of any purchaser of Common Series Stock (the
"Purchase Notice"). In addition to the proposed date of the Closing, the
Purchaser Notice shall advise the Company of the amount of shares of Common
Series Stock that Purchaser intends to purchase at such Closing. The delivery of
documentions for each Closing may be made by mail, overnight courier or such
other means as may be deemed acceptable by the Parties. Delivery of funds at
each Closing may be made by check or wire transfer to an account directed by
the Company.
8. Termination.
8.1 In the event of a breach of any of the terms or conditions of
this Agreement, the non-breaching party may provide notice of such breach to
the breaching party, in accordance with the notice provisions of Section _
herein. If the breaching party fails to remedy the breach within thirty (30)
days after having received notice, the non-breaching party may in its sole
discretion elect to terminate this Agreement at any time thereafter.
8.2 Termination of this Agreement shall not affect any rights or
remedies of either party accrued hereunder including, without limitation,
Purchaser's right to retain all Capital Stock in the Company issued to it prior
to termination.
9. Confidential Information.
9.1 "Confidential Information" shall mean, without limitation, the
following, whether in existence now or arising in the future:
9.1.1 such confidential business information relating to the
business of either party as any of such party's directors, officers or
employees may from time to time designate to the other party in writing as
being included in the expression "Confidential Information";
9.1.2 confidential business information related to the
business of either party encompossed in all drawings, designs, plans,
proposals, marketing plans and sales plans of either party;
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<PAGE> 20
9.1.3 all confidential proprietary information,
financial information, profit information, cost information, client information,
strategies, plans, proposals, economic policies and any confidential technique,
process, formula, development, experimental work, idea, secret, trade secret,
know-how or other confidential matter related to either party or any of their
activities, processes and operations and the proposed activities, process and
operations of any party; and
9.1.4 all computer programs existing or under
development and all information related thereto including algorithms,
specifications, flow charts, listings, source codes and object codes owned by
any party or to which any party has access.
9.2 Notwithstanding the provisions of Section 9.1 above,
Confidential Information shall not include:
9.2.1 information which is in the public domain at the
date of disclosure to a party or which thereafter enters the public domain
through no fault of that party (but only after it enters the public domain); or
9.2.2 information which is known by a party prior to
such disclosure; or
9.2.3 information which is learned by a party from a
third party who that party does not have reason to believe is under an
obligation to keep such information confidential;
9.3 Purchaser covenants and agrees that Purchaser shall:
9.3.1 use its best reasonable efforts to regard and
preserve as confidential all Confidential Information regarding the Company;
9.3.2 refrain from, directly or indirectly, utilizing,
disclosing, divulging or disseminating to any Person any Confidential
Information, except as required by law or any judicial or administrative
process; and
9.3.3 not, without prior written authorization from the
Company, use for its own benefit or purpose (other than in connection with this
Agreement or in connection with any financing undertaken by the Purchaser), or
for the benefit or purposes of any third party, any Confidential Information.
10. Non-Competition. Except with respect to any ownership interests
in the Company, so long as the Purchaser owns at least ten percent (10%) of the
Capital Stock of the Company, Purchaser shall not, without the Company's prior
consent, directly or indirectly own any legal or beneficial interest in, or
render services or give advice to, any business located anywhere or any entity
located anywhere which grants franchises, licenses or other interests to
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<PAGE> 21
others to operate any business which sells or distributes commemorative stamps
pursuant to the plan of operation currently contemplated by the Company.
11. Assignment. The Company may not transfer or assign any of its
rights, responsibilities or duties under this Agreement to any entity. I.T. may
transfer any or all of its rights, responsibilities or duties under this
Agreement to any corporation or other business entity, all of the voting equity
of which is owned or controlled by I.T.
12. Miscellaneous.
12.1 Expenses. Each party shall bear all of its own costs
and expenses incurred in connection with the transactions contemplated hereby.
12.2 Modification or Amendments. This Agreement may not be
modified or amended except pursuant to an instrument in writing signed by both
parties.
12.3 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
12.4 Captions. The captions appearing at the commencement
of the sections hereof are descriptive only and for convenience in reference.
Should there be any conflict between any such caption and the section at the
head of which it appears, the section and not such caption shall control and
govern in the construction of this Agreement.
12.5 Severability. Nothing contained herein shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provisions contained herein and any
present or future stature, law, ordinance or regulation, the latter shall
prevail; but the provision of this Agreement which is affected shall be
curtailed and limited only to the extent necessary to bring it within the
requirements of the law.
12.6 Representation by Counsel. The Company acknowledges
that Jeffer, Mangels, Butler & Marmaro LLP has represented only the Purchaser
and not any other party in the negotiation, drafting of this Agreement and the
transactions contemplated hereby and the Company has consulted with his own
legal counsel in connection with negotiation and drafting of this Agreement and
the transactions contemplated hereby and its rights with respect hereto prior
to the execution hereof.
12.7 Survival of Representations and Warranties. The
representations and warranties of the parties hereto as set forth herein shall
survive the consummation of the transactions contemplated hereby and for a
period of three years following last Closing Date with respect to any purchase
of Common Series Stock by the Purchaser hereunder.
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<PAGE> 22
12.8 No Finders or Brokers. Except with respect to Mendel Mochkin whose
fees shall be the sole responsibility of the Purchaser, the parties hereto
represent and warrant that they have not engaged or have been represented by
any broker or finder in connection with this Agreement or the transactions
contemplated hereby and each party fully indemnifies and holds harmless the
other party from any losses, damages or expenses incurred by the other party in
connection their breach of this Section.
12.9 Attorneys' Fees. Should any party hereto institute any action or
proceeding at law or in equity, or in connection with an arbitration, to
enforce any provision of this Agreement, including an action for declaratory
relief, or for damages by reason of an alleged breach of any provision of this
Agreement, or otherwise in connection with this Agreement, or any provision
thereof, the judge or the arbitrator, as the case may be, shall allocate the
costs and expenses (including attorney's fees and expenses) of such proceeding
between the parties based on such judge's or arbitrator's determination of the
merits of the parties respective positions in the proceedings.
12.10 Notices. Unless applicable law requires a different method of giving
notice, any and all notices, demands or other communications required or
desired to be given hereunder by any party shall be in writing. Assuming that
the contents of a notice meet the requirements of the specific paragraph of
this Agreement which mandates the giving of that notice, a notice shall be
validly given or made to another party if served either personally or if
deposited in the United States mail, certified or registered, return receipt
requested, postage prepaid, or if transmitted by telegraph, telecopy or other
electronic written transmission device. If such notice, demand or other
communication is served personally, service shall be conclusively deemed made
at the time of such personal service. If such notice, demand or other
communication is given by mail, such receipt shall be conclusive evidence of
delivery, or if by telegraph or if by other carrier service, upon confirmation
of delivery by the carrier, addressed to the party to whom such notice, demand
or other communication is to be given as set forth below. Any party hereto may
change its address for the purpose of receiving notices, demands and other
communications as herein provided, by a written notice given in the manner
aforesaid to the other party or parties hereto.
The Company: 535 Fifth Avenue
Suite 300
New York, NY 10017
Attn: C. Jonathan Malumud
Fax: 718-369-6270
With a copy to: Leon Schrage, Esq.
26 Court Street, Suite 810
Brooklyn, New York 11242
Fax: 718-858-0751
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<PAGE> 23
The Purchaser: A.C.N. 085 839 738
18 Denman Avenue
East St. Kilda, Victoria 3143
Melbourne, Australia
Attn: Jonathan Herzog
Fax: 011-613-9525-8077
With a copy to: Barry L. Burten, P.C.
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars
10th Floor
Los Angeles, CA 90067
Fax: (310) 203-0567
12.11 Entire Agreement. This Agreement along with the Exhibits and
Schedules attached hereto constitutes the entire agreement of the Company and
Purchaser with respect to this subject matter and any and all prior agreements,
understandings or representations with respect to its subject matter are hereby
terminated and canceled in their entirety and are of no further force or effect.
12.12 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to its rules regarding conflicts of laws.
12.13 Arbitration. Each party hereto agrees to submit any claim or
dispute arising out of, or related to this Agreement, to private and
confidential arbitration before a single arbitrator. The arbitrator selected
shall be a person experienced in negotiating, making and consummating agreements
of the type of this agreement. The arbitrator shall be selected by mutual
agreement or, if no agreement can be reached within sixty (60) days after the
initial notice requesting arbitration is delivered by one of the parties, by the
American Arbitration Association pursuant to its rules. Subject to the terms of
this section 12.13, the arbitration proceedings shall be governed by the
Commercial Rules of Arbitration of the American Arbitration Association and
shall take place in New York, New York. There shall be no punitive damages may
be awarded. The decision of the arbitrator shall be final and binding on each of
the parties and judgment thereon may be entered in any court having
jurisdiction. This arbitration procedure is intended to be the exclusive method
of resolving any claim arising out of or related to this Agreement. The only
exception to this arbitration provision shall be an action by either party
seeking equitable, including injunctive, relief in a court of competent
jurisdiction. Each party agrees to the personal and subject matter jurisdiction
of the Supreme Court for the State of new York located in New York County for
the resolution of any dispute, including related to this arbitration provision
or enforcement of any award upon any judgment rendered in arbitration.
12.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute
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<PAGE> 24
one and the same instrument, and shall become effective when the counterparts
have been signed by each party hereto and delivered to the other parties.
12.15 Further Assurances. Each of the parties hereto shall execute
and delivery any and all additional papers, documents and other assurances, and
shall do any and all acts and things reasonably necessary in connection with
the performance of their obligations hereunder to carry out the intent of the
parties hereto.
12.16 Non-Waiver. No waiver by any party hereto of a breach of any
provision of this Agreement shall constitute a waiver of any preceding or
succeeding breach of the same or any other provision hereof.
12.17 Number and Gender. In this Agreement, the masculine, feminine
or neuter gender, and the singular or plural number, shall each be deemed to
include the others whenever the context so requires.
12.18 Cross-References. All cross-references in this Agreement,
unless specifically directed to another agreement or document, refer to
provisions in this Agreement and shall not be deemed to be reference to the
overall transaction or to any other agreements or documents.
12.19 Exhibits. All exhibits and schedules, as the case may be,
attached hereto are hereby incorporated by reference.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
STAMPVILLE.COM INC. I.T. TECHNOLOGY, INC.
By: /s/ C. JONATHAN MALAMUD By: /s/ LEVI MOCHKIN
------------------------------- -------------------------------
Name: C. Jonathan Malamud Name: Levi Mochkin
------------------------------- -------------------------------
Title: Chief Executive Officer Title: Chief Executive Officer
------------------------------- -------------------------------
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<PAGE> 1
EXHIBIT 10.1(b)
AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT TO STOCK PURCHASE AGREEMENT (the "AGREEMENT") is entered
into as of December 8, 1999, by and between I.T. Technology, Inc., a Delaware
Corporation ("I.T.") and Stampville.com Inc., a New York corporation
("STAMPVILLE").
RECITALS
A. I.T. and Stampville have entered into a Stock Purchase Agreement (the
"Original Agreement") dated as of June 18, 1999 relating to the acquisition of
stock of Stampville by I.T.
B. I.T. has, as of the date of this Agreement, paid $325,000 of the
consideration contemplated by the Original Agreement.
C. I.T. and Stampville now desire to amend certain terms of the Original
Agreement,
NOW, THEREFORE, in consideration of the promises and the terms,
provisions, covenants and conditions hereinafter set forth, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
AGREEMENT
1. Definitions unless otherwise defined in this Agreement, all
capitalized terms used in this Agreement shall have the meanings set forth in
the Original Agreement.
2. Acceleration of Consideration Notwithstanding the provisions of the
Original Agreement I.T. agrees to pay the balance of the Stage One Consideration
and the Stage Two Consideration as follows:
2.1 $75,000 upon execution of this Amendment;
2.2 $100,000 on or before December 10, 1999;
2.3 Not later than sixty (60) days following the date of this Agreement,
I.T. shall pay to Stampville the sum of One Million Dollars ($1,000,000) a
portion of the Stage Two Consideration; and
2.4 The remainder of the Stage Two Consideration shall be paid in eight
equal quarterly installments of One Hundred Fifty-Six Two Hundred Fifty Dollars
($156,250.00), commencing on [the first day of the third month following the
date on which I.T. completes the investment described in Section 2.3 above], but
in any event not later than one hundred fifty
1
<PAGE> 2
(150) days from the date of this Agreement. I.T. may, but shall not be required
to, accelerate any payment pursuant to this Section 2.
3. Additional Payment. In addition to the payment of the Stage One
Consideration and the Stage Two Consideration, I.T. agrees to use commercially
reasonable efforts to make a further payment, or otherwise cause a party or
parties designated by I.T. to invest, an additional Five Million Dollars
($5,000,000) in Stampville (the "Additional Payment"). The Additional Payment
shall be made not later than twelve (12) months from the date of this Agreement;
or alternatively within 30 days following the closing of an initial public
offering "IPO" by I.T., that raises a minimum amount of Ten Million Dollars
($10,000,000) provided however, that the sole recourse of Stampville or any
other party shall be the reduction in equity ownership provided in Section 5.2,
below.
4. Elimination of Stage Three Consideration. The Stage Three
Consideration described in the Original Agreement is hereby eliminated, and I.T.
shall have no obligation therewith.
5. Equity Ownership.
5.1 In consideration for the accelerated payments provided in this
Agreement, I.T. shall be granted, effective as of the date of this Agreement,
50.1% of the total equity interests in Stampville on a fully-diluted basis, it
being understood that such equity interest shall include the equity interests
currently held by I.T, and that except for the provisions of Section 5.2 below,
I.T.'s voting rights in respect of such 50.1% equity interest , on a
fully-diluted basis, may not be limited or compromised under any circumstances
at any time. In order to effect the foregoing, Stampville shall, concurrently
with the execution of this Agreement, (a) amend its Articles of Incorporation to
authorize the issuance of 100,000 shares of common stock of Stampville (the
"Common Stock), (b) cause I.T. to own 50,100 shares of Common Stock (which
shares shall replace all shares of any series or class of capital stock of
Stampville issued to I.T.) and which shall constitute 50.1% of the outstanding
shares of Common Stock (including all securities convertible into Common Stock
and all shares of Common Stock to be issued pursuant to any option, warrant or
other agreement), and (c) cause the remaining shareholders of Stampville to own
49,900 shares of Common Stock (which shares shall replace all shares of any
series or class of capital stock of Stampville issued to the shareholders of
Stampville other than I.T.).
5.2 Notwithstanding the foregoing, if I.T., for any reason, fails to
make or arrange for the Additional Payment, I.T. shall surrender such number of
shares of Common Stock so that, upon such surrender, I.T. shall hold a
percentage of the outstanding shares of Common Stock (including all securities
convertible into common stock and all shares of Common Stock to be issued
pursuant to any option, warrant or other agreement) equal to the lesser of (a)
27.5% of the outstanding shares of Common Stock, or (b) the total amount
invested by I.T. pursuant to this Agreement and the Original Agreement divided
by 100,000. Thus, for purposes of illustration only, if I.T. invests an
aggregate of $2,500,000 in Stampville and does not make or arrange the
Additional Payment, I.T.'s percentage investment in Stampville shall be
2
<PAGE> 3
25% ($2,500,000 / 100,000 = 25). In the event that I.T. shall arrange for the
Additional Payment, rather than provide the Additional Payment itself, the
equity interest of I.T. in Stampville shall be reduced by the amount required by
the party providing the Additional Payment; provided, however, that I.T.'s
equity interest shall not be reduced below 27.5%, without a pro rata reduction
in the ownership interests of all the other shareholders of Stampville other
than I.T. (the "Malamuds").
6. Management. Concurrently with the execution of this Agreement,
Stampville, I.T. and the shareholders of Stampville shall amend the Shareholders
Agreement among Stampville and its shareholders to provide for the following:
6.1 Concurrently with the execution of this Agreement, I.T. shall be
entitled to appoint to the Board of Directors of Stampville such additional
nominees selected by I.T. so that at all times half of the members of the Board
of Directors of Stampville shall consist of individuals nominated by I.T. and
one-half of the members of the Board of Directors of Stampville shall consist of
individuals nominated by the current shareholders of Stampville other than I.T.
(collectively, the "Malamud Shareholders").
6.2 I.T. shall be entitled to designate an individual to serve as the
chief operating officer, or such other position as the Board of Stampville may
designate(s) will be paid by Stampville. The individual(s) designated by I.T.
shall work predominantly for Stampville out of Stampville's offices, but may
retain a title with and serve in a concurrent position with I.T. in a
consultative role.
6.3 Any check, draft or other instrument shall be executed by two
individuals, one designated by I.T. and one designated by the Malamuds and shall
be accompanied by a check requisition form containing information and back-up
materials.
6.4 Notwithstanding the foregoing, if I.T. fails to make or arrange
the Additional Payment, I.T.'s management rights shall be limited to those set
forth in the Original Agreement.
7. IGPC Contract. It shall be a condition precedent to any of I.T.'s
performance under this Agreement that Stampville shall have entered into an
agreement with Inter-Governmental Philatelic Corporation substantially in the
form of Exhibit A hereto.
8. Audits and Reports.
8.1 Stampville agrees that, as a condition to the performance of I.T.
hereunder, Stampville shall cause to be performed an audit of its financial
condition, books and records with a independent public auditor selected by I.T.,
which may be the independent auditor for I.T., the costs of which audit shall be
borne by Stampville; and in the future will furnish and assist I.T. and its
representatives in conducting any such further audits, revues, materials or
accounts of Stampville as may be required, the cost of such audits or revues
shall be borne by
3
<PAGE> 4
I.T., with the exception of one full audit to be conducted annually by an
independent auditor selected by I.T., the costs of which shall be borne by
Stampville.
8.2 Stampville shall, in addition to any other reports required under
the Shareholders Agreement or Original Agreement, provide weekly and "flash"
reports of operations, cash flows and such other matters as I.T. may reasonably
request.
9. Representations and Warranties. As additional inducement to I.T. to
make the Stage One Investment, the Stage Two Investment and the Additional
Payment, Stampville hereby confirms as accurate each of the representations and
warranties set forth in Section 7 of the Original Agreement as if made on the
date hereof.
10. Malamuds-Options in I.T. I.T. shall, upon completion of the Stage
One Investment and the earlier of a completion of the Additional Payment or the
closing of an IPO by I.T., which raises a minimum of Ten million dollars
($10,000,000), grant to designees of the Malamud Shareholders (which designees
shall be limited to employees, officers and directors of Stampville who are
regularly engaged in the operations of Stampville) options (the "Options") to
purchase 1,600,000 shares of Common Stock. at an exercise price of equal to
$1.25 per share pursuant to a Stock Option Agreement substantially in the form
of Exhibit B hereto. The Options shall become exercisable commencing two years
from the date of grant and then in increments of twenty percent (20%) per annum
thereafter. The Stock Option Agreement will include provisions for the cashless
exercise of the Options.
11. Survival of Provisions. Except as specifically provided in this
Agreement, all of the terms and conditions contained in the Original Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
STAMPVILLE.COM INC. I.T. TECHNOLOGY, INC.
By: /s/ [Signature Illegible] By: /s/ LEVI MOCHKIN
---------------------------- ----------------------------
Name: [Illegible] Name: Levi Mochkin
Title: President Title: Chief Executive Officer
4
<PAGE> 1
EXHIBIT 10.2
VENDOR ROCOCO HOLDINGS PTY LTD ACN 007 023 574 of 55-57 Wellington Street,
Windsor 3181
PROPERTY 34-36 Punt Road, Windsor
IMPORTANT NOTICE TO PURCHASERS
The use to which you propose to put the property may be prohibited by planning
or building controls applying to the locality or may require the consent or
permit of the municipal council or other responsible authority. It is in your
interest to undertake a proper investigation of permitted land use before you
commit yourself to buy. You should check with the appropriate authorities as to
the availability (and cost) of providing any essential services not connected
to the property.
1. RESTRICTIONS - Details of any registered or unregistered easement,
covenant, caveat or other similar restriction affecting the property are
set out in the attached copies of Title documents.
To the best of the Vendor's knowledge there is no existing failure to
comply with the terms of any easement, covenant, caveat or similar
restriction.
2. PLANNING AND ROAD ACCESS - Details of any planning instruments affecting
the land are attached.
The property is outside the Melbourne metropolitan area (ad defined in the
Act) and the planning instrument prohibits the construction of a dwelling
house on the land.
There is access to the property by road.
3. OUTGOINGS AND STATUTORY CHARGES - Details concerning any rates, taxes or
other similar outgoings (including any Body Corporate charges) and any
interest payable on any part of them are attached.
Amounts for which the purchaser may become liable in consequence of the
sale will be adjusted at settlement.
Amount owing under any other registered or unregistered statutory charge
that secures an amount due under any other legislation: Nil
4. SERVICES
Avail. Connected Authority
4.1 Electricity Yes Yes Citipower
4.2 Gas No No
4.3 Water Yes Yes South East Water
4.4 Sewerage Yes Yes South East Water
4.5 Telephone Yes No Telstra
<PAGE> 2
- 2 -
5.1 BUILDING APPROVALS - Particulars of any building permit granted during the
past seven years under the Building Control Act 1981 or Building Act 1993
are contained in the attached certificates.
5.2 GUARANTEE - Details of an owner-builder under the House Contracts Guarantee
Act 1987 in the preceding seven years - nil.
5.3 INSURANCE - Details in the preceding six years and six months in the case
of a residence to which s137B of the Building Act 1993 applies - nil.
Nil, as per attached.
6. NOTICES - Particulars of any notice, order, declaration, report or
recommendation of a public authority or government department or approved
proposal affecting the property of which the Vendor might reasonably
expected to have knowledge, including:
6.1 if there is a Body Corporate, affecting it and its contingent,
proposed or other liabilities, including those relating to repairs;
6.2 notice of any current land use restriction given in relation to the
land under the Agricultural and Veterinary Chemicals Act 1992 due to
contamination.
6.3 notice pursuant to Section 6 of the Land Acquisition and Compensation
Act 1986;
None.
BUT NOTE: The Vendor has no means of knowing of all decisions of Public
Authorities and Government Departments affecting the property unless
communicated to the Vendor.
7. TITLE - Copies of relevant Title documents are attached.
DATE OF STATEMENT: 7 July 1999
Vendor's Signature: /s/ JOHN LAZAR
------------------------------------------------------------
For and on behalf of Rococo Holdings Pty Ltd
The Purchaser acknowledges being given a copy of this statement signed by the
Vendor before the Purchaser signed any Contract.
DATE OF ACKNOWLEDGMENT: 7/7/99
Purchaser's Signature: /s/ HENRY HERZOG
------------------------------------------------------------
<PAGE> 3
- 3 -
PLEASE NOTE THAT WHERE THE PROPERTY IS TO BE SOLD ON TERMS PURSUANT TO SECTION
32(2)(f) OF THE ACT AND/OR SOLD SUBJECT TO A MORTGAGE THAT IS NOT TO BE
DISCHARGED BY THE DATE OF POSSESSION (OR RECEIPT OF THE RENTS AND PROFITS) OF
THE PROPERTY PURSUANT TO SECTION 32(2)(a) OF THE ACT - then the Vendor must
provide an additional statement containing the particulars specified in
Schedules 1 and 2 of the Act.
<PAGE> 4
SALE OF LAND ACT (the Act) - SECTION 32
ADDITIONAL VENDOR'S STATEMENT TO THE PURCHASER OF REAL
ESTATE
VENDOR ROCOCO HOLDINGS PTY LTD ACN 007 023 574 of 55-57 Wellington
Street, Windsor 3181
PROPERTY 34-36 Punt Road, Windsor
NOTICE TO VENDORS
This additional Vendor's Statement is to be attached to the standard Vendor's
Statement (completed as appropriate and signed by the Vendor) where the
property is to be sold on terms pursuant to section 32(2)(f) of the Act and/or
sold subject to a mortgage that is not to be discharged by the date of
possession (or upon receipt of the rents and profits of the property).
1. VENDORS TERMS - Cost of the finance to be provided by the Vendor:
<TABLE>
<S> <C>
1.1 Purchaser price $900,000.00
Deposit $200,000.00
-----------
Residue (lowest price if paid out now) $700,000.00
Total interest payable
over full contract period $101,500.00
-----------
Total balance payable,
including interest $801,500.00
-----------
1.2 Number of repayments 24 (including the final payment)
Amount of each repayment $ 4,229.17
Repayments due: the 26th day of each and
every month commencing on the 26th day of
August 1999.
Final payment $704,229.17
1.3 Interest rate: 7.25% p.a.
Default interest rate The rate prescribed by General
Condition 4 in Table A as
defined in the Contract.
Is the interest rate variable? No
1.4 The Purchaser is to pay GST (if any)
payable by the Vendor in respect of the
payments to be made to it under the Contract.
</TABLE>
<PAGE> 5
2. VENDORS MORTGAGE - Mortgages to which the property will remain subject:
Nil.
DATE OF THIS ADDITIONAL STATEMENT: 7 July 1999
Vendor's Signature: /s/ JOHN LAZAR
----------------------------------
The Purchaser acknowledges being given a copy of this additional statement
signed by the Vendor before the Purchaser signed any Contract.
DATE OF THIS ACKNOWLEDGEMENT: 7/7/99
Purchaser's Signature: /s/ HENRY HERZOG
-------------------------------
<PAGE> 6
ORIGINAL REGISTER BOOK
NOT TO BE TAKEN FROM THE OFFICE [SEAL] VOL. 8200 FOL. 757
OF TITLES SECOND EDITION
CERTIFICATE OF TITLE
UNDER THE "TRANSFER OF LAND ACT"
MURENE HARRIS of 28 Langtree Avenue Mildura Married Woman is the proprietor of
an estate in fee simple subject to the encumbrances notified hereunder in
all that piece of land in the Parish of Prahran County of Bourke being part of
Crown Allotment B Portion 59 which land is shown enclosed by continuous lines on
the map hereon
DATED the 10th day of December 1979
/s/ G. GUGGENHEIMER [SEAL]
------------------------------
Assistant Registrar of Titles
ENCUMBRANCES REFERRED TO
[MAP] SEARCHED 17 FEB 1999
UNREG. DEALS: U839509
B. & A. FRASER & CO.
Processing [illegible]
P.O. Box 12 [illegible]
[illegible]
Ph [illegible]
MEASUREMENTS ARE IN METRES Derived from Vol.860 Fol.824
H794808
<PAGE> 7
VOL 8200 FOL. 757 INSTRUMENT APPLICATION
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
SECOND EDITION
WALTER LINGARD HICK and MAUREEN HICK MORTGAGE
both of 2 Montana Parade Croydon ESANDA LIMITED
Business Proprietors are now JOINT REGISTERED 4/9/85
PROPRIETORS L870811H
Registered 10th December 1979 [STAMP ILLEGIBLE]
No.H794809
[SEAL] [SEAL]
--------
- --------------------------------------
MORTGAGE to THE COMMERCIAL BANK OF MORTGAGE
AUSTRALIA LIMITED CAPITAL BUILDING SOCIETY
Registered 10th December 1979 REGISTERED 22/3/88
No. H794810 N356764G
[STAMP- ??? DISCHARGED [STAMP ILLEGIBLE]
- -2 SEP 1985]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
[STAMP- CAVEAT NO. K168128 LODGED CAVEAT
22 NOV 1982 CAVEAT WITHDRAWAL CAVEATOR: ALIFRA PTY. LTD.
10 JAN 1983] CAPACITY: PURCHASER/FEE SIMPLE
[SEAL] [SEAL] LODGED BY: 731G JOHN DI SANTO OF 694
- -------------------------------------- SYDNEY RD. BRUNSWICK 3056
NOTICE TO: AS ABOVE
[STAMP- CAVEAT NO. L847955Y LODGED NO: N898197E
22 AUG 1985 CAVEAT WILL LAPSE ON DATE: 13/12/88
REGISTRATION OF L864597B 27 NOV. 1985] [STAMP- ????? P14925K 22 FEB 1989]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
PROPRIETOR PROPRIETOR
CHESTNUTS PTY. LIMITED OF 34 PUNT RD. ALIFRA PTY. LTD. OF 278 CHURCH ST.
PRAHRAN RICHMOND
REGISTERED 2/9/85 REGISTERED 15/2/89
L864597B P14925K
[SEAL] [SEAL] [SEAL]
- -------- --------
PROPRIETOR MORTGAGE
UNKLES HOTELS PTY. LTD. OF WESTPAC SAVINGS BANK LIMITED
- -15/285 CARLISLE-ST.-BALACLAVA- REGISTERED 15/2/89
REGISTERED 2/9/85 P14926G
L864598X [SEAL] [SEAL]
[SEAL] [STAMP- DISCHARGED V400176T
[STAMP- 04 MAY 1998]
????? NO. M101761? --------
28 JUL 1987] [SEAL] [STAMP-V.8310 F.066]
- --------
[STAMP- ENDORSEMENTS CONTINUE ON
ANNEXED SHEET MARKED A COMMENCING
WITH V229283M]
[SEAL]
</TABLE>
<PAGE> 8
____ marked "A" referred to in the Certificate of Title
entered in the Register Book Vol. 8200 Fol. 757 [SEAL]
ORIGINAL
-------- ------------------------------
Assistant Registrar of Taxes
- --------------------------------------------------------------------------------
CAVEAT |
|
CAVEATOR: ROCOCO HOLDINGS PTY. LTD. |
|
CAPACITY: PURCHASER/FEE SIMPLE |
|
LODGED BY: MCGRATH CAREY KATZ |
|
NOTICE TO: LEVEL 28/55 COLLINS ST. |
|
MELBOURNE 3000 |
|
NO: V2229283M |
[SEAL] |
DATE: 29/1/98 |
|
11 MAY 1998 |
[ILLEGIBLE] LAPSED |
[ILLEGIBLE] V400177Q |
|
[SEAL] |
|
PROPRIETOR |
ROCOCO HOLDINGS PTY. LTD. |
*1/843A GLENHUNTLY RD. |
CAULFIELD SOUTH 3162 |
[SEAL] |
V4001770 04/05/98 |
<PAGE> 9
ORIGINAL REGISTER BOOK
NOT TO BE TAKEN FROM THE OFFICE [SEAL] VOL. 8310 FOL. 066
OF TITLES SECOND EDITION
CERTIFICATE OF TITLE
UNDER THE "TRANSFER OF LAND ACT"
MURENE HARRIS of 28 Langtree Avenue Mildura Married Woman is the proprietor of
an estate in fee simple subject to the encumbrances notified hereunder in
all that piece of land in the Parish of Prahran County of Bourke being part of
Crown Allotment B Portion 59 which land is shown enclosed by continuous lines on
the map hereon TOGETHER WITH a right of carriage way over the roads shown marked
A on the said map.
DATED the 10th day of December 1979
/s/ G. GUGGENHEIMER [SEAL]
------------------------------
Assistant Registrar of Titles
[MAP] SEARCHED 17 FEB 1999
UNREG. DEALS: U839509
B. & A. FRASER & CO.
Processing [illegible]
P.O. Box 12 [illegible]
[illegible]
Ph [illegible]
MEASUREMENTS ARE IN METRES Derived from Vol.2381 Fol.073
H794808
<PAGE> 10
VOL 8310 FOL. 066 INSTRUMENT APPLICATION
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
SECOND EDITION
WALTER LINGARD HICK and MAUREEN HICK MORTGAGE
both of 2 Montana Parade Croydon ESANDA LIMITED
Business Proprietors are now JOINT REGISTERED 4/9/85
PROPRIETORS L870811H
Registered 10th December 1979 [STAMP ILLEGIBLE]
No.H794809
[SEAL] [SEAL]
--------
- --------------------------------------
MORTGAGE to THE COMMERCIAL BANK OF MORTGAGE
AUSTRALIA LIMITED CAPITAL BUILDING SOCIETY
Registered 10th December 1979 REGISTERED 22/3/88
No. H794810 N356764G
[STAMP- ??? DISCHARGED [STAMP ILLEGIBLE]
- -2 SEP 1985]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
[STAMP- CAVEAT NO. K168128 LODGED CAVEAT
22 NOV 1982 CAVEAT WITHDRAWAL CAVEATOR: ALIFRA PTY. LTD.
10 JAN 1983] CAPACITY: PURCHASER/FEE SIMPLE
[SEAL] [SEAL] LODGED BY: 731G JOHN DI SANTO OF 694
- -------------------------------------- SYDNEY RD. BRUNSWICK 3056
NOTICE TO: AS ABOVE
[STAMP- CAVEAT NO. L847955Y LODGED NO: N898197E
22 AUG 1985 CAVEAT WILL LAPSE ON DATE: 13/12/88
REGISTRATION OF L864597B 27 NOV. 1985] [STAMP- ????? P14925K 22 FEB 1989]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
PROPRIETOR PROPRIETOR
CHESTNUTS PTY. LIMITED OF 34 PUNT RD. ALIFRA PTY. LTD. OF 278 CHURCH ST.
PRAHRAN RICHMOND
REGISTERED 2/9/85 REGISTERED 15/2/89
L864597B P14925K
[SEAL] [SEAL] [SEAL]
- -------- --------
PROPRIETOR MORTGAGE
UNKLES HOTELS PTY. LTD. OF WESTPAC SAVINGS BANK LIMITED
- -15/285 CARLISLE-ST.-BALACLAVA- REGISTERED 15/2/89
REGISTERED 2/9/85 P14926G
L864598X [SEAL] [SEAL]
[SEAL] [STAMP- DISCHARGED V400176T
[STAMP- 04 MAY 1998]
????? NO. M101761? --------
28 JUL 1987] [SEAL] [STAMP-V.8310 F.066]
- --------
[STAMP- ENDORSEMENTS CONTINUE ON
ANNEXED SHEET MARKED A COMMENCING
WITH V229283M]
[SEAL]
</TABLE>
<PAGE> 11
____set marked "A" referred to in the Certificate of Title
entered in the Register Book Vol. 8310 Fol. 066 [SEAL]
ORIGINAL
------------------------------
Assistant Registrar of Taxes
- --------------------------------------------------------------------------------
CAVEAT |
|
CAVEATOR: ROCOCO HOLDINGS PTY. LTD. |
|
CAPACITY: PURCHASER/FEE SIMPLE |
|
LODGED BY: MCGRATH CAREY KATZ |
|
NOTICE TO: LEVEL 28/55 COLLINS ST. |
|
MELBOURNE 3000 |
|
NO: V2229283M |
[SEAL] |
DATE: 29/1/98 |
|
11 MAY 1998 |
[ILLEGIBLE] LAPSED |
[ILLEGIBLE] V400177Q |
|
[SEAL] |
|
PROPRIETOR |
ROCOCO HOLDINGS PTY. LTD. |
*1/843A GLENHUNTLY RD. |
CAULFIELD SOUTH 3162 |
[SEAL] |
V4001770 04/05/98 |
<PAGE> 12
ORIGINAL REGISTER BOOK
NOT TO BE TAKEN FROM THE OFFICE [SEAL] VOL. 8200 FOL. 757
OF TITLES SECOND EDITION
CERTIFICATE OF TITLE
UNDER THE "TRANSFER OF LAND ACT"
MURENE HARRIS of 28 Langtree Avenue Mildura Married Woman is the proprietor of
an estate in fee simple subject to the encumbrances notified hereunder in
all that piece of land in the Parish of Prahran County of Bourke being part of
Crown Allotment B Portion 59 which land is shown enclosed by continuous lines on
the map hereon.
DATED the 10th day of December 1979
/s/ G. GUGGENHEIMER [SEAL]
------------------------------
Assistant Registrar of Titles
[MAP] SEARCHED 17 FEB 1999
UNREG. DEALS: U839509
B. & A. FRASER & CO.
Processing [illegible]
P.O. Box 12 [illegible]
[illegible]
Ph [illegible]
MEASUREMENTS ARE IN METRES Derived from Vol.860 Fol.824
H794808
<PAGE> 13
VOL 8200 FOL. 757 INSTRUMENT APPLICATION
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
SECOND EDITION
WALTER LINGARD HICK and MAUREEN HICK MORTGAGE
both of 2 Montana Parade Croydon ESANDA LIMITED
Business Proprietors are now JOINT REGISTERED 4/9/85
PROPRIETORS L870811H
Registered 10th December 1979 [STAMP ILLEGIBLE]
No.H794809
[SEAL] [SEAL]
--------
- --------------------------------------
MORTGAGE to THE COMMERCIAL BANK OF MORTGAGE
AUSTRALIA LIMITED CAPITAL BUILDING SOCIETY
Registered 10th December 1979 REGISTERED 22/3/88
No. H794810 N356764G
[STAMP- ??? DISCHARGED [STAMP ILLEGIBLE]
- -2 SEP 1985]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
[STAMP- CAVEAT NO. K168128 LODGED CAVEAT
22 NOV 1982 CAVEAT WITHDRAWAL CAVEATOR: ALIFRA PTY. LTD.
10 JAN 1983] CAPACITY: PURCHASER/FEE SIMPLE
[SEAL] [SEAL] LODGED BY: 731G JOHN DI SANTO OF 694
- -------------------------------------- SYDNEY RD. BRUNSWICK 3056
NOTICE TO: AS ABOVE
[STAMP- CAVEAT NO. L847955Y LODGED NO: N898197E
22 AUG 1985 CAVEAT WILL LAPSE ON DATE: 13/12/88
REGISTRATION OF L864597B 27 NOV. 1985] [STAMP- ????? P14925K 22 FEB 1989]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
PROPRIETOR PROPRIETOR
CHESTNUTS PTY. LIMITED OF 34 PUNT RD. ALIFRA PTY. LTD. OF 278 CHURCH ST.
PRAHRAN RICHMOND
REGISTERED 2/9/85 REGISTERED 15/2/89
L864597B P14925K
[SEAL] [SEAL] [SEAL]
- -------- --------
PROPRIETOR MORTGAGE
UNKLES HOTELS PTY. LTD. OF WESTPAC SAVINGS BANK LIMITED
- -15/285 CARLISLE-ST.-BALACLAVA- REGISTERED 15/2/89
REGISTERED 2/9/85 P14926G
L864598X [SEAL] [SEAL]
[SEAL] [STAMP- DISCHARGED V400176T
[STAMP- 04 MAY 1998]
????? NO. M101761? --------
28 JUL 1987] [SEAL] [STAMP-V.8310 F.066]
- --------
[STAMP- ENDORSEMENTS CONTINUE ON
ANNEXED SHEET MARKED A COMMENCING
WITH V229283M]
[SEAL]
</TABLE>
<PAGE> 14
____ marked "A" referred to in the Certificate of Title
entered in the Register Book Vol. 8200 Fol. 757 [SEAL]
ORIGINAL
-------- ------------------------------
Assistant Registrar of Taxes
- --------------------------------------------------------------------------------
CAVEAT |
|
CAVEATOR: ROCOCO HOLDINGS PTY. LTD. |
|
CAPACITY: PURCHASER/FEE SIMPLE |
|
LODGED BY: MCGRATH CAREY KATZ |
|
NOTICE TO: LEVEL 28/55 COLLINS ST. |
|
MELBOURNE 3000 |
|
NO: V2229283M |
[SEAL] |
DATE: 29/1/98 |
|
11 MAY 1998 |
[ILLEGIBLE] LAPSED |
[ILLEGIBLE] V400177Q |
|
[SEAL] |
|
PROPRIETOR |
ROCOCO HOLDINGS PTY. LTD. |
*1/843A GLENHUNTLY RD. |
CAULFIELD SOUTH 3162 |
[SEAL] |
V4001770 04/05/98 |
<PAGE> 15
ORIGINAL REGISTER BOOK
NOT TO BE TAKEN FROM THE OFFICE [SEAL] VOL. 8310 FOL. 066
OF TITLES SECOND EDITION
CERTIFICATE OF TITLE
UNDER THE "TRANSFER OF LAND ACT"
MURENE HARRIS of 28 Langtree Avenue Mildura Married Woman is the proprietor of
an estate in fee simple subject to the encumbrances notified hereunder in
all that piece of land in the Parish of Prahran County of Bourke being part of
Crown Allotment B Portion 59 which land is shown enclosed by continuous lines on
the map hereon TOGETHER WITH a right of carriage way over the roads shown marked
A on the said map
DATED the 10th day of December 1979
/s/ G. GUGGENHEIMER [SEAL]
------------------------------
Assistant Registrar of Titles
[MAP] SEARCHED 17 FEB 1999
UNREG. DEALS: U839509
B. & A. FRASER & CO.
Processing [illegible]
P.O. Box 12 [illegible]
[illegible]
Ph [illegible]
MEASUREMENTS ARE IN METRES Derived from Vol.2381 Fol.073
H794808
<PAGE> 16
VOL 8310 FOL. 066 INSTRUMENT APPLICATION
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
SECOND EDITION
WALTER LINGARD HICK and MAUREEN HICK MORTGAGE
both of 2 Montana Parade Croydon ESANDA LIMITED
Business Proprietors are now JOINT REGISTERED 4/9/85
PROPRIETORS L870811H
Registered 10th December 1979 [STAMP ILLEGIBLE]
No.H794809
[SEAL] [SEAL]
--------
- --------------------------------------
MORTGAGE to THE COMMERCIAL BANK OF MORTGAGE
AUSTRALIA LIMITED CAPITAL BUILDING SOCIETY
Registered 10th December 1979 REGISTERED 22/3/88
No. H794810 N356764G
[STAMP- ??? DISCHARGED [STAMP ILLEGIBLE]
- -2 SEP 1985]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
[STAMP- CAVEAT NO. K168128 LODGED CAVEAT
22 NOV 1982 CAVEAT WITHDRAWAL CAVEATOR: ALIFRA PTY. LTD.
10 JAN 1983] CAPACITY: PURCHASER/FEE SIMPLE
[SEAL] [SEAL] LODGED BY: 731G JOHN DI SANTO OF 694
- -------------------------------------- SYDNEY RD. BRUNSWICK 3056
NOTICE TO: AS ABOVE
[STAMP- CAVEAT NO. L847955Y LODGED NO: N898197E
22 AUG 1985 CAVEAT WILL LAPSE ON DATE: 13/12/88
REGISTRATION OF L864597B 27 NOV. 1985] [STAMP- ????? P14925K 22 FEB 1989]
[SEAL] [SEAL] [SEAL] [SEAL]
--------
- --------------------------------------
PROPRIETOR PROPRIETOR
CHESTNUTS PTY. LIMITED OF 34 PUNT RD. ALIFRA PTY. LTD. OF 278 CHURCH ST.
PRAHRAN RICHMOND
REGISTERED 2/9/85 REGISTERED 15/2/89
L864597B P14925K
[SEAL] [SEAL] [SEAL]
- -------- --------
PROPRIETOR MORTGAGE
UNKLES HOTELS PTY. LTD. OF WESTPAC SAVINGS BANK LIMITED
- -15/285 CARLISLE-ST.-BALACLAVA- REGISTERED 15/2/89
REGISTERED 2/9/85 P14926G
L864598X [SEAL] [SEAL]
[SEAL] [STAMP- DISCHARGED V400176T
[STAMP- 04 MAY 1998]
????? NO. M101761? --------
28 JUL 1987] [SEAL] [STAMP-V.8310 F.066]
- --------
[STAMP- ENDORSEMENTS CONTINUE ON
ANNEXED SHEET MARKED A COMMENCING
WITH V229283M]
[SEAL]
</TABLE>
<PAGE> 17
____set marked "A" referred to in the Certificate of Title
entered in the Register Book Vol. 8310 Fol. 066 [SEAL]
ORIGINAL
------------------------------
Assistant Registrar of Taxes
- --------------------------------------------------------------------------------
CAVEAT |
|
CAVEATOR: ROCOCO HOLDINGS PTY. LTD. |
|
CAPACITY: PURCHASER/FEE SIMPLE |
|
LODGED BY: MCGRATH CAREY KATZ |
|
NOTICE TO: LEVEL 28/55 COLLINS ST. |
|
MELBOURNE 3000 |
|
NO: V2229283M |
[SEAL] |
DATE: 29/1/98 |
|
11 MAY 1998 |
[ILLEGIBLE] LAPSED |
[ILLEGIBLE] V400177Q |
|
[SEAL] |
|
PROPRIETOR |
ROCOCO HOLDINGS PTY. LTD. |
*1/843A GLENHUNTLY RD. |
CAULFIELD SOUTH 3162 |
[SEAL] |
V4001770 04/05/98 |
<PAGE> 18
CONTRACT OF SALE OF REAL ESTATE
IMPORTANT NOTICE TO PURCHASERS
COOLING-OFF PERIOD SECTION 31, SALE OF LAND ACT 1962
If none of the exceptions listed below applies to you, you may end this
contract within 3 clear business days of the day that you sign the contract.
To end this contract within this time, you must either give the Vendor or the
Vendor's Agent written notice that you are ending the contract, or leave the
notice at the address of the Vendor or the Vendor's agent.
If you end this contract in this way, you are entitled to a refund of all the
money you paid EXCEPT for $100.00 or 0.2% of the purchase price (whichever is
more).
EXCEPTIONS - The 3-day cooling-off period does not apply if -
o The price of the property (including chattels) exceeds $250,000.00
o You bought the property at or within 3 clear business days BEFORE OR AFTER
a publicly advertised auction
o You received independent advice from a solicitor before signing the
contract
o The property is used mainly for industrial or commercial purposes
o The property is more than 20 hectares in size and is used mainly for
farming
o You previously signed a similar contract for the same property
o You are an estate agent or a corporate body.
The conditions of this contract are contained in the attached -
Particulars of Sale;
Schedule;
General Conditions; and
Special Conditions (if any).
The Vendor sells and the Purchaser buys both the Property and the Chattels for
the price and upon the conditions set out in this contract.
The Vendor's Statement required by Section 32(1) of the Sale of Land Act 1962
is attached to, and included in, this contract.
Where the signature of any party to this contract is secured by an agent, the
parties acknowledge being given a copy of this contract by the agent at the
time of signing.
/s/ JOHN LAZAR Vendor
- -----------------------------------------------
For and on behalf of Rococo Holdings Pty Ltd
/s/ HENRY HERZOG Purchaser
- -----------------------------------------------
For and on behalf of I.T. Technology Pty Ltd
<PAGE> 19
GENERAL CONDITIONS ("GC")
ENCUMBRANCES
1.1 The Purchaser buys the property and the chattels subject to the
encumbrances shown in Item 1 of the Schedule.
PAYMENT
2.1 The Purchaser must pay all money (except the deposit) to the Vendor, the
Vendor's Solicitor or at the direction of the Vendor.
2.2 The Purchaser must pay the deposit:-
(a) to the Vendor's Estate Agent or, if there is no Estate Agent, to the
Vendor's Solicitor; or
(b) if the Vendor directs, into a special purpose banking account
specified by the Vendor in the joint names of the Purchaser and the
Vendor.
2.3 If the land sold is a lot on an unregistered plan of subdivision then the
deposit:-
(a) must not exceed 10% of the price; and
(b) must be paid:-
(i) to the Vendor's Solicitor or Estate Agent to be held by the
Solicitor or Estate Agent on trust for the Purchaser; or
(ii) if the Vendor directs, into a special purpose banking account in
Victoria specified by the Vendor in the joint names of the
Purchaser and the Vendor until the registration of the plan.
BREACH
3. A party who breaches this contract must pay to the other party on demand:-
(a) compensation for any reasonably foreseeable loss to the other party
resulting from the breach, and
(b) any interest due under this contract as a result of the breach.
TERMS CONTRACTS
4. If this is a "terms contract" as defined in section 2(1) of the Sale of
Land Act 1962, then:-
(a) the Vendor must arrange the discharge of any mortgage affecting the
land by the settlement date;
(b) all money payable under the contract must be paid to a duly qualified
Legal Practitioner or a licensed Estate Agent to be applied towards
discharging the mortgage;
(c) the Purchaser must pay interest to the Vendor from the settlement date
upon the balance outstanding at the rate, on the days, and with the
adjustments set out in Item 2 on the Schedule;
(d) the Vendor must apply installments under this contract first to pay
interest and then to reduce the balance owing.
TIME
5. If the time for performing any action expires on a Saturday, Sunday or bank
holiday, then time is extended until the next business day.
GENERAL CONDITIONS IN LEGISLATION
6.1 The general conditions in Table A of the Seventh Schedule of the Transfer
of Land Act 1958 apply if the land is under the operation of that Act.
6.2 The general conditions in the Third Schedule of the Property Law Act 1958
apply if the land is not under the operation of the Transfer of Land Act
1958.
6.3 General Condition 9 in the Table A or in the Third Schedule applies as if
its second last sentence ended with the additional words, "as a resident
Australian beneficial owner of the land".
CONFLICT BETWEEN CONDITIONS
7. In case of a conflict between the conditions the order of priority is:-
(a) any special conditions in this contract;
(b) general conditions in this contract;
(c) general conditions in legislation.
CONDITIONS
8. These conditions prevail over the conditions in any earlier contract and
any requisitions and answers properly made and given under that contract
are deemed to be requisitions and answers properly made and given under
this contract.
SERVICE
9. Any document served by post is deemed to be served on the next business day
after posting unless proved otherwise.
TRANSFER AND SETTLEMENT
10.1 The purchaser must provide the instrument of transfer required by General
Condition 12 of Table A, or the assurance required by the Third Schedule
(as the case may be), to the Vendor or the Vendor's Solicitor at
<PAGE> 20
least 10 days prior to the date for payment of the balance
of the price.
10.2 The Vendor must pay the bank fees on all bank cheques
exceeding 3 that are required by the Vendor for settlement.
- --------------------------------------------------------------------------------
LAW INSTITUTE OF VICTORIA PROPERTY LAW DISPUTE RESOLUTION COMMITTEE GUIDELINES
1. The Committee has been established to decide disputes relating to property
law matters. Where one party does not have a Solicitor representing
them, the dispute cannot be heard until that party instructs a Solicitor.
2. An agreed Statement of Facts must be signed by all parties and referring
Solicitors and must include:-
2.1 A clear and concise statement of all the relevant agreed facts
upon which the dispute is based.
The Committee is unable to make any decision unless the facts are agreed
between the parties.
2.2 A copy of all relevant documents.
2.3 The issues, based on the agreed facts, to be decided by the
Committee.
2.4 Applications for disputes to be decided by the Committee shall
include an agreement by the referring Solicitors and the parties
to be bound by the Committee's decision on any question of law or
practice.
3. Applications in the appropriate form must be lodged with the Secretary of
the Property Law Dispute Resolution Committee C/- the Law Institute of
Victoria. The form may be obtained from the Property Law Section of the
Institute.
4. An administration fee of $50.00 for each referring Solicitor must be paid
to the Institute when the application is lodged.
5. The Committee's decision will be based upon the material contained in the
Statement of Facts only. In making its decision the Committee shall act as
an expert panel and not as an arbitrator.
6. The Committee reserves the right:-
(i) to call for further and better particulars in order to make a
decision.
(ii) to refuse to decide any dispute, in which case any fees will be
refunded in full.
7. The Committee's written decision will be sent to the referring Solicitors
within seven days of the dispute being decided.
- --------------------------------------------------------------------------------
<PAGE> 21
PARTICULARS OF SALE
VENDORS BLOUNT OSBORNE WALSH of 180 Albert Road, South Melbourne,
AGENT 3205
Tel: 9690 6464 Fax: 9690 6467
VENDORS MCGRATH CAREY KATZ of Level 7,128 Exhibition Street Melbourne
SOLICITOR 3000
Ref: HS990184
DX 30810 Collins Street Tel: 9656 9200 Fax: 9650 5375
PURCHASERS P. ROSENBAUM & ASSOCIATES
SOLICITOR Suite 1, 1st Floor, 206-208 Commercial Road, Prahran, 3181
Ref:
DX Tel: 9529 6622 Fax: 9529 6627
VENDOR ROCOCO HOLDINGS PTY LTD ACN 007 023 574 of 55-57 Wellington
Street, Windsor 3181
PURCHASER I.T. TECHNOLOGY PTY LTD ACN 085 839 738 of 18 Denman Avenue
East St Kilda, 3183
LAND described in Certificates of Title Volume 8200 Folio 757 and
Volume 8310 Folio 066
PROPERTY the land together with any improvements known as
ADDRESS 34-36 Punt Road, Windsor
CHATTELS Carpets, electric light fittings, air conditioning unit and fire
extinguishers
PRICE $900,000.00
DEPOSIT $200,000.00 on the 9th day of July 1999
-----------
BALANCE $700,000.00
-----------
PAYMENT on the 9th day of July 2001 or earlier by agreement.
OF BALANCE
SETTLEMENT is the date upon which vacant possession or receipt of the rents
DATE and profits of the Property and Chattels must be provided,
namely, upon acceptance of title and payment of the deposit and
discharge of the mortgage affecting the Vendor's title.
DAY OF SALE is the 7th day of July 1999
<PAGE> 22
SCHEDULE
ITEM 1 Encumbrances
(GC 1) Any easements and covenants disclosed in the Vendor's Statement.
Leases - Nil
Mortgage Nos. - Nil
ITEM 2 7.25% per annum with monthly rests and payable monthly in
(GC4) arrears commencing the date of discharge of the Mortgage
referred to in Special Condition 11.
SPECIAL CONDITIONS ("SC")
See attached
<PAGE> 23
SPECIAL CONDITIONS ("SC")
As follows:
1. The Purchaser admits that the land as offered for sale and inspected by
him is identical with that described in the title particulars given
herein. He shall not make any requisition or claim any compensation for
any alleged misdescription of the land or deficiency in its area or
measurements or call upon the Vendor to amend title or to bear all or
any part of the cost of doing so. Condition 3 of the said Table "A" of
the said Third Schedule shall not apply.
2. The Purchaser acknowledges having been supplied with a Statement
required by Section 32(l) of the Sale of Land Act 1982.
3. The property and any chattels sold by this Contract shall not pass to
the Purchaser until payment in full of the purchase price.
4. The Purchaser acknowledges that the Vendor's Agent has acted only as
Agent of the Vendor and no information representation or warranty of the
Vendor or his Agent was made with the intention or knowledge that it
would be relied upon and that no such information representation or
warranty has in fact been relied upon and it is further agreed that this
Contract of Sale and the original Vendor's Statement (a copy of which is
included in this Contract of Sale) are the sole and full repository of
the agreement between the Vendor, his Agent and the Purchaser.
5. a. If the Purchaser fails to pay any installment of interest on or
within seven (7) days after the date upon which such instalment
is due to be paid then, in addition to any other rights or
remedies which the Vendor may otherwise have, the rate of
interest at which such instalment shall be paid shall be the
rate prescribed by General Condition 4 in Table A in lieu of the
rate referred to in Item 2 of the Schedule.
b. In the event of default in payment of any instalment of interest
as aforesaid the whole of the balance of the purchase money then
remaining unpaid together with any unpaid interest will become
immediately due and payable and the Vendor may thereupon
exercise such rights and remedies as provided by this Contract
or as otherwise available to it arising from such breach by the
Purchaser.
6. If the Purchaser shall be or include a company, the company will
forthwith upon execution of this Contract procure the execution by each
of its directors of the Guarantee annexed to that part of this Contract
to be held by the Vendor.
<PAGE> 24
- 2 -
7. It is hereby agreed between the parties hereto that there are no
conditions, warranties or other terms affecting the sale other than
those embodied herein and the Purchaser shall not be entitled to rely on
any representations made by the vendor or his agents except such as are
made conditions of this Contract.
8. a. The Purchaser shall carry the risk of loss or damage to the
property and chattels therein from the day of sale. The
Purchaser hereby releases the Vendor from any claim whatsoever
in relation to the condition of the property and chattels and
shall complete the purchase thereof on the due date without
making or claiming deduction in the Price for any reason
whatsoever.
b. On the settlement date, and whilst and so long as any purchase
or other moneys remain owing by the Purchaser to the vendor
pursuant to the terms of this contract the Purchaser shall, at
its own cost and expense:
i. Insure and keep insured in the names of the Vendor and
the Purchaser and every other person having an insurable
interest in the property with an insurer to be approved
by the Vendor all buildings and improvements now or
hereafter erected on the land and shall deliver the
policy and annual premium receipt to the Vendor at least
7 days prior to the date of expiration of the insurance
policy period save for the first premium in respect of
which the Purchaser must produce the policy and receipt
to the Vendor on or before the settlement date. Such
policy shall be for the full insurable value of the
buildings now erected or hereafter to be erected on the
land.
ii. Insure and keep insured in the names of the vendor and
the Purchaser and every other person having an insurable
interest in the property with an insurer to be approved
by the Vendor in respect of public risk for any cause or
event loss or injury whatsoever on or relation to the
land for a sum not less than $10,000,000.00 and shall
deliver the policy and annual premium receipt to the
Vendor at least 7 days prior to the date of expiration
of the insurance policy period save for the first
premium in respect of which the Purchaser must produce
the policy and receipt to the Vendor on or before the
settlement date.
c. In the event of any breach on the part of the Purchaser to
insure or keep insured the improvements on the land for their
full replacement value or for public risk the vendor may insure
for such risks and add the amount expended to the price in
respect of which the Purchaser shall pay interest in the manner
herein provided in respect of the price until payment to the
Vendor of the premium but without
<PAGE> 25
- 3 -
prejudice to the rights and remedies of the Vendor arising from
such default by the Purchaser.
d. Any money received under the policy of insurance in respect of
the destruction or damage to the improvements on the land shall,
at the option of the Vendor, be applied either in rebuilding or
reinstating the improvements to their former condition or in
paying to the Vendor any balance of purchase money and interest
then still unpaid and any balance of the insurance moneys
thereafter will belong to the Purchaser.
9. a. The parties hereby agree that the price is made up as follows:
1. 34 Punt Road being the land contained in Certificate of
Title Volume 8200 Folio 757 $482,400.00
2. 36 Punt Road being the land contained in Certificate of
Title Volume 8310 Folio 066 $417,600.00
b. The written down value of the Chattels sold with the property
shall be that to be advised to the Purchaser in writing by the
Vendor's Accountant.
10. The amounts payable by the Purchaser to the Vendor under this Contract
do not include any GST. Despite any other provision in this Contract, if
a GST is levied or imposed on any supply made to the Vendor or to the
Purchaser under or is contemplated by this Contract the amount payable
by the Purchaser to the Vendor in relation to that supply will be
increased by the amount of the GST and the Purchaser must pay the
increased amount accordingly.
"GST" means any goods and services, consumption, value add or other
similar tax.
"Supply" will have the meaning given to that term under any Statute
pursuant to which a GST is levied or imposed.
11. a. The Mortgage affecting the Vendor's Titles is to be discharged
on or before 23 July 1999 (or such later date as the parties may
otherwise agree in writing, being a date not later than 90 days
from the date hereof) failing which the Purchaser may avoid this
Contract whereupon all moneys paid hereunder shall be refunded
in full.
b. The deposit shall be held in the trust account of the vendor's
solicitors until the Mortgage referred to in a. hereof has been
discharged.
12. It is agreed between the parties hereto that throughout this Contract
unless the context so requires, words importing the singular shall
include the plural and vice versa and words referring to any one gender
shall include the other and where more persons than one are included in
<PAGE> 26
- 4 -
the term "Purchaser" their covenants hereunder shall be joint as well as
several.
<PAGE> 27
GUARANTEE AND INDEMNITY
TO: The withinnamed and described Vendor
(hereinafter called "the Vendor")
IN CONSIDERATION of the Vendor having at the request of the person whose name
address and description are set forth in the Schedule hereto (hereinafter called
"the Guarantor") agreed to sell the land described in the within Contract of
Sale to the withinnamed Purchaser (hereinafter called "the Purchaser") the
Guarantor HEREBY GUARANTEES to the Vendor the due and punctual payment by the
Purchaser of the purchase money and interest payable thereon as detailed in the
said Contract of Sale and all other monies that are payable or may become
payable pursuant thereto (hereinafter called "the monies hereby secured") AND
ALSO the due performance and observance by the Purchaser of all and singular the
covenants provisions and stipulations contained or implied in the said Contract
of Sale and on the part of the Purchaser to be performed and observed AND THE
GUARANTOR HEREBY EXPRESSLY ACKNOWLEDGES AND DECLARES that it has examined the
said Contract of Sale and has access to a copy thereof and further that this
Guarantee is given upon and subject to the following conditions:-
A. THE Vendor shall have the fullest liberty without affecting this
Guarantee to postpone for any time and from time to time the exercise of
all or any of the powers rights authorities and discretions conferred by
the said Contract of Sale on it and to exercise the same at any time and
in any manner and either to enforce or forbear to enforce the covenants
for payment of the monies owing or any other covenants contained or
implied in the said Contract of Sale or any other remedies or securities
available to the Vendor and the Guarantor shall not be released by any
exercise by the Vendor of its liberty with reference to the matters
aforesaid or any of them or by any time being given to the Purchaser or
by any other thing whatsoever which by Contract of Sale or any other
remedies or securities available to operation of law would but for this
provision have the effect of so releasing the Guarantor.
B. THIS Guarantee shall be a continuing Guarantee and shall not be
considered as wholly discharged by the payment at any time hereafter of
any part of the monies hereby secured or by any settlement of account,
intervening
<PAGE> 28
- 2 -
payment or by any other matter or thing whatsoever except the payment by
the Purchaser of the whole of the purchase price, interest and other
monies payable by the Purchasers under the said Contract of Sale.
C. THIS Guarantee shall not be determined by the liquidation of the
Guarantor and shall bind the successors or assignees of the Guarantor.
D. THIS Guarantee shall not be affected or prejudiced by any variation or
modification of the terms of the said Contract of Sale except that the
Contract as varied or modified shall thereafter be deemed to be the
Contract of Sale referred to herein or by the Transfer or partial
Transfer of any part of the land to the Purchaser pursuant to the terms
thereof.
E. This Guarantee shall not affect or be affected by any or any further
security now or hereafter taken by the Vendor or by any loss by the
Vendor of such collateral or other security or otherwise any of the
moneys at any time owing under the said Contract of Sale to the Vendor
or by any laches or mistake on the part of the Vendor.
F. THIS Guarantee and Indemnity shall at all times be valid and enforceable
against the Guarantor notwithstanding:-
(a) That the contract for the repayment of the moneys hereby secured
is void or cannot be legally enforced against the Purchaser for
reasons arising out of an act, omission, state or condition of
the Purchaser.
(b) That the Purchaser was prohibited (whether expressly or by
implication) by law contract or otherwise from entering into the
said Contract of Sale or was without the capacity or under some
legal disability in respect thereof;
(c) That the Vendor had or ought to have had knowledge of any
matters referred to in sub-paragraph (b) of this clause.
G. UNTIL the Vendor shall have received all monies payable to it under the
said Contract of Sale the Guarantor shall not be entitled on any grounds
whatsoever to claim the benefit of any security for the time being held
by the Vendor or either directly or indirectly to claim or receive the
benefit of any dividend or payment on the winding up of the Purchaser
and in the event of the
<PAGE> 29
- 3 -
Purchaser going into liquidation or assigning its assets for the benefit
of its creditors or making a deed or arrangement or a composition in
satisfaction of its debts or a scheme of arrangement of its affairs the
Guarantor shall not be entitled to prove or claim in the liquidation of
the Purchaser in competition with the vendor so as to diminish any
dividend or payment which but for such proof the Vendor would be
entitled to receive out of such winding up and the receipt of any
dividend or other payment which the vendor may receive from such winding
up shall not prejudice the right of the Vendor to recover from the
Guarantor to the full amount of this Guarantee the monies due to the
Vendor. The Guarantor further covenants with the Vendor after the
Purchaser shall have gone into liquidation to pay to the vendor all sums
of money received by the Guarantor for credit of any account of the
Purchaser and for which the Guarantor may in any liquidation or official
management of the Purchaser be obliged to account or may in its
discretion so account.
H. ANY demand or notice to be made upon the Guarantor by or on behalf of
the Vendor hereunder shall be deemed to be duly made if the same be in
writing and signed by a Director of the Vendor or by any Solicitor
purporting to act for the Vendor or by any other person duly authorised
by the Directors of the Vendor to make such demand on behalf of the
Vendor and the same may be left at or sent through the post in a prepaid
registered letter addressed to the Guarantor at its address as
hereinbefore provided.
I. THE Guarantor shall be deemed to be jointly and severally liable with
the Purchaser (in lieu of being merely a surety for it) for the payment
of the purchase moneys interest and all other monies if any payable
pursuant to the within Contract in the performance of the obligations
herein contained and it shall not be necessary for the Vendor to make
any claim or demand on or to take any action or proceedings against the
Purchaser before calling on the Guarantor to pay the moneys or to carry
out and perform the obligations herein contained.
J. THIS Guarantee shall enure for the benefit of the Vendor and its
successors and transferees.
<PAGE> 30
- 4 -
K. FOR the consideration aforesaid and as a separate and coverable covenant
the Guarantor HEREBY AGREES to indemnify the Vendor not only by reason
of the non-payment by the Purchaser of all monies payable or that may
become payable under the said Contract of Sale but also in respect of
all costs charges and expenses whatsoever which the Vendor may incur by
reason of any default on the part of the Purchaser in relation to the
said Contract of Sale.
L. NOTWITHSTANDING anything else herein contained (but subject to Clause
F(a) and K hereof) the Guarantor shall not be liable, in any
circumstances whatsoever, for any amount whatsoever in excess of the
amount for which the Purchaser shall be liable under the said Contract
and upon payment to the Vendor of all monies payable as aforesaid under
the said Contract and any monies payable under clause F(a) and K hereof
(if any) whether by the Purchaser or by the Guarantor or otherwise then
this Guarantee shall be at an end and the Guarantor shall be forever
freed and discharged from all of its provisions.
M. This Guarantee shall constitute a charge over any real property of which
the Guarantor is presently or hereafter the proprietor whether
registered or otherwise and in the event of the Guarantor making default
hereunder the Guarantors acknowledges that the Vendor may lodge a Caveat
against such real property noting its interest.
<PAGE> 31
- 5 -
SCHEDULE
Vendor: Rococo Holdings Pty. Ltd. of 55-57 Wellington Street, Windsor
Purchaser: I.T. Technology Pty. Ltd. of 18 Denman Avenue, East St Kilda
Guarantor: Henry Herzog of 18 Denman Avenue, East St Kilda and Jonathan
Herzog of 9 Bickham Court, East St Kilda
IN WITNESS whereof the said Guarantor have set their hands and seals this 7th
day of July 1999.
SIGNED SEALED AND DELIVERED by }
the said HENRY HERZOG in } /s/ HENRY HERZOG
Victoria in the presence of: }
[ILLEGIBLE SIGNATURE]
SIGNED SEALED AND DELIVERED by }
the said JONATHAN HERZOG in } /s/ JONATHAN HERZOG
Victoria in the presence of: }
[ILLEGIBLE SIGNATURE]
<PAGE> 32
SALE OF LAND ACT (the Act) - SECTION 32
VENDOR'S STATEMENT TO THE PURCHASER OF REAL ESTATE
VENDOR ROCOCO HOLDINGS PTY LTD ACN 007 023 574 of 55-57 Wellington
Street, Windsor 3181
PROPERTY 34-36 Punt Road, Windsor
IMPORTANT NOTICE TO PURCHASERS
The use to which you propose to put the property may be prohibited by
planning or building controls applying to the locality or may require the
consent or permit of the municipal council or other responsible authority. It is
in your interest to undertake a proper investigation of permitted land use
before you commit yourself to buy. You should check with the appropriate
authorities as to the availability (and cost) of providing any essential
services not connected to the property.
1. RESTRICTIONS - Details of any registered or unregistered easement,
covenant, caveat or other similar restriction affecting the property are
set out in the attached copies of Title documents.
To the best of the Vendor's knowledge there is no existing failure to
comply with the terms of any easement, covenant, caveat or similar
restriction.
2. PLANNING AND ROAD ACCESS - Details of any planning instruments affecting
the land are attached.
The property is outside the Melbourne metropolitan area (as defined in
the Act) and the planning instrument prohibits the construction of a
dwelling house on the land.
There is access to the property by road.
3. OUTGOINGS AND STATUTORY CHARGES - Details concerning any rates, taxes or
other similar outgoings (including any Body Corporate charges) and any
interest payable on any part of them are attached.
Amounts for which the purchaser may become liable in consequence of the
sale will be adjusted at settlement.
Amount owing under any other registered or unregistered statutory charge
that secures an amount due under any other legislation: Nil
<TABLE>
<CAPTION>
4. SERVICES Avail. Connected Authority
<S> <C> <C> <C> <C>
4.1 Electricity Yes Yes Citipower
4.2 Gas No No
4.3 Water Yes Yes South East Water
4.4 Sewerage Yes Yes South East Water
4.5 Telephone Yes No Telstra
</TABLE>
<PAGE> 33
- 2 -
5.1 BUILDING APPROVALS - Particulars of any building permit granted during
the past seven years under the Building Control Act 1981 or Building Act
1993 are contained in the attached certificates.
5.2 GUARANTEE - Details of an owner-builder under the House Contracts
Guarantee Act 1987 in the preceding seven years - nil.
5.3 INSURANCE - Details in the preceding six years and six months in the
case of a residence to which s137B of the Building Act 1993 applies -
nil.
Nil. as per attached.
6. NOTICES - Particulars of any notice, order, declaration, report or
recommendation of a public authority or Government department or
approved proposal affecting the property of which the Vendor might be
reasonably expected to have knowledge, including:
6.1 if there is a Body Corporate, affecting it and its contingent,
proposed or other liabilities, including those relating to
repairs;
6.2 notice of any current land use restriction given in relation to
the land under the Agricultural and Veterinary Chemicals Act
1992 due to contamination.
6.3 notice pursuant to Section 6 of the Land Acquisition and
Compensation Act 1986;
None.
BUT NOTE: The Vendor has no means of knowing of all decisions of
Public Authorities and Government Departments affecting the
property unless communicated to the Vendor.
7. TITLE - Copies of relevant Title documents are attached.
DATE OF STATEMENT: 7 July 1999
Vendor's Signature: /s/ JOHN LAZAR
----------------------------------------------------------
For and on behalf of Rococo Holdings Pty Ltd
The Purchaser acknowledges being given a copy of this statement signed by the
Vendor before the Purchaser signed any Contract.
DATE OF ACKNOWLEDGMENT: 7/7/99.
Purchaser's Signature: /s/ HENRY HERZOG
---------------------------------------------------------
<PAGE> 34
- 3 -
PLEASE NOTE THAT WHERE THE PROPERTY IS TO BE SOLD ON TERMS PURSUANT TO SECTION
32(2)(f) OF THE ACT AND/OR SOLD SUBJECT TO A MORTGAGE THAT IS NOT TO BE
DISCHARGED BY THE DATE OF POSSESSION (OR RECEIPT OF THE RENTS AND PROFITS) OF
THE PROPERTY PURSUANT TO SECTION 32(2)(a) OF THE ACT - then the Vendor must
provide an additional statement containing the particulars specified in
Schedules 1 and 2 of the Act.
<PAGE> 35
SALE OF LAND ACT (the Act) - SECTION 32
ADDITIONAL VENDOR'S STATEMENT TO THE PURCHASER OF REAL ESTATE
VENDOR ROCOCO HOLDINGS PTY LTD ACN 007 023 574 of 55-57 Wellington
Street, Windsor 3181
PROPERTY 34-36 Punt Road, Windsor
NOTICE TO VENDORS
This additional Vendor's Statement is to be attached to the standard
Vendor's Statement (completed as appropriate and signed by the Vendor) where the
property is to be sold on terms pursuant to section 32(2)(f) of the Act and/or
sold subject to a mortgage that is not to be discharged by the date of
possession (or upon receipt of the rents and profits of the property).
1. VENDORS TERMS - Cost of the finance to be provided by the Vendor:
<TABLE>
<S> <C>
1.1 Purchase price $ 900,000.00
Deposit $ 200,000.00
------------
Residue (lowest price if paid out now) $ 700,000.00
Total interest payable
over full contract period $ 101,500.00
------------
Total balance payable,
including, interest $801,500.00
-----------
1.2 Number of repayments 24 (including the final payment)
Amount of each repayment $ $4,229.17
Repayments due: the 9th day
of each and every month commencing
on the 9th day of
August 1999.
Final payment $ 704,229.17
1.3 Interest rate: 7.25 % p.a.
Default interest rate The rate prescribed by General
Condition 4 in Table A as
defined in the Contract.
Is the interest rate variable? No
1.4 The Purchaser is to pay GST (if any)
payable by the Vendor in respect
of the payments to be made to it
under the Contract.
</TABLE>
<PAGE> 36
- 2 -
2. VENDORS MORTGAGE - Mortgages to which the property will remain subject:
Nil.
DATE OF THIS ADDITIONAL STATEMENT: 7 July 1999
Vendor's Signature: /s/ JOHN LAZAR
-----------------------------------------------------------
The Purchaser acknowledges being given a copy of this additional statement
signed by the Vendor before the Purchaser signed any Contract.
DATE OF THIS ACKNOWLEDGEMENT: 7/7/99
Purchaser's Signature: /s/ HENRY HERZOG
---------------------------------------------------------
<PAGE> 37
Unreg'd
MORTGAGE OF LAND APPR V839509B
SECTION 74 TRANSFER OF LAND ACT 1958 VICTORIAN 140199 1143 74
----------------------------
Lodged at the Land Titles Office by: MADE AVAILABLE, [BARCODE]
Name: Stamfords
Land Titles Office Use Only
Phone: 9663 8182
-----------------------------------------
Address: Levels 9 & 10, 278 Collins Street, Melbourne
Ref: 980597/DW:RL Customer Code: 948E
The Mortgagor being registered as the proprietor of an estate in fee simple in
the land described subject to the registered encumbrances affecting the land and
any encumbrances created by dealings lodged for registration prior to the
lodging of this Mortgage and subject to the rights of the Caveator under the
Caveat (if any) specified below in consideration of credit loans advances and
other banking accommodations extended by the Mortgagee to the Mortgagor and/or
other or others at the request of the Mortgagor (including any Agreement
referred to in the Schedule hereto) and in pursuance of the agreement of the
Mortgagor to give this security for better securing the payment of the Money
Hereby Secured and all other moneys payable hereunder mortgages to the Mortgagee
the said estate in the land.
- --------------------------------------------------------------------------------
Land
CERTIFICATE OF TITLE VOLUME 8200 FOLIO 757 & VOLUME 8310 FOLIO 066
- --------------------------------------------------------------------------------
Mortgagor (Registered Proprietor) (Note
ROCOCO HOLDINGS PTY LTD A.C.N. 007 023 574
- --------------------------------------------------------------------------------
Mortgagee (Note
CITIBANK LIMITED A.C.N. 004 325 080
of 350 Collins Street, Melbourne, 3000
- --------------------------------------------------------------------------------
CAVEAT(S) if any: NO(S):
Note: Unless the number of a Caveat is specified, this Mortgage is not subject
to the rights of any Caveator.
- --------------------------------------------------------------------------------
SCHEDULE HEREINBEFORE REFERRED TO:
For the purposes of this Mortgage (including the Memorandum of Common
Provisions) Agreement means:
*(a) Loan Agreement dated day of
between of the one part and Citibank of the other part.
*Complete whichever is applicable.
- --------------------------------------------------------------------------------
Date of this Mortgage:
- --------------------------------------------------------------------------------
The provisions contained in Memorandum of Common Provisions retained by the
Registrar of Titles in No. AA216 are incorporated in this mortgage.
- --------------------------------------------------------------------------------
CONTINUED ON M PAGE 2
- --------------------------------------------------------------------------------
APPROVAL NO. 568966A ORDER TO REGISTER STAMP DUTY USE ONLY
Please register and Collateral Security
M issue title to: Trn:402906 13-JAN-1999
Amount Secured: $600,000.00
[SEAL] Signed Cust. Code: Stamp Duty Victoria, PSE1
THE BACK OF THIS FORM MUST NOT BE USED
<PAGE> 38
COVENANTS
The Mortgagor covenants with the Mortgagee as follows:
1. Subject to Clause 3 hereof to pay the Mortgagee at such time or times and
in such manner as may at any time and from time to time be agreed upon
between the Mortgagor and the Mortgagee and in default of any such
agreement on demand by the Mortgagee each and all sums of money for which
the Mortgagor may now or hereafter be indebted or liable to the Mortgagee
and/or any associated company of the Mortgagee (whether such indebtedness
or liability be present or future, actual or contingent, fixed or
fluctuating, liquidated or unliquidated) on any present or future account
or for any reason or ground whatsoever and without limiting the generality
of the foregoing including under pursuant to or in connexion with any
Agreement referred to in the Schedule hereto together with the Moneys
Hereby Secured (as defined in the Memorandum of Common Provisions
incorporated in this Mortgage) and any present or future agreement of any
nature (including without limiting the generality of the foregoing any
credit agreement loan agreement supply agreement leasing agreement sale
agreement hire purchase agreement guarantee and/or under pursuant to or in
connexion with any obligation or liability incurred by the Mortgagee
and/or any associated company of the Mortgagee on behalf of on account of
or at the request of the Mortgagor and/or in relation to any bill of
exchange promissory note or negotiable instrument and/or otherwise than by
agreement (all of which sums and moneys referred to herein are called "the
Moneys Hereby Secured").
2. To pay to the Mortgagee interest upon the Moneys Hereby Secured and such
fees and charges at such times and rates as may be agreed in writing
between the Mortgagor and the Mortgagee and in default of such agreement
at the higher rate to accrue from day to day and to be payable on demand
by the Mortgagor.
The "higher rate" means, in the case of all or any part of the Moneys
Hereby Secured where the rate of interest thereon is limited by law, the
rate so limited, and in any other the highest rate chargeable from time to
time by the Mortgagee under this Mortgage or the Agreement and in the
absence of such rate the highest rate allowable under S. 57 of
Supreme Court Act at the time of demand under Clause 1 hereof.
3. That notwithstanding Clauses 1, 2 and 4 hereof to the extent (if any) that
the Moneys Hereby Secured included liability of the Mortgagor under a sale
or lease to which Sections 114 or 115 of the Goods Act applies the
obligations of the Mortgagor under this mortgage in respect of that sale
or lease shall be limited to the amount for which the Mortgagor is liable
by reason of the breach of that sale or lease, the Moneys Hereby Secured
shall not include liability under a regulated contract under the Credit
Act and this Mortgage shall not secure liability in respect of a loan
under the Money Lenders Act or a guarantee under the Hire Purchase Act
unless and until the procedural requirements respectively of S. 23
and S. 19 shall have been complied with.
4. To indemnify and keep indemnified the Mortgagee and each associated company
of the Mortgagee against all debts expenses and liabilities the Mortgagee
or that associated company may incur and all moneys the Mortgagee or that
associated company may pay on behalf of on account of or at the request of
the Mortgagor or to any creditor of the Mortgagor.
5. For the purposes of this Mortgage and any Agreement referred to in the
Schedule hereto, any reference to the Companies Code means a reference to
its equivalent in the Corporations Law.
Execution and attestation
The Common Seal of ROCOCO HOLDINGS )
PTY LTD A.C.N. 007 023 574 was hereto ) [SEAL]
affixed in accordance with its Articles of )
Association in the presence of: ) ----------------------------
JOHN LAZAR
Sole Director/Sole Secretary
MORTGAGEE-OPTIONAL:
If there is insufficient space in any panel to accommodate the required
information, enter the information under the appropriate heading on a annexure
sheet (Form A1) or, if there is space available, after the covenants. Insert
only the words "See Annexure" or "See overleaf" in the panel, as appropriate.
APPROVAL NO. 568966A
M PAGE 2
THE BACK OF THIS FORM MUST NOT BE USED
V839509B
140199 1143 74
<PAGE> 39
PLANNING CERTIFICATE
Schedule 1 Section 199(2) Planning & Environment Act 1987
Number Vendor
609992 ROCOCO HOLDINGS PTY LTD.
Purchaser
MCGRATH CAREY KATZ
DX 30810 Reference
COLLINS STREET
HS 990184
This certificate is issued for:
34-36 PUNT ROAD
City of PORT PHILLIP
The land is covered by the:
PORT PHILLIP PLANNING SCHEME.
The Minister for Planning and Local Government is the Responsible Authority
issuing the Certificate.
The land:
- - is included in a SERVICE BUSINESS ZONE.
and abuts on a ROAD - EXISTING MAIN.
A new planning scheme has been prepared which affects this land. The Scheme has
been prepared under Section 18 of the Planning and Environment (Planning
Schemes) Act 1996. The scheme is not approved and is not in operation. It shows
this property to be within a proposed:
BUSINESS 2 ZONE
DESIGN AND DEVELOPMENT OVERLAY (DDO2)
and abuts a ROAD ZONE CATEGORY 1
21 Feb 1999
/s/ [Signature illegible]
MANAGER LAND & DEVELOPMENT INFORMATION
"Additional site-specific controls may apply. The Planning Scheme Ordinance
should be checked carefully.
Copies are available from the Local Government, Planning, Market Information
Services Division and the municipality shown above."
THE ABOVE INFORMATION INCLUDES ALL AMENDMENTS AND SCHEMES PLACED ON PUBLIC
EXHIBITION UP TO THE DATE OF ISSUE OF THIS CERTIFICATE AND WHICH ARE STILL THE
SUBJECT OF ACTIVE CONSIDERATION.
Copies of Planning Schemes and Amendments can be inspected at
Nauru House and relevant Municipal Offices.
[INFRASTRUCTURE LETTERHEAD]
<PAGE> 40
[LOGO]
-----------------
STONNINGTON City Council
REQUEST FOR INFORMATION
BUILDING REGULATIONS 1994
REGULATION 2.10
To: McGrath Carey Katz Solicitors
DX 30810
COLLINS STREET
Your Ref HS 990184
Property 34-36 Punt Road Windsor
1. Details of any building permit issued in the preceding 10 years.
<TABLE>
<CAPTION>
BUILDING DATE ISSUED ISSUED FOR DATE OF FINAL
APPROVAL/PERMIT INSPECTION
NO.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9300 3/12/93 Shop - Additions/Alterations 12/12/97
BS1183/98282 16/7/98 Road Reserve Alterations to Office & Showroom* 14/12/98
8/2
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* PRIVATE BUILDING SURVEYOR APPOINTED: PHILIP CHUN & ASSOCIATES PTY LTD LEV 9
108 LONSDALE ST MELBOURNE
2. Details of any current notice, order or certificate issued under these
Regulations or the Act; and/or the Building Act 1993 or the Building
Regulations 1994.
COUNCILS RECORDS INDICATE THERE ARE NO STATEMENTS UNDER BUILDING REGULATION
3.3(2), CURRENT NOTICES, CURRENT ORDERS OR CERTIFICATES UNDER THE BUILDING
REGULATIONS 1994, BUILDING ACT 1993, AND OR BUILDING CONTROL ACT 1981 OR
THE VICTORIA BUILDING REGULATIONS 1983
3. The land IS NOT in an area known by Council to be liable to flooding
within the meaning of Building Regulation 6.2.
4. The land is not in an area designated under Building Regulation 6.3 as an
area in which buildings are likely to be subject to be infestation by
termites.
5. The land is not in a designated bush fire prone area determined under
Building Regulation 6.4.
6. The land is not in an area determined under Building Regulation 6.5 to be
likely to be subject to significant snowfalls.
7. The land is not in an area of designated land within the meaning of
regulation 6.6.
ADVISORY NOTES TO VENDORS AND PURCHASERS
BUILDING WORK BY OWNER-BUILDERS
An owner-builder, to which the provisions Part 9 of the Building Act 1993
apply (building work carried out under the responsibility of non-practitioners
and domestic building work of a value exceeding $5000), must not enter into a
contract to sell the building unless an inspection report from a prescribed
building practitioner has been obtained within 6 months of the date of the
contract, the report is disclosed to the purchaser, the vendor is covered by
the required insurance (if any) and, in the case of a home, the contract sets
out the warranties of section 137c of the Building Act.
[LETTERHEAD]
RECEIVED
04 MAR 1999
<PAGE> 41
Existing SWIMMING POOLS
In accordance with regulation 5.13 of the Building Regulations 1994 a pool fence
or other suitable barriers to restrict access by children to the part of the
allotment or building containing a swimming pool must now be in place.
WHO IS RESPONSIBLE? Owners of swimming pools in place before 8 April 1991 in
Victoria are responsible. Swimming pool means any pool or spa which can hold
more than 300mm of water that is used for swimming or wading and is not emptied
immediately after use. The requirement for barriers applies to pools associated
with houses. It does not matter if it is inside or outside the house. It is an
offence under Building Regulation 5.13 if suitable barriers have not already
been installed - and the council building surveyor can issue an on-the-spot fine
or prosecute the owner of the pool. The amount of the on-the-spot fine shall be
the maximum prescribed in the regulations for the offence - being 2 penalty
units ($200). In addition to the fine, remedial work may be necessary to ensure
compliance with the Building Regulations.
SELF CONTAINED SMOKE ALARMS
Under Regulation 5.14 of the Building Regulations 1994, the purchaser of a
building being a dwelling or sole-occupancy unit will be required to, within 30
days of becoming the owner, provide self contained smoke alarms complying with
AS 3786-1993 and in the appropriate locations referred to in the enclosed
document.
ESSENTIAL SERVICES (FIRE-SUPPRESSION EQUIPMENT AND SAFETY FEATURES) - NOT
APPLICABLE TO HOUSES
Where building work has occurred under the Building Act 1993, the vendor must
supply an ESSENTIAL SERVICES LISTING, when issued (under Regulations 11.2 or
11.4 of the Building Regulations), to the purchaser.
Under Regulation 11.5 the property OWNER is responsible to maintain records of
maintenance checks, complete an essential services report (logbook) and ensure
that all the above records are kept available on the relevant premises for
inspection by the municipal building surveyor or chief officer on request.
EXISTING SAFETY FEATURES OR MEASURES - (NOT APPLICABLE TO HOUSES)
Under Division 2 of Part 11 of the Building Regulations 1994, the OWNER of a
building or place of public entertainment constructed before 1 July 1994 must
ensure that any existing or required safety features are maintained in a state
which enables them to fulfill their purpose and must not remove such features
except for maintenance or in accordance with the Regulations.
Further advice and information may be gained by calling the office of the
Municipal Building Surveyor on 9522 3218.
Receipt of $30.00 is acknowledged.
/s/ per [Signature Illegible]
- -----------------------------
JACK WICKHAM
PROPERTY INFORMATION OFFICER
<PAGE> 42
6. SHOULD SELF CONTAINED SMOKE ALARMS BE INTERCONNECTED?
If a building has a number of smoke alarms there is usually no requirement that
they be interconnected (some types of alarm are capable of interconnection to
the other alarms so that if one alarm sounds then the other alarms are also
activated). However, as it is inexpensive to interconnect alarms, it is
advisable that smoke alarms be interconnected. This is particularly relevant
where a detector is located on an unoccupied storey such as a garage.
Further advice and information can be gained by calling the Municipal Building
Surveyors office on 9522 3218.
Stephen Hempel
Municipal Building Surveyor
<PAGE> 43
[PHILIP CHUN AND ASSOCIATES LETTERHEAD]
AR/RW/98282-00 Form 11
OP:BS1183/98282/1
BUILDING ACT 1993
BUILDING REGULATIONS 1994
REGULATIONS 9.5
OCCUPANCY PERMIT
PROPERTY DETAILS
<TABLE>
<CAPTION>
Number Street/road City/suburb/town
- ------ ----------- ----------------
<S> <C> <C>
34-36 Punt Road Windsor
</TABLE>
Municipal District City of Stonnington
ISSUED TO
Owner Mr Joe Lazar
C/- 49 Alice Street
Address CLAYTON 3168
BUILDING DETAILS
<TABLE>
<CAPTION>
Allowable No of people
Part of the Class of floor deemed
Building Use Occupancy loading accommodated
- ----------- --- --------- --------- ------------
<S> <C> <C> <C> <C>
Ground Floor Office, Showroom, 5, 6, 7 N/A 21
Carpark
First Floor Office, Showroom 5, 6 3.0 kPa 32
</TABLE>
RELEVANT BUILDING SURVEYOR
Richard Wells Registration No. BS1183
Philip Chun and Associates Pty Ltd
L9, 108 Lonsdale Street
Melbourne
Signature /s/ RICHARD WELLS Date of issue of permit: 22/12/98
---------------------------
INSPECTION OF BUILDING WORK
For the purposes of Regulation 2.13 of the Building Regulations, the following
dates are applicable:
Frame 12/10/98
Final 14/12/98, 21/12/98
NOTE: This Occupancy Permit is not evidence that the building, part of the
building or building work listed above complies with the Building Act
1993 or the Building Regulations 1994.
The OP number specified at the top of this form, is the Certificate
Number pursuant to the Building Act 1993.
<PAGE> 44
APPENDIX A
OCCUPANCY PERMIT CONDITIONS
The following essential services must be maintained in accordance with the
relevant requirements of the BCA and the Australian Standards contained within,
in force at the time of approval.
<TABLE>
<CAPTION>
ESSENTIAL SERVICE TO BE INSTALLATION STANDARDS / NATURE OF INSPECTION OR
INSPECTED OR TESTED LEVEL OF PERFORMANCE TEST, FREQUENCY
- ----------------------- ------------------------ -----------------------
<S> <C> <C>
Air conditioning systems AS 1668 Monthly to AS 1851.6, AS
3666
- ------------------------------------------------------------------------------------
Emergency lighting BCA Part E4, AS 2293.1 6 monthly to AS 2293.2
- ------------------------------------------------------------------------------------
Exit doors BCA Section D 3 monthly inspection to
confirm exit doors are
intact, operation and fitted
with conforming hardware
- ------------------------------------------------------------------------------------
Exit signs BCA Part E4, AS 2293.1 6 monthly to AS 2293.2
- ------------------------------------------------------------------------------------
Fire extinguishers BCA E1.6, AS 2444 6 monthly to AS 1851.1
(portable)
- ------------------------------------------------------------------------------------
Fire hose reels BCA E1.4 6 monthly to AS 1851.2
- ------------------------------------------------------------------------------------
Fire indices for materials BCA C1.10, AS 1530.3 Annual inspection to
confirm no materials with
potentially non-conforming
fire indices occur
- ------------------------------------------------------------------------------------
Paths of travel to exits BCA Section D 32 monthly inspections to
confirm travel paths are
intact
- ------------------------------------------------------------------------------------
Smoke alarms BCA E2.2, AS 3786 Monthly to AS 1851.8 (as
applicable)
- ------------------------------------------------------------------------------------
</TABLE>
Note: Pursuant to Regulation 11.5 of the Building Regulations 1994, the
owner of the property is required to:
a) maintain records of maintenance check;
b) complete an essential services report in accordance with
Regulation 11.6 before each anniversary of the date of occupancy
permit or determination under this Division; and
c) keep all essential service reports and records of maintenance
checks on the premises for inspection by the municipal building
surveyor or chief officer at any time on request.
COPY TO
Agent of Owner Palma Building Design
Address 49 Alice Street
CLAYTON 3168
Attention: Luciano Palma
Council City of Stonnington
Address DX 30108
PRAHRAN
Register
File
<PAGE> 45
[SOUTH EAST WATER LIMITED FORM]
INFORMATION STATEMENT
STATEMENT UNDER SECTION 75, WATER INDUSTRY INDUSTRY ACT 1994
STATEMENT UNDER MMBW ACT 1958 SECTION 239F&G
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
REFERENCE NO. YOUR REFERENCE DATE OF ISSUE APPLICATION NO.
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
11J//04469/4 HS990184 19 March 1999 169783
- --------------------------------------------------------------------------------
</TABLE>
MCGRATH CAREY KATZ This is to certify that the sum of:
DX 30810 Nil
MELBOURNE
is payable in respect to rates and
charges on property:
36 PUNT ROAD, PRAHRAN 3181
======================================
34 & 36 PUNT RD are sewered by a combined drain. The property service plan may
be obtained from South East Water Ltd., 30 Corporate Drive, Monrahhin or PO Box
1383 Monrahhin 3180 for the proscribed plan fee of $30.00. Please quote PS
16203.
South East Water Limited (SEWL) has not received notification that the sewer
consent has been completed. The licensed plumber must provide SEWL with an
updated PSP and the owner with a "Certificate of Compliance" upon the
completion of the work. To allow SEWL to update its records, the owner is to
ensure SEWL is in receipt of the above.
[SOUTH EAST WATER LIMITED LETTERHEAD]
Page 2 of 2
<PAGE> 46
[ILLEGIBLE] made the day of One thousand nine hundred
and sixty-nine B E T W E E N MARIO FUSCALDO of 34-36 Punt Road Prahran
(hereinafter called "the Owner") AND MELBOURNE AND METROPOLITAN BOARD OF
[ILLEGIBLE] on 110 Spencer Street, Melbourne (hereinafter called "the
Board") W H E R E A S the Owner has applied to the Board for the issue of a
Drainage Plan and Consent in respect of plumbing work to be carried out at the
property known as No. 36 Punt Road Prahran including the installation of a Floor
Trap below the level of the Disconnector Trap breather AND WHEREAS the Board
has agreed to issue the said Drainage Plan and Consent in accordance with the
Owner's request subject to the indemnity herein contained NOW THIS AGREEMENT
WITNESSETH that in consideration of the Board issuing the said Drainage Plan and
Consent the Owner for himself and his transferees HEREBY AGREE to indemnify and
keep indemnified the Board and its successors against all actions suits claims
and demands which may be instituted or made by any person company or corporation
for or in respect of any damage which may be caused to the said property or to
the goods chattels and effects therein by any inflow of sewage or water through
the drains and connections to the said property by reason of the Floor Trap
being installed below the level of the Disconnector Trap breather in accordance
with design requested by the Owner.
IN WITNESS WHEREOF the Owner has executed these presents the day and year first
before written.
SIGNED by the said MARIO FUSCALDO ) /s/ MARIO FUSCALDO
in the presence of: )
/s/ Charles Brucell [RUBBER STAMP]
<PAGE> 47
[GRAPHIC - SITE PLAN]
<PAGE> 48
FORM 4.2
PROPERTY INQUIRY APPLICATION FORM OFFICE USE ONLY
-------------------------------
REFERENCE CODE APPLICATIONS
-------------------------------
IMPORTANT - IF MORE THAN ONE CERTIFICATE
REQUIRED, COMPLETE AND FORWARD ONE FORM -------------------------------
FOR EACH CERTIFICATE TO RELEVANT MUNICIPAL
AUTHORITIES IN ACCORDANCE WITH THE PROPERTY
PROPERTY INQUIRY INFORMATION SHEET NUMBER
AS APPEARING ON
-------------------------------
Certificate/Advice Request
TO:
VIC ROADS ADVICE OF ANY CURRENTLY APPROVED ROAD
560 LYGON STREET PROPOSALS
(DX 27 MELBOURNE)
CARLTON VIC 3053 FEE ENCLOSED: $13.00
--------------------------------------------------------------------------
NOTE: Generally replies will be mailed to applicant's address. However if
you wish to collect a Melbourne Water Rate Certificate - available 3
business days after receipt of application - cross here [ ]
If you wish to collect a Melbourne Water 239G Statement - cross here [ ]
--------------------------------------------------------------------------
VENDOR RE: PURCHASE TO:
ROCOCO HOLDINGS PTY LTD ACN 007 023 574
REGISTERED PROPRIETOR IF NOT THE VENDOR VENDOR'S SOLICITOR
MCGRATH CAREY KATZ
LEVEL 28,
55 COLLINS STREET
MELBOURNE, 3000
NAME & ADDRESS OF APPLICANT
<TABLE>
<S> <C> <C>
Our Reference: HS990184
MCGRATH CAREY KATZ Total Sale Price: $ Date Required
LEVEL 28, 55 COLLINS STREET ASAP
MELBOURNE, VIC 3000 Auction/Settlement Date:
DX 30810 COLLINS STREET Phone: 9650 5355
Fax: 9650 5375
</TABLE>
DESCRIPTION OF LAND - BE PRECISE, INSUFFICIENT INFORMATION WILL RESULT IN
RETURN OF APPLICATION.
LOCALITY PLAN (COPY OF THE TITLE OR SKETCH) SHOWING
DIMENSIONS OF WHOLE PROPERTY AND DISTANCE FROM NEAREST
STREET INTERSECTION MUST BE ATTACHED TO EACH FORM.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Flat/Unit No Street No. Street Municipality
<S> <C> <C> <C>
34-36 PUNT ROAD CITY OF PORT PHILLIP
- --------------------------------------------------------------------------------------------------------
Lot No. Plan No. C.A. No. C.P. No. Section Parish
B 59 PRAHRAN
- --------------------------------------------------------------------------------------------------------
Town or Suburb Postcode Volume Folio Frontage Depth
WINDSOR 3181 8200 757
8310 066 REFER ATTACHED PLAN
- --------------------------------------------------------------------------------------------------------
Situated on side of street commencing of
- --------------------------------------------------------------------------------------------------------
State whether vacant land or nature Name of Map
of building (eg. Dwelling, Factory) Directory Reference
HOUSE (PREVIOUSLY OCCUPIED) - DETACHED MELWAY 58B6
- --------------------------------------------------------------------------------------------------------
FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------------------------------
N
- --------------------------------------------------------------------------------------------------------
B
- --------------------------------------------------------------------------------------------------------
RP
- --------------------------------------------------------------------------------------------------------
D
- --------------------------------------------------------------------------------------------------------
R
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- ---------------------------------
NO PROPOSALS
As at 18 FEB 1999 the
ROADS CORPORATION has no
approved proposal requiring any
part of the property described in
your application.
- ---------------------------------
</TABLE>
<PAGE> 49
[MERCANTILE MUTUAL LETTERHEAD]
FROM - TO POLICY No.
07/12/98 7/12/99 POLICY CERTIFICATE 41 A172746 BPK
BUSINESS PAK
HEIMANN & ASSOCIATES THIS POLICY CERTIFICATE INDICATES
P O BOX 2133 THE COVER YOU HAVE SELECTED FOR
ST KILDA WEST THE PERIOD SHOWN.
3182 IT FORMS PART OF AND MUST ALWAYS
BE READ IN CONJUNCTION WITH THE
POLICY WORDING SUPPLIED.
THE INSURED PLEASE CHECK THE POLICY DETAILS
AS SET OUT BELOW AND LET US KNOW
ROCOCO HOLDINGS PTY LTD IF ANY CHANGE IS NECESSARY.
20/01/1999 0001
SITUATION
34-36 PUNT ROAD WINDSOR 3181
BUSINESS: UNOCCUPIED RISKS
POLICY A - FIRE:
- ----------------- SUM INSURED EXCESS
BUILDING: $750,000 NIL
CONTENTS: NOT INSURED
ACCIDENTAL DAMAGE - BUILDING: $25,000 $100
ACCIDENTAL DAMAGE - CONTENTS: NOT INSURED
REINSTATEMENT/EXTRA COST CONDITIONS APPLY
***************************************************
UNOCCUPIED PREMISES
IT IS NOTED THAT THIS PROPERTY WILL BE UNOCCUPIED
FROM 07/12/98. THE POLICY IS SUBJECT TO AN EXCESS
OF $1,000 IN RESPECT OF EACH AND EVERY LOSS
WHILST THE PREMISES ARE UNOCCUPIED.
***************************************************
- --------------------------------------------------------------------------------
STAMP DUTY REQUIREMENTS
WESTERN AUSTRALIA TASMANIA QUEENSLAND
WESTERN AUSTRALIAN TASMANIAN STAMP QUEENSLAND STAMP
STAMP DUTY PAID DUTY PAID DUTY PAID
<PAGE> 50
[MERCANTILE MUTUAL]
FROM - TO POLICY No.
07/12/98 7/12/99 POLICY CERTIFICATE 41 A172746 BPK
BUSINESS PAK
HEIMANN & ASSOCIATES ** PAGE 2 **
P O BOX 2133
ST KILDA WEST
3182
THE INSURED
ROCOCO HOLDINGS PTY LTD
20/01/1999 0002
SITUATION
34-36 PUNT ROAD WINDSOR 3181
BUSINESS: UNOCCUPIED RISKS
POLICY 3 - GLASS:
- ----------------- SUM INSURED
REPLACEMENT VALUE BASINS INCLUDED
EXCESS NIL
STAMP DUTY REQUIREMENTS
WESTERN AUSTRALIA TASMANIA QUEENSLAND
WESTERN AUSTRALIAN TASMANIAN STAMP QUEENSLAND STAMP
STAMP DUTY PAID DUTY PAID DUTY PAID
<PAGE> 51
[MERCANTILE MUTUAL LETTERHEAD]
<TABLE>
<CAPTION>
FROM - TO POLICY No.
<S> <C> <C>
7/12/98 7/12/99 POLICY CERTIFICATE 41 A172746 BPK
AT 4:00 P.M.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
BUSINESS PAK
HEIMANN & ASSOCIATES ** PAGE 3 **
P O BOX 2133
ST KILDA WEST
3182
THE INSURED
ROCOCO HOLDINGS PTY LTD
</TABLE>
<TABLE>
<S> <C> <C>
[ILLEGIBLE]/01/1999 0003
SITUATION
34-36 PUNT ROAD WINDSOR 3181
BUSINESS: PROPERTY OWNER
POLICY F - LEGAL LIABILITY:
- --------------------------- SUM INSURED
LIMIT OF LIABILITY: $5,000,000
PROPERTY DAMAGE EXCESS $250
$2,610.00 PREMIUM $351.00 STAMP $900.00 LEVIES
[SEAL] $3,861.00 TOTAL
</TABLE>
SIGNED ON BEHALF OF THE COMPANY .................
*** PLEASE READ THE ATTACHMENT FOR THE YEAR 2000 EXCLUSION WORDINGS ***
STAMP DUTY REQUIREMENTS
<TABLE>
<S> <C> <C>
WESTERN AUSTRALIA TASMANIA QUEENSLAND
WESTERN AUSTRALIAN TASMANIAN STAMP QUEENSLAND STAMP
STAMP DUTY PAID DUTY PAID DUTY PAID
</TABLE>
<PAGE> 52
FORM 4.2
PROPERTY INQUIRY APPLICATION FORM OFFICE USE ONLY
-- -------------------------------
REFERENCE CODE APPLICATION NO.
----------------------------------
IMPORTANT - IF MORE THAN ONE CERTIFICATE
REQUIRED, COMPLETE AND FORWARD ONE FORM ----------------------------------
FOR EACH CERTIFICATE TO RELEVANT MUNICIPAL
AUTHORITIES IN ACCORDANCE WITH THE PROPERTY
PROPERTY INQUIRY INFORMATION SHEET NUMBER
AS APPEARING ON
----------------------------------
Certificate/Advice Requested
TO:
STATE REVENUE OFFICE CERTIFICATE AS TO LAND TAX
505 LITTLE COLLINS STREET (DX 26)
MELBOURNE 3000
FEE ENCLOSED: $12.50
--------------------------------------------------------------------------
NOTE: Generally replies will be mailed to applicant's address. However if
you wish to collect a Melbourne Water Rate Certificate - available 3
business days after receipt of application - cross here [ ]
If you wish to collect an Melbourne Water 239G Statement - cross here [ ]
--------------------------------------------------------------------------
VENDOR RE: PURCHASE TO:
ROCOCO HOLDINGS PTY LTD ACN 007 023 574
REGISTERED PROPRIETOR IF NOT THE VENDOR VENDOR'S SOLICITOR
MCGRATH CAREY KATZ
LEVEL 28,
55 COLLINS STREET
MELBOURNE, 3000
NAME & ADDRESS OF APPLICANT
<TABLE>
<S> <C> <C>
Our Reference: HS990184
MCGRATH CAREY KATZ Total Sale Price: $ Date Required
LEVEL 28, 55 COLLINS STREET ASAP
MELBOURNE, VIC 3000 Auction/Settlement Date:
DX 30810 COLLINS STREET Phone: 9650 5355
Fax: 9650 5375
</TABLE>
DESCRIPTION OF LAND - BE PRECISE, INSUFFICIENT INFORMATION WILL RESULT IN
RETURN OF APPLICATION.
LOCALITY PLAN (COPY OF THE TITLE OR SKETCH) SHOWING
DIMENSIONS OF WHOLE PROPERTY AND DISTANCE FROM NEAREST
STREET INTERSECTION MUST BE ATTACHED TO EACH FORM.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Flat/Unit No Street No. Street Municipality
<S> <C> <C> <C>
34-36 PUNT ROAD CITY OF PORT PHILLIP
- --------------------------------------------------------------------------------------------------------
Lot No. Plan No. C.A. No. C.P. No. Section Parish
B 59 PRAHRAN
- --------------------------------------------------------------------------------------------------------
Town or Suburb Postcode Volume Folio Frontage Depth
WINDSOR 3181 8200 757
8310 066 REFER ATTACHED PLAN
- --------------------------------------------------------------------------------------------------------
Situated on side of street commencing of Area
- --------------------------------------------------------------------------------------------------------
State whether vacant land or nature Name of Map
of building (e.g. Dwelling, Factory) Directory Reference
HOUSE (PREVIOUSLY OCCUPIED) - DETACHED MELWAY 58B6
- --------------------------------------------------------------------------------------------------------
FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------------------------------
N
- --------------------------------------------------------------------------------------------------------
B
- --------------------------------------------------------------------------------------------------------
RP
- --------------------------------------------------------------------------------------------------------
D
- --------------------------------------------------------------------------------------------------------
R
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
CERTIFICATE UNDER SECTION 97 AS AT 22/3/99
- --------------------------------------------------------------------------------------------------------
ARREARS 1999 YEAR TOTAL UNIMPR, VALUE
- --------------------------------------------------------------------------------------------------------
N/L $223-69 $223-69 $153,900
- --------------------------------------------------------------------------------------------------------
REMARKS
LID = 14317429
- --------------------------------------------------------------------------------------------------------
COMMISSIONER OF STATE REVENUE
</TABLE>
<PAGE> 53
[SOUTH EAST WATER LIMITED FORM]
INFORMATION STATEMENT
STATEMENT UNDER SECTION 75, WATER INDUSTRY ACT 1994
STATEMENT UNDER MMBW ACT 1958 SECTION 239F&G
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
REFERENCE NO. YOUR REFERENCE DATE OF ISSUE APPLICATION NO.
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
11J//04469/4 HS990184 19 March 1999 169783
- --------------------------------------------------------------------------------
</TABLE>
MCGRATH CAREY KATZ This is to certify that the sum of:
DX 30810 Nil
MELBOURNE
is payable in respect to rates and
charges on property:
36 PUNT ROAD, PRAHRAN 3181
================================================================================
RATES AND CHARGES SUMMARY - PURSUANT TO SECTION 239F
================================================================================
QUARTERLY CHARGES
<TABLE>
<S> <C> <C>
Melbourne Water Corporation
Drainage [ILLEGIBLE] $ 58.41
ANNUAL CHARGES
Parks Victoria
Parks charge 01/07/1998 to 30/06/1999 $102.22
ARREARS $ 0.00
PAYMENTS $58.41 or
[ILLEGIBLE] $ [ILLEGIBLE]
</TABLE>
NOTES:
Please note the total annual charge for Transfer of Land Act Section 32
purposes is estimated at $335.86. This estimate is subject to the NAV and any
additional charges raised by Melbourne Water Corporation and/or Parks.
For Certificate charges updates please contact South East Water Limited's hot
line on 131851. Usage charges are not included on this certificate.
================================================================================
ENCUMBRANCE SUMMARY
================================================================================
THE FOLLOWING PARTICULARS ARE GIVEN PURSUANT TO SECTIONS [ILLEGIBLE].
Where available location of Sewerage Mains are shown on the attached plan.
A previous owner of the property executed an indemnity and a copy is attached.
The property has a trade waste fixture or apparatus connected to South East
Water's sewer. Should the occupancy change, and it is intended to discharge
trade waste into South East Water's sewer it will be necessary for the occupier
to negotiate a new agreement. If the trade waste discharge is to cease, the
fixture or apparatus must be disconnected from the sewer. For details of any
outstanding trade waste matters or the negotiation of a new Trade Waste
Agreement, telephone 9552 3662 quoting TW 10881569A.
<PAGE> 54
[STONNINGTON LOGO]
LAND INFORMATION CERTIFICATE Cert. No.: 39039799
Section 229 Local Government Act, 1989. Page No.: 1
Receipt No.: 104611
Issue date: 26 Feb 1999
Ref.: HS990184
Assn: 1.08475.00080
Owner (as recorded by Council):
MCGRATH CAREY KATZ ROCOCO HOLDINGS PTY LIMITED
DX 30810 165 KAMBROOK ROAD
COLLINS STREET CAULFIELD SOUTH 3162
36 PUNT ROAD, WINDSOR 3181 Net Annual Value: 42,000
Valuation Date: 1/10/96
11.4M X IRREG. Site Value: 135,000
Capital Imp'd Val.: 440,000
Level Value Date.: 30/06/94
This certificate provides information regarding valuation, rates, charges, other
monies and any orders and notices made under the Local Government Act, 1958,
Local Government Act, 1989 or any local law or by by-law of the Council, and
specified flood level by Council (if any) is provided in "good faith". This
certificate is not required to include information regarding planning,
building, health, land fill, land slip, other flooding information or service
easements. Information regarding these matters may be available from the
Council or other relevant authority. A fee may be charged for such information.
PARTICULARS OF RATES AND CHARGES, OUTSTANDING NOTICES AND WORKS FOR WHICH A
CHARGE HAS BEEN MADE:-
<TABLE>
<S> <C> <C> <C>
LEVY FOR YEAR ENDING 30/06/69 General 913.10
Garbage 96.65 1,009.75
Payments and other transactions to 24/02 :-
Receipt CR 505.75-
--------
RATES AND CHARGES SUB-TOTAL .................. $504.00
Current rates are eligible for payment by installments.
In accordance with Section 175 of the LGA 1989, all amounts TOTAL $504.00
unpaid MUST be paid by the following dates:- DUE
--------
FULL payment due by 15/02/99
Installments due by 30/9/98, 30/11/98, 1/3/99, and 31/5/99
NOTE: PROPERTY IS SUBJECT TO A BUILDING ORDER FOR FURTHER
INFORMATION PLEASE CONTACT COUNCIL'S BUILDING DEPARTMENT.
</TABLE>
After the issue of this certificate, Council may be prepared to provide
up-to-date verbal information to the applicant about matters disclosed in this
certificate, but if it does so, Council accepts no responsibility whatsoever
for the accuracy of the verbal information given and no employee of the Council
is authorised to bind Council by the giving of such verbal information.
For further information contact [Illegible]
-------------------------
Revenue Section Authorized Officer
<PAGE> 55
[STONNINGTON CITY COUNCIL LOGO]
SELF CONTAINED SMOKE ALARMS
"smoke alarms save lives"
1. BACKGROUND
A high percentage of fatalities from fire occur in residential buildings. The
majority of deaths occur during the period when most people are normally
asleep. As people sleep they are unable to smell smoke and therefore cannot
detect a fire. A smoke alarm that is properly installed, regularly tested and
adequately maintained will address this problem and provide for smoke detection
and alarm for sleeping occupants in residential buildings.
The mandatory requirements for smoke alarms (devices that combine both smoke
detection and alarm facilities in a single unit) are specified in the Building
Code of Australia (BCA) clause E1.7 and regulation 5.14 of the Building
Regulations 1994. These provisions require self contained smoke alarms that
comply with AS 3786 to be installed in Class 1, 2, 3 & 4 buildings (typically
houses, flats, residential care and boarding house/hotel buildings and single
dwellings within buildings of other non-residential Classes). AS 3786 specifies
requirements for the design, performance and testing of electrically operated
smoke alarms. It does not detail location requirements. This Practice Note
specifies the appropriate locations referred to in regulation 5.14.
Note: Some Class 3 residential buildings require additional fire and life
safety equipment. Where a fire detection and alarm system complying with
AS 1670, and having smoke detectors installed in all sleeping areas with
alarm devices audible to all sleeping residents, is installed in the
building then this is deemed to comply with the smoke alarm requirements
of the BCA and the Building Regulations 1994 without any further
installation.
When must smoke alarms be installed?
Within 2 years of the date of commencement of regulation 5.14 which commenced
1 February 1997
or
If a contract for the sale of the dwelling or sole-occupancy unit is entered
into after that commencement, within 30 days after;
in the case of a contract other than a terms contract (as defined in Section 2
of the Sale of Land Act 1962), the date of completion of the contract; and
in the case of a terms contract, the purchaser becomes entitled to possession
or to the receipt of rents and profits under the contract;
whichever is the earlier.
Who must comply with the regulation?
This regulation must by complied with by:
in the case of a dwelling or sole-occupancy unit being purchased under a terms
contract (as defined in section 2 of the Sale of Land Act 1962) under which the
purchaser has become entitled to possession or to the receipt of the rents and
profits, the purchaser of that dwelling or unit; and
in the case of any other dwelling or sole-occupancy unit, the owner of that
dwelling or unit
<PAGE> 56
2. POWER SUPPLY
The regulations require that smoke alarms be powered as follows:
(a) In all new Class 1, 2, 3, & 4 buildings
Connection directly to the consumer power mains as well as a battery back
up.
(b) In all existing Class 1, 2, 3, & 4 buildings
Smoke alarms installed in existing buildings (or parts) are only required
to have an internal battery power supply
3. LOCATION OF SMOKE ALARMS
When deciding on the position of smoke alarms it is important to remember that
they are intended to detect smoke before it reaches the sleeping occupants of a
building. The ensuing alarm is designed to wake the occupants and give them time
to evacuate the building.
3.1 Class 1 Buildings
The following provisions relate to installations within Class 1 dwellings.
3.1.1 Protection of sleeping areas
The regulation requires that a smoke alarm be located "between each area
containing bedrooms and the remainder of the dwelling". In some dwellings the
bedrooms are located in a common area and connected by a hallway. In this
instance the alarm must be located as shown in Diagram 1.
DIAGRAM 1
SMOKE ALARMS IN HALLWAYS
Located on ceiling between sleeping area and remainder of dwelling
[MAP]
If the bedrooms are not grouped in a common area or no connecting hallway
exists, then an alarm must be located within 1.5m of the entrance to each
bedroom as shown in Diagram 2.
3.1.2 Location of smoke alarm on other storeys
An alarm is also required on every other storey that is not already provided
with a smoke alarm. The location for this alarm will be in the path of travel
people will most likely take to evacuate the building. This will ensure an alarm
will be raised before smoke makes the common exit path impassable (e.g. if the
bedrooms are on the first floor, then an alarm must be positioned near the area
of the inter-connecting stair at ground level).
If the other storey is not connected to the remainder of the building (for
instance a ground floor garage) then the alarm must be centrally located in the
lower area. In all cases the alarm must be audible in the other storey (one way
of achieving this would be to interconnect the units so that the alarm in the
unit within the sleeping area is activated).
<PAGE> 57
DIAGRAM 2
RESIDENTIAL BUILDING WITH SEPARATE SLEEPING AREAS
Smoke alarm within 1.5m of the bedroom doorway
[DIAGRAM]
3.2 CLASS 2 BUILDINGS
Protection of sleeping areas and location of smoke alarms within dwellings
(sole-occupancy units) are as per 3.1.1 and 3.1.2. In other areas (public
corridors, lobbies, etc) smoke alarms must be installed not more than 5m from
any wall and not more than 10m between detectors. These alarms must be audible
to sleeping residents.
If there are other storeys not connected to the remainder of the building (for
instance a ground floor garage or laundry) or not part of a public corridor
then an alarm must be centrally located in the lower area. In all cases the
alarm must be audible in the other storeys.
As with alarms in public corridors, one way of achieving this would be to
interconnect the units so that the alarm in the unit within the sleeping area
is activated.
3.3 CLASS 3 BUILDINGS
Class 3 Buildings must comply with the provisions for Class 1 and 2 buildings
and in addition to providing smoke alarms to sole-occupancy units must have a
smoke alarm installed in all other habitable rooms, except that in kitchen
areas suitable self-contained heat alarms may be installed. As before, these
must all be audible in the sleeping areas.
3.4 CLASS 4 BUILDINGS
A Class 4 building is a single dwelling within a building of another (non
residential) Class and must comply with the provisions for Class 1 dwellings.
In addition it must have smoke alarms installed within any non-fire isolated
exit and any public corridor areas serving the Class 4 building unless the
building is sprinkler protected.
3.5 MOUNTING SMOKE ALARMS
Smoke alarms must be installed on or near the ceiling with special care being
taken to avoid dead air spaces.
A dead air space is an area in which trapped air will prevent smoke from
reaching the alarm. This space generally occurs at the apex of cathedral
ceilings, the corner junction of walls and ceilings, between exposed floor
joists etc. If it is impractical to mount the smoke alarm on the ceiling then
it may be located on the wall. The top of the smoke alarm must be between 300mm
and 500mm of the ceiling. (See Diagram 3).
<PAGE> 58
The distance from the apex of a cathedral ceiling to the top of the alarm must
be between 500mm and 1500mm.
DIAGRAM 3
Dead air space and proper mounting of smoke alarms on side walls
Smoke alarm must be located between
500mm - 1500mm of the apex
[GRAPHIC]
4. MAINTENANCE OF SMOKE ALARMS
For smoke alarms to be effective it is important that they are adequately
maintained. The level of maintenance required for each building classification
is determined from Part 11 of the Building Regulations 1994.
The operation of most smoke alarms can be readily checked by depressing a
button on the outside of the alarm. The test should be conducted in accordance
with manufacturer's instructions.
The battery in most smoke alarms will need to be renewed on an annual basis
(lithium batteries lasting up to seven years are also available). Smoke alarms
should emit a warning sound when the battery needs replacement.
The alarm should also be cleaned annually. This usually involves carefully
vacuuming to remove dust particles that may affect the operation of the unit.
Once again full details will be in the manufacturer's installation and operation
details.
Neither a council or a relevant building surveyor is required to check that the
owner is maintaining the smoke alarm. However, a municipal building surveyor
can inspect smoke alarms installed in Class 1b, 2 and 3 buildings under
regulation 11.7.
5. FALSE ALARMS
Smoke alarms are extremely sensitive and by nature may detect smoke and
moisture created by common household activities (such as burnt toast or steam
from a bathroom). Accordingly, to reduce the likelihood of the false alarms, the
smoke alarm should not be located near cooking appliances and bathrooms.
Some types of smoke alarm may be provided with a method for switching off a
false alarm. Solutions can range from a simple time delay switch that
deactivates the alarm for a period of time while the smoke clears to opening a
window to remove the contaminated air.
If false alarms persist, then the smoke alarm should be moved to a more
suitable location.
<PAGE> 59
DATED 1999
ROCOCO HOLDINGS PTY LTD ACN
007 023 574
-----------------------------------
VENDOR'S STATEMENT
-----------------------------------
Property:
34-36 Punt Road, Windsor
McGrath Carey Katz
Solicitors
Level 28, 55 Collins Street
MELBOURNE 3000
Tel: 9650 5355
DX: 30810 Collins Street
FAX: 9650 5375
Ref: HS990184
<PAGE> 1
EXHIBIT 10.3(a)
----------------------------------------------
STANDARD FORM OF LOFT LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
(c) Copyright 1982. All Rights Reserved.
Reproduction in whole or in part prohibited.
----------------------------------------------
AGREEMENT OF LEASE, made as of this ____ day of November, 1999, between
RDL Realty, LLC,
party of the first part, hereinafter referred to as OWNER, and
Stampville.com, Inc., party of the second part, hereinafter referred to as
TENANT,
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from Owner
The Entire Third Floor
in the building known as 456 5th Avenue, Brooklyn, New York in the Borough of
Brooklyn, City of New York for the term of
See Rider
(or until such term shall sooner cease and expire as hereinafter provided) to
commence on the ____ day of ___________ nineteen hundred and ___________, and
to end on the ____ day of ___________ ________________________________ both
dates inclusive, at an annual rental rate of,
SEE RIDER
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant
shall pay the first ________ monthly installment(s) on the execution hereof
(unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Occupancy
1. Tenant shall pay the rent as above and as hereinafter provided.
2. Tenant shall use and occupy demised premises for office provided such
use is in accordance with the Certificate of Occupancy for the building, if any,
and for no other purpose.
ALTERATIONS:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent. Subject to the prior written consent of
Owner, and to the provisions of this article, Tenant at Tenant's expense, may
make alterations, installations, additions or improvements which are
non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises using
contractors or mechanics first approved by Owner. Tenant shall, at its expense,
before making any alterations, additions, installations or improvements obtain
all permits, approval and certificates required by any governmental or
quasi-governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Owner. Tenant agrees to carry and will cause Tenant's
contractors and sub-contractors to carry such workman's compensation, general
liability, personal and property damage insurance as Owner may require. If any
mechanic's lien is filed against the demised premises, or the building of which
the same forms a part, for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within ten days thereafter, at Tenant's expense,
by filing the bond required by law or otherwise. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner on Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises unless Owner, by notice to Tenant no later than twenty days
prior to the date fixed as the termination of this lease, elects to relinquish
Owner's right thereto and to have them removed by Tenant, in which event the
same shall be removed from the demised premises by Tenant prior to the
expiration of the lease, at Tenant's expense. Nothing in this Article shall be
construed to give Owner title to or to prevent Tenant's removal of trade
fixtures, moveable office furniture and equipment, but upon removal of any such
from the premises or upon removal of other installations as may be required by
Owner, Tenant shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and repair any damage
to the demised premises or the building due to such removal. All property
permitted or required to be removed, by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or removed from the
premises by Owner, at Tenant's expense.
REPAIRS:
4. Owner shall maintain and repair the exterior of and the public portions
of the building. Tenant shall, throughout the term of this lease, take good
care of the demised premises including the bathrooms and lavatory facilities
(if the demised premises encompass the entire floor of the building) and the
windows and window frames and, the fixtures and appurtenances therein and at
Tenant's sole cost and expense promptly make all repairs thereto and to the
building, whether structural or non-structural in nature, cause by or resulting
from the carelessness, omission, neglect or improper conduct of Tenant,
Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other
provisions of this lease, including Article 6. Tenant shall also repair all
damage to the building and the demised premises caused by the moving of
Tenant's fixtures, furniture or equipment. All the aforesaid repairs shall be
of quality or class equal to the original work or construction. If Tenant
fails, after ten days notice, to proceed with due diligence to make repairs
required to be made by Tenant, the same may be made by the Owner at the expense
of Tenant, and the expenses thereof incurred by Owner shall be collectible, as
additional rent, after rendition of a bill or statement therefor. If the
demised premises be or become infested with vermin, Tenant shall, at its
expense, cause the same to be exterminated. Tenant shall give Owner prompt
notice of any defective condition in any plumbing, heating system or electrical
lines located in the demised premises and following such notice, Owner shall
remedy the condition with due diligence, but at the expense of Tenant, if
repairs are necessitated by damage or injury attributable to Tenant, Tenant's
servants, agents, employees, invitees or licensees as aforesaid. Except as
specifically provided in Article 9 or elsewhere in this lease, there shall be
no allowance to the Tenant for a diminution of rental value and no liability on
the part of Owner by reason of inconvenience, annoyance or injury to business
arising from Owner, Tenant or others making or failing to make any repairs,
alterations, additions or improvements in or to any portion of the building or
the demised premises or in and to the fixtures, appurtenances or equipment
thereof. The provisions of this Article 4 with respect to the making of repairs
shall not apply in the case of fire or other casualty with regard to which
Article 9 hereof shall apply.
WINDOW CLEANING:
5. Tenant will not clean nor require, permit, suffer or allow any window
in the demised premises to be cleaned from the outside in violation of Section
202 of the New York State Labor Law or any other applicable law or of the Rules
of the Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE, FLOOR LOADS:
6. Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant shall, at Tenant's sole cost
and expense, promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire
Underwriters, or the Insurance Services Office, or any similar body which shall
impose any violation, order or duty upon Owner or Tenant with respect to the
demised premises, whether or not arising out of Tenant's use or manner of use
thereof, or, with respect to the building, if arising out of Tenant's use or
manner of use of the demised premises or the building (including the use
permitted under the
<PAGE> 2
lease. Except as provided in Article 29 hereof, nothing herein shall require
Tenant to make structural repairs or alterations unless Tenant has, by its
manner of use of the demised premises or method of operations therein, violated
any such laws, ordinances, orders, rules, regulations or requirements with
respect thereto. Tenant shall not do or permit any act or thing to be done in or
to the demised premises which is contrary to law, or which will invalidate or be
in conflict with public liability, fire or other policies of insurance at any
time carried by or for the benefit of Owner. Tenant shall not keep anything in
the demised premises except as now or hereinafter permitted by the Fire
Department, Board of Fire Underwriters, Fire Insurance Rating Organization and
other authority have jurisdiction, and then only in such manner and such
quantity so as not to increase the rate for fire insurance applicable to the
building, nor use the premises in a manner which will increase the insurance
rate for the building or any property located therein over that in effect prior
to the commencement of Tenant's occupancy. If by reason of failure to comply
with the foregoing the fire insurance rate shall, at the beginning of this lease
or at any time thereafter, be higher than it otherwise would be then Tenant
shall reimburse Owner, as additional rent hereunder, for that portion of all the
insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant. In any action or proceeding wherein Owner and
Tenant are parties, a schedule or "make-up" or rate for the building or demised
premises issued by a body making fire insurance rates applicable to said
premises shall be conclusive evidence of the facts therein stated and of the
several items and charges in the fire insurance rates then applicable to said
premises. Tenant shall not place a load upon any floor of the demised premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law. Owner reserves the right to prescribe the weight and
position of all safes, business machines, and mechanical equipment. Such
installations shall be placed and maintained by Tenant, at Tenant's expense, in
settings sufficient, in Owner's judgement, to absorb and prevent vibration,
noise and annoyance.
SUBORDINATION:
7. This lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall exercise promptly any certificate that Owner may request.
PROPERTY -- LOSS, DAMAGE, REIMBURSEMENT, INDEMNITY:
8. Owner or its agents shall not be liable for any damage to property of
Tenant or of others entrusted to employees of the building, nor for loss of or
damage to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Owner, its agents, servants or
employees; Owner or its agents shall not be liable for any damage caused by
other tenants or persons in, upon or about said building or enused by operations
in connection of any private, public or quasi public work. If at any time any
windows of the demised premises are temporarily closed, darkened or bricked up
(or permanently closed, darkened or bricked up, if required by law) for any
reason whatsoever including, but not limited to Owner's own acts. Owner shall
not be liable for any damage Tenant may sustain thereby and Tenant shall not be
entitled to any compensation therefor nor abatement or diminution of rent nor
shall the same release Tenant from its obligations hereunder nor constitute an
eviction. Tenant shall indemnify and save harmless Owner against and from all
liabilities, obligations, damages, penalties, claims, costs and expenses for
which Owner shall not be reimbursed by insurance, including reasonable
attorney's fees, paid suffered or incurred as a result of any breach by Tenant,
Tenant's agents, contractors, employees, invitees, or licensees, of any covenant
or condition of this lease, or the carelessness, negligence or improper conduct
of the Tenant, Tenant's agents, contractors, employees, invitees or licensees.
Tenant's liability under this lease extends to the acts and omissions of any
sub-tenant, and any agent, contractor, employee, invitee or licensee of any
sub-tenant. In case any action or proceeding is brought against Owner by reason
of any such claim, Tenant, upon written notice from Owner, will, at Tenant's
expense, resist or defend such action or proceeding by counsel approved by Owner
in writing, such approval not to be unreasonably withheld.
DESTRUCTION, FIRE AND OTHER CASUALTY:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty. Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the premises which is usable. (c) If the demised premises are
totally damaged or rendered wholly unusable by fire or other casualty, then the
rent shall be proportionately paid up to the time of the casualty and
thenceforth shall cease until the date when the premises shall have been
repaired and restored by Owner, subject to Owner's right to elect not to restore
the same as hereinafter provided. (d) If the demised premises are rendered
wholly unusable or (whether or not the demised premises are damaged in whole or
in part) if the building shall be so damaged that Owner shall decide to demolish
it or to rebuild it, then, in any of such events, Owner may elect to terminate
this lease by written notice to Tenant, given within 90 days after such fire or
casualty, specifying a date for the expiration of the lease, which date shall
not be more than 60 days after the giving of such notice, and upon the date
specified in such notice the term of this lease shall expire as fully and
completely as if such date were the date set forth above for the termination of
this lease and Tenant shall forthwith quit, surrender and vacate the premises
without prejudice however, to Owner's rights and remedies against Tenant under
the lease provisions in effect prior to such termination, and any rent owing
shall be paid up to such date and any payments of rent made by Tenant which were
on account of any period subsequent to such date shall be returned to Tenant,
unless Owner shall serve a termination notice as provided for herein, Owner
shall make the repairs and restorations under the conditions of (b) and (c)
hereof, with all reasonable expedition, subject to delays due to adjustment of
insurance claims, labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's restoration by removing from
the premises as promptly as reasonably possible, all of Tenant's salvageable
inventory and movable equipment, furniture, and other property. Tenant's
liability for rent shall resume five (5) days after written notice from Owner
that the premises are substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieve Tenant from liability that may exist as a
result of damage from fire or other casualty. Notwithstanding the foregoing,
each party shall look first to any insurance in its favor before making any
claim against the other party for recovery for loss or damage resulting from
fire or other casualty, and to the extent that such insurance is in force and
collectible and to the extent permitted by law. Owner and Tenant each hereby
releases and waives all right of recovery against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance. If, and to the extent, that such waiver can be obtained only by
the payment of additional premiums, then the party benefitting from the waiver
shall pay such premiums within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that Owner will not be obligated to
repair any damage therein or replace the same. (f) Tenant hereby waives the
provisions of Section 227 of the Real Property Law and agrees that the
provisions of this article shall govern and control in lieu thereof.
EMINENT DOMAIN:
10. If the whole or any part of the demised premies shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of the vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease.
ASSIGNMENT, MORTGAGE, ETC.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it shall
not assign mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance.* Transfer of the majority
of the stock of a corporate Tenant shall be deemed an assignment. If this lease
be assigned, or if the demised premises or any part thereof be underlet or
occupied by anybody other than Tenant, Owner may, after default by Tenant,
collect rent from the assignee, under-tenant or occupant, and apply the net
amount collected to the rent herein reserved, but no such assignment,
underletting, occupancy or collection shall be deemed a waiver of this
covenant, or the acceptance of the assignee, under-tenant or occupant as tenant,
or a release of Tenant from the further performance by Tenant of covenants on
the part of Tenant herein contained. The consent by Owner to an assignment or
underletting shall not in any wise be construed to relieve Tenant from obtaining
the express consent in writing of Owner to any further assignment or
underletting.
CURRENT:
***
12. Rates and conditions in respect to subletting or rent inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing leeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise Owner liable or responsible to Tenant, for any
loss, damages or expenses which Tenant may sustain.
ACCESS IN PREMISES:
13. Owner or Owner's agents shall have the right (but shall not be obligated)
to enter the demised premises in any emergency at any time, and, at other
reasonable times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to any portion
of the building of which Owner may elect to perform in the premises after
Tenant's failure to make repairs or perform any work which Tenant is obligated
to perform under this lease, or for the purpose of complying with laws,
regulations and other directions of governmental authorities. Tenant shall
permit Owner to use and maintain and replace pipes and conduits in and through
the demised premises and to erect new pipes and conduits therein provided,
wherever possible, they are within walls or otherwise concealed. Owner may,
during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants and may, during said six months period, place upon the premises the
usual notices "To Let" and "For Sale" which notices Tenant shall permit to
remain thereon without molestation. If Tenant is not present to open and permit
on entry into the premises, Owner or Owner's agents may enter the same whenever
such entry may be necessary or permissible by master key or forcibly and
provided reasonable care is exercised to safeguard Tenant's property, such entry
shall not render Owner or its agents liable therefor, nor in any event shall the
obligations of Tenant hereunder be affected. If during the last month of the
term Tenant shall have removed all or substantially all of Tenant's property
therefrom, Owner may immediately enter, alter, renovate or redecorate the
demised premises without limitation or abatement of rent, or incurring liability
to Tenant for any compensation and such act shall have no effect on this lease
or Tenant's obligations hereunder.
- -----------
*** Rider to be added if necessary.
<PAGE> 3
VAULT, VAULT SPACE, AREA:
14. No Vaults, vault space area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant, if used by Tenant,
whether or not specifically leased hereunder.
OCCUPANCY:
15. Tenant will not at any time use or occupy the demised premises in violation
of the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's work, if any. In
any event, Owner makes no representation as to the condition of the premises
and Tenant agrees to accept the same subject to violations, whether or not of
record. If any governmental license or permit shall be required for the proper
and lawful conduct of Tenant's business, Tenant shall be responsible for and
shall procure and maintain such license or permit.
BANKRUPTCY:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Owner by sending of a written notice to Tenant within
a reasonable time after the happening of any one or more of the following
events: (1) the commencement of a case in bankruptcy or under the laws of any
since naming Tenant as the debtor; or (2) the making by Tenant of an
assignment or any other arrangement for the benefit of creditors under any state
statute. Neither Tenant nor any person claiming through or under Tenant, or by
reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rental reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and
the fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages in any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time
when, and governing the proceedings in which, such damages are to be proved,
whether or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
DEFAULT:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises becomes vacant or deserted or if this lease be rejected under
Section 235 of Title II of the U.S. Code (bankruptcy code); or if any execution
or attachment shall be issued against Tenant or any of Tenant's property
whereupon the demised premises shall be taken or occupied by someone other than
Tenant; or if Tenant shall make default with respect to any other lease between
Owner and Tenant; or if Tenant shall have failed, after five (5) days written
notice, to redeposit with Owner any portion of the security deposited hereunder
which Owner has applied to the payment of any rent and additional rent due and
payable hereunder or failed to move into or take possession of the premises
within fifteen (15) days after the commencement of the term of this lease, of
which fact Owner shall be the sole judge; then in any one or more of such
events, upon Owner serving a written five (5) days notice upon Tenant
specifying the nature of said default and upon the expiration of said five (5)
days, if Tenant shall have failed to comply with or remedy such default, or if
the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said five (5) day period, and if
Tenant shall not have diligently commenced during such default within such
five (5) day period, and shall not thereafter with responsible diligence and in
good faith, proceed to remedy or cure such default, then Owner may serve a
written three (3) days' notice of cancellation of this lease upon Tenant, and
upon the expiration of said three (3) days this lease and the term thereunder
shall end and expire as fully and completely as if the expiration of such three
(3) day period were the day herein definitely fixed for the end and expiration
of this lease and the term thereof and Tenant shall then quit and surrender the
demised premises to Owner but Tenant shall remain liable as hereinafter
provided.
(2) If the notice provided for in (1) hereof shall have been given, and
the term shall expire a aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
REMEDIES OF OWNER AND WAIVER OF REDEMPTION:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent, and additional rent, shall
become due thereupon and be paid up to the time of such re-entry, disposes
and/or expiration, (b) Owner may re-let the premises or any part or parts
thereof, either in the name of Owner or otherwise, for a term or terms, which
may at Owner's option be less than or exceed the period which would otherwise
have constituted the balance of the term of this lease and may grant
concessions or free rent or charge a higher rental than that in this lease, (c)
Tenant or the legal representatives of Tenant shall also pay Owner as
liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and or covenanted to be paid and the net amount, if any, of the rents
collected on account of the subsequent lease or leases of the demised premises
for each month of the period which would otherwise have constituted the balance
of the term of this lease. The failure of Owner to re-let the premises or any
part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency such expenses as Owner may incur in connection with re-letting, such
as legal expenses, attorneys' fees, brokerage, advertising and for keeping the
demised premises in good order or for preparing the same for re-letting. Any
such liquidated damages shall be paid in monthly installments by Tenant on the
rent day specified in this lease and any suit brought to collect the amount of
the deficiency for any month shall not prejudice in any way the rights of Owner
to collect the deficiency for any subsequent month by a similar proceeding.
Owner, in putting the demised premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations, repairs, replacements,
and/or decorations in the demised premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder, in the event of a breach or threatened breach by Tenant of any of
the covenants or provisions hereof, Owner shall have the right of injunction and
the right to invoke any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not herein provided for. Mention in
this lease of any particular remedy, shall not preclude Owner from any other
remedy, in law or in equity. Tenant hereby expressly waives any and all rights
of redemption granted by or under any present or future laws.
FEES AND EXPENSES:
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, then, unless otherwise
provided elsewhere in this lease, Owner may immediately or at any time
thereafter and without notice perform the obligation of Tenant thereunder. If
Owner, in connection with the foregoing or in connection with any default by
Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs
any obligations for the payment of money, including but not limited to
attorney's fees, in instituting, prosecuting or defending any action or
proceedings, then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred
by reason of Tenant's default shall be deemed to be additional rent hereunder
and shall be paid by Tenant to Owner within five (5) days of rendition of any
bill or statement to Tenant therefor. If Tenant's lease term shall have expired
at the time of making of such expenditures or incurring of such obligations,
such sums shall be recoverable by Owner as damages.
BUILDING ALTERATIONS AND MANAGEMENT:
20. Owner shall have the right at any time without the same constituting an
eviction and without, incurring liability to Tenant therefor to change the
arrangement and or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenant making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition
of any controls of the insurer of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.
NO REPRESENTATIONS BY OWNER:
21. Neither Owner nor Owner's agents have made any representations or promises
with respect to the physical condition of the building, the land upon which it
is erected or the demised premises, the rents, leases, expenses of operation or
any other matter or thing affecting or related to the demised premises or the
building except as herein expressly set forth and no rights, easements or
licenses are required by Tenant by implication or otherwise except as expressly
set forth in the provisions of this lease. Tenant has inspected the building
and the demised premises and is thoroughly acquainted with their condition and
agrees to take the same "as is" on the date possession is tendered and
acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understandings and
agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between
Owner and Tenant and any executory agreement hereafter made shall be
ineffective to
<PAGE> 4
change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreement is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.
End of 22. Upon the expiration or other termination of the term of
Term: this lease, Tenant shall quit and surrender to Owner the demised
premises, broom clean, in good order and condition, ordinary
wear and damages which Tenant is not required to repair as provided elsewhere in
this lease excepted, and Tenant shall remove all its property from the demised
premises. Tenant's obligation to observe or perform this covenant shall survive
the expiration or other termination of this lease. If the last day of the term
of this Lease or any renewal thereof, falls on Sunday, this lease shall expire
at noon on the preceding Saturday unless it be a legal holiday in which case it
shall expire at noon on the preceding business day.
Quiet 23. Owner covenants and agrees with Tenant that upon Tenant
Enjoyment: paying the rent and additional rent and observing and performing
all the terms, covenants and conditions, on Tenant's part to be
observed and performed, Tenant may peaceably and quietly enjoy the premises
hereby demised, subject, nevertheless, to the terms and conditions of this
lease including, but not limited to, Article 34 hereof and to the ground
leases, underlying leases and mortgages hereinbefore mentioned.
Failure 24. If Owner is unable to give possession of the demised
to Give premises on the date of the commencement of the term hereof,
Possession: because of the holding-over or retention of possession of any
tenant, undertenant or occupants or if the demised premises are
located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or if Owner has
not completed any work required to be performed by Owner, or for any other
reason, Owner shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for Owner's liability to obtain possession or complete
any work required) until after Owner shall have given Tenant notice that the
premises are substantially ready for Tenant's occupancy. If permission is given
to Tenant to enter into the possession of the demised premises or to occupy
premises other than the demised premises prior to the date specified as the
commencement of the term of this lease. Tenant covenants and agrees that such
occupancy shall be deemed to be under all the terms, covenants, conditions and
provisions of this lease, except as to the covenant to pay rent. The provisions
of this article are intended to constitute "an express provision to the
contrary" within the meaning of Section 223-n of the New York Rent Property Law.
No Waivers 25. The failure of Owner to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition
of this lease or of any of the Rules or Regulations, set forth or hereafter
adopted by Owner, shall not prevent a subsequent net which would have
originally constituted a violation from having all the force and effect of an
original violation. The receipt by Owner of rent with knowledge of the breach of
any covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. All checks tendered to Owner
as and for the rent of the demised premises shall be deemed payments for the
account of Tenant. Acceptance by Owner of rent from anyone other than Tenant
shall not be deemed to operate as an attornment to Owner by the payor of such
rent or as a consent by Owner to an assignment or subletting by Tenant of the
demised premises to such payor, or as a modification of the provisions of this
lease. No act or thing done by Owner or Owner's agents during the term hereby
demised shall be deemed an acceptance of a surrender of said premises and no
agreement to accept such surrender shall be valid unless in writing signed by
Owner. No employee of Owner or Owner's agent shall have any power to accept the
keys of said premises prior to the termination of the lease and the delivery of
keys to any such agent or employee shall not operate as a termination of the
lease or a surrender of the premises.
Waiver 26. It is mutually agreed by and between Owner and Tenant that
of Trial the respective parties hereto shall and they hereby do waive
by Jury: trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other (except for
personal injury or property damage) on any matters whatsoever arising out of or
in any way connected with this lease, the relationship of Owner and Tenant,
Tenant's use of or occupancy of said premises, and any emergency statutory or
any other statutory remedy, it is further mutually agreed that in the event
Owner commences any summary proceeding for possession of the premises, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding.
Inability to 27. This Lease and the obligation of Tenant to pay rent
Perform: hereunder and perform all of the other covenants and agreements
hereunder on part of Tenant to be performed shall in no wise be
affected, impaired or excused because Owner is unable to fulfill any of its
obligations under this lease or to supply or is delayed in supplying any
service expressly or impliedly to be supplied or is unable to make, or is
delayed in making any repair, additions, alterations or decorations or is
unable to supply or is delayed in supplying any equipment or fixtures if Owner
is prevented or delayed from so doing by reason of strike or labor troubles or
any cause whatsoever beyond Owner's sole control including, but not limited to,
government preemption in connection with a National Emergency or by reason of
any rule, order or regulation of any department or subdivision thereof of any
government agency or by reason of the conditions of supply and demand which
have been or are affected by war or other emergency.
Bills and 28. Except as otherwise in this lease provided, a bill,
Notices: statement, notice or communication which Owner may desire or be
required to give to Tenant, shall be deemed sufficiently given or
rendered it, in writing, delivered to Tenant personally or sent by registered
or certified mail addressed to Tenant at the building of which the demised
premises form a part or at the last known residence address or business address
of Tenant or left at any of the aforesaid premises addressed to Tenant, and the
time of the rendition of such bill or statement and of the giving of such
notice or communication shall be deemed to be the time when the same is
delivered to Tenant, mailed, or left at the premises as herein provided. Any
notice by Tenant to Owner must be served by registered or certified mail
addressed to Owner at the address first hereinabove given or at such other
address as Owner shall designate by written notice.
Water 29. If Tenant requires, uses or consumes water for any purpose
Charges: in addition to ordinary lavatory purposes (of which fact Tenant
constitutes Owner to be the sole judge) Owner may install a
water meter and thereby measure Tenant's water consumption for all purposes.
Tenant shall pay Owner for the cost of the meter and the cost of the
installation, thereof and throughout the duration of Tenant's occupancy Tenant
shall keep said meter and installation equipment in good working order and
repair at Tenant's own cost and expense in default of which Owner may cause
such meter and equipment to be replaced or repaired and collect the cost
thereof from Tenant, as additional rent. Tenant agrees to pay for water
consumed, as shown on said meter as and when bills are rendered, and on
default in making such payment Owner may pay such charges and collect the same
from Tenant, as additional rent. Tenant covenants and agrees to pay, as
additional rent, the sewer rent, charge or any other tax, rent, levy or charge
which now or hereafter is assessed, imposed or a lien upon the demised premises
or the realty of which they are part pursuant to law, order or regulation made
or issued in connection with the use, consumption, maintenance or supply of
water, water system or sewage or sewage connection or system. If the building
or the demised premises or any part thereof is supplied with water through a
meter through which water is also supplied to other premises Tenant shall pay
to Owner, as additional rent, on the first day of each month, ______. %
($______) of the total meter charges as Tenant's portion. Independently of and
in addition to any of the remedies reserved to Owner hereinabove or elsewhere
in this lease. Owner may sue for and collect any monies to be paid by Tenant or
paid by Owner for any of the reasons or purposes hereinafter set forth.
Sprinklers: 30. Anything elsewhere in this lease to the contrary
notwithstanding. If the New York Board of Fire Underwriters
or the New York Fire Insurance Exchange or any bureau, department or official
of the federal, state or city government recommend or require the installation
of a sprinkler system or that any changes, modifications, alterations, or
additional sprinkler heads or other equipment be made or supplied in an existing
sprinkler system by reason of Tenant's business, or the location of partitions,
trade fixtures or other contents of the demised premises, or for any other
reason, or if any such sprinkler system installations, modifications,
alterations, additional sprinkler heads or other such equipment, become
necessary to prevent the imposition of a penalty or charge against the full
allowance for a sprinkler system in the fire insurance rate set by any said
Exchange or by any fire insurance company, Tenant shall, at Tenant's expense,
promptly make such sprinkler system installations, changes, modifications,
alterations and supply additional sprinkler heads or other equipment as
required whether the work involved shall be structural or non-structural in
nature. Tenant shall pay to Owner as additional rent the sum of $________, on
the first day of each month during the term of this lease, as Tenant's portion
of the contract price for sprinkler supervisory service.
Elevators, 31. As long as Tenant is not in default under any of the
Heat, Cleaning covenants of this lease Owner shall; (a) provide necessary
passenger elevator facilities on business days from 8 a.m.
to 6 p.m. and on Saturdays from 8 a.m. to 1 p.m.; (b) if freight elevator
service is provided same shall be provided only on regular business days Monday
through Friday inclusive, and on those days only between the hours of 9 a.m.
and 12 noon and between 1 p.m. and 5 p.m.; (c) furnish heat, water and other
services supplied by Owner to the demised premises, when and as required by
law, on business days from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1
p.m.; (d) clean the public halls and public portions of the building which are
used in common by all tenants. Tenant shall, at Tenant's expense, keep the
demised premises, including the windows, clean and in order, to the
satisfaction of Owner, and for that purpose shall employ the person or persons,
or corporation approved by Owner. Tenant shall pay to Owner the cost of removal
of any of Tenant's refuse and rubbish from the building. Bills for the same
shall be rendered by Owner to Tenant at such time as Owner may elect and shall
be due and payable hereunder, and the amount of such bills shall be deemed to
be, and be paid as, additional rent. Tenant shall, however, have the option of
independently contracting for the removal of such rubbish and refuse in the
event that Tenant does not wish to have same done by employees of Owner. Under
such circumstances however, the removal of such refuse and rubbish by others
shall be subject to such rules and regulations as, in the judgment of Owner, are
necessary for the proper operation of the building. Owner reserves the right to
stop service of the heating, elevator, plumbing and electric systems, when
necessary, by reason of accident, or emergency, or for repairs, alterations,
replacements or improvements, in the judgment of Owner desirable or necessary
to be made, until said repairs, alterations, replacements or improvements shall
have been completed. If the building of which the demised premises are a part
supplies manually operated elevator service. Owner may proceed with alterations
necessary to substitute automatic control elevator service upon ten (10) day
written notice to Tenant without in any way affecting the obligations of Tenant
hereunder, provided that the same shall be done with the minimum amount of
inconvenience to Tenant, and Owner pursues with due diligence the completion
of the alterations.
<PAGE> 5
CORPORATE TENANT
STATE OF NEW YORK, ss.1
COUNTY OF
On this ____ day of ___________________, 19__, before me personally came
____________________________ to me known, who being by me duly sworn, did
depose and say that he resides in _________________________________
that he is the ___________________________ of _____________________________
the corporation described in and which executed the foregoing Instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said Instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name therein by
like order.
...................................
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.1
COUNTY OF
On this ____ day of ___________________, 19__, before me personally came
____________________________ to me known and known to me to be the individual
described in and who, as TENANT, executed the foregoing instrument and
acknowledged to me that he executed the same.
...................................
IMPORTANT -- PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN ACCORDANCE
WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are [illegible] on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
loud or [illegible] gas or substance in the demised premises, or permit or
suffer the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any animals or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without prior written consent
of Owner, except that the name of Tenant may appear on the entrance door of the
premises. In the event of the violation of the foregoing by any Tenant, Owner
may remove same without any liability and may charge the expense incurred by
such removal to Tenant or Tenants violating this rule. Interior signs on doors
and directory tablet shall be inscribed, painted or affixed for each Tenant by
Owner at the expense of such Tenant, and shall be of a size, color and style
acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used as interlining of builder's [illegible] felt
shall be first affixed to the floor, by a paste or other material, soluble in
water, the use of cement or other similar adhesive material being expressly
prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanisms thereof. Each Tenant must, upon the termination of its
Tenancy, restore to Owner all keys of suites, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the premises only on
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which [illegible] any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises ice, drinking
water, towel and other similar services, or accept barbering or bootblacking
services in the demised premises, except from persons authorized by Owner, and
at hours and under regulations fixed by Owner. Canvassing, soliciting and
peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building between the
hours of 6 p.m. and 8 a.m. on business days, after 1 p.m. on Saturdays, and at
all hours on Sundays and legal holidays all persons who do not present a pass to
the building signed by Owner. Owner will furnish passes to persons for whom any
Tenant requests same in writing. Each Tenant shall be responsible for all
persons for whom he requests such pass and shall be liable to Owner for all acts
of such persons. Notwithstanding the foregoing, Owner shall not be required to
allow Tenant or any person to enter or remain in the building, except on
business days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to
1:00 p.m.
11. Owner shall have the right to prohibit any advertising by any Tenant
which in Owner's opinion, tends to injure the reputation of the building or its
desirability as a [illegible] building, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any flammable, combustible or explosive fluid, [illegible],
chemical or substance, or cause or permit any odors of cooking or other process,
or any unusual or other objectionable odors to permeate in or emanate from the
demised premises.
13. Tenant shall not use the demised premises in a manner which disturbs
or interferes with other Tenants in the beneficial use of their premises.
Address
Premises
- --------------------------------------------------------------------------------
TO
- --------------------------------------------------------------------------------
[SEAL] STANDARD FORM OF [SEAL]
LOFT LEASE
The Real Estate Board of New York, Inc.
(c)Copyright 1987. All rights Reserved.
Reproduction in whole or in part prohibited.
- --------------------------------------------------------------------------------
Dated 19
Rent per Year
Rent per Month
Term
From
To
Drawn by..................................Checked by............................
Entered by................................Approved by...........................
<PAGE> 6
SECURITY:
32. Tenant has deposited with Owner the sum of $8,000.00 as security for
the faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
supply or retain the whole or any part of the security so deposited to the
extent required for the payment of any rent and additional rent or any other sum
as to which tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be released to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
CAPTIONS:
33. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEFINITIONS:
34. The term "Owner" as used in this lease means only the owner of the
fee or of the leasehold of the building, or the mortgagee in possession, for the
time being of the land and building for the owner of a lease of the building or
of the land and building of which the demised premises form a part, so that in
the event of any sale or sales of said land and building or of said lease, or in
the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to new Owner from Tenant under this lease, in addition to the
annual rental rate. The term "business days" as used in this lease, shall
exclude Saturdays (except such portion thereof as is covered by specific hours
in Article 31 hereof). Sundays and all days observed by the State or Federal
Government as legal holidays and those designated as holidays by the applicable
building service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service.
ADJACENT EXCAVATION -- Shoring:
35. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Owner, or diminution or abatement
of rent.
RULES AND REGULATIONS:
36. Tenant and Tenant's servants, employees, agents, visitors, and
licensees shall observe faithfully, and comply strictly with, the Rules and
Regulations annexed herein and such other and further responsible Rules and
Regulations as Owner or Owner's agents may from time to time adopt. Notice of
any additional rules or regulations shall be given in such manner as Owner may
elect. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Owner or Owner's agents, the parties
hereto agree to submit the question of the reasonableness of such Rule or
Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within ten (10) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulations or terms, covenants or conditions in any other lease, as against
any other tenant and Owner shall not be liable to Tenant for violation of the
same by any other tenant, its servants, employees, agents, visitors or
licensees.
GLASS:
37. Owner shall replace, at the expense of the Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and about the
demised premises. Owner may insure, and keep insured, at Tenant's expense, all
plate and other glass in the demised premises for and in the name of Owner.
Bills for the premiums therefor shall be rendered by Owner to Tenant at such
times as Owner may elect, and shall be due from, and payable by, Tenant when
rendered, and the amount thereof shall be deemed to be, and be paid, as
additional rent.
ESTOPPEL CERTIFICATES:
38. Tenant, at any time, and from time to time, upon at least 10 days'
prior notice by Owner, shall execute, acknowledge and deliver to Owner, and/or
to any other person, firm or corporation specified by Owner, a statement
certifying that this Lease is unmodified in full force and effect (or, if there
have been modifications, that the same is in full force and effect as modified
and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
DIRECTORY BOARD LISTING:
39. If, at the request of and as accommodation to Tenant, Owner shall
place upon the directory board in the lobby of the building, one or more names
of persons other than Tenant, such directory board listing shall not be
construed as the consent by Owner to an assignment or subletting by Tenant to
such person or persons.
SUCCESSORS AND ASSIGNS:
40. The covenants, conditions and agreements contained in this lease shall
bind and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed
this lease as of the day and year first above written.
Witness for Owner:
/s/ TOM SUTHERLAND /s/ MARIA TOMMISSETTI
- ------------------------------ ------------------------------
RDL Realty, LLC
------------------------------
RDL REALTY, LLC
Witness for Tenant:
/s/ ROBERT PETTY /s/ DAVID ELI POPACK
- ------------------------------ ------------------------------
Stampville.com, Inc.
Corp. Seal
<PAGE> 7
Security: 32. Tenant has deposited with Owner the sum of $8,000.00 as
security for the faithful performance and observance by Tenant of
the terms, provisions and conditions of this lease; it is agreed that in the
event Tenant defaults in respect of any of the terms, provisions and conditions
of this lease, including, but not limited to, the payment of rent and
additional, Owner may [illegible], supply or retain the whole or any part of the
security [illegible] deposited to the extent required for the payment of any
rent and additional rent or any other sum as to which Tenant is in default or
for any sum which Owner may expend or may be required to expend by reason of
Tenant's default in respect of any of the terms, covenants and conditions of
this lease, including but not limited to, any damages or deficiency in the
re-letting of the premises, whether such damages or deficiency accrued before or
after statutory proceedings or other [illegible] by Owner. In the event that
Tenant shall fully and faithfully comply with all of the terms, provisions,
covenants and conditions of this lease, the security shall be returned to Tenant
after the date fixed as the end of the Lease and after delivery of [illegible]
of the demised premises to Owner. In the event of a sale of the land and
building or leasing of the building, of which the demised premises form a part,
Owner shall have the right to transfer the security to the [illegible] or lessee
and Owner shall thereafter be released by Tenant from all liability for the
return of such security and Tenant agrees to look to the new Owner solely for
the return of said security, and it is agreed that the provisions hereof shall
apply in every transfer or assignment made of the security to a new Owner.
Tenant further covenants that it will not assign or encumber or attempt to
assign or encumber the monies deposited herein as security and that neither
Owner nor his successors or assignees shall be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.
Captions: 33. The Captions are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope
of this lease nor the intent of any provision thereof.
Definitions: 34. The term "Owner" as used in this lease [illegible] the owner
of the [illegible] or of the leasehold of the building, or the
mortgagee in possession, for the time being of the land and building (or the
owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of said
land and building or of said lease, or in the event of a lease of said building,
or of the land and building, the said Owner shall be and hereby is entirely
freed and relieved of all covenants and obligations of Owner hereunder, and it
shall be deemed and construed without further agreement between the parties or
their successors in interest, or between the parties and the purchaser, at any
such sale, or the said lease of the building, or of the land and building, that
the purchaser or the lessee of the building has [illegible] and [illegible] to
[illegible] and any and all covenants and obligations of Owner hereunder. The
words "re-enter" and "re-entry" as used in this lease are not restricted to
their technical legal meaning. The term "rent" includes the annual rental rate
whether not expressed or expressed in monthly installments, and "additional
rent." "Additional rent" means all rents which shall be due to new Owner from
Tenant under this lease, in addition to the annual rental rate. The term
"business days" as used in this lease, shall exclude Saturdays (except such
portions thereof as is covered by specific hours in Article 31 hereof), Sundays
and all days observed by the State or Federal Government as legal holidays and
those designated as holidays by the applicable building service union employees
service contract or by the applicable Operating Engineers contract with respect
to HVAC service.
Adjacent 35. If an excavation shall be made upon land adjacent to the
Excavations- demised premises, or shall be authorized to be made, Tenant shall
Shoring: afford to the person causing or authorized to cause such
excavation, license to enter upon the demised premises for the
purpose of doing such work as said persons shall deem necessary to preserve the
wall or the building of which demised premises form a part from injury or
damage and to support the same by proper foundations without any claim for
damages or indemnity against Owner, or disruption or abandonment of same.
Rules and 36. Tenant and Tenant's servants, employees, agents, visitors,
Regulations: and licensees shall observe faithfully, and comply strictly with,
the Rules and Regulations [illegible] hereto and such other and
further responsible Rules and Regulations as Owner or Owner's agents may from
time to time adopt. Notice of any additional rules or regulations shall be given
in such manner as Owner may elect. In case Tenant disputes the reasonableness of
any additional Rule or Regulation hereafter made or adopted by Owner or Owner's
agents, the parties hereto agree to submit the question of the reasonableness of
such Rule or Regulation for decision to the New York office of the American
Arbitrators Association, whose determination shall be final and conclusive upon
the parties hereto. The right to dispute the reasonableness of any additional
Rule or Regulation upon Tenant's part shall be deemed waived when the notice
shall be asserted by service of a notice, in writing, upon Owner within ten (10)
days after the giving of notice thereof. Nothing in this lease contained shall
be construed to impose upon Owner any duty or obligation to enforce the Rules
and Regulations or terms, covenants or conditions in any other lease, or against
any other tenant and Owner shall not be liable to Tenant for violation of the
same by any other tenant, its servants, employees, agents, visitors or
licensees.
[illegible]: 37. Owner shall replace, at the expense of the Tenant, any and
all plate and other glass damaged or broken from any cause
whatsoever in and about the demised premises. Owner may insure, and keep
insured, at Tenant's expense, all plate and other glass in the demised premises
for and in the name of Owner. [illegible] for the premises therefor shall be
rendered by Owner to Tenant at such times as Owner may elect, and shall be due
from, and payable by, Tenant when rendered, and the amount thereof shall be
deemed to be, and be paid, as additional rent.
Estoppel 38. Tenant, at any time, and from time to time, upon at least
Certificate: ten (10) days' prior notice by Owner, shall execute, acknowledge
and deliver to Owner, and/or to any other person, firm or
corporation specified by Owner, a statement certifying that this Lease is
unmodified in full force and effect, or if there have been modifications, that
the same is in full force and effect as modified and stating the modifications,
stating the dates to which the rent and additional rent have been paid, and
stating whether or not there exists any default by Owner under this Lease, and,
if so, specifying each such default.
Directory 39. If, at the request of and as an accommodation to Tenant,
Board Listing: Owner shall place upon the directory board in the lobby of the
building, one or more names of persons other than Tenant, such
directory board listing shall not be construed as the consent by Owner as an
assignment or subletting by Tenant to such person or persons.
Successors 40. The covenants, conditions and agreements contained in this
and Assigns: lease shall bind and inure to the benefit of Owner and Tenant and
their respective heirs, distributees, executors, administrators,
successors, and except as otherwise provided in this lease, their assigns.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed
this lease as of the day and year first above written.
Witness for Owner: /s/ MARION THOMMISSETTI
-------------------------------
/s/ TOM SUTHERLAND
- --------------------------------------- -------------------------------
RDL Realty, LLC
-------------------------------
RDL REALTY, LLC
/s/ [Signature Illegible]
-------------------------------
[Illegible]
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 10.3(b)
RIDER TO AGREEMENT OF LEASE
Dated this 28 of November, 1999 by and between RDL Realty, as Landlord and
Stampville.Com Inc. as Tenant.
1. Upon the signing of this two year lease, all other leases made or
executed by the above parties shall be null and void and shall have no
effect upon either party.
2. The term "Lease Year" shall be the period of duration commencing on
the first day of the term of this lease and ending on the anniversary
of said date. Tenant shall, at the end of the original lease term,
have the option of renewing said lease, for an additional term of one
(1) year or two (2) years.
The "Annual Base Rent Rate" shall be the rent charged to the Tenant by
Landlord for the first and second year Tenant occupies the premises as per the
lease terms ($48,000.00).
3. The Annual Base Rent Rate payable by Tenant during the terms of this
lease shall be:
$48,000.00, payable at the rate of $4,000.00 per month, as and
for, the first and second years of the lease term.
Thereafter each successive year, the Annual Base Rent Rate payable by the
Tenant to the Landlord shall be the previously charged Annual Base Rent Rate
plus 5% of the Annual Base Rent Rate, payable in equal monthly payments.
$50,400.00 payable at the rate of $4,200.00 per month as and for
the third year of the lease term;
$52,920.00 payable at the rate of $4,410.00 per month as and for
the fourth year of the lease term;
4. The rent payments shall be due on the first day of the month. If the
rent is paid on or after sixteenth day of the month, a charge of --
shall be due and owed to the Landlord from Tenant and said shall be
considered additional rent.
5. At the end of the original two (2) year lease term, if the Tenant
elects to accept the optional lease period of two years, this lease
and its terms shall remain in full force and effect and Tenant then
agrees to abide by all the lease terms and regulations contained
therein for the full lease term including the payment of the rental
amounts stated above. Tenant must give notice to Landlord 60 days
prior to the expiration of the original lease term stated herein,
whether it will accept the option to renew and for the period such
option shall apply. Notice must be in
<PAGE> 2
writing and mailed to Landlord at its current business address by
certified mail return receipt requested or by personal delivery.
6. Should the Tenant hold over in possession after the expiration or
sooner termination of the original lease term or of any extended
term of this lease, such holding over shall not be deemed to extend
the term or renew the lease, but such holding over thereafter shall
continue upon the covenants and conditions herein set forth except
that the charge for use and occupancy of such holding over for each
calendar month or part thereof (even if such part shall be a small
fraction of a calendar month) shall be the sum of:
1/12 of the highest annual base rent rate as set forth in
paragraph three of this Rider, multiplied by 1.5.
The aforesaid provision of this Rider shall survive the expiration
or sooner termination of this lease. The sum stated above, if due and owing
shall be promptly paid by Tenant, without the right to any offset.
7. All other obligations of the Tenant under this Rider to pay a sum of
money in addition to the stated rent, shall be deemed to be
additional rent and the Landlord shall have the same rights and
remedies for non-payment thereof as upon a default in the payment of
the annual base rent.
8. Tenant shall make no alterations or modifications to the rented
premises without the prior written consent of Landlord. Landlord
shall not unreasonably withhold such consent.
9. The terms of this Rider may only be modified in writing signed by
both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement,
By: /s/ Maria Tommissetti By: /s/ C. Jonathan Malamud
- ----------------------------- -----------------------------
LANDLORD, RDL REALTY TENANT, STAMPVILLE.COM
DATED: NOVEMBER 28, 1999
<PAGE> 1
EXHIBIT 10.4
IGPC AND STAMPVILLE .COM INC. SUPPLIERS' AGREEMENT
This Agreement is made and entered into this 1st day of December, 1999,
by and between the Inter-Governmental Philatelic Corporation, ("supplier") a
corporation duly organized and existing under the laws of the State of New York
with its principal place of business at 460 West 34th Street, New York, New
York, 10001 (hereinafter referred to as "IGPC"), and Stampville .Com Inc. a
corporation duly existing under the laws of the State of New York and having its
principal place of business at 456 Fifth Avenue, Suite 200, Brooklyn, New York
(hereinafter referred to as "Stampville").
RECITALS
WHEREAS, Stampville .Com Inc. engages in the business of selling philatelic
merchandise and related memorabilia on a wholesale basis to market outlets and
businesses, and on a retail basis to the general public;
WHEREAS, Stampville .Com Inc. is establishing an Internet Web Site for the sale
of Philatelic merchandise in the United States and international markets;
WHEREAS, Inter-Governmental Philatelic Corporation is one of the largest
suppliers and dealers of philatelic merchandise in the world today and is
desirous of expanding sales by selling philatelic items to Stampville.Com for
its distribution;
WHEREAS, Stampville and IGPC enter into this Agreement for the purpose of the
sale of philatelic merchandise both on and off the Internet.
NOW THEREFORE, in consideration of the above recitals and the covenants and
agreements contained below Stampville and IGPC agree as follows:
I. SUPPLY OF STAMPS.
It is hereby agreed to by and between the parties that IGPC shall supply
and sell to Stampville at or before the time such stamps are made available to
other wholesalers, distributors, dealers, collectors or other retail outlets
("the Distribution Outlets") for the period of this Agreement, and subject to
the terms and conditions of this Agreement, stamps that IGPC has made available
for public sale to the Distribution Outlets.
II. TERMS OF SALE.
It is hereby agreed to by and between the parties that IGPC shall sell
its stamps to Stampville at prices no greater than its lowest pricing structure
to any of the Distribution Outlets ("most favored dealer" status). It is
understood by and between the parties that the sale of stamps by IGPC to
Stampville is for resale by Stampville to its customers for the period of this
Agreement. All shipping and handling costs shall be paid by Stampville.
<PAGE> 2
III. LINE OF CREDIT.
It is hereby agreed to by and between the parties that IGPC shall grant
to Stampville a "line of credit" which shall not exceed the sum of $2,000,000.00
(two million dollars) exclusively for the purchase and shipping of stamps from
IGPC. Stampville, in consideration of the extension of credit made by IGPC, does
hereby absolutely and unconditionally guarantee the prompt and complete payment
and performance of any credit extended to Stampville on or before 120 days from
the extension of such credit. The parties may extend said 120 days by mutual
consent in writing signed by both parties.
IV. UNSOLD MERCHANDISE AND RETURNS.
It is agreed upon by and between the parties that any stamps purchased
by Stampville from IGPC may be returned within 90 days for full credit, provided
that stamps are returned in the same condition as received. All shipping and
handling costs for returns shall be the responsibility of Stampville.
V. PROMOTION OF STAMPVILLE AND SUPPLY OF INFORMATIONAL CONTENT.
It is agreed upon by and between the parties that IGPC shall grant to
Stampville those promotional rights which are legally assignable and not bound
by restrictions for the promotion of special issues and selected promotion of
celebrities for use in Stampville materials and promotions. IGPC further agrees
to promote the Stampville Network through press releases, promotional events and
periodically sending advertising material supplied by Stampville containing
information regarding Stampville .Com Inc. IGPC further agrees to supply
Stampville with informational content for its website(s), newsletters and other
such promotional materials.
VI. IGPC DATABASE.
It is understood by and between the parties that Stampville is creating
a Master Database ("Stampville Master Database"), which will integrate the IGPC
database and to the extent possible, the databases of other vendors who will be
supplying Stampville with product. IGPC does hereby grant to Stampville the
perpetual right to use the IGPC database along with the stamp images and
content.
VII. CONFIDENTIAL INFORMATION, TRADE SECRET AND NONCOMPETITION.
1. IGPC and Stampville each acknowledge that they may be furnished or otherwise
receive or have access to information which relates to each other's past,
present or future products, software, web sites, web design or formatting,
research, development, improvements, inventions, processes, methods, techniques,
designs or other technical data or regarding administrative, management,
financial, marketing or manufacturing activities of one another on a
confidential basis. All such information shall be considered by the respective
parties as proprietary and confidential ("Proprietary Information") and the sole
exclusive property of Stampville and IGPC respectively. Both during and after
the term of this Agreement, IGPC and Stampville agree to preserve and protect
the confidentiality of the Proprietary Information and all physical forms
thereof, whether disclosed to before this Agreement or afterward. In addition,
IGPC and Stampville shall not (i) disclose or disseminate the Proprietary
Information to any third party, (ii) remove Proprietary Information from the
premises of Stampville or IGPC respectively, without the prior consent of the
other party, (iii) use the Proprietary Information to its own benefit or the
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benefit of any third party without prior written consent of the other party,
(iv) engage and compete with one another during the period of this Agreement in
that IGPC shall not establish a same or similar Internet Web Site during the
period of this Agreement.
3. It is agreed that all Proprietary Information used or generated during the
course of IGPC's relationship with Stampville that is generated by Stampville is
the property of Stampville. It is agreed that IGPC will deliver to Stampville
all documents and other tangibles (including diskettes and other storage media)
containing Proprietary Information upon termination of Agreement.
4. It is acknowledged and agreed that all tangible and intangible information
disclosed by Stampville shall always remain the exclusive property of
Stampville. This includes, without limitation, web site design, graphics,
program codes, processes, methods, services, copyrights, trademarks, patents or
domains or any other form of intellectual property. It is acknowledged and
agreed that all tangible and intangible information disclosed by IGPC shall
always remain the exclusive property of IGPC. This includes, without limitation,
graphics, program codes, processes, methods, services, copyrights, trademarks,
patents or domains or any other form of intellectual property.
5. In consideration of the execution of this Agreement by Stampville, IGPC
covenants and agrees that it will not, during or following the term of this
Agreement, disseminate, publish upon, lecture, or disclose in any manner
information relating to design, method or techniques employed by Stampville or
any information relating to research, development or marketing used by
Stampville and such information is the sole exclusive property of Stampville. In
consideration of the execution of this Agreement by IGPC, Stampville covenants
and agrees that it will not, during or following the term of this Agreement,
disseminate, publish upon, lecture, or disclose in any manner information
relating to design, method or techniques employed by IGPC or any information
relating to research, development or marketing used by IGPC and such information
is the sole exclusive property of IGPC.
6. It is understood by and between the parties that IGPC in its business acts as
philatelic agent for numerous World Governments, Stampville and its affiliates
do hereby agree that during the term of this Agreement, neither Stampville nor
its affiliates shall solicit, engage or compete with IGPC in that Stampville and
its associates will not acquire or attempt to acquire any agency, whether or not
IGPC is in fact the Government agent, without the prior written consent of IGPC.
It is further understood and agreed to by and between the parties that IGPC in
its discretion may seek to introduce Stampville and its affiliates to business
opportunities with investors both inside and outside the philatelic community.
Stampville hereby agrees that in the event it agrees to accept such
introductions both during and after this Agreement, neither Stampville nor its
affiliates shall enter into any business ventures or agreements with said
investors arising out of such introduction without the prior written consent of
IGPC.
VIII. NON-ASSIGNABILITY OF RIGHTS.
It is agreed upon by and between Stampville and IGPC that none of the
rights granted to either party by this Agreement are assignable or otherwise
transferable without the prior written consent of both parties.
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IX. DURATION OF AGREEMENT.
It is agreed upon by and between the parties that this agreement shall
have a term of three (3) years; provided however, that on the 3rd anniversary of
this Agreement, IGPC may terminate the Agreement by written notice to Stampville
(the "Termination Notice"). If no Termination Notice is delivered to Stampville
on or within 30 days before the 3rd anniversary of this Agreement, the Agreement
will automatically extend for an additional two (2) years without any further
action by either party. In the event Stampville receives a timely Termination
Notice, IGPC agrees to continue to supply Stamps to Stampville for an additional
two-year period pursuant to Sections 1 and 2 of this Agreement. In such event
the parties expressly acknowledge and agree that the "line of credit" extended
to Stampville under this Agreement shall terminate on the 3rd anniversary of
this Agreement.
X. CHOICE OF LAW.
This Agreement shall be governed by the laws of the State of New York as
such laws are applied to contracts executed by New York residents and performed
entirely within the State of New York. In the event that any provision of this
Agreement conflicts with the law under which this Agreement is to be construed
or if any such provision is held invalid by a court with jurisdiction over the
parties to this Agreement, such provision shall be deemed to be restated to
reflect as nearly as possible the original intentions of the parties in
accordance with applicable force and effect.
XI. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between Stampville and
IGPC and supersedes any prior negotiations, agreements or understandings
pertaining to the subject matter hereof whether written or oral. No modification
or amendment of this Agreement shall be effective unless in written instrument
executed by the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement,
STAMPVILLE .COM INC. INTER-GOVERNMENTAL
PHILATELIC CORPORATION
By: /s/ C. JONATHAN MALAMUD By: /s/ SAM MALAMUD
------------------------ ---------------------------------
Name: C. Jonathan Malamud Name: Sam Malamud
---------------------- -------------------------------
Title: President Title: President
--------------------- ------------------------------
DATED: DECEMBER 1, 1999
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EXHIBIT 10.5(a)
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement"), is entered into this __ day of
January, 2000 (the "Execution Date"), by and between I.T. Technology, Inc. a
Delaware corporation (the "Company") and Petty Consulting, Inc. (the
"Consultant") and for the services of Robert Petty ("Petty").
WHEREAS, Petty is an experienced executive with financial, operational
and marketing expertise in high technology and Internet related businesses;
WHEREAS, the Company requires immediate additional senior executive
expertise and experience to assist it in strategic planning and operational
initiatives, and in connection therewith, the Company desires to engage the
Consultant to provide the services of Petty to provide such management and
financial expertise;
WHEREAS, the Consultant agrees to accept such assignment and to provide
the Company with the services of Petty pursuant to the terms and conditions set
forth in this Agreement for one year from the date hereof or such shorter period
as provided herein; and
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, the Company and Consultant agree as follows:
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1. Definitions. As used in this Agreement, the following capitalized
terms shall have the following meanings, unless otherwise expressly provided or
unless the context otherwise requires.
"Cause" means, except as otherwise contemplated by Sections 5(a) or
5(c) below, the involuntary termination of the Agreement by the Company by
reason of:
(i) the material breach by Consultant or Petty of the terms and
conditions of this Agreement;
(ii) the willful or habitual failure by Consultant or Petty to
perform requested duties commensurate with their duties pursuant to the terms of
this Agreement (the "Breach"); or
(iii) the willful engaging by Consultant or Petty in misconduct
materially injurious to the Company.
2. Consulting Services. Subject to the restrictions and limitations set
forth below, during the "Term", as hereinafter defined, of this Agreement,
Consultant and the Company hereby agree:
(a) Consultant shall make available Petty to the Company to serve
the Company. As such Petty shall assist the Board of Directors as requested
concerning the Company's strategic direction and initiatives. Consultant shall
be responsible for developing and fostering shared goals and strategies amongst
the Company's operating subsidiaries or divisions and shall have shared
accountability with other management members for the Company's overall financial
results. Consultant shall also be responsible for assisting the Company in
recruiting and developing executives for its operating subsidiaries or
divisions.
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(b) Subject to any services rendered by Petty as a Consultant or
employee to Stampville.com, Inc., Consultant shall make Petty available to
render his services to the Company on a substantially full-time basis. The
consulting services rendered by Consultant as set forth in Sections 2(a) and
2(b) above shall hereinafter be defined as the "Consulting Services."
(c) The Consultant shall, during the Term hereof while performing
the Consulting Services, shall at all times be, act, function, and perform all
services and responsibilities as an independent contractor. It is further
mutually understood and agreed that no work, act, commission or omission of any
act by the Consultant, Petty or the Company pursuant to the terms of this
Agreement shall be construed to make or render the Consultant or Petty an
employee of the Company. The Consultant shall and shall cause Petty to: (i) be
fully responsible for their own debts and obligations and (ii) not under any
circumstances hold themselves out as an employee of the Company.
(d) Consultant shall cause Petty to make take such out of town
business trips as requested by the Company in connection with Consultant's
duties pursuant to this Agreement.
(e) Petty shall report to and be supervised by the Chief Executive
Officer of the Company and its Board of Directors.
(f) Subject to the overall supervision of the Company's Board of
Directors and its Chief Executive Officer, except as otherwise provided in this
Agreement, the Company shall have no right or authority to direct or control the
Consultant or Petty with respect to the actual performance of the Consulting
Services. The Company is only interested in the results obtained by the
Consultant with respect to the Consulting Services. The manner and
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methods utilized by the Consultant or Petty in performing the Consulting
Services and achieving the desired result on behalf of the Company shall be
under the exclusive control of the Consultant.
3. Compensation.
(a) Subject to Section 12(e) below, as compensation for Consultant's
agreement to cause Petty to be available to render the Consulting Services
during the Term of this Consulting Agreement, the Company agrees to compensate
the Consultant at a rate of Twelve Thousand Dollars ($12,000USD) annually (the
"Consulting Fee"). Said Consulting Fee shall be payable in equal monthly
installments in arrears, pursuant to the Company's normal compensation
practices, or in such other installments as may be agreed upon between the
parties.
(b) The Consulting Fee shall be reviewed quarterly by the Company
and may be adjusted to reflect the achievement of mutually agreeable milestones
by the Company.
(c) Except as expressly set forth in this Section 3 or elsewhere in
this Agreement, Consultant shall not be entitled to receive any other
compensation or benefits from the Company as a result of the performance of
Consultant's consulting services hereunder, including but not limited to
participation in the Company's life, health and disability insurance plans,
profit sharing, pension or 401(k) bonus plans or any other plans or programs
currently or which in the future may become available to the Company's officers
or employees, in such capacities. Neither Consultant nor Petty shall be entitled
to vacation, severance, sick-pay, holiday or other benefits from the Company.
(d) The Company agrees to grant Petty options to purchase up to
1,450,000 shares of its common stock (the "Options"). The terms of the Options
shall be as set
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forth in the Option Agreement between Petty and the Company attached hereto and
made a part hereof as Exhibit "A".
4. Expenses. The Company shall promptly reimburse Consultant for all
reasonable out of pocket expenses incurred by Consultant in the discharge of
Consultant's duties hereunder, including, but not limited to reasonable expenses
incurred by Consultant in connection with the performance of the Consulting
Services; provided that, automobile, office overhead, local telephone charges,
meals and hotel expenses shall not be reimbursable. The Company shall reimburse
Consultant for authorized expenses incurred in connection with the performance
of the Consulting services only upon receipt from Consultant of vouchers,
receipts or other reasonable substantiation of such expenses.
5. Term of Agreement. The term of this Agreement shall commence as of
the date hereof and, unless earlier terminated as herein provided, shall
continue for a period of one year from the date hereof. This Agreement shall be
terminated prior to the expiration of one year from the date hereof only in the
event of the occurrence of any one of the following circumstances:
(a) The death of Petty;
(b) The Company terminates this Agreement for Cause; or
(c) Upon no less than ninety (90) days prior written notice pursuant
to Section 12(j) below by the Company or the Consultant.
For the purposes of this Agreement, the "Term" hereof shall be the period from
the date hereof through the expiration of the Term or such other shorter period
in the event the Agreement is terminated sooner pursuant to Sections 5(a)
through 5(c) above.
6. Compensation Upon Termination.
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(a) In the event this Agreement is terminated pursuant to Sections
5(a) through 5(c) hereof, the Company shall be obligated to pay or provide to
the Consultant under this Agreement the following and only the following: (y)
any unpaid Consulting Fee through the date of termination and (z) payment for
any unreimbursed expenses through the termination date.
7. Non-Competition, Ownership and Protection of Confidential
Information.
(a) During the Term of this Agreement and for twelve (12) months
thereafter, neither the Consultant nor Petty shall (i) serve as an employee,
officer, director, advisor, consultant , partner, trustee or purchase an amount
in excess of five percent (5%) of any corporation, partnership, joint venture,
limited liability company or other business or enterprise which competes
directly or indirectly with the Company or any of its subsidiaries, affiliates
or business ventures in the United States of America, the United Kingdom or the
Commonwealth of Australia (hereinafter, collectively "Competitors") or (ii)
solicit orders or business from any corporation, partnership, joint venture,
limited liability company or other business or enterprise which was a customer
of the Company or any of its subsidiaries, affiliates or business ventures
during the twelve (12) months immediately preceding the termination of this
Agreement.
(b) As between the Company, on the one hand, and the Consultant and
Petty, on the other hand, each project, production and all material pertaining
to Petty's services hereunder, all material acquired or developed by the
Company, all material of any nature whatsoever created, written, composed,
prepared, supervised, submitted or interpolated by Petty, and all results,
products and proceeds thereof, are and automatically shall become the sole and
exclusive property of the Company (including, but not limited to, all original
ideas in connection therewith) as works-made-for-hire by Petty within the course
and scope of Petty's services for the Company hereunder. As between the Company,
on the one hand, and the Consultant and
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Petty, on the other hand, Company shall have the sole and exclusive right in
perpetuity, throughout the universe, in its sole and absolute discretion, to
sell, use, license and otherwise exploit each such project, production, material
and results, products and proceeds, or any portion or element thereof, without
any obligation or liability to Consultant or Petty of any kind or nature
whatsoever, by any means, method or medium, whether now known or hereafter
devised. All of the results, products and proceeds of Petty's services hereunder
(including, but not limited to, all material of any nature whatsoever created,
written, composed, prepared, supervised, submitted or interpolated by Petty) is
the sole and exclusive property of Company and Company shall, solely for this
purpose, be the author thereof as Petty's employer-for-hire. All rights granted
or agreed to be granted to Company hereunder shall vest in Company immediately
and shall remain perpetually vested in Company, its successors or assigns,
whether this Agreement expires in its normal course or is terminated for any
reason whatsoever. If the Company at any time desires to secure separate
assignments with respect to any of the foregoing, Consultant shall, and shall
cause Petty to, duly execute, acknowledge and deliver the same upon the
Company's request therefor; it being expressly agreed, however, that all rights
herein granted or agreed to be granted to the Company shall vest in the Company
whether or not any such separate assignment is requested by Company or executed
and delivered by the Consultant or Petty. The Consultant shall not, and
concurrently herewith shall cause Petty to agree not to and the Consultant shall
not permit Petty to, transfer or purport to transfer any right, title, privilege
or interest in or to any of the results, products or proceeds of Petty's
services hereunder, or any of the Company's rights or property, to any other
person or authorize or willingly permit any person to infringe in any way upon
any of the Company's rights or property, and the Consultant hereby authorizes
the Company, and concurrently herewith shall cause Petty to authorize the
Company, in Consultant's
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or Petty's name or otherwise to institute any proper legal proceedings to
prevent such infringement.
(c) The Consultant covenants and agrees that neither it nor Petty
will at any time during or after the Term of this Agreement reveal, divulge or
make known to any person, firm or corporation any information, knowledge or data
of a proprietary nature relating to the business of the Company or any of its
affiliates which is not or has not become generally known or public. The
Consultant and Petty shall hold, in a fiduciary capacity, for the benefit of the
Company, all information, knowledge or data of a proprietary nature, relating to
or concerned with, the operations, customers, developments, sales, business and
affairs of the Company and its affiliates which is not generally known to the
public and which is or was obtained by the Consultant and Petty during the Term
of this Agreement. The Consultant and Petty recognize and acknowledges that all
such information, knowledge or data is a valuable and unique asset of the
Company and accordingly he will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation or organization
other than to the Company, its affiliates, designees, assignees or successors or
except as may otherwise be required by the law, as ordered by a court or other
governmental body of competent jurisdiction, or in connection with the business
and affairs of the Company.
8. Consultant's Representations, Warranties and Further Agreements. The
Consultant hereby represents and warrants to, and further agrees with, the
Company as follows:
(a) The Consultant is a duly organized, validly existing corporation
in good standing in the State of New York and each other state where the conduct
of its business requires such qualification; the Consultant is free to enter
into this Agreement and to grant the
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rights herein granted; the Consultant has a valid, binding, subsisting agreement
with Petty pursuant to which Petty is obligated to render services for the
Consultant exclusively for the Term and the Consultant is entitled exclusively
to the services of Petty and all of the results and proceeds thereof.
(b) The Consultant is a bona fide corporate business entity
established for a valid business purpose within the meaning of the tax laws of
the United States and not a mere sham, conduit, or agent for Petty.
(c) The Consultant covenants and agrees to make all required
"Governmental Payments", as hereinafter defined, in a timely manner which arise
out of OR which may become due as a result of the Consultant's and/or Petty
rendering Consulting Services under this Agreement. For the purposes of this
Agreement "Governmental Payments" shall be defined as any and all payments
required to be made on behalf of either the Consultant and/or Petty to a
Federal, state or local taxing authority or governmental agency arising out of
or resulting from this Agreement or the rendering of the Consulting Services
hereunder, including but not limited to withholding for state or Federal income,
disability or social security taxes and workers compensation.
(d) The Consultant further acknowledges and agrees that the
foregoing covenants, representations and warranties will be relied upon by the
Company for the purpose of determining whether or not it is necessary for the
Company to make Governmental Payments and the Consultant agrees that if any
Governmental Payments are not made, and if thereafter it is determined that such
Governmental Payments were legally required by the Company, each of Consultant
and Petty shall indemnify, defend and hold the Company, and each of the
Company's officers, shareholders, directors, members, and other representatives,
harmless from and against
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any and all claims, liabilities, judgments, lawsuits, damages, costs and
expenses with respect to such unpaid Governmental Payments, including, but not
limited to, any penalties, interest and reasonable attorneys' fees and costs in
the defense and disposition of any such matter relating thereto.
(e) The Consultant is now, and will for at least the Term continue
to be, the employer of Petty, the Consultant is not subject to any obligation or
disability which will or might prevent or interfere with the full completion and
performance by the Consultant or Petty of all the obligations and conditions to
be kept or performed by the Consultant or Petty hereunder, the Consultant has
not made and will not make any grant or assignment which will or might conflict
with or impair the complete enjoyment of the rights and privileges granted to
the Company hereunder, and the Consultant shall discharge all obligations
imposed on employers including, without limitation, the payment of taxes and the
making of all payments required to be made under any applicable collective
bargaining agreement by reason of Petty's services rendered pursuant hereto.
(f) If the Consultant should be dissolved, or should otherwise cease
to exist, or for any reason whatsoever should fail, be unable, neglect, or
refuse to perform, observe or comply with the terms, covenants and conditions of
this Agreement, the Company in its sole discretion, may terminate this Agreement
for "cause".
9. Indemnities.
(a) The Consultant shall, and shall cause Petty to, defend,
indemnify and hold the Company and its "affiliates" (as such term is defined
under the Securities Exchange Act of 1934, as amended) harmless, from and
against any liabilities, losses, claims, demands, costs (including, without
limitation, reasonable attorneys' fees) and expenses arising out of or in
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connection with any breach or alleged breach of any warranty, representation or
agreement of the Consultant or Petty under this Agreement.
(b) The Company shall indemnify the Consultant, during and after the
Term of this Agreement, to the fullest extent provided for in the Company's
Articles of Incorporation or Bylaws, as in effect, or as may thereafter be
amended, modified or revised from time to time (collectively, "Company's
Articles"), or permitted under the law of Delaware or such other state in which
the Company may hereafter be domiciled, against any and all costs, claims,
judgments, fines, settlements, liabilities, and fees or expenses (including,
without limitation, reasonable attorneys' fees) incurred in connection with any
proceedings (including, without limitation, threatened actions, suits or
investigations) brought by party or parties other than the Consultant or the
Consultant's successors or assignees arising out of or relating to the
Consultant's actions or inactions or the Consulting Services performed by the
Consultant or any counterclaims brought in defense of an otherwise indemnifiable
action at any time during the Term of this Agreement. The indemnification
contemplated under this Section 9(b) shall be provided to the Consultant unless,
at the time indemnification is sought, such indemnification would be prohibited
under the law of Delaware or of the state in which the Company may then be
domiciled; and the Company may rely on the advice of its counsel in determining
whether indemnification is so prohibited.
10. Arbitration. With the exception of the Company's right to enforce
the provisions found in Section 7 of this Agreement pursuant to Section 11
hereof, any and all disputes arising out of or relating to this Agreement,
including the rendering by Petty of the Consulting Services hereunder, the
termination of this Agreement, any claim for unlawful retaliation, wrongful
termination of employment, violation of public policy or unlawful
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discrimination or harassment because of race, color, sex, national origin,
religion, age, physical or mental disability or condition, marital status,
sexual orientation or other legally protected characteristic shall be resolved
by final and binding arbitration before a single arbitrator. EXCEPT AS OTHERWISE
PROVIDED IN THIS SECTION, THE PARTIES AGREE THAT IF A DISPUTE OR CLAIM OF ANY
KIND ARISES BETWEEN THEM, THEY AGREE TO WAIVE ANY RIGHTS EACH MAY HAVE TO A JURY
OR COURT TRIAL.
Any party hereto electing to commence an action shall give written
notice to the other parties hereto of such election. The arbitrator shall be
limited to an award of monetary damages, shall not be entitled to award punitive
damages and shall conduct the arbitration in accordance with the California
Rules of Evidence. The dispute shall be settled by arbitration to take place in
Los Angeles County, California, in accordance with the then rules of the
American Arbitration Association or its successor. The award of such arbitrator
may be confirmed or enforced in any court of competent jurisdiction. The costs
and expenses of the arbitrator including the attorney's fees and costs of each
of the parties, shall be apportioned between the parties by such arbitrator
based upon such arbitrator's determination of the merits of their respective
positions. Nothing contained in this Section shall in any way be construed to
modify, expand or otherwise alter the rights and obligations of the Company and
the Consultant contained elsewhere in this Agreement.
11. Equitable Remedies. In the event of a breach or threatened breach by
the Consultant or Petty of any of their obligations under Section 7 hereof, the
Consultant acknowledges that the Company may not have an adequate remedy at law
and therefore it is mutually agreed between the Consultant and the Company that
in addition to any other remedies at law or in equity which the Company may
have, the Company shall be entitled to seek in a
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court of law and/or equity a temporary and/or permanent injunction restraining
the Consultant from any continuing violation or breach of this Agreement.
12. General Provisions.
(a) Nothing contained herein shall constitute a partnership between,
or joint venture by, the parties hereto or constitute either party the agent of
the other. Neither party shall hold itself out contrary to the terms of this
subsection, and neither party shall become liable for the representation, act or
omission of the other contrary to the provisions hereof. This Agreement is not
for the benefit of any third party and shall not be deemed to grant any right or
remedy to any third party whether referred to herein or not. Nothing contained
in this Agreement shall be construed so as to require the commission of any act
contrary to law, and wherever there is any conflict between any provision(s) of
this Agreement and any material statute, law, ordinance, order or regulation
contrary to which the parties hereto have no legal right to contract, the latter
shall prevail; provided, however, that in such event the provision(s) of this
Agreement so affected shall be curtailed and limited only to the extent
necessary to permit compliance with the minimum legal requirement, and no other
provisions of this Agreement shall be affected thereby, and all such other
provisions shall continue in full force and effect.
(b) The Consultant acknowledges that the Company has advised the
Consultant to seek the advice of counsel in connection with Consultant's rights
with respect to this Agreement. In connection with the foregoing, the Consultant
and the Company acknowledge that the Company has been represented by its outside
counsel, the firm of Jeffer, Mangels, Butler & Marmaro LLP ("JMBM") in
connection with the negotiation, documentation and execution of this Agreement.
The Consultant further acknowledges and agrees that JMBM
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has represented only the interests of the Company in connection with this
Agreement and has not represented the Consultant or Petty.
(c) Neither the Consultant nor Petty is an employee of or employed
by the Company with respect to the performance of Consulting Services to the
Company during the Term of this Agreement; accordingly, the Consultant shall
indemnify the Company against any and all withholding and/or employment taxes
charged against the Company with respect to the Consultant's performance of
Consulting Services during the Term of this Agreement.
(d) This Agreement shall be binding upon and inure to the benefit of
the Company and any successor of the Company. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the Company or by any
merger, reorganization or other transaction in which the Company is not the
surviving or resulting corporation or upon any transfer of all or substantially
all of the assets of Company in the event of any such merger, or transfer of
assets. The provisions of this Agreement shall be binding upon and shall inure
to the benefit of the surviving business entity or the business entity to which
such assets shall be transferred in the same manner and to the same extent that
the Company would be required to perform it if no such transaction had taken
place.
(e) Except as otherwise provided by law or elsewhere herein, during
the pendency of an act of force majeure, as hereinafter defined, at the
Company's sole discretion, the Company may elect to suspend the operation of
this Agreement for all or any part of the pendency of an act of force majeure
(the "Suspension"). During any such Suspension, the Term of this Agreement shall
be suspended and the obligations of the Company to the Consultant, including the
accrual or payment of compensation due the Consultant during the period of such
suspension, shall be inoperative. In the event the Suspension is in effect for a
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period in excess of thirty (30) days the Consultant may elect to terminate the
Agreement by prior written notice to the Company, pursuant to Section 12(l)
below. For the purposes hereof force majeure shall be defined as any act
commonly referred to as force majeure which materially and adversely affects the
Company's business and operations, including but not limited to:
(i) the Company having sustained a material loss, whether or not
insured, by reason of fire, earthquake, flood, epidemic, explosion, accident,
calamity or other act of God;
(ii) any strike or labor dispute or court or government action,
order or decree;
(iii) a banking moratorium having been declared by federal or state
authorities;
(iv) an outbreak of major armed conflict, blockade, embargo, or
other international hostilities or restraints or orders of civic, civil defense,
or military authorities, or other national or international calamity having
occurred;
(v) any act of public enemy, riot or civil disturbance or threat
thereof; or
(vi) an injunction, temporary restraining order or other legal or
governmental action, which materially adversely affects the Company's ongoing
business and operations.
(f) Neither the Consultant nor Petty directly or indirectly shall
issue or permit the issuance of any publicity whatsoever regarding, or grant any
interview to make any statements concerning, Petty's services hereunder, or any
of the results, products or proceeds thereof, without Company's prior written
consent in each such instance.
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(g) Neither the Consultant nor Petty shall any right, power or
authority to accept any order or to assume or create any obligation, expressed
or implied, on behalf of the Company without previously being empowered by
either the Board or the CFO to do so.
(h) The Consultant shall furnish and be fully responsible for all
equipment. tools, and instrumentalities that may be necessary for the Consultant
to perform the Consulting Services.
(i) This Agreement may not be modified, altered or amended except by
an instrument in writing signed by the parties hereto.
(j) This Agreement shall be construed in accordance with the laws of
the State of California except to the extent that any provision of Section 9
hereof may relate to an interpretation of the corporation laws of Delaware, the
state in which the Company is domiciled, in which case such provision shall be
construed in accordance with the corporation laws of that state.
(k) Nothing in the Agreement is intended to require or shall be
construed as requiring the Company to do or fail to do any act in violation of
applicable law. The Company's inability pursuant to court order to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. If any provision of this Agreement is declared by a court of
competent jurisdiction to be void, invalid or enforceable, the remainder of this
Agreement shall nevertheless remain in full force and effect. If any provision
is held invalid or unenforceable with respect to particular circumstances, it
shall, nevertheless, remain in full force and effect in all other circumstances
and shall automatically be deemed to be replaced by another provision which are
as similar as possible to the provisions which are deemed unenforceable, but are
valid and enforceable.
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(l) Any notice to the Company required or permitted hereunder shall
be given in writing to the Company, either by personal service, facsimile or, if
by mail, by registered or certified mail return receipt requested, postage
prepaid, duly addressed to the Secretary of the Company at its then principal
place of business with a copy to Barry L. Burten, Esq., Jeffer, Mangels, Butler
& Marmaro LLP, 2121 Avenue of the Stars, 10th Floor, Los Angeles, California
90067. Any such notice to Consultant shall be given in a like manner, and if
mailed shall be addressed to Consultant at Consultant's address above or such
later address then shown in the files of the Company with a copy to
_______________________________________. For the purpose of determining
compliance with any time limit herein, a notice shall be deemed given on the
fifth business day following the postmarked date, if mailed, or the date of
delivery if personally delivered or delivered by facsimile.
(m) A waiver by either party of any term or condition of this
Agreement or any breach thereof, in any one instance, shall not be deemed or
construed to be a waiver of such term or condition or of any subsequent breach
thereof.
(n) This Consulting agreement along with Exhibit "A" hereto
constitutes the complete understanding of the parties with respect to the
subject matter hereof and supercedes all other arrangements, understandings and
agreements between the parties. In this regard, Consultant and Petty acknowledge
and agree that the Company and I.T. Technology Pty. Ltd. have fulfilled all of
their obligations and discharged all of their responsibilities with regard to
Petty's employment by I.T. Technology Pty. Ltd. prior to the date hereof.
Furthermore, ConsultanT and Petty acknowledge that such employment terminated as
of December 17th, 1999.
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(o) The section and subsection headings contained in this Agreement
are solely for convenience and shall not be considered in its interpretation.
(p) This Agreement may be executed in one or more counterparts, each
of which shall constitute an original.
(q) The Consultant represents and agrees that the Consultant has
carefully read and fully understands all of the provisions of this Agreement and
is voluntarily entering into this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement
as of the day and year first written above.
COMPANY:
I.T. TECHNOLOGY, INC.
a Delaware corporation
/s/ LEVI MOCHKIN
---------------------------------
By: Levi Mochkin
Its: Chief Executive Officer
CONSULTANT:
PETTY CONSULTING, INC.
/s/ ROBERT PETTY
------------------------------
By: Robert Petty
Its: President
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EXHIBIT 10.5(b)
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement"), is entered into this 10th day of
January, 2000 (the "Execution Day"), by and between StampVille.com, inc.
(Hereinafter referred to as "the Company") and Petty Consulting, Inc.
WHEREAS, Petty Consulting Inc. is experienced with financial, operational
and marketing expertise in high technology and Internet related businesses;
WHEREAS, the Company requires immediate additional senior executive
expertise and experience to assist it in strategic planning and operational
initiatives, and in connection therewith, the Company desires to engage Petty
Consulting Inc to provide the services of such management.
WHEREAS, Petty Consulting Inc agrees to accept such assignments and to
provide the Company with the Consulting Services described herein pursuant to
the terms and conditions set forth in this Agreement for a period of one year
from the date hereof, or such shorter period as provided herein; and
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, the Company and Petty Consulting Inc agree as follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
terms shall have the following meanings, unless otherwise expressly provided or
unless the context otherwise requires.
"Cause" means, except as otherwise contemplated by Sections 5(a) or
5(c) below, the involuntary termination of the Agreement by the Company by
reason of:
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(i) The material breach by Petty Consulting Inc of the terms and
conditions of this Agreement;
(ii) The willful or habitual failure by Petty Consulting Inc to
perform requested duties commensurate with their duties pursuant to the terms
of this Agreement (the "Breach"); or
(iii) The willful engaging by Petty Consulting Inc in misconduct
materially injurious to the Company.
2. CONSULTING SERVICES. Subject to the restrictions and limitations set
forth below, during the "Term", as hereinafter defined, of this Agreement,
Petty Consulting Inc and the Company hereby agree:
(a) Petty Consulting Inc shall make Robert Petty available to the
Company to serve as the Acting Chief Executive Officer of the Company (the
"Acting CEO"). Robert Petty will report to and be supervised by the Board of
Directors of the Company as requested concerning the Company's strategic
direction and initiatives. Robert Petty shall be responsible for developing and
fostering shared goals and strategies amongst the Company, including shared
accountability with other management members for the Company's overall
financial results. Robert Petty shall also be responsible for assisting the
Company in recruiting and developing executives.
(b) Petty Consulting Inc shall make Douglas Wu available to the
Company to serve as a Financial Consultant of the Company. Douglas Wu will
report to the Acting CEO and to board of Directors of the Company as requested
concerning the Company's strategic direction, financial condition and related
matters. Douglas Wu shall be responsible for developing and fostering shared
goals and strategies amongst the Company shared accountability with other
management members for the Company's overall financial results. Douglas Wu
shall also be responsible for assisting the Company in recruiting and
developing executives.
(c) Petty Consulting Inc shall make available Jennifer Christopher
for a period to the Company to serve as the Vice President - Human Resources of
the Company. Jennifer
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Christopher will report to the Acting CEO concerning the Company's strategic
direction and Human Resources initiatives.
(d) Subject to any services rendered by Petty Consulting Inc or
any of the individuals identified above, Petty Consulting Inc shall make the
individuals identified above available to render their services to the Company
in the capacities specified above on a substantially full-time basis. The
consulting services rendered by Petty Consulting Inc as set forth in Sections
2(a), 2(b) and 2(c) above shall hereinafter be defined as the "Consulting
Services."
(e) Petty Consulting Inc. shall at all times be, act, function,
and perform all services and responsibilities as an independent contractor. It
is further mutually understood and agreed that no work, act, commission or
omission of any act by Petty Consulting Inc. or the Company pursuant to the
terms of this Agreement shall be construed to make or render Petty Consulting
Inc or any employees of Petty Consulting Inc employees of the Company. Petty
Consulting Inc shall be fully responsible for their own debts and obligations.
(f) Subject to the overall supervision of the Company's Board of
Directors and except as otherwise provided in this Agreement, the Company
shall have no right or authority to direct or control Petty Consulting Inc
with respect to the actual performance of the Consulting Services. The Company
is only interested in the results obtained by Petty Consulting Inc with respect
to the Consulting Services. The manner and methods utilized by Petty Consulting
Inc in performing the Consulting Services and achieving the desired result on
behalf of the Company shall be under the exclusive control of Petty Consulting
Inc within the boundaries and direction of the company's board.
3. Compensation.
(a) Petty Consulting Inc shall be compensated for its services
under this Agreement pursuant to Schedule 3(a) hereto, which is incorporated
herein and made a part hereof by this reference.
(b) Except as expressly set forth in this Section 3 or
elsewhere in this Agreement, Petty Consulting Inc shall not be entitled to
receive any other compensation or benefits from
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the Company as a result of the performance of Petty Consulting Inc's consulting
services hereunder, including but not limited to participation in the Company's
life, health and disability insurance plans, profit sharing, pension or 401(k)
bonus plans or any other plans or programs currently or which in the future
may become available to the Company's officers or employees, in such
capacities. Petty Consulting Inc's consultants may, however, be eligible to
participate a company share option scheme, if introduced by the Company and if
such consultants meet the qualifications for participation established by the
Company, it being understood that nothing herein shall obligate the Company to
establish or maintain any such plan, scheme or arrangement.
Expenses. The Company shall promptly reimburse Petty Consulting Inc for
all reasonable out of pocket expenses incurred by Petty Consulting Inc in the
performing their duties. The obligation of the Company to reimburse Petty
Consulting Inc for any expenses shall be subject to the confirmation that such
expenses were incurred in connection with the performance of Consulting
Services, and only upon receipt from Petty Consulting Inc of vouchers, receipts
or other reasonable substantiation of such expenses. The Company shall not be
obligated to reimburse any expenses which were not approved in advance by the
Company.
5. Retainer. Within ____ days of the execution of this
Agreement, the Company shall pay to Petty Consulting Inc a
retainer (the "Retainer") in the amount of One Hundred
Thousand Dollars ($100,000). The parties agree that the
Retainer is a deposit for payment of a portion of the fees
and costs to be incurred pursuant to this Agreement, and may
be applied only upon the Company's approval of an invoice
provided by Petty Consulting Inc describing the work
performed and the approved expenses incurred. Except to the
extent any fees or costs are incurred and approved, the
Retainer is a refundable deposit which shall be returned
immediately upon the Company's request. Upon the termination
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<PAGE> 5
of this Agreement, any final charges will be applied against the
Retainer and the balance of the Retainer, if any, will be refunded.
6. TERM OF AGREEMENT. THE TERM OF THIS AGREEMENT SHALL COMMENCE AS OF
THE DATE HEREOF AND, UNLESS EARLIER TERMINATED AS HEREIN PROVIDED,
SHALL CONTINUE FOR A PERIOD OF ONE YEAR FROM THE DATE HEREOF. This
Agreement shall be terminated prior to the expiration of one year
from the date hereof only in the event of the occurrence of any one
of the following circumstances:
(b) The death of Petty;
(c) The Company terminates this Agreement for Cause; or
(c) Upon no less than sixty (60) days prior written notice,
pursuant to section 12(k) below by the Company or Petty
Consulting Inc.
For the purposes of this Agreement, the "Term" hereof shall be the period from
the date hereof through the expiration of the Term or such other shorter period
in the event the Agreement is terminated sooner pursuant to Sections 5(a)
through 5(c) above.
7. Compensation Upon Termination.
(a) In the event this Agreement is terminated pursuant to
Sections 6(a) through 6(c) hereof, the Company shall be obligated to pay or
provide to Petty Consulting Inc. under this Agreement the following and only the
following: (1) any unpaid Consulting Fee through the date of termination and
(2) payment for any un-reimbursed expenses through the termination date.
(b) In addition to the foregoing payments, if this
Agreement is terminated by the Company pursuant to Section 6(c) above, the
Company shall pay to Petty Consulting Inc. the sum equal to two months
consulting fees based on the rate of usage during the thirty (30) days prior to
termination.
8. Non-Competition, Ownership and Protection of Confidential
Information.
(a) During the Term of this Agreement and for twelve (12)
months thereafter, Robert Petty shall NOT (i) serve as an employee, officer,
director, advisor, partner, trustee or purchase an amount in excess of five
percent (5%) of any corporation,
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<PAGE> 6
partnership, joint venture, limited liability company or other business or
enterprise which competes directly or indirectly with the Company or any of
its subsidiaries, affiliates or business ventures in the United States of
America, the United Kingdom or the Commonwealth of Australia (hereinafter,
collectively "Competitors") or (ii) solicit orders or business from any
corporation, partnership, joint venture, limited liability company or other
business or enterprise which was a customer of the Company or any of its
subsidiaries, affiliates or business ventures during the twelve (12) months
immediately proceeding the termination of this Agreement without written
company approval.
(b) As between the Company, on the one hand, and Petty Consulting Inc
the other hand, each project, production and all material pertaining to
hereunder, all material acquired or developed by the Company, all material of
any nature whatsoever created, written, composed, prepared, supervised,
submitted or interpolated, and all results, products and proceeds thereof, are
and automatically shall become the sole and exclusive property of the Company
(including, but not limited to, all original ideas in connection therewith) as
works-made-for-hire by Petty Consulting Inc within the course and scope of
Petty Consulting Inc services for the Company hereunder. As between the
Company, on the one hand, and Petty Consulting Inc on the other hand, Company
shall have the sole and exclusive right in perpetuity, throughout the universe,
in its sole and absolute discretion, to sell, use, license and otherwise
exploit each such project, production, material and results, products and
proceeds, or any portion or element thereof, without any obligation or
liability to Petty Consulting Inc of any kind or nature whatsoever, by any
means, method or medium, whether now known or hereafter devised. All of the
results, products and proceeds of Petty Consulting Inc services hereunder
(including, but not limited to, all material of any nature whatsoever created,
written, composed, prepared, supervised, submitted or interpolated by Petty
Consulting Inc) is the sole and exclusive property of Company and Company
shall, solely for this purpose, be the author thereof as Petty's
employer-for-hire. All rights granted or agreed to be granted to
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<PAGE> 7
Company hereunder shall vest in Company immediately and shall remain perpetually
vested in Company, its successors or assigns, whether this Agreement expires in
its normal course or is terminated for any reason whatsoever. If the Company at
any time desires to secure separate assignments with respect to any of the
foregoing, Petty Consulting Inc shall, and shall, duly execute, acknowledge and
deliver the same upon the Company's request therefore; it being expressly
agreed, however, that all rights granted or agreed to be granted to the Company
shall vest in the Company whether or not any such separate assignment is
requested by Company or executed and delivered by Petty Consulting Inc. Petty
Consulting Inc shall not, and concurrent agree not permit Petty to, transfer or
purport to transfer any right, title, privilege or interests in or to any of the
results, products or proceeds of Petty services hereunder, or any of the
Company's rights or property, to any other person or authorize or willingly
permit any person to infringe in any way upon any of the Company's rights or
property. Petty Consulting Inc covenants and agrees that it will NOT at any
time during or after the Term of this Agreement reveal, divulge or make known
to any person, firm or corporation any information, knowledge or data of a
proprietary nature relating to the business of the Company or any of its
affiliates which is not or has not become generally known or public. Petty
Consulting Inc shall hold, in a fiduciary capacity, for the benefit of the
Company, all information, knowledge or data of a proprietary nature, relating
to or concerned with, the operations, customers, developments, sales, business
and affairs of the Company and its affiliates which is not generally known to
the public and which is or was obtained by Petty Consultant Inc during the Term
of this Agreement. Petty Consulting Inc recognize and acknowledges that all
such information, knowledge or data is a valuable and unique asset of the
Company and accordingly will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation or organization
other than to the Company, its affiliates, designees, assignees or successors
or except as may otherwise be required by the
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law, as ordered by a court or other governmental body of competent
jurisdiction, or in connection with the business and affairs of the
Company.
9. PETTY CONSULTING INC'S REPRESENTATION, WARRANTIES AND FURTHER
AGREEMENTS. Petty Consulting Inc hereby represents and warrants to, and
further agrees with, the Company as follows:
(a) Petty Consulting Inc is a duly organized, validly existing corporation
in good standing in the State of New York and each other state where the
conduct of its business requires such qualification; Petty Consulting Inc
is free to enter into this Agreement, and neither entering into this
Agreement nor performing any act or obligation hereunder shall constitute a
breach or default under any agreement or understanding to which Petty
Consulting Inc. is a party or by which it or its property is bound.
(b) Petty Consulting Inc is a bona fide corporate business entity
established for a valid business purpose within the meaning of the tax laws
of the United States.
(c) Petty Consulting Inc covenants and agrees to make all required
"Governmental Payments", as hereinafter defined, in a timely manner which
arise out of or which may become due as a result of Petty Consulting Inc's
rendering Consulting Services under this Agreement. For the purposes of
this Agreement "Governmental Payments" shall be defined as any and all
payments required to be made on behalf of either Petty Consulting Inc to a
Federal, state or local taxing authority or governmental agency arising out
of or resulting from this Agreement or the rendering of the Consulting
Services hereunder, including but not limited to withholding for state or
Federal income, disability or social security taxes and workers
compensation.
(d) Petty Consulting Inc further acknowledges and agrees that the
foregoing covenants, representations and warranties will be relied upon by
the Company for the purpose of determining whether or not it is necessary
for the Company to make Governmental Payments
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and Petty Consulting Inc agrees that if any Governmental Payments are not
made, and if thereafter it is determined that such Governmental Payments
were legally required by the Company, Petty Consulting Inc shall indemnify,
defend and hold the Company, and each of the Company's officers,
shareholders, directors, members, and other representatives, harmless from
and against any and all claims, liabilities, judgments, lawsuits, damages,
costs and expenses with respect to such unpaid Governmental Payments,
including, but not limited to, any penalties, interest and reasonable
attorneys' fees and costs in the defense and disposition of any such matter
relating thereto.
(e) Petty Consulting Inc is not subject to any obligation or
disability which will or might prevent or interfere with the full
completion and performance by Petty Consulting Inc of all the obligations
and conditions to be kept or performed by Petty Consulting Inc hereunder.
Petty Consulting Inc has not made and will not make any grant or assignment
which will or might conflict with or impair the complete enjoyment of the
rights and privileges granted to the Company hereunder, and Petty
Consulting Inc shall discharge all obligations imposed on employers
including, without limitation, the payment of taxes and the making of all
payments required to be made under any applicable collective bargaining
agreement by reason of Petty Consulting Inc's services rendered pursuant
hereto.
(d) If Petty Consulting Inc should be dissolved, or should otherwise
cease to exist, or for any reason whatsoever should fail, be unable,
neglect, or refuse to perform, observe or comply with the terms, covenants
and conditions of this Agreement, the Company in its sole discretion, may
terminate this Agreement for "cause".
10. Indemnities.
(a) Petty Consulting Inc shall defend, indemnify and hold the Company
and its "affiliates" (as such term is defined under the Securities Exchange
Act of 1934, as amended) harmless, from and against any liabilities,
losses, claims, demands, costs (including, without limitation, reasonable
attorneys' fees) and expenses arising out
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of any act or omission by Petty Consulting, Inc or any of its
employees or representatives.
(b) The Company shall indemnify Petty Consulting Inc, during and
after the Term of this Agreement, to the fullest extent provided for in the
Company's Articles of Incorporation or Bylaws, as in effect, or as may
thereafter be amended, modified or revised from time to time (collectively,
"Company's Articles"), or permitted under the law of New York or such other
state in which the Company may hereafter be domiciled, against any and all
costs, claims, judgments, fines, settlements, liabilities, and fees or
expenses (including, without limitation, reasonable attorney's fees)
incurred in connection with any proceedings (including, without limitation,
threatened actions, suits or investigations) brought by party or parties
other than Petty Consulting Inc or successors or assignees arising out of
or relating to Petty Consulting Inc's actions or inactions or the
Consulting Services performed by Petty Consulting Inc or any counterclaims
brought in defense of an otherwise indemnifiable action at any time during
the Term of this Agreement. The indemnification contemplated under this
Section 9(b) shall be provided to Petty Consulting Inc unless, at the time
indemnification is sought, such indemnification would be prohibited under
the law of New York or of the state in which the Company may then be
domiciled; and the Company may rely on the advice of its counsel in
determining whether indemnification is so prohibited.
11. Arbitration. Any and all disputes arising out of or relating to this
Agreement, including the termination of this Agreement, any claim for unlawful
retaliation, wrongful termination of employment, violation of public policy or
unlawful discrimination or harassment because of race, color, sex, national
origin, religion, age, physical or mental disability or condition, marital
status, sexual orientation or other legally protected characteristic shall be
resolved by final and binding arbitration before a single arbitrator. EXCEPT AS
OTHERWISE PROVIDED IN THIS SECTION, THE PARTIES AGREE THAT IF A DISPUTE OR
CLAIM OF ANY KIND ARISES BETWEEN THEM, THEY AGREE TO WAIVE ANY RIGHTS EACH MAY
HAVE TO A JURY OR COURT TRIAL.
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Any party hereto electing to commence an action shall give written notice
to the other parties hereto of such election. The arbitrator shall be limited
to an award of monetary damages, shall not be entitled to award punitive
damages and shall conduct the arbitration in accordance with the New York Rules
of Evidence. The dispute shall be settled by arbitration to take place in New
York county, in accordance with the then rules of the American Arbitration
Association or its successor. The award of such arbitrator may be confirmed or
enforced in any court of competent jurisdiction. The costs and expenses of the
arbitrator including the attorney's fees and costs of each of the parties shall
be apportioned between the parties by such arbitrator based upon such
arbitrator's determination of the merits of their respective positions. Nothing
contained in this Section shall in any way be construed to modify, expand or
otherwise alter the rights and obligations of the Company and Petty Consulting
Inc contained elsewhere in this Agreement.
12. Equitable Remedies. In the event of a breach of threatened breach by
Petty Consulting Inc of any of its obligations under this Agreement, Petty
Consulting Inc acknowledges that the Company may not have an adequate remedy at
law and therefore it is mutually agreed between Petty Consulting Inc and the
Company that in addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a court of law
and/or equity a temporary and/or permanent injunction restraining Petty
Consulting Inc from any continuing violation or breach of this Agreement.
4. General Provisions.
(a) Nothing contained herein shall constitute a partnership
between, or joint venture by, the parties hereto or constitute either party the
agent of the other. Neither party shall hold itself out contrary to the terms of
this subsection, nor neither party shall become liable for the representation,
act or omission of the other contrary to the provisions hereof. This Agreement
is not for the benefit of any third party and shall not be deemed to grant any
right or remedy to any third party whether referred to herein or not. Nothing
contained in this Agreement shall be construed so as to require the commission
of any act contrary to law, and wherever there is any conflict between any
provision(s) of this Agreement and any material statute, law, ordinance, order
or regulation contrary to which the parties
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hereto have no legal right to contract, the latter shall prevail; provided,
however, that in such event the provision(s) of this Agreement so affected shall
be curtailed and limited only to the extent necessary to permit compliance with
the minimum legal requirement, and no other provisions of this Agreement shall
be affected thereby, and all such other provisions shall continue in full force
and effect.
(b) Petty Consulting Inc acknowledges that the Company has advised Petty
Consulting Inc to seek the advice of counsel in connection with Petty Consulting
Inc's rights with respect to this Agreement. In connection with the foregoing,
Petty Consulting Inc and the Company acknowledge that its outside counsel, Leon
Schrage Esq connection with the negotiation, documentation and execution of this
Agreement, has represented the Company. Petty Consulting Inc further
acknowledges and agrees that Leon Schrage Esq has represented only the interests
of the Company in connection with this Agreement and has not represented Petty
Consulting Inc.
(c) Neither Petty Consulting Inc nor its employees are employees of or by
the Company with respect to the performance of Consulting Services to the
Company during the Term of this Agreement; accordingly, Petty Consulting Inc
shall indemnify the Company against any and all withholding and/or employment
taxes charged against the Company with respect to Petty Consulting Inc's
performance of Consulting Services during the Term of this Agreement.
(d) This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company. This Agreement shall not be terminated
by the voluntary or involuntary dissolution of the Company or by any merger,
reorganization or other transaction in which the Company is not the surviving or
resulting corporation or upon any transfer of all or substantially all of the
assets of Company in the event of any such merger, or transfer of assets. The
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the surviving business entity or the business entity to which such
assets shall be transferred in the same manner and to the same extent that the
Company would be required to perform it if no such transaction had taken place.
(e) Except as otherwise provided by law or elsewhere herein, during the
pendency of an act of force majeure, as hereinafter defined, at the Company's
sole discretion, the
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Company may elect to suspend the operation of this Agreement for all or any
part of the pendency of an act of force majeure (the "Suspension"). During any
such Suspension, the Term of this Agreement shall be suspended and the
obligations of the Company to the Petty Consulting Inc, including the accrual
or payment of compensation due Petty Consulting Inc during the period of such
suspension, shall be inoperative. In the event the Suspension is in effect for
a period in excess of thirty (30) days Petty Consulting Inc may elect to
terminate the Agreement by prior written notice to the Company, pursuant to
Section 13(1) below. For the purposes hereof force majeure shall be defined as
any act commonly referred to as force majeure which materially and adversely
affects the Company's business and operations, including but not limited to:
(i) The Company having sustained a material loss, whether
or not insured, by reason of fire, earthquake, flood, epidemic, explosion,
accident, calamity or other act of God;
(ii) Any strike or labor dispute or court or government
action, order or decree;
(iii) A banking moratorium having been declared by federal or
state authorities;
(iv) An outbreak of major armed conflict, blockade, embargo,
or other international hostilities or restraints or orders of civic, civil
defense, or military authorities, or other national or international calamity
having occurred;
(v) Any act of public enemy, riot or civil disturbance or
threat thereof; or
(vi) An injunction, temporary restraining order or other
legal or governmental action, which materially adversely affects the Company's
ongoing business and operations
(f) Neither Petty Consulting Inc nor its representatives
shall have any right, power or authority to accept any order or to assume or
create any obligation, expressed or implied, on behalf of the Company without
prior empowerment by the board.
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(g) Petty Consulting Inc shall furnish and be fully responsible for
all equipment, Tools and instrumentalities that may be necessary for Petty
Consulting Inc to perform the Consulting Services unless prior agreement.
(h) This Agreement may not be modified, altered or amended except by
an instrument in writing signed by the parties hereto.
(i) This Agreement shall be construed in accordance with the laws
of the State of New York except to the extent that any provision of
Section 9 hereof may relate to an interpretation of the corporation laws
of New York or the state in which the Company is domiciled, in which case
such provision shall be construed in accordance with the corporation laws
of that state.
(j) Nothing in the Agreement is intended to require or shall be
construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability pursuant to court
order to perform its obligations under this Agreement shall not constitute
a breach of this Agreement. If any provision of this Agreement is declared
by a court of competent jurisdiction to be void, invalid or enforceable,
the remainder of this Agreement shall nevertheless remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall, nevertheless, remain in full force and
effect in all other circumstances and shall automatically be deemed to be
replaced by another provision, which is as similar as possible to the
provisions, which are deemed unenforceable, but are valid and enforceable.
(k) Any notice to the Company required or permitted hereunder shall
be given in writing to the Company, either by personal service, facsimile
or, if by mail, by registered or certified mail return receipt requested,
postage prepaid, duly addressed to the Secretary of the Company at its
then principal place of business with a copy to Leon Schrage Esq. 26 Court
Street Brooklyn NY 11242. Any such notice to Petty Consulting Inc shall
be given in a like manner, and if mailed shall be addressed to Petty
Consulting Inc at Petty Inc's
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address above or such later address then shown in the files of the Company with
a copy to Robert Petty 20H 240 86th East NY 10028 New York. For the purpose of
determining compliance with any time limit herein, a notice shall be deemed
given on the fifth business day following the postmarked date, if mailed, or
the date of delivery if personally delivered or delivered by facsimile.
(l) A waiver by either party of any term or condition of this
Agreement or any breach thereof, in any one instance, shall not be deemed or
construed to be a waiver of such term or condition or of any subsequent breach
thereof.
(m) The section and subsection headings contained in this
Agreement are solely for convenience and shall not be considered in its
interpretation.
(n) This Agreement may be executed in one or more counterparts,
each of which shall constitute an original.
(o) Petty Consulting Inc agrees that Robert Petty has carefully
read and fully understands all of the provisions of this Agreement and is
voluntarily entering into this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement
as of the day and year first written above.
COMPANY:
StampVille com. Inc.
/s/ CHESKY MALAMUD
--------------------------------
CHESKY MALAMUD
President
PETTY CONSULTING, INC.
/s/ ROBERT PETTY
---------------------------------
Robert Petty
President
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Schedule 3(a)
Fee Schedule
Consulting Services shall be compensated on the following basis:
Robert Petty: $8,166.67 per month
Douglas Wu: $13,000 per month
Jennifer Christopher: $6,450 per month
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EXHIBIT 10.5(c)
Consulting Agreement
This Consulting Agreement (this "Agreement") is entered into as of June
18, 1999, between Mendel Mochkin, and individual ("Consultant") and I.T.
Technology, Inc., a Delaware corporation (the "Company") with respect to the
following:
RECITALS
A. The Company has entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") with Stampville.Com, Inc. ("Stampville"), dated as of June
18, 1999, relating to the acquisition by the Company of equity interests in
Stampville, all as described in the Stock Purchase Agreement.
B. Consultant has assisted the Company in its negotiation of the Stock
Purchase Agreement and has agreed to render additional services in connection
with the Company's investment in Stampville.
NOW, THEREFORE, in consideration of the foregoing premises and for good
and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties hereby agree as follows:
1. Consulting and Management Services. Consultant agrees to render
services to the Company by serving, at the Company's discretion, in an active
executive position of Stampville representing the Company's interests (the "I.T.
Representative") until terminated by the Board of Directors or the decision of
the Company to replace Consultant as the I.T. Representative. Subject to the
rights of termination set forth below, it is the intent of the parties that
Consultant act as the I.T. Representative until the consummation of the Stage
Three investment contemplated in the Stock Purchase Agreement.
2. Term. The term of this Agreement (the "Term") shall commence upon
June 18, 1999, and shall terminate thirty (30) days after the delivery of
written notice of termination by the Company or by Consultant, for any reason,
with or without cause. Except as set forth in Section 3, below, upon
termination, the Company shall have no further obligations to Consultant in the
event it elects to terminate Consultant's Consulting Services at any time.
3. Compensation. In consideration for entering into this Agreement
performing the Consulting Services, the Consultant and the Company agree that
Consultant shall be compensated as follows:
(a) Issuance of Shares. Concurrently herewith, Consultant
shall receive One Hundred Fifty Thousand (150,000) shares of the Company's par
value $0.001 common stock (the "Common Stock"). Further, upon the consummation
of the Final Stage Three Closing, as defined in the Stock Purchase Agreement,
the Consultant shall receive an additional One Hundred Fifty Thousand (150,000)
shares of Common Stock. In addition, if the total consideration for the Series C
Common Stock required to be paid by the Company is zero (0), Consultant shall
receive
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an additional Two Hundred Thousand (200,000) shares of Common Stock upon the
consummation of the Stage Three Closing.
(b) Stampville.com, Inc. In addition to the foregoing
issuance of shares, Consultant shall be entitled to receive the following
consideration:
(i) Upon the completion of the Final Stage One Closing,
Consultant shall receive one-half (1/2) share of Series A Common Stock;
(ii) Upon the completion of the Final Stage Two Closing,
Consultant shall surrender the one- half (1/2) share of Series A Common Stock
issued pursuant to Section 3(b)(i) above and receive one share of Series B
Common Stock; and
(iii) Upon the completion of the Final Stage Three
Closing, Consultant shall receive one share of Series C Common Stock.
The foregoing transfer shall be subject to the consent of Stampville and the
shareholders of Stampville, and the execution and delivery of any documentation
required by Stampville, including but not limited to the Shareholders Agreement
entered into by the shareholders of Stampville.
(c) Effect of Termination.
(i) If the Company terminates the Agreement other than
for cause, Consultant shall be entitled to the compensation set forth in this
Paragraph 3.
(ii) If the Consultant terminates this Agreement for any
reason, or if the Company terminates this Agreement for cause, Consultant shall
forfeit any right to any compensation not yet earned pursuant to this paragraph
3.
(iii) No shares of stock of either the Company or of
Stampville shall be deemed earned until issued, and Consultant shall not be
entitled to any such shares, nor any rights as a shareholder of the Company or
Stampville, until such time as the shares have been issued to Consultant and
unless this Agreement is in force on the date of issuance.
4. Independent Contractor. Consultant shall, at all times, render the
Consulting Services pursuant to this Agreement as an independent contractor and
not as an employee, agent or servant of the Company, nor shall Consultant be
deemed, by reason of this Agreement or the services performed pursuant hereto,
to be an employee of the Company for purposes of withholding, employee payroll
taxes, contributions, pensions or otherwise. Consultant shall pay or withhold
all such taxes and contributions and shall, at the request of the Company,
provide the Company with evidence of compliance with this paragraph.
5. No Benefits. Except as expressly set forth herein, Consultant shall
not as a result of the Management Services to be rendered by him pursuant to
this Agreement, be eligible to receive and/or participate in any of the employee
benefits available to employees of the Company, including, without limitation,
health or life insurance or benefits, vacation pay, severance pay or bonus
pools.
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6. Confidentiality and Proprietary Information. Consultant agrees that:
(a) Consultant shall not at any time (during or after the term
of this Agreement) disclose or use, except in pursuit of the business of the
Company with the Company's permission, any Proprietary Information of the
Company acquired during the term of this Agreement. For purposes of this
Agreement the phrase "Proprietary Information" means all information which
relates to the business of the Company, Stampville and any affiliate of the
Company, such as patents, patent applications, technical date, product
development, software, equipment modifications, capacities, trademarks,
copyrights, trade secrets, secret processes, proprietary know-how, business
strategies, information of the Company's business (including the business of its
affiliates), costs, pricing, personnel, suppliers, marketing plans, and identity
of suppliers or customers or accounting procedures of the Company. Proprietary
Information shall not include, however, information which is publicly available
or becomes so in the future without restriction; information which is rightfully
received by Consultant from third parties and is not accompanied by secrecy
obligations; information which is independently developed by Contractor; or
information approved for release or disclosure by the Company in writing.
Notwithstanding the foregoing, Consultant shall promptly advise the Company in
writing of any information received by Consultant from third parties and not
accompanied by secrecy obligations and information which is independently
developed by Contractor which, absent such conditions, would be Proprietary
Information. Consultant agrees not to remove from the premises of the Company
except in the pursuit of business of the Company any document, record or other
information of the Company. Consultant recognizes that all such documents,
records or other information, whether developed by Consultant or by someone else
for the Company are the exclusive property of the Company; and
(b) The sale or unauthorized use or disclosure of any
Proprietary Information by any means whatsoever and any time before, during or
after Consultant's services to the Company hereunder shall constitute unfair
competition. Consultant agrees that Consultant shall not engage in unfair
competition either during the time Consultant is engaged as an independent
contractor by the Company or at any time thereafter.
7. Ownership. Consultant hereby acknowledges that all of the Proprietary
Information and materials are and shall continue to be the exclusive proprietary
property of the Company, whether or not prepared in whole or in part by
Consultant and whether or not disclosed to or entrusted to the custody of
Consultant. Consultant further hereby acknowledges that all Proprietary
Information and materials (to which Consultant has had access or which
Consultant has learned during Consultant's employment or to which Consultant
shall hereafter have access or which Consultant shall hereafter learn), have
been disclosed to Consultant solely by virtue of Consultant's employment with
Company and solely for the purpose of assisting Consultant in performing
Consultant's duties for the Company.
8. Nondisclosure and Nonuse. Consultant hereby agrees that Consultant
will not, either during the course of his employment with Company or at any time
thereafter, disclose any Proprietary Information or materials of Company, in
whole or in part, to any person or entity, for any reason or purpose whatsoever,
unless Company shall have given its written consent to disclosure. Consultant
further agrees that Consultant shall not, either during the course of
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Consultant's employment with Company or at any time thereafter, use in any
manner other than for and in the course of Consultant's furtherance of Company
for Consultant's own purposes or for the benefit of any other person or entity
except Company, whether such use consists of the duplication, removal, oral use
or disclosure or the transfer of any unauthorized use in whatever manner, unless
Company shall have given its prior written consent to such use.
9. New Developments. Consultant hereby further agrees that during the
course of Consultant's Consulting Services, Consultant will promptly disclose to
Company any and all improvements, inventions, developments, discoveries,
innovations, systems, techniques, ideas, processes, programs and other things
which may be of assistance to Company, whether or not patentable or
copyrightable, relating to or arising out of any development, services or
products of, or pertaining to in any manner, the business of Company, and made
or conceived by Consultant, or alone or with others, who are employed by Company
or other independent contractors engaged by the Company (collectively referred
to hereinafter as the "New Developments"). Consultant further agrees that all
New Developments shall be and remain the sole and exclusive property of Company
and that Consultant shall, upon the request of Company, and without further
compensation, do all lawful things reasonably necessary to insure Company's
ownership of such New Developments including without limitation the execution of
any necessary documents assigning and transferring to Company and its assigns
all of Consultant's rights, title and interest in and to such New Developments,
and the rendering of assistance in execution of all necessary documents required
to enable Company to file and obtain patents or copyrights in the United States
and foreign countries on any of such New Developments.
10. Surrender of Material Upon Termination of Agreement. Consultant
hereby agrees that, upon termination of this Agreement, for whatever reason and
whether voluntary or involuntary, or at any time at the request of Company,
Consultant will immediately surrender to Company all of the property and other
things of value in Consultant's possession, or in the possession of any person
or entity under Consultant's control, including without limitation all personal
notes, drawings, manuals, documents, photographs, or the like, and copies
thereof, relating directly or indirectly to any Proprietary Information or
materials or New Developments, or relating directly or indirectly to the
business of Company.
11. Solicitations of Employment. During or after the Term, Consultant
hereby agrees not to induce or attempt to induce any person who, at the time of
termination of Consultant's employment, was an officer, director, Consultant,
principal or agent of Company, or any of its affiliated companies, to leave his
or her employment, agency, directorship or office with Company.
12. Warranties and Representations of Consultant. Consultant hereby
represents and warrants to the Company and covenants and agrees with the Company
as follows:
(a) THE SECURITIES ISSUED AND OFFERED BY THIS INSTRUMENT HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE, AND ANY SALE OF SUCH SECURITIES IS SUBJECT
TO COMPLIANCE WITH, OR THE AVAILABILITY OF EXEMPTIONS FROM COMPLIANCE WITH, THE
REGISTRATION AND QUALIFICATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. THIS INSTRUMENT DOES NOT CONSTITUTE AN OFFER OR
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SOLICITATION TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION
MAY NOT LAWFULLY BE MADE. TRANSFER OF THIS INSTRUMENT AND THE SECURITIES OFFERED
HEREBY IS RESTRICTED AS PROVIDED HEREIN.
(b) Consultant acknowledges that no registration statement
under the 1933 Act or under any state securities law has been filed and that the
Company has no obligation to file such a registration statement in the future
with respect to the any shares of Common Stock or interests in Stampville that
may be acquired by Consultant.
(c) Consultant warrants and represents that all securities
acquired pursuant to this Agreement are and will be acquired and held by
Consultant for Consultant's own account, for investment purposes only, and not
with a view towards the distribution or public offering thereof or with any
present intention of reselling or distributing the same at any particular future
time.
(d) Consultant agrees not to sell, transfer or otherwise
voluntarily dispose of any shares of Common Stock or any interests in Stampville
unless (i) there is an effective registration statement under the 1933 Act
covering the proposed disposition and compliance with governing state securities
laws, (ii) Consultant delivers to the Company, at Consultant's expense, a
"no-action" letter or similar interpretative opinion, satisfactory in form and
substance to the Company, from the staff of each appropriate securities agency,
to the effect that such shares may be disposed of by Consultant in the manner
proposed, or (iii) Consultant delivers to the Company an opinion of counsel
reasonably satisfactory to the Company to the effect that the proposed
disposition is exempt from registration under the 1933 Act and governing state
securities laws.
(e) Consultant acknowledges and consents to the appearance of
a restrictive legend, in substantially the following form, on any securities
issued pursuant to this Agreement:
NOTICE: RESTRICTIONS ON TRANSFER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ENCUMBERED, OR OTHERWISE DISPOSED OF EXCEPT UPON SATISFACTION OF
CERTAIN CONDITIONS. INFORMATION CONCERNING THESE RESTRICTIONS
MAY BE OBTAINED FROM THE CORPORATION. ANY OFFER OR DISPOSITION
OF THESE SECURITIES WITHOUT SATISFACTION OF SAID CONDITIONS WILL
BE WRONGFUL AND WILL NOT ENTITLE THE TRANSFEREE TO REGISTER
OWNERSHIP OF THE SECURITIES WITH THE CORPORATION.
(f) Consultant agrees not to sell, transfer or otherwise
dispose of the Common Stock or the interests in Stampville, except as
specifically permitted by this Agreement and any applicable securities laws.
13. Warranties and Representations of the Company.
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(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The issuance of Shares to Consultant has been duly
authorized by all requisite corporate action on the part of the Company.
(c) No consents, approvals or permits are required to be
obtained from any third person, other than those which may be required under
applicable securities laws, before the issuance of Common Stock.
14. Procedures Upon Permitted Transfer. Before any sale, transfer or
other disposition of any of the shares of Common Stock acquired hereby
Consultant agrees to give written notice to the Company of his or her intention
to effect such disposition. The notice must describe the circumstances of the
proposed transfer in reasonable detail and must specify the manner in which the
requirements of Section 12(d) above will be satisfied in connection with the
proposed disposition. After (a) legal counsel to the Company has determined in
good faith that the requirements of Section 12(d) will be satisfied and (b)
Consultant has executed such documentation as may be necessary to effect the
proposed disposition, the Company will, as soon as practicable, transfer such
Shares in accordance with the terms of the notice. Any stock certificate issued
upon such transfer will bear a restrictive legend, in the form set forth in
Section 12(e) of this Agreement, unless in the opinion of the Company's legal
counsel such legend is not required. Compliance with the foregoing procedures is
in addition to compliance with any separate requirements applicable to
Consultant under the Certificate or otherwise.
15. Noncompetition. Except as to prior or existing engagements and
further work with respect thereto by Consultant, during the term of this
Agreement, Employee will not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever with
the business of the Company.
16. Remedies. Without acknowledging the amount, nature or extent of
possible damages in the event of a breach, prior to the actual occurrence of
such breach, Consultant hereby acknowledges and agrees that the services
rendered by Consultant to Company, and the information disclosed to Consultant
during and by virtue of Consultant's employment, are of a special, unique and
extraordinary character, and the breach of any provision of the Agreement will
cause Company irreparable injury and damage, and consequently Company shall be
entitled, in addition to all other remedies available to it, to injunctive and
equitable relief to prevent a breach of this Agreement, or any part of it, and
to secure the enforcement of this Agreement.
17. Modification of Agreement. It is agreed that this Agreement may be
modified only by an express agreement between Consultant and Chief Executive
Officer of Company, and that any such modification must be in writing and
signed.
18. Severability. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any
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other such instrument. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable. The
parties agree that there is separate consideration for each provision of this
Agreement and that all of the provisions of this Agreement are severable.
19. Entire Agreement. This Agreement is intended to set forth the entire
agreement regarding Consultant's position as an independent contractor with the
Company and cannot be changed or terminated orally. This Agreement supersedes
all prior negotiations or agreements, whether oral or written, regarding the
terms and conditions of Consultant's position as an independent contractor with
the Company (including but in no way limited to compensation and duration).
20. No Waiver. No waiver by any party hereto of a breach of any
provision of this Agreement shall constitute a waiver of any preceding or
succeeding breach of the same or any other provision hereof.
21. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
reference to its rules regarding conflicts of laws.
22. Non-Assignability by Consultant. This Agreement, and Consultant's
rights and obligations hereunder, may not be assigned by Consultant. The Company
may assign its rights, together with its obligations, hereunder to any
affiliate, provided that the obligations of the Company hereunder shall be
binding on its successors or assigns.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date first above written.
"Company" I.T. Technology, Inc., a Delaware corporation
By /s/ HENRY HERZOG
------------------------------------
Its President
"Consultant" /s/ MENDEL MOCHKIN
--------------------------------------
Mendel Mochkin
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE ISSUER, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT.
OPTION
This OPTION (the "Option") is granted as of the 8th day of December, 1999
by I.T. Technology, Inc., a Delaware corporation (the "Issuer"), to Cheski
(Jonathan) Malamud ("Holder").
RECITAL
In consideration for Holder's agreement to serve as a senior executive
officer of the Issuer's subsidiary, Stampville.com, Inc., the Issuer has agreed
to issue to Holder, Options, permitting the Holder purchase of One Million Six
Hundred Thousand (1,600,000) shares of the Common Stock of the Issuer (subject
to adjustment pursuant to Section 13 below) on the terms and conditions set
forth below (collectively, the "Option Shares").
AGREEMENT
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Issuer and Holder agree as follows:
1. GRANT OF OPTION.
The Issuer hereby grants to Holder the right and option (the "Option"),
upon the terms and subject to the conditions set forth in this Option, to
purchase the Option Shares, at a per share exercise price equal to $1.25 per
share (the "Exercise Price").
2. TERM OF OPTION.
The Option shall terminate and expire at 5:00 p.m., New York time, on the
fifth (5th) anniversary of the date which is the "Vesting Date", as defined in
Section 3(a) below (the "Option Expiration Date").
3. VESTING OF OPTION.
(a) No portion of the Option will be exercisable until the occurance of
both of the following:
<PAGE> 1
EXHIBIT 10.6(a)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (I) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (II) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE ISSUER, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT.
OPTION
This OPTION (the "Option") is granted as of the __ day of January, 2000
("Grant Date") by I.T. Technology, Inc., a Delaware corporation (the "Issuer"),
to Robert Petty ("Holder").
RECITAL
In consideration for Holder's agreement to serve as a consultant of the
Issuer, the Issuer has agreed to issue to Holder, Options, permitting the Holder
purchase of One Million Four Hundred and Fifty Thousand (1,450,000) shares of
the Common Stock of the Issuer (subject to adjustment pursuant to Section 15
below) on the terms and conditions set forth below (collectively, the "Option
Shares").
AGREEMENT
NOW, THEREFORE, in consideration of these premises and the mutual covenants
and agreements hereinafter set forth, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Issuer and Holder agree as follows:
1. GRANT OF OPTION.
The Issuer hereby grants to Holder the right and option (the "Option"),
upon the terms and subject to the conditions set forth in this Option, to
purchase the Option Shares, at a per share exercise price equal to $1.00 per
share (the "Exercise Price"), with the exception of the Third Capitalization
Option (the "Third Option"), which shall have an exercise price of $2.00 per
option share.
2. TERM OF OPTION.
The Option shall terminate and expire at 5:00 p.m., New York time, upon the
earlier occurrence of either (i) the second (2nd) anniversary of the Vesting
Date, (ii) the fifth (5th) anniversary of the Grant Date, or (iii) 30 days
after termination of Holder's employment or consulting arrangement for the
Issuer (the "Option Expiration Date").
<PAGE> 2
3. VESTING OF OPTION.
The Options following number of Options shall vest upon the occurrence of
the following events ("Vesting Date"), no Options may vest after the
termination of Petty's employment or consulting arrangement with the Issuer:
(a) Options to purchase Two Hundred Fifty Thousand (250,000) shares
shall vest upon the Corporation reaching a market capitalization of One Hundred
Fifty Million Dollars ($150,000,000) for thirty (30) consecutive business days
within three (3) years of the Grant Date ("First Capitalization Option");
(b) Options to purchase Three Hundred Fifty Thousand (350,000) shares
shall vest upon the Corporation reaching a market capitalization of Three
Hundred Million Dollars ($300,000,000) for sixty (60) consecutive business days
within three (3) years of the Grant Date ("Second Capitalization Option");
(c) Options to purchase Five Hundred Thousand (500,000) shares shall
vest upon the Corporation reaching a market capitalization of Seven Hundred
Million Dollars ($700,000,000) for sixty (60) consecutive business days within
three (3) years of the Grant Date ("Third Capitalization Option");
(d) Options to purchase One Hundred Seventy-Five Thousand (175,000)
shares shall vest upon the successful sale within three (3) years of the Grant
Date of equity securities of Stampville in an initial public offering through
the means of a registration statement which has been declared effective by the
SEC ("Stampville IPO Option"); and
(e) Options to purchase One Hundred Seventy-Five Thousand (175,000)
shares shall vest upon the successful sale within three (3) years of the Grant
Date of (1) equity of securities of one of the Issuer's majority owned
subsidiaries (other than Stampville) (the "Subsidiary") in an initial public
offering through a registration statement which has been declared effective by
the SEC or (2) all or any portion of the shares or assets of such Subsidiary for
no less than $50,000,000 ("Subsidiary IPO Option").
(f) Notwithstanding anything to the contrary contained above, all
unvested Options shall vest upon the consummation by the Issuer of a merger,
reorganization, sale of the Issuer's capital stock or other corporate
transaction where the shareholders of the Issuer immediately prior to such
transaction do not constitute a majority of the shareholders of the surviving
entity immediately following the transaction (the "Change of Control
Transaction"); provided, further however, that such Change of Control
Transaction occurs only after (1) the effectiveness of an IPO by the Issuer and
(2) where the market capitalization of the Issuer immediately prior to the
consummation of the Change of Control Transaction is at least $150,000,000.
(g) In addition to the foregoing, the Holder agrees that
notwithstanding anything to the contrary contained above, no Option may not be
exercised unless and until any
<PAGE> 3
then-applicable requirements of all state and federal securities laws shall have
been fully complied with to the reasonable satisfaction of the Issuer and its
counsel; provided, however, that the Issuer use its best efforts to comply with
the requirements of all such state and federal securities laws.
4. EXERCISE OF OPTION.
There is no obligation to exercise the Option, but the Option may be
exercised in whole or in part at any time or from time to time on or prior to
the Option Expiration Date. A new Option shall be issued for the amount of
unexercised shares. The Option must be exercised by delivery to the Issuer of:
(a) written notice of exercise in substantially the form of Exhibit
"A" attached to this Option; and
(b) payment of the Exercise Price of the Option Shares pursuant to
Section 6.
Upon receipt of the foregoing, the Issuer shall promptly issue in the name
of the Holder one or more stock certificates evidencing the Option Shares issued
pursuant to such exercise and deliver such certificate(s) to the Holder in such
denominations as the Holder shall request.
5. SALE OF OPTION SHARES.
(a) Sale Restriction. The Holder hereby agrees that, notwithstanding
anything in this Option to the contrary, the Holder shall be entitled to sell
from Open Shares issued to him pursuant to the exercise of Options, no more than
twenty percent (20%) of the total number of Option Shares during any twelve (12)
month period.
(b) Notice of Offer, Right of First Refusal. Holder shall first offer to
the Issuer any Option Shares, Holder wishes to sell (the "Offer"). In the event
Holder is entitled and intends to sell such Option Shares to the public, the
offering price shall be deemed to be the closing trading price of the Issuer's
common stock on the last trading day prior to the day on which the Issuer
receives notice from the Holder of the intended sale . In the event Holder
wishes to sell any Option Shares in private placement, Holder agrees that upon
receiving a bona fide offer by a third party to purchase all or any of the
Option Shares which the Holder is willing to accept the Holder shall give notice
thereof to the Issuer. The notice shall specify:
(1) The number Option Shares proposed to be sold (the "Offered
Shares");
(2) The identity of the proposed buyer;
(3) The consideration to be received for the Offered Shares; and
(4) The terms and conditions upon which the Holder intends to make the
sale.
<PAGE> 4
This notice shall be accompanied by a true and complete copy of the proposed
buyer's written offer. The Issuer shall have ten (10) business days to notify
the Holder of its acceptance of any Offer by the Holder to sell the Offered
Shares to the Issuer. The Issuer shall have the right to purchase all or a
portion of the Offered Shares at the price per Share and on the terms set forth
in the Offer, which it may exercise only by giving written notice thereof to the
Holder (the "Issuer's Acceptance"), during the ten (30) business day period
following the receipt of the Holder's notice. The Issuer's Acceptance shall
specify the number of the Offered Shares that the Issuer desires to purchase.
The Holder shall not participate in any vote that may be required in connection
with the Issuer's decision as to whether to exercise its right to purchase any
or all of the Offered Shares.
(c) Closing for Right of First Refusal Purchase. If the Issuer exercises
its right to purchase the Offered Shares, the closing of such purchase shall
take place on or before the thirtieth (30th) day following the date that the
Issuer, gave notice of the exercise of its right to purchase such Shares. The
Issuer shall give written notice to the Holder of the closing date and the
location of the closing for the purchase by Issuer, at least five (5) days prior
to such date.
(d) Transfer of Offered Shares to Third Party. Notwithstanding any other
provision in this Section, if and only if the Issuer either (i) does not
exercise its rights to purchase all or a portion of the Offered Shares in
accordance with the terms and conditions set forth in this Section or (ii) after
exercising such rights, the Issuer fails to consummate such purchases through no
fault of the Holder, then Holder may carry out its proposed sale to the proposed
buyer in accordance with the terms set forth in the Offer.
6. DELIVERY OF SHARES; PAYMENT OF EXERCISE PRICE.
Payment of the Exercise Price may be made as follows: (i) in United States
currency by wire transfer to an account designated by the Issuer or by cash or
by delivery of a certified check, bank draft or postal or express money order
payable to the order of the Issuer, or (ii) in the discretion of the Plan
Administrator, upon such terms as the Plan Administrator shall approve, a copy
of instructions to a broker directing such broker to sell the Common Stock for
which such Option is exercised, and to remit to the Issuer the aggregate
exercise price of such Options (a "cashless exercise"); (iii) in the discretion
of the Issuer, upon such terms as the Issuer shall approve, the Holder may pay
all or a portion of the purchase price for the number of shares being purchased
by tendering shares of the Issuer's Common Stock owned by the Holder, duly
endorsed for transfer to the Issuer, with a fair market value on the date of
delivery equal to the aggregate purchase price of the shares with respect to
which such Option or portion is thereby exercised (a "stock-for-stock
exercise"), or (iv) in the discretion of the Issuer, upon such terms as the
Issuer shall approve, the Holder may pay all or a portion of the purchase price
for the number of shares being purchased by withholding shares of stock from any
transfer or payment to the Optionee ("stock withholding exercise").
<PAGE> 5
7. RESTRICTIONS ON OPTION SHARES.
Unless the Issuer has on file with the Securities and Exchange Commission
(the "SEC") an effective registration statement covering the reoffer or resale
of the Option Shares issued to the Holder, each certificate for Option Shares
issued upon the exercise of the Option, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH
HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES,
OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED
THE WRITTEN OPINION OF COUNSEL TO THE ISSUER, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
8. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
The Issuer represents and Options that it has properly set aside and
reserved from its authorized but unissued shares of Common Stock, and will at
all times maintain as reserved, a number of shares equal to the Option Shares.
The Option Shares will, upon issuance, be duly authorized, validly issued, fully
paid and nonassessible and free from all preemptive rights of any shareholders
and free of all taxes, liens and charges with respect to the issuance thereof.
Except as expressly set forth in this Section 8, the Issuer has made no
representation, warranty, covenant or agreement regarding the Option, the shares
issuable in connection therewith or any other matter relating thereto. including
but not limited to whether or not the Issuer shall file a registration statement
with the SEC, if such a registration statement is filed, whether the SEC will
declare the registration Statement effective.
<PAGE> 6
9. RESERVE.
The Issuer shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
maintaining a reserve equal to the number of Option Shares, and if at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the issuance of Common Stock upon exercise of the Option,
the Issuer shall promptly seek such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
In the event of the consolidation or merger of the Issuer with another
corporation where the Issuer is not the surviving corporation, effective
provision shall be made in the Certificate or Articles of Incorporation,
documents of merger or consolidation, or otherwise, of the surviving corporation
so that such corporation will at all times reserve and keep available a
sufficient number of shares of Common Stock or other securities or property to
provide for the Option in accordance with the provisions of this Section 9.
10. NO RIGHTS AS STOCKHOLDER.
Holder shall have no rights as a stockholder of the Issuer with respect to
the Option Shares until the date the exercise notice is received by the Issuer
together with payment (the "Exercise Date"). No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the Exercise Date.
11. LOST, MUTILATED OR MISSING OPTION.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Option, and, in the case of loss,
theft or destruction, upon receipt of indemnification, or, in the case of
mutilation, upon surrender and cancellation of the mutilated Option, the Issuer
shall execute and deliver a new Option of like tenor and representing the right
to purchase the same aggregate number of Option Shares.
12. TAXES.
The Issuer shall pay all expenses, taxes and owner charges payable in
connection with the preparation, issuance and delivery of certificates for the
Option Shares and any new Options, except that if the certificates for the
Option Shares or the new Options are to be registered in a name or names other
than the name of the Option Holder, funds sufficient to pay all transfer taxes
payable as a result of such transfer shall be paid by the Option Holder at the
time of its delivery of the Notice of Exercise or promptly upon receipt of a
written request by the Issuer for payment
<PAGE> 7
13. NO IMPAIRMENT.
The Issuer will not, by amendment of its Certificate of Incorporation or
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Issuer, but will at all times in good
faith assist in the carrying out of all the provisions of this Option and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment.
14. ADJUSTMENT.
(a) If outstanding shares of the Common Stock of the Issuer shall be
subdivided into a greater number of shares, or a dividend in Common Stock or
other securities of the Issuer convertible into or exchangeable for Common Stock
(in which latter event the number of shares of Common Stock issuable upon the
conversion or exchange of such securities shall be deemed to have been
distributed), shall be paid or distributed in respect to the Common Stock of the
Issuer, the number of Option Shares for which this Option may be exercised
immediately prior to such subdivision or at the record date of such dividend
shall, simultaneously with the effectiveness of such subdivision or immediately
after the record date of such dividend or other distribution, be proportionately
increased, and conversely, if outstanding shares of the Common Stock of the
Issuer shall be combined into a smaller number of shares, the number of Option
Shares for which this Option may be exercised prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
decreased. Any adjustment to the Option Shares under this Section 14(a) shall
become effective at the close of business on the date the subdivision or
combination referred to herein becomes effective.
(b) In the event of any recapitalization, consolidation, merger or
reorganization ("Reorganization"), where the Issuer shall not be the surviving
entity the Holder of the Options shall at the sole discretion of the Issuer be
entitled to either (1) receive, and provision shall be made therefore in any
agreement relating to any such Reorganization, upon exercise of the Option the
kind and number of shares of Common Stock or other securities or property
(including cash) of the Issuer, which the Holder would have received in
connection with the Reorganization as the holder of the number of shares of
Common Stock into which the Option could have been exercised in full immediately
prior to such Reorganization; and in any such case appropriate adjustment shall
be made in the application of the provisions herein set forth with respect to
the rights and interests thereafter of the Holders, to the end that the
provisions set forth herein (including the specified changes and other
adjustments to the number of Option Shares) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares, to such other securities
or property thereafter receivable upon issuance of the Option Shares or (b) no
less than thirty (30) days prior notice of such Reorganization, during which
time the Holder may elect to exercise all Options which have then vested. All
other Options shall expire upon the consummation of the Reorganization . The
provisions of this Section 14(b) shall similarly apply to successive
Reorganizations. For purposes of this Section 14, the term "Reorganization"
shall include the acquisition of the Issuer by another entity by means of a
merger, consolidation or other reorganization.
<PAGE> 8
(c) In addition to the adjustments to the number of Option Shares or other
property receivable upon exercise of the Options as provided in Sections 14(a)
and (b) above, the Exercise price per Option Share shall be appropriately
adjusted so that the aggregate exercise price shall remain constant.
15. CERTIFICATE OF ADJUSTMENT.
Within thirty (30) days following any event requiring an adjustment or
readjustment of the number of shares of Common Stock or other securities
issuable upon exercise of the Option, the Issuer, at its expense, shall cause a
nationally recognized firm of independent public accountants selected by the
Issuer to compute such adjustment or readjustment in accordance with this Option
and to prepare a certificate showing such adjustment or readjustment, and shall
mail such certificate, by first-class mail, postage prepaid, to the Holder at
the address set forth in Section 18(b). The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based.
16. MODIFICATION.
The Board or a committee thereof may modify, extend or renew the Option or
accept the surrender of, and authorize the grant of a new option or Option in
substitution for, the Option (to the extent not previously exercised). No
modification of the Option shall be made without the written consent of Holder.
17. GENERAL PROVISIONS.
(a) FURTHER ASSURANCES. Holder shall promptly take all actions and execute
all documents requested by the Issuer, which the Issuer deems to be reasonably
necessary to effectuate the terms and intent of this Option.
(b) NOTICES. All notices, requests, demands and other communications under
this Option shall be in writing and shall be given to the parties hereto as
follows:
If to the Issuer, to:
I.T. Technology, Inc.
34-36 Punt Road
Windsor, Vic 3181
Melbourne, Australia
If to Holder, to:
Robert Petty
20H 240 86th
East NY 10028 NY
or at such other address or addresses as may have been furnished by either party
in writing to the
<PAGE> 9
other party hereto. Any such notice, request, demand or other communication
shall be effective (i) if given by mail, two days after such communication is
deposited in the mail by first-class certified mail, return receipt requested,
postage prepaid, addressed as aforesaid, or (ii) if given by any other means,
when delivered at the address specified in this subparagraph (b).
(c) GOVERNING LAW. THIS OPTION SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
IN, AND TO BE PERFORMED WITHIN, THAT STATE. JURISDICTION AND VENUE OVER ANY
LEGAL ACTION BROUGHT HEREUNDER SHALL RESIDE EXCLUSIVELY IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA. EACH OF THE PARTIES HERETO WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY SUCH LEGAL ACTIONS.
(d) ATTORNEYS' FEES. In the event that any action, suit or arbitration or
other proceeding is instituted upon any breach of this Option, the prevailing
party shall be paid by the other party thereto an amount equal to all of the
prevailing party's costs and expenses, including reasonable attorneys' fees
incurred in each and every such action, suit or proceeding (including any and
all appeals or petitions therefrom).
(e) AMENDMENT; WAIVER. This Option shall be binding upon and inure to the
benefit of the Holder and the Issuer and their respective successors, heirs and
personal representatives. No provision of this Option may be amended or waived
unless in writing signed by the Holder and the Issuer. Waiver of any one
provision of this Option shall not be deemed to be a waiver of any other
provision.
<PAGE> 10
IN WITNESS WHEREOF, the Issuer has caused this Option to be executed as of
the date first above written.
I.T. TECHNOLOGY, INC.
By:
------------------------------------
AGREED TO AND ACCEPTED THIS
17 DAY OF JANUARY, 2000.
By: /s/ ROBERT PETTY
--------------------------------
Robert Petty
<PAGE> 11
EXHIBIT "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
TO: I.T. Technology, Inc.
The undersigned hereby irrevocably elects to exercise the purchase right
represented by the Option granted to the undersigned on ___________, 1999 and to
purchase thereunder _______ shares of Common Stock of I.T. Technology, Inc., a
Delaware corporation (the "Issuer"). The closing of the exercise of the purchase
right shall take place at _____ on ________________, _____ at the principal
executive office of the Issuer located at ________________________________.
[Holder]
By:
--------------------------------
Its:
--------------------------------
<PAGE> 1
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE ISSUER, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT.
OPTION
This OPTION (the "Option") is granted as of the 8 day of December, 1999
by I.T. Technology, Inc., a Delaware corporation (the "Issuer"), to Cheski
(Jonathan) Malamud ("Holder").
RECITAL
In consideration for Holder's agreement to serve as a senior executive
officer of the Issuer's subsidiary, Stampville.com, Inc., the Issuer has agreed
to issue to Holder, Options, permitting the Holder purchase of One Million Six
Hundred Thousand (1,600,000) shares of the Common Stock of the Issuer (subject
to adjustment pursuant to Section 13 below) on the terms and conditions set
forth below (collectively, the "Option Shares").
AGREEMENT
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Issuer and Holder agree as follows:
1. GRANT OF OPTION.
The Issuer hereby grants to Holder the right and option (the "Option"),
upon the terms and subject to the conditions set forth in this Option, to
purchase the Option Shares, at a per share exercise price equal to $1.25 per
share (the "Exercise Price").
2. TERM OF OPTION.
The Option shall terminate and expire at 5:00 p.m., New York time, on
the fifth (5th) anniversary of the date which is the "Vesting Date", as defined
in Section 3(a) below (the "Option Expiration Date").
3. VESTING OF OPTION.
(a) No portion of the Option will be exercisable until the
occurance of both of the following:
<PAGE> 2
(i) the public sale of at least $10,000,000 of the
Issuer's equity securities through an effective Registration Statement under the
Securities Act or the investment by the Issuer of an additional $5,000,000 in
Stampville.com, Inc.("Stampville") above the "Stage One" Investment, as such
term is defined in the Stock Purchase Agreement dated as of June 18, 1999
between the Issuer and Stampville; and
(ii) the second anniversary of the date of this Option
(the "Vesting Date").
(b) Commencing on the Vesting Date, the Holder may purchase up to
320,000 shares issuable upon the exercise of the Option or 20% of the Option;
thereafter the Holder may purchase up to the following amounts of shares
issuable upon the exercise of the Option:
(i) commencing one year after the Vesting Date, the Holder
may purchase up to an aggregate of 640,000 shares issuable upon the exercise of
the Option or 40% of the Option;
(ii) commencing two years after the Vesting Date, the
Holder may purchase up to an aggregate of 960,000 shares issuable upon the
exercise of the Option or 60% of the Option;
(iii) commencing three years after the Vesting Date, the
Holder may purchase up to an aggregate of 1,280,000 shares issuable upon the
exercise of the Option or 80% of the Option; and
(iv) commencing four years after the Vesting Date, the
Holder may purchase up to an aggregate of 1,600,000 shares issuable upon the
exercise of the Option or 100% of the Option.
(c) Notwithstanding anything to the contrary contained in this
Option, the Option may not be exercised unless and until any then-applicable
requirements of all state and federal securities laws shall have been fully
complied with to the reasonable satisfaction of the Issuer and its counsel;
provided, however, that the Issuer use its best efforts to comply with the
requirements of all such state and federal securities laws.
4. EXERCISE OF OPTION.
There is no obligation to exercise the Option, but the Option may be
exercised in whole or in part at any time or from time to time on or prior to
the Option Expiration Date. A new Option shall be issued for the amount of
unexercised shares. The Option must be exercised by delivery to the Issuer of:
(a) written notice of exercise in substantially the form of
Exhibit "A" attached to this Option; and
(b) payment of the Exercise Price of the Option Shares pursuant
to Section 5.
Upon receipt of the foregoing, the Issuer shall promptly issue in the
name of the Holder one or more stock certificates evidencing the Option Shares
issued pursuant to such exercise and deliver such certificate(s) to the Holder
in such denominations as the Holder shall request.
<PAGE> 3
5. DELIVERY OF SHARES; PAYMENT OF EXERCISE PRICE.
Payment of the Exercise Price may be made as follows: (i) in United
States currency by wire transfer to an account designated by the Issuer or by
cash or by delivery of a certified check, bank draft or postal or express money
order payable to the order of the Issuer, or (ii) in the discretion of the Plan
Administrator, upon such terms as the Plan Administrator shall approve, a copy
of instructions to a broker directing such broker to sell the Common Stock for
which such Option is exercised, and to remit to the Company the aggregate
exercise price of such Options (a "cashless exercise"); (iii) in the discretion
of the Issuer, upon such terms as the Issuer shall approve, the Holder may pay
all or a portion of the purchase price for the number of shares being purchased
by tendering shares of the Issuer's Common Stock owned by the Holder, duly
endorsed for transfer to the Issuer, with a fair market value on the date of
delivery equal to the aggregate purchase price of the shares with respect to
which such Option or portion is thereby exercised (a "stock-for-stock
exercise"), or (iv) in the discretion of the Issuer, upon such terms as the
Issuer shall approve, the Holder may pay all or a portion of the purchase price
for the number of shares being purchased by withholding shares of stock from any
transfer or payment to the Optionee ("stock withholding exercise").
6. RESTRICTIONS ON OPTION SHARES.
(a) Each certificate for Option Shares issued upon the exercise
of the Option, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
(b) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME
EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A
SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON A
HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE
ISSUER, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED
DISPOSITION IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
7. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
<PAGE> 4
The Issuer represents and Options that it has properly set aside and
reserved from its authorized but unissued shares of Common Stock, and will at
all times maintain as reserved, a number of shares equal to the Option Shares.
The Option Shares will, upon issuance, be duly authorized, validly issued, fully
paid and nonassessible and free from all preemptive rights of any shareholders
and free of all taxes, liens and charges with respect to the issuance thereof.
Except as expressly set forth in this Section 7., the Issuer has made no
representation, warranty, covenant or agreement regarding the Option, the shares
issuable in connection therewith or any other matter relating thereto. including
but not limited to whether or not the Issuer shall file a registration statement
with the Securities and Exchange Commission (the SEC"), if such a registration
statement is filed, whether the SEC will declare the registration Statement
effective or if declared effective, whether the Issuer will successfully raise
$10,000,000 pursuant to such Registration Statement. Notwithstanding the
foregoing, in the event such registration statement is filed with the SEC and
declared effective, the Issuer agrees to use its reasonable best efforts to
register the offer and sale and or resale of the shares issuable upon the
exercise of the Option on a Form S-8 Registration Statement and, if necessary, a
Form S-3 Prospectus contained therein, prior to the initial vesting date of the
Options.
8. RESERVE.
The Issuer shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
maintaining a reserve equal to the number of Option Shares, and if at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the issuance of Common Stock upon exercise of the Option,
the Issuer shall promptly seek such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
In the event of the consolidation or merger of the Issuer with another
corporation where the Issuer is not the surviving corporation, effective
provision shall be made in the Certificate or Articles of Incorporation,
documents of merger or consolidation, or otherwise, of the surviving corporation
so that such corporation will at all times reserve and keep available a
sufficient number of shares of Common Stock or other securities or property to
provide for the Option in accordance with the provisions of this Section 8.
9. NO RIGHTS AS STOCKHOLDER.
Holder shall have no rights as a stockholder of the Issuer with respect
to the Option Shares until the date the exercise notice is received by the
Issuer together with payment (the "Exercise Date"). No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the Exercise Date.
10. LOST, MUTILATED OR MISSING OPTION.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Option, and, in the case of
loss, theft or destruction, upon receipt of indemnification, or, in the case of
mutilation, upon surrender and cancellation of the mutilated Option, the Issuer
shall execute and deliver a new Option of like tenor and representing the right
to purchase the same aggregate number of Option Shares.
<PAGE> 5
11. TAXES.
The Issuer shall pay all expenses, taxes and owner charges payable in
connection with the preparation, issuance and delivery of certificates for the
Option Shares and any new Options, except that if the certificates for the
Option Shares or the new Options are to be registered in a name or names other
than the name of the Option Holder, funds sufficient to pay all transfer taxes
payable as a result of such transfer shall be paid by the Option Holder at the
time of its delivery of the Notice of Exercise or promptly upon receipt of a
written request by the Issuer for payment
12. NO IMPAIRMENT.
The Issuer will not, by amendment of its Certificate of Incorporation or
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Issuer, but will at all times in good
faith assist in the carrying out of all the provisions of this Option and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment.
13. ADJUSTMENT.
(a) If outstanding shares of the Common Stock of the Issuer shall
be subdivided into a greater number of shares, or a dividend in Common Stock or
other securities of the Issuer convertible into or exchangeable for Common Stock
(in which latter event the number of shares of Common Stock issuable upon the
conversion or exchange of such securities shall be deemed to have been
distributed), shall be paid or distributed in respect to the Common Stock of the
Issuer, the number of Option Shares for which this Option may be exercised
immediately prior to such subdivision or at the record date of such dividend
shall, simultaneously with the effectiveness of such subdivision or immediately
after the record date of such dividend or other distribution, be proportionately
increased, and conversely, if outstanding shares of the Common Stock of the
Issuer shall be combined into a smaller number of shares, the number of Option
Shares for which this Option may be exercised prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
decreased. Any adjustment to the Option Shares under this Section 13(a) shall
become effective at the close of business on the date the subdivision or
combination referred to herein becomes effective.
(b) In the event the Issuer at any time, or from time to time,
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable in
securities of the Issuer other than shares of Common Stock or securities
convertible into or exchangeable for Common Stock, or other property or assets
(other than cash) then and in each such event, provision shall be made so that
the Holders of the Options shall receive upon exercise thereof, in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Issuer or other property or assets which they would have
received had their Options been exercised in full on the date of such event and
had thereafter, during the period from the date of such event to and including
the date of conversion, retained such securities or other property or assets
receivable by them as aforesaid during such period, giving application to all
adjustments called for during such period under this Section 13(b) with respect
to the rights of the Holders.
<PAGE> 6
(c) In the event of any recapitalization, consolidation, merger
or reorganization ("Reorganization"), the Holder of the Options shall thereafter
be entitled to receive, and provision shall be made therefore in any agreement
relating to any such Reorganization, upon exercise of the Option the kind and
number of shares of Common Stock or other securities or property (including
cash) of the Issuer, which the Holder would have received in connection with the
Reorganization as the holder of the number of shares of Common Stock into which
the Option could have been exercised in full immediately prior to such
Reorganization; and in any such case appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the Holders, to the end that the provisions set forth
herein (including the specified changes and other adjustments to the number of
Option Shares) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares, to such other securities or property thereafter
receivable upon issuance of the Option Shares. The provisions of this Section
13(c) shall similarly apply to successive Reorganizations. For purposes of this
Section 13, the term "Reorganization" shall mean include the sale of all or
substantially all of the assets of the Issuer or the acquisition of the Issuer
by another entity by means of a merger, consolidation or other reorganization.
(d) In addition to the adjustments to the number of Option Shares
or other property receivable upon exercise of the Options as provided in
Sections 13(a), (b) and (c) above, the Exercise price per Option Share shall be
appropriately adjusted so that the aggregate exercise price shall remain
constant.
14. NOTICES OF CHANGE.
(a) The Company shall give written notice to the Holder at least
ten (10) business days prior to the date on which the Company closes its books
or takes a record for determining rights to receive any dividends or
distributions.
(b) The Company shall also give written notice to the Holder at
least twenty (20) business days prior to the date on which a Reorganization
shall take place.
15. CERTIFICATE OF ADJUSTMENT.
Within thirty (30) days following any event requiring an adjustment or
readjustment of the number of shares of Common Stock or other securities
issuable upon exercise of the Option, the Issuer, at its expense, shall cause a
nationally recognized firm of independent public accountants selected by the
Issuer to compute such adjustment or readjustment in accordance with this Option
and to prepare a certificate showing such adjustment or readjustment, and shall
mail such certificate, by first-class mail, postage prepaid, to the Holder at
the address set forth in Section 17(b). The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based.
16. MODIFICATION.
The Board or a committee thereof may modify, extend or renew the Option
or accept the surrender of, and authorize the grant of a new option or Option in
substitution for, the Option (to the extent not previously exercised). No
modification of the Option shall be made without the written consent of Holder.
<PAGE> 7
17. GENERAL PROVISIONS.
(a) FURTHER ASSURANCES. Holder shall promptly take all actions
and execute all documents requested by the Issuer, which the Issuer deems to be
reasonably necessary to effectuate the terms and intent of this Option.
(b) NOTICES. All notices, requests, demands and other
communications under this Option shall be in writing and shall be given to the
parties hereto as follows:
If to the Issuer, to:
I.T. Technology, Inc.
----------------------
----------------------
----------------------
If to Holder, to:
----------------------
----------------------
----------------------
or at such other address or addresses as may have been furnished by either party
in writing to the other party hereto. Any such notice, request, demand or other
communication shall be effective (i) if given by mail, two days after such
communication is deposited in the mail by first-class certified mail, return
receipt requested, postage prepaid, addressed as aforesaid, or (ii) if given by
any other means, when delivered at the address specified in this subparagraph
(b).
(c) GOVERNING LAW. THIS OPTION SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE IN, AND TO BE PERFORMED WITHIN, THAT STATE. JURISDICTION AND VENUE OVER ANY
LEGAL ACTION BROUGHT HEREUNDER SHALL RESIDE EXCLUSIVELY IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA. EACH OF THE PARTIES HERETO WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY SUCH LEGAL ACTIONS.
(d) ATTORNEYS' FEES. In the event that any action, suit or
arbitration or other proceeding is instituted upon any breach of this Option,
the prevailing party shall be paid by the other party thereto an amount equal to
all of the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in each and every such action, suit or proceeding
(including any and all appeals or petitions therefrom).
(e) AMENDMENT; WAIVER. This Option shall be binding upon and
inure to the benefit of the Holder and the Issuer and their respective
successors, heirs and personal representatives. No provision of this Option may
be amended or waived unless in writing signed by the Holder and the Issuer.
Waiver of any one provision of this Option shall not be deemed to be a waiver of
any other provision.
<PAGE> 8
IN WITNESS WHEREOF, the Issuer has caused this Option to be executed as
of the date first above written.
I.T. TECHNOLOGY, INC.
By: /s/ JONATHAN HERZOG
-------------------------------
AGREED TO AND ACCEPTED
THIS 10th DAY OF FEBRUARY 2000
by: /s/ C. JONATHAN MALAMUD
-------------------------------
Jonathan (Chesky) Malamud
<PAGE> 9
EXHIBIT "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
TO: I.T. Technology, Inc.
The undersigned hereby irrevocably elects to exercise the purchase right
represented by the Option granted to the undersigned on ___________, 1999 and to
purchase thereunder _______ shares of Common Stock of I.T. Technology, Inc., a
Delaware corporation (the "Issuer). The closing of the exercise of the purchase
right shall take place at _____ on ________________, _____ at the principal
executive office of the Issuer located at __________________________________.
[Holder]
By:
--------------------------------
Its:
-------------------------------
<PAGE> 1
EXHIBIT 23.1
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated December 30, 1999 (except for Note H, as to
which the date is January 17, 2000), accompanying the consolidated financial
statements of I.T. Technology, Inc., contained in the Registration Statement on
Form SB-2. We consent to the use of the aforementioned report in the
Registration Statement, and to the use of our name as it appears under the
caption "Experts".
/s/ GRANT THORNTON LLP
Los Angeles, California
February 14, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated December 30, 1999 accompanying the
financial statements of Stampville.Com Inc., contained in the Registration
Statement on Form SB-2. We consent to the use of the aforementioned report in
the Registration Statement, and to the use of our name as it appears under the
caption "Experts".
/s/ GRANT THORNTON LLP
Los Angeles, California
February 14, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> FEB-02-1999
<PERIOD-END> SEP-30-1999
<CASH> 172,682
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 231,829
<PP&E> 643,938
<DEPRECIATION> 7,170
<TOTAL-ASSETS> 1,121,436
<CURRENT-LIABILITIES> 140,506
<BONDS> 0
0
0
<COMMON> 14,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,121,436
<SALES> 0
<TOTAL-REVENUES> 19,618
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 121,822
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,504
<INCOME-PRETAX> (107,708)
<INCOME-TAX> 0
<INCOME-CONTINUING> (107,708)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107,708)
<EPS-BASIC> (0.01)
<EPS-DILUTED> 0
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