UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO.1 TO FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
SCHIMATIC Cash Transactions Network.com, Inc.
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Name of Small Business Issuer in its charter
Florida
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(State or other jurisdiction of
incorporation or organization)
88-0415947
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(I. R. S. Employer Identification No.)
205 West 700 South, Suite 200,
Salt Lake City, UT 84101
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(Address of principal executive offices)
(801) 355-0066
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(Issuer's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act.
Common Stock, $.001 par value
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(Title of each class)
OTC Bulletin Board (Symbol: SCTN)
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(Name of each exchange on which registered)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
THIS REGISTRATION STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 27(a) OF THE SECURITIES ACT OF 1933 AND SECTION 21(e) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. AS A RESULT OF CERTAIN FACTORS
DESCRIBED BELOW AND ELSEWHERE IN THIS REGISTRATION STATEMENT, AND OTHER FACTORS,
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THOSE
FORWARD-LOOKING STATEMENTS.
Note: The Company has elected to follow Disclosure Alternative 3 in preparation
of this Registration Statement
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PART I
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ITEM 1: DESCRIPTION OF BUSINESS
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General
The Company. Schimatic Cash Transactions Network.com, Inc. ( the
"Company" or "SCTN" ) Company is in the business of providing smart card
solutions for the loyalty transaction needs in the retail and financial
industries, e-commerce markets and an emerging internet world. Through its
proprietary patented technology and its custom-designed database,
LoyaltyCentral.com(TM) , the Company proposes to become a processing center and
repository for loyalty programs worldwide.
The Company is a development-stage Company with no significant
operating revenues to date.
The Patent. The Company owns US patent No. 5,806,045, issued on
September 8, 1998. ( the "Patent" ).In October 1999, the Patent was issued in
Australia ( No. 703349 ) and is currently pending in Canada, Japan, and Mexico.
The Patent covers smart card and loyalty methodology designed to
promote a common platform for all loyalty applications. This platform
encompasses any and all loyalty programs that begin with or incorporate a smart
card initiated transaction. A loyalty award includes any incentive, discount,
award or rebate. The industry refers to loyalty programs generally as "cause
related marketing" or more simply as "value add". Possession of the Patent and
using it to promote a common loyalty platform to the industry gives the Company
a decided market advantage. Standardizing the loyalty platform promises cost
efficiencies to banking, finance, and commerce.
The Patent covers a methodology independent of the technology in which
it happens to reside. This technology allows data to be compiled, compared and
manipulated in many ways. The patent applies to a process or methodology for
manipulating the data. That methodology promotes consumer loyalty in processing
financial transactions such as purchases.The Patent is broadly applicable to any
loyalty award program that operates by means of a smart card or any portable
electronic device such as palm tops, lap tops, or cellular telephones. Thus as
loyalty program technology evolves, the Patent's methodology will continue to
cover the inevitable evolution from smart cards to the next generation of smart
portable devices.
The Patent applies to a dynamic allocation process. This is a process
by which transaction data is recorded, stored, accessed and combined to create
useful information. The Patent applies to all of these database management
functions. Specifically, there are four types of loyalty data stored on the
database: value allocation, value redemption, transaction recording and various
demographic data. The Patent applies to loyalty transactions that are acquired
or redeemed in these database management functions from one or more loyalty
programs.
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The Database. Beginning in 1997 with the support of IBM the Company
developed a robust, flexible, and scalable DB2 database for back-end loyalty and
charity transaction processing. This database, now known as "LoyaltyCentral.com
"(TM), is capable of processing transactions involving virtually any electronic
medium. The database allows for front-end and back-end interfaces, where
multiple retailers can split payments to multiple beneficiaries, whether
card-holders or charitable organizations. The database also allows data capture
and demographic profiling for use and sale in targeted marketing programs.
LoyaltyCentral.com(TM) enables the integration and processing of
diverse transactions, ranging from internet-based loyalty programs to POS (Point
of Sale) loyalty redemption using a smart card.
In July 1999, the Company acquired IC One, Inc., a Salt Lake City based
developer of "smart card" technologies. IC One, Inc. is now a wholly-owned
subsidiary of the Company which now operates its new acquisition directly. The
Company is now doing business as "IC One" and plans to change its name to "IC
One, Inc." References throughout this document to the "Company" include IC One,
Inc.
THE NATURE OF PRODUCTS OR SERVICES OFFERED:
The Company's products and services include: (1) patent marketing and
licensing; (2) patent protection of intellectual property; (3) loyalty
transaction processing, (4) database management and (5) demographic sales.
On August 5, 1999, SCTN concluded an agreement in principle with IBM to
pursue partnership arrangements for smart card deployment worldwide.
Present contracts include eExpo and Rent Smart.
eExpo Project
eExpo (Electronic Exposition Information Technologies, Inc. ), is an
information technologies and services provider to the trade show, convention and
training industries. Its services include trade show management, exhibition,
transportation, hospitality, entertainment, computing, communications and
educational functions.
On November 17, 1999, the Company and eExpo signed a contract granting
the exclusive worldwide rights to the IC Kids Card(TM) Program under the Patent.
This contract allows eExpo to provide smart cards, smart card readers, cash
handling, information processing and data management to the educational,
exhibition and trade show industries.
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The project builds upon the success of the IC Kids Card(TM)Program
currently running in Utah. eExpo has engineered a leading edge concept utilizing
smart cards based on the SCTN loyalty patent. This concept will provide free
computers and educational software (K-12) to smart card carrying consumers. This
educational program requires that the consumer attain a specified monthly
spending amount in order to receive the free computer.
eExpo has issued a Request For Proposal (RFP) to support the roll-out
and distribution of 28 million smart cards. Distribution is planned over 36
months. This program is called "eduSmartCard". It will feature loyalty with a
stored value purse for payment at both participating merchants and internet
retailers. The card will also feature electronic allocation for storing and
redeeming incentives off the card at participating retailers. Future plans are
being made for credit and debit functionality.
The Company is approaching celebrities and politicians to endorse the
program because of the potential it may provide in funding education technology
requirements through the private sector.
The Company believes that the philanthropic and humanitarian features
of this program provide the necessary incentives to overcome the retailer's
resistance to the cost of implementation. eExpo expects success demonstrated by
the commitment from corporate America through their paid advertising on the
card. This advertising covers the cost of the smart cards and the card reader
devices.
RentSmart Project
The Company concluded a contract on August 6, 1999 with Global Capital
Limited and RentSmart. RentSmart is a rental publication company based in Las
Vegas, NV. The project specifies the deployment of smart cards and internet
ready set top boxes for a minimum of 1.5 million rental units over the next 36
months.
The RentSmart project is currently in the first phase of development.SCTN
has formed strategic alliances with a number of companies that bring valued
pieces to the project. Each of the companies involved is in different stages of
development on the applications that they bring to this project. The plan
includes a pilot roll out during the calendar year 2000. The pilot program will
center on an 860-unit apartment community in the city of Las Vegas, NV.
Additional sites for the program will be determined based on a successful pilot.
The pilot program creates a community environment where the end user will be
able to shop with local merchants, pay apartment rent, and order video-on-demand
through his/her set-top box. In addition to the extensive local content they
will also be able to access the internet, send and receive e-mail, and
communicate with apartment management by the use of a smart card and set top box
located in their apartment. Additional features will be added at a later date.
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SCTN brings to the project the critical and integrating feature of
loyalty with its patented smart card methodology. The end user can pay rent,
order pizza from a local merchant, then order a video on demand to be viewed
from the comfort of his/her apartment, all the while earning loyalty points that
are being stored on the smart card. These loyalty points are redeemable at local
and participating merchants and LoyaltyCentral.comTM for goods and services. The
value-add to the consumer will promote usage of the card and convenience. The
Company believes that paying rent through smart cards will bring enormous
dividends to landlords by automatically depositing payments directly into the
landlord bank account. Decreased turnover in the apartment community will bring
a financial value to the apartment management companies involved in this
program. New features and transactions will be developed to provide additional
revenue streams in subsequent phases.
R & D Expenses
Since Inception in 1997 through September 30, 1999 the Company has
spent approximately $2,117,000 on Company-sponsored research and development.
Strategic Alliances
The Company's further development is dependent upon the establishment
of several strategic alliances ("Key Alliances").Due to the comprehensive nature
of the Patent, smart card, and e-commerce technology in general, the Company
hopes to tap into a rich supply of alliances. The following are a few of the
major alliances currently in place:
The IBM Relationship. Beginning in late 1997, IC One and IBM developed
a series of robust, complex, and scalable databases for IC One's back-end
processing. The architecture of these databases allows for an almost unlimited
number of front-end and back-end interfaces. Using these databases, multiple
retailers can split payments to multiple beneficiaries. Moreover, the databases
allow significant data capture and mining for retailers and targeted marketing
programs. The IC One back-end processing capability allows the user to analyze
and to manipulate information in virtually unlimited ways, providing valuable
and easily and cheaply accessible demographic data and financial information.
On August 5, 1999, IBM and the Company announced an agreement to
jointly market solutions in the international smart card and loyalty arenas.
This is evidence of an expanding IBM relationship, due in part to a patent
evaluation performed by IBM, in addition to the growing commitment of both
companies to the idea of a strategic alliance to gain market share and revenues.
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IBM has been involved with the Company since that time in the negotiation of
marketing contracts and in exchange of technical personnel and expertise. The
Company is confident that, going forward, the IBM relationship will be a source
of increasing value and resources.
Personnel
The Company currently has 16 employees, all of whom are full time. The Company's
Board of Directors currently includes three members who are employees of the
Company, and two who are not. The Board is seeking an additional director and it
is anticipated that the Company will hire additional employees as growth
demands. The Company expects to use the services of third parties to develop and
host its products for the immediate future.
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ITEM 2. MANAGEMENT DISCUSSION AND THE ANALYSIS OF PLAN OF OPERATION
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OVERVIEW
The following discussion should be read in conjunction with the
Financial Statements of the Company and the Notes thereto appearing elsewhere
herein.
The Company`s financial condition and results of operations reflect
that it is a start-up company in the process of attempting to build a base of
service to add value to it's potential customers. Revenues to the date of the
financial statements have been nominal due to the Company's focus on preparing
to get this base of services ready for the market.
During the period ended September 30, 1999 the Company acquired IC One,
Inc. IC One, Inc. was purchased for the potential of using IC One's patent in
conjunction with SCTN's pool of talent.
The Company has completed test markets to verify the viability of its
software and loyalty system and is now in a position to market the process and
software to merchants, debit and credit card issuers and banks.
Plan of Operation
1. SCTN will be unable to meet its cash requirements for the next twelve
months without raising additional funds through debt and/or equity investments.
The Company's projections indicate that it will need at least $10,000,000 in
additional capital before it begins to earn enough revenue to meet current
needs.
2. Internal sources of liquidity include the expected cash flow on two
contracts the Company has entered into that are to become operational this
summer. Additionally the Company expects to raise funds through borrowings and
the sale of additional securities. There is no assurance that these expectations
will prove to be successful.
3. The Company entered into a transactions to purchase a building for
$900,000.00 in December 1999. This is a step transaction in that the company
first purchased 34% of the building and intends to acquire the balance of the
building at a later date. It is paying for the building by issuing stock in lieu
of cash. The Company intends to occupy the building in the second quarter of
2000 and use it as its headquarters.
4. The Company will be adding ten to twenty new employees in this calendar
year to meet its needs under the two contracts that will become operational.
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ITEM 3. DESCRIPTION OF PROPERTY
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On December 30, 1999, the Company completed the purchase of a newly
renovated, fully leased 10,000-square foot office building located at 740 East
3900 South, Salt Lake City, UT 84107, a portion of which the Company plans to
occupy beginning in second quarter 2000. Until January 2001, the Company will
own 34% of the building, after which the Company intends to acquire the balance
of the building at which time it will own 100%. With the monthly offset of
income generated from other tenants in the building, the Company expects to
realize an initial annual savings of more than $80,000 over its previous lease
payment obligation. The Company will initially occupy 4,000 square feet and
relocate additional tenants in the future as growth requires and as tenant
leases expire. The Company believes the space available will be sufficient for
its needs for at least the next two years.
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ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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The following table sets forth the record ownership of the Company's
Common Stock (the Company's only class of stock) as of December 31, 1999 as to
(i) each person or entity who owns more than five percent (5%^) of any class of
the Company's Securities (including those shares subject to outstanding
options), ( ii) each person named in the table appearing in "Remuneration of
Directors and Officers", and ( iii) all officers and directors of the Company as
a group.
NAME & ADDRESS SHARES OWNED PERCENT OF CLASS
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David J. Simon 1,067,478 1.67%
President, CEO and Chairman
205 West 700 South
Salt Lake City, UT 84101
Doug Lloyd 1,580,071 2.48%
11471 South Canton Court
Sandy, UT 84092
Peter J. Bennee 2,090,065 3.27%
Corporate Secretary and Director
205 West 700 South
Salt Lake City, UT 84101
Paul E. Christensen 1,512,622 2.37%
Director
205 West 700 South
Salt Lake City, UT 84101
Jim Biorgi 11,503,138 18.20%
888 Heartwood Circle
Fruit Heights, UT 84037
Nathan Welch 3,872,872 6.07%
1125 North 1050 East
Orem, UT 84097
OFFICERS & DIRECTORS AS A GROUP 6,250,236 9.79%
To the Company's knowledge, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock owned by
them, subject to community property laws where applicable. The above referenced
number of shares does not include shares available upon exercise of the options
described in the table below.
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Other than Common Stock, the Company has no class of voting or
non-voting stock outstanding.
The following table sets forth the options, warrants and other rights
to purchase the Company's Common Stock (the Company's only class of voting
stock) as of December 31, 1999, as to i) each person or entity who owns more
than five percent (5%) of any class of the Company's Securities (including those
shares subject to outstanding options), ii) each person named in the table
appearing in "Remuneration of Directors and Officers", and iii) all officers and
directors of the Company as a group.
OPTIONS:
TITLE AND AMOUNT OF SECURITIES CALLED FOR BY OPTIONS, WARRANTS OR EXERCISE.
NAME & TITLE RIGHTS SHARES PRICE EXP. DATE
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David Simon OPTION 6,778,000 $0.15 11/30/02
Chairman/CEO
OFFICERS & DIRECTORS
AS A GROUP 6,778,000
NOTE: Pursuant to an agreement with R&D Technology prior to the IC One merger,
Mr. Simon has been issued options for 6,778,000 shares of the Company's common
stock. The original agreement, dated November 1, 1998 and ratified by the Board
of the Company on November 11, 1999, was for 2,000,000 shares of R&D stock at
$0.50 per share. These numbers have been adjusted, per the agreement, by factors
of 2.1309 and 1.5904 for the R&D/STI and SCTN/IC One mergers, respectively, for
a net factor of 3.389.
NOTE: Each Current Director also receives 5000 shares of Common Stock of the
Company for each month of service, beginning with the month of November, 1999.
These shares are as yet unissued.
NOTE: The Company has a stock option plan in effect:
On December 8th 1999, the Company adopted the 1999 Employee Stock Option Plan,
(the "Plan"). The Plan is administered by a committee (the "Committee")
consisting of the Board of Directors or a committee of the board. Under the
Plan, the Committee may grant stock options, which may be incentive stock
options ("ISO's") as defined in the Internal Revenue Code, stock awards or
options which do not qualify as ISO's to employees and officers. All employees
of the Company are eligible to participate in the Plan. A maximum of 1,250,000
shares, subject to adjustment for certain events of dilution, are available for
grant under the Plan. During 1999 the Company did not grant any shares under the
Plan. In early 2000 the Company granted options to purchase an aggregate of
1,250,000 shares of Common Stock, including options to purchase 500,000 shares
granted to executive officers and directors at $0.80 per share, exercisable
through February, 2005.
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ITEM 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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Set forth below is information regarding the directors and executive
officers of the Company. The Company has no other significant employees besides
those described below, and there are currently no other persons under
consideration to become directors or executive officers of the Company.
NAME AGE POSITION
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David J. Simon 51 Chairman
Jim Williams 53 President, CEO. Director
Richard Hauge 53 Senior V.P., Director
Peter J. Bennee 47 Director, Corporate Secretary
Paul E. Christensen 56 Director
David J. Simon, Chairman
Mr Simon has been a Director since November, 1998, Chairman since May,
1999, and CEO since November, 1999. Mr. Simon began his career as a computer
programmer in 1966. He has programmed, designed, developed, maintained,
architected, and managed applications and systems in many diverse industries
including banking, healthcare, manufacturing, stock exchange, and
telecommunications.
Mr. Simon has worked as an employee and consultant for many prestigious
organizations including PacifiCare Health Systems, the Pacific Stock Exchange,
Bank of America, Security Pacific National Bank, USWest Network Systems, Seattle
First National Bank, Electronic Data Systems, and several US government defense
organizations.
Key accomplishments include pioneering real-time systems for the
banking industry, development and implementation of the first client/server,
on-line transaction processing system for a major healthcare company's core
application, and successfully managing the consolidating more than 40 savings
and loans and credit unions into a single data center.
A major California firm selected Mr. Simon as System Architect and
Technical Lead for a confidential feasibility study for processing the bank's
primary business in a real-time mode against a consolidated, relational
database. This benchmark represented the largest (processing power) staged
evaluation of capabilities in the history of the industry. He was responsible
for determining the evaluation criteria, managing the resources of the bank and
its vendor(s), analyzing vendor results and reporting the results of the
benchmark to the bank's executive management.
Jim Williams, President, CEO, Director
Mr. Williams has been a Director since November, 1999. He has over 30
years experience in Information Technology Management in the Financial Service
and Health Care Industries. His information systems experience encompasses the
design, implementation and support of both large scale, high volume and
distributed (client server) transaction processing systems. For the past seven
years he has served as Chief Information Officer and Senior Vice President of
one of the nation's leading health care services companies, PacifiCare Health
Systems. PacifiCare is a Company with 8,900 employees, 3.7 million members and
annual revenues of $10 billion, where he directs the activities of Systems
Development, Data Center Operations, Voice and Data Telecommunications and
Office Services. He also serves as a member of PacifiCare's Senior Council,
which sets Company direction. Other previous positions include senior
vice-president, information services, posts with Sanwa Bank, Merchants National
Bank & Trust Company, Security Pacific Automation Co., and Citibank.
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Peter J. Bennee, Director and Corporate Secretary
Mr. Bennee has been Secretary since September, 1999, and a Director
since November. Mr. Bennee was formerly President & CEO of The Regent Group, a
commercial investment real estate Company; Chairman & CEO of Hawaii Federal
Mortgage Corporation; and Co-Founder and President of AlphaMation, Inc., a
sight, sound and motion simulation Company, prior to joining IC One in 1996.
Paul Christensen, Director
Mr. Christensen has been a director since September, 1999. He has been
instrumental in introducing the Company to many of its current investors. He is
currently the managing member of WESPAC Holdings L.C., which develops Marriott
and Hampton Inn Hotels. He has had over 30 years of real estate experience,
logging over $60 Million in sales. He has served as Vice President of the
largest residential real estate sales Company in Hawaii, and has specialized in
all phases of commercial and residential real estate in the U.S. and around the
world. Mr. Christensen has a Master's Degree in Accounting with a specialty in
taxes.
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ITEM 6: EXECUTIVE COMPENSATION
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The following table sets forth the current annual salaries of i) each of the
Company's three highest-paid officers and ii) the Company's officers or
directors as a group:
NAME OR IDENTITY OF GROUP TITLE COMPENSATION
David Simon Chairman $ 120,000
Jim Williams President/CEO 120,000
Peter Bennee Corporate Secretary, Director 96,000
TOTAL SALARIES FOR THE YEAR 1999 OF OFFICERS
AND DIRECTORS AS A GROUP $ 294,000
1) The Company's group life, health, hospitalization and other employee
benefits do not discriminate scope, terms, or operations in favor of
officers or directors and are available generally to all salaried
employees.
2) Each Current Director also receives 5000 shares of Common Stock of the
Company for each month of service, beginning with the month of November,
1999. These shares are as yet unissued.
Stock Option Plan. The Company has a stock option plan in effect.
On December 8th 1999, the Company adopted the 1999 Employee Stock Option Plan,
(the "Plan"). The Plan is administered by a committee (the "Committee")
consisting of the Board of Directors or a committee of the board. Under the
Plan, the Committee may grant stock options, which may be incentive stock
options ("ISO's") as defined in the Internal Revenue Code, stock awards or
options which do not qualify as ISO's to employees and officers. All employees
of the Company are eligible to participate in the Plan. A maximum of 1,250,000
shares, subject to adjustment for certain events of dilution, are available for
grant under the Plan. During 1999 the Company did not grant any shares under the
Plan. In early 2000 the Company granted options to purchase an aggregate of
1,250,000 shares of Common Stock, including options to purchase 500,000 shares
granted to executive officers and directors at $0.80 per share, exercisable
through February, 2005.
Other Compensation Arrangements. The Company currently has 17 employees, all of
whom are exempt employees, whose annual salaries range from $18,000 to $102,000
and who also receive standard coverage health care insurance and participation
in an Employee Stock Option Plan described above.
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ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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There have been no transactions by the Company since its inception or which
are recently proposed in which (i) any Company director, officer, promoter or
greater than 10% shareholder (or a relative or spouse thereof, or any relative
of such a spouse) has or is to have a direct or indirect interest and (ii) the
amount exceeds $50,000.
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ITEM 8: DESCRIPTION OF SECURITIES
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The Company's Articles of Incorporation, as amended, authorize the
Company to issue 200 million shares of Common Stock, par value $.0001 per share.
As of December 31, 1999, there were 63,390,278 shares of Common Stock of the
Company issued and outstanding. On all matters submitted to a vote of the
shareholders, each holder of Common Stock has the right to one vote for each
share held of record. Holders of Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up of
the Company, holders of Common Stock have no preemptive rights and no right to
convert their Common stock into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock, and all outstanding
shares of Common Stock are fully paid and non-assessable.
Florida law does not require shareholder approval for the issuance of
authorized but unissued shares of Common Stock. Such issuances may be for a
variety of corporate purposes, including future private and public offerings to
raise additional capital or facilitate corporate acquisitions.
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PART II
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ITEM 1: MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
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At the present time, the Company's Common Stock trades on the National
Association of Securities Dealers Automated Quotation service as an
Over-the-Counter Bulletin Board (OTCBB) Company, Symbol: SCTN . This quotation
forum's prices represent quotations between dealers, without adjustment for
retail mark-up, mark-down, or commission, and do not necessarily represent
actual transactions.
The High and Low Bid Prices for the Company's Common Stock on the OTCBB
for each quarter of the last two fiscal years of the Company are as follows
1998 High Bid Low Bid
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IVQ $6.625 $1.875
1999
IQ $4.00 $1.25
IIQ $2.50 $0.50
IIIQ $4.375 $2.75
IVQ $3.375 $0.875
2000
IQ $5.25 $0.875
The Company has not paid any cash dividends on its Common Stock and
anticipates that, for the foreseeable future, earnings, if any, will continue to
be retained for use in its business. As of December 31, 1999, the number of
record holders of the Company's Common Stock was 265.
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ITEM 2: LEGAL PROCEEDINGS
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None
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ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTS
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None
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ITEM 4: RECENT SALES OF UNREGISTERED SECURITIES
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The Company engaged in the following sales of unregistered securities
during the past three years:
Acquisition of R&D Technology. The Company was incorporated in Florida
as Apple Tree Capital Corp. on October 4, 1996 and remained essentially inactive
until, effective November 18, 1998, it changed its name to Schimatic Cash
Transactions Network.com, Inc. In connection with this transaction the Company
issued 3,500,000 shares of its Common Stock to 120 individual shareholders who
had individually agreed to exchange their shares in R & D Technology, Inc., a
privately held company. No commissions or other remuneration were paid by the
Company in connection with these transactions. There was no corporate vote taken
and no form of general solicitation or advertising was employed. All securities
were issued with restrictive legends prohibiting further transfer without
registration or proof of exemption. The transactions were exempt from the
registration requirements of the 1933 Act by virtue of Section 4(2) thereof.
Shares Issued for Services. During the period from inception through
September 30, 1999, the Company issued from time to time an aggregate of
6,813,490 shares of restricted Common Stock to 33 individuals and entities in
exchange for services rendered. During the period from October 1, 1999 through
December 31, 1999, the Company issued an aggregate of 6,990 shares of restricted
Common Stock to 7 individuals and entities in exchange for services rendered.
The services included programming and computer related services, legal,
financial, consulting, public relations and similar services. All securities
were issued with restrictive legends prohibiting further transfer without
registration or proof of exemption. The issuance of these shares was exempt from
the registration requirements of the 1933 Act by virtue of Section 4(2) thereof.
Shares Issued for Cash. During the period February 26, 1997 through
December 31, 1997, IC One, Inc. issued 3,299,454 shares of common stock for an
aggregate consideration of $932,882 in cash. During the period January 1, 1998
through December 31, 1998, the Company issued 5,732,546 shares of common stock
for an aggregate consideration of $1,626,518 in cash. These shares were tendered
to the Company in connection with the IC One acquisition described below. During
the period January 1, 1999 to September 30, 1999, the Company issued an
aggregate of 184,000 shares of restricted Common Stock to 6 individuals and
firms in exchange for an aggregate of $51,500 cash. During the period October 1,
1999 to December 31, 1999, the Company issued an aggregate of 229,865 shares of
restricted Common Stock to 14 individuals and firms in exchange for an aggregate
of $155,650 cash. No form of general solicitation or advertising was employed.
During this period there was an additional 875,000 shares issued for previously
existing debt. These shares were issued by the Company through its officers and
employees who received no special compensation therefor. Proceeds were used for
working capital. The issuance of these shares was exempt from the registration
requirements of the 1933 Act by virtue of Section 4(2) thereof.
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Acquisition of IC One In May, 1999 several major shareholders of IC One,
Inc., a privately held Company, agreed to exchange their shares for shares of
the Company's Common Stock. This exchange was not embodied in any plan of merger
or consolidation under state law. In June - August 1999, the major shareholders
of IC One, a private company (who then owned no shares of the Company) solicited
offers from approximately 30 of their fellow IC One shareholders to increase the
total shares exchanged above the stated threshold level. No form of general
solicitation or advertising was employed. While meetings were held to discuss
the transactions, no formal vote of shareholders to take corporate action on any
plan was ever solicited or obtained. Each shareholder tendered shares by way of
a written consent. By the end of July 1999, tenders of 30,826,087 IC One Shares
by 36 shareholders had been obtained, and the Company commenced to close the
transaction on or about August 1, 1999, by obtaining transfer to the Company of
certificates for IC One Common Stock. On August 17, 1999, the Company issued
certificates for 23,394,530 shares of its Common Stock to the former IC One
shareholders who had tendered their shares. Effective August 18, 1999 IC One,
Inc. was merged into the Company. From August through December, 1999 the Company
issued an additional 19,005,470 shares of its Common stock to the remaining
former IC One shareholders. There was no form of general solicitation. No
commissions or other remuneration were paid by the Company in connection with
these transactions. All securities were issued with restrictive legends
prohibiting further transfer without registration or proof of exemption. The
transactions were exempt from the registration requirements of the 1933 Act by
virtue of Section 4(2) thereof.
Stock Dividend. In July, 1999, the Company issued an aggregate of 4,788,678
shares of restricted Common Stock to 161 individuals and firms as a stock
dividend. The purpose of this distribution was to protect existing stock
ownership from dilution as a result of the IC One acquisition. No promotion or
any form of advertising was employed. These shares were issued by the Company
through its officers and employees who received no special compensation
therefor. The issuance of these shares was exempt from the registration
requirements of the 1933 Act by virtue of Section 4(2) thereof.
Purchase of Building. On December 30,1999 the Company issued 420,000 shares
of its Common stock to 3 individuals and entities in connection with its
purchase of a building (see above under "Properties"). No commissions or other
remuneration were paid by the Company in connection with these transactions. All
securities were issued with restrictive legends prohibiting further transfer
without registration or proof of exemption. The transactions were exempt from
the registration requirements of the 1933 Act by virtue of Section 4(2) thereof.
Loans by Shareholders The Company obtained short term loans from 4
shareholders during 1999 in the amount of approximately $540,325. These loans
are due in 1 year and bear interest at 10%. The purpose of these loans was to
provide working capital. These loans were issued by the Company through its
officers and employees who received no special compensation therefor. The
issuance of these shares was exempt from the registration requirements of the
1933 Act by virtue of Section 4(2) thereof.
18
<PAGE>
- --------------------------------------------------------------------------------
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
The Company's bylaws provide for indemnification of directors and officers to
the full extent provided by law.
Section 607.0850 of the Florida Corporation Law, under which the Company is
incorporated, provides in essence that a corporation shall have power to
indemnify any person who was or is a party to any proceeding (other than an
action by, or in the right of, the corporation), by reason of the fact that he
or she 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 liability incurred in connection with such proceeding,
including any appeal thereof, if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
19
<PAGE>
PART F/S
- --------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Please see page F - 1 of Exhibits.
20
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC.
D/B/A IC ONE, INC
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Page
Number
---------
INDEPENDENT AUDITORS' REPORT F-2
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet F-3
Statements of Operations F-4
Statements of Shareholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7--F-12
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Schimatic Cash Transactions Network.com, Inc.
We have audited the accompanying consolidated balance sheet of
Schimatic Cash Transactions Network.com, Inc. (A Development Stage
Enterprise) as of December 31, 1999 and the related consolidated
statements of operations, shareholders' deficit and cash flows for the
years ended December 31, 1999 and 1998 and for the period February 26,
1997 (inception) to December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above
present fairly, the consolidated financial position of Schimatic Cash
Transactions Network.com, Inc. (A Development Stage Enterprise) as of
December 31, 1999 and the consolidated results of its operations and
its cash flows for the years ended December 31, 1999 and 1998 and for
the period February 26, 1997 (inception) to December 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company incurred
losses of $9,793,000 since inception. Additionally, the Company had a
working capital and a total capital deficiency of approximately
$2,854,000 and $2,236,000 at December 31, 1999. These conditions raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans with respect to these matters are also
described in Note 2 to the financial statements. The accompanying
financial statements do not include any adjustments that might result
should the Company be unable to continue as a going concern.
/s/ Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
March 28, 2000
F-2
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC. d/b/a IC ONE, Inc.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEET
December 31, 1999
ASSETS
CASH $ 6,002
PROPERTY AND EQUIPMENT, less accumulated
depreciation and amortization of $164,426 178,212
PATENTS, net of accumulated amortization of $6,496 40,358
INVESTMENT IN REAL ESTATE JOINT VENTURE 400,000
------------
$ 624,572
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 1,667,415
Accrued expenses and other liabilities 477,684
Notes payable 375,000
Loans payable - shareholder 340,325
------------
TOTAL CURRENT LIABILITIES 2,860,424
------------
COMMITMENTS AND CONTINGENCIES
-
SHAREHOLDERS' DEFICIT:
Common stock - $.001 par value; 200,000,000 shares
authorized; 63,390,278 shares issued and outstanding. 63,390
Additional paid-in capital 8,834,431
Deficit accumulated during the
development stage (11,133,673)
------------
TOTAL SHAREHOLDERS' DEFICIT (2,235,852)
------------
$ 624,572
============
See notes to consolidated financial statements
F-3
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC. D/B/A IC ONE, INC.
( A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
February 26, 1997
(Inception)
Year Ended Year Ended through
December 31, December 31, December 31,
1999 1998 1999
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES: $ - $ - $ -
COSTS AND EXPENSES:
Research and development 1,313,577 1,450,186 3,014,352
Selling, general and administrative 2,027,943 1,499,841 4,490,922
Interest expense 238,928 35,386 283,314
Depreciation and amortization 85,811 76,100 170,922
Loss on settlement of vendor liability 1,533,333 - 1,533,333
-------------- -------------- --------------
TOTAL COSTS AND EXPENSES 5,199,592 3,061,513 9,492,843
-------------- -------------- --------------
LOSS BEFORE EXTRAORDINARY ITEM (5,199,592) (3,061,513) (9,492,843)
EXTRAORDINARY ITEM - LOSS ON
EXTINGUISHMENT OF DEBT (300,000) - (300,000)
-------------- -------------- --------------
NET LOSS $ (5,499,592) $ (3,061,513) $ (9,792,843)
============== ============== ==============
NET LOSS PER SHARE - BASIC AND DILUTED:
LOSS BEFORE EXTRAORDINARY ITEM $ (0.15) $ (0.72) $ (0.70)
EXTRAORDINARY ITEM (0.01) - (0.02)
-------------- -------------- --------------
NET LOSS - BASIC AND DILUTED $ (0.16) $ (0.72) $ (0.72)
============== ============== ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 33,966,498 4,258,212 13,588,132
============== ============== ==============
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC. D/B/A IC ONE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
--------------------------
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE - February 26, 1997 - - - -
Issuance of shares for cash 3,299,454 $ 3,299 $ 929,583 - $ 932,882
Net loss - - - (1,231,738) (1,231,738)
----------- ----------- ----------- ------------ -------------
BALANCE - December, 1997 3,299,454 3,299 929,583 (1,231,738) (298,856)
Issuance of shares for:
Cash 3,522,724 3,523 1,622,995 - 1,626,518
Acquisition of R&D Technology, Inc. 2,229,822 2,230 (2,230) - -
Net loss - - - (3,061,513) (3,061,513)
----------- ----------- ----------- ------------ -------------
BALANCE - December 31, 1998 9,052,000 9,052 2,550,348 (4,293,251) (1,733,851)
Issuance of shares for :
Cash 831,788 831 1,332,017 - 1,332,848
Debt 2,003,624 2,004 3,316,883 - 3,318,887
Services 6,819,990 6,820 344,007 - 350,827
Stock dividend 4,788,678 4,789 1,336,041 (1,340,830) -
Acquisition of IC One, Inc. 42,400,000 42,400 (447,371) - (404,971)
Investment in real estate joint venture 420,000 420 399,580 400,000
Shares contributed to treasury
and cancelled (2,925,802) (2,926) 2,926 - -
Net loss - - - (5,499,592) (5,499,592)
----------- ----------- ----------- -------------- ---------------
BALANCE - December 31, 1999 63,390,278 $ 63,390 $ 8,834,431 $ (11,133,673) $ (2,235,852)
=========== =========== =========== ============== ==============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC. D/B/A IC ONE, INC.
( A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
February 26, 1997
(Inception)
Year Ended Year Ended to
December 31, December 31, December 31,
1999 1998 1999
--------------- ------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,499,592) $ (3,061,513) $ (9,792,843)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 85,811 76,100 170,922
Stock issued for services 350,827 - 350,827
Loss on extinguishment of debt 300,000 - 300,000
Loss on settlement of vendor liability 1,533,333 - 1,533,333
Changes in assets and liabilities:
Increase in inventory - - -
Decrease in other assets 30,018 30,000 -
Increase in accounts payable and accrued expenses 1,424,964 956,583 3,566,007
--------------- ------------- ---------------
NET CASH USED IN OPERATING ACTIVITIES (1,774,639) (1,998,830) (3,871,754)
--------------- ------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (48,290) (112,424) (342,638)
Acquisition of patents (15,079) (46,854)
--------------- ------------- ---------------
NET CASH USED IN INVESTING ACTIVITIES (63,369) (112,424) (389,492)
--------------- ------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in cash deficit - (981) -
Proceeds from notes and loans 480,325 516,554 375,000
Sales of common stock 1,332,848 1,626,518 3,892,248
--------------- ------------- ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,813,173 2,142,091 4,267,248
--------------- ------------- ---------------
NET INCREASE (DECREASE) IN CASH (24,835) 30,837 6,002
CASH AT BEGINNING OF PERIOD 30,837 - -
--------------- ------------- ----------------
CASH AT END OF PERIOD $ 6,002 $ 30,837 $ 6,002
=============== ============= ================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ - $ - $ -
=============== ============= ================
Income taxes $ - $ - $ -
=============== ============= ================
Non-cash financing and investing activities:
Issuance of stock for:
Conversion of debt to equity $ 1,485,554 $ - $ 1,485,554
=============== ============= ================
Acquisition of IC One, Inc. $ 404,971 $ - $ 404,971
=============== ============= ================
Common stock dividend $ 1,340,830 $ - $ 1,340,830
=============== ============= ================
Investment in real estate partnership $ 400,000 $ - $ 400,000
=============== ============= ================
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
<PAGE>
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC.
D/B/A IC ONE, INC.
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1999
1. THE COMPANY
Schimatic Cash Transactions Network.com, Inc. (the "Company") is in
the business of research, development and integration of proprietary
smart card and Internet technologies to implement loyalty and
incentive purchase programs. The Company also uses its technology in
value-added smart card and e-commerce applications to retail and other
consumer marketing clients.
The Company was incorporated in Florida as Apple Tree Capital Corp. in
October 1996 and remained inactive until it merged in November 1998
with Schimatic Technologies, Inc. and concurrently changed its name to
Schimatic Cash Transactions Network.com, Inc.
In November 1998, the Company issued 2,229,822 shares for all of the
shares of R&D Technology, Inc., a privately held company providing
internet-based marketing solutions.
In September 1999, the Company acquired all of the outstanding shares
of IC One Inc. ("IC One") in exchange for 42,400,000 shares of its
common stock. The transaction was deemed a reverse acquisition and
accordingly, the historical financial statements prior to October 1999
are those of IC One.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company incurred
losses of $9,793,000 since inception. Additionally, the Company had a
working capital and a total capital deficiency of $2,854,000 and
$2,236,000 at December 31, 1999. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans with respect to these matters include restructuring
its existing debt, raising additional capital through future issuances
of stock and or debentures and ultimately developing a viable
business. The accompanying financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue as a going concern.
F-7
<PAGE>
3. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation.
SOFTWARE DEVELOPMENT COSTS - In accordance with SFAS No. 86,
"Accounting for Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed", software development costs are expensed as
incurred until technology feasibility has been established. The
Company defines the establishment of technological feasibility as the
completion of all planning, designing, coding and testing activities
that are necessary to establish products that meet design
specifications including functions, features and technical performance
requirements. As of December 31, 1999, the Company had not established
technological feasibility.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Depreciation is calculated using the straight-line method over
estimated useful lives of three to seven years. Depreciation and
amortization expense related to property and equipment was $82,463 and
$74,527 in 1999 and 1998, respectively.
INTANGIBLE ASSETS - Patents and trademarks are amortized ratably over
fourteen years.
STOCK-BASED COMPENSATION - The company accounts for stock-based
compensation transactions in accordance with APB No. 25, "Accounting
for Stock Issued to Employees". In accordance with Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation", the Company adopted the pro forma
disclosure requirements of SFAS 123.
INCOME TAXES - The Company follows Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", which requires
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
assets and liabilities are based on the differences between the
financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse.
LOSS PER COMMON SHARE - Net loss per common share is based on the
weighted average number of shares outstanding. Potential common shares
includable in the computation of fully diluted per share results are
not presented in the financial statements as their effect would be
anti-dilutive.
F-8
<PAGE>
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company considers its
financial instruments, which are carried at cost, to approximate fair
value due to their near-term maturities.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company reviews long-lived
assets for impairment whenever circumstances and situations change
such that there is an indication that the carrying amounts may not be
recovered. At December 31, 1999, the Company believes that there has
been no impairment of its long-lived assets.
NOTES PAYABLE
At December 31, 1999, notes payable were as follows:
<TABLE>
<CAPTION>
<S> <C>
Note payable - Canopy Group, Inc., interest
payable at 8% per annum; the note is secured
by certain assets of the Company and is payable
on demand $250,000
125,000
Notes payable - other, unsecured and payable ----------
on demand with interest at 10 percent per annum. $375,000
==========
</TABLE>
5. LOANS PAYABLE -OFFICER
The loans are primarily non-interest bearing advances on behalf of the
Company, unsecured and payable on demand.
6. LEASE COMMITMENTS
The Company occupies office space requiring lease payments
approximating $105,000 per annum through September 2002.
F-9
<PAGE>
7. INCOME TAXES
At December 31, 1999, the Company had net operating loss carryovers of
approximately $5,250,000 available as offsets against future taxable
income, if any, which expire at various dates through 2019.The Company
has a deferred tax asset arising from such net operating loss
deductions and has recorded a valuation allowance for the full amount
of such deferred tax asset.
A significant portion of these carry forwards may be subject to
limitations on annual utilization due to "equity structure shifts" or
"owner shifts" involving "5 percent stockholders" (as defined in the
Internal Revenue Code), which resulted in more than a 50% change in
ownership.
The difference between the recorded income tax benefits and the
computed tax benefits using a 40 percent effective rate are as
follows:
Year Ended December 31,
----------- ----------
1999 1998
----------- ----------
Computed expected income tax benefit $ 2,200,000 $ 1,225,000
Non-deductible items (751,000) (3,000)
Benefits not recorded (1,449,000) (1,222,000)
----------- ----------
- -
=========== ==========
8. STOCK OPTION PLAN
On December 8, 1999, the Company adopted the 1999 Employee Stock
Option Plan, (the "Plan"). The Plan is administered by a committee
(the "Committee") as selected by the board. Under the Plan, the
Committee may grant stock options, which may be incentive stock
options ("ISO's") as defined in the Internal Revenue Code, stock
awards or options which do not qualify as ISO's to employees and
officers. All employees of the Company are eligible to participate in
the Plan. A maximum of 1,250,000 shares, subject to adjustment for
certain events of dilution, are available for grant under the Plan.
During 1999, the Company did not grant any shares under the Plan.
Pursuant to an agreement with R&D Technology, Inc. prior to the IC One
merger, the Company's chairman and chief executive officer, was issued
options for 6,778,000 post merger shares of the Company's common
stock. The original agreement, dated November 1, 1998 was ratified by
the Board of the Company on November 11, 1999. The options are
exercisable at $0.15 per share through November 30, 2002.
F-10
<PAGE>
9. ACQUISITION OF IC ONE, INC.
In September 1999, the Company acquired all of the outstanding shares
of IC One, Inc. in exchange for 42,400,000 shares of its common stock.
For accounting purposes, the acquisition was treated as a
recapitalization of IC One with IC One as the acquirer (reverse
acquisition). The historical financial statements prior to October
1999 are those of IC One.
The Company issued 5,700,000 restricted shares in 1999 to certain
unrelated persons for consulting services in connection with the
acquisition. Such amount was included in additional paid-in capital in
the financial statements.
10. OUTSIDE RESEARCH AND DEVELOPMENT SERVICES
The Company retained IBM in 1997 to perform certain research and
development services relating to the Company's database technology. As
of December 31, 1999, cumulative costs incurred for such services
approximated $2,000,000, of which $1,400,000 remains unpaid. During
1999, the Company issued 700,000 shares of stock in addition to cash
of $125,000 as partial payments for such services. The market value of
such shares exceeded the liquidated portion of the payable by $
1,533,333 and was included in the results of operations in 1999.
Additionally, the Company placed 1,400,000 shares in escrow to secure
the remaining unpaid debt.
11. INVESTMENT IN REAL ESTATE JOINT VENTURE
On December 30, 1999, the Company issued 420,000 restricted shares for
a thirty-four percent interest in a real estate joint venture, which
acquired land and a three-story office building in Salt Lake City,
Utah at a cost of $896,291. The consideration paid by the joint
venture consisted of: cash - $261,291; notes - $500,000 and 270,000
shares of the Company's restricted stock valued at $135,000. The note
calls for monthly payments of $3,845 for which the Company is jointly
and severally obligated.
The Company has agreed to purchase the sixty-four percent interest of
its partner in January 2001 for $322,000. Such amount will be
satisfied by the partner's retention of 150,000 shares issued to the
joint venture at December 31, 1999. In the event that the shares have
a market value less than $322,000 at that date, the Company will be
obligated to make a cash payment for the difference between the market
value of such shares and $322,000. Any amount of value above $322,000
remains with the partner as additional compensation.
F-11
<PAGE>
12. EXTRAORDINARY ITEM
In November 1999, the Company issued 175,000 shares of common stock
with a market value of $450,000 to repay a loan of $150,000 received
from a shareholder. The excess of market value over the debt was
included in the financial statements as an extraordinary item.
F-12
<PAGE>
PART III
- --------------------------------------------------------------------------------
ITEMS 1 AND 2. INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS
- --------------------------------------------------------------------------------
The following exhibits are included as part of this Registration
Statement:
EXHIBIT NO. DESCRIPTION
2.1 Articles of Incorporation, Apple Tree Capital Corp, dated
Oct 4, 1996
2.2 Articles of Amendment - Name change from Schimatic Technologies,
Inc. to Schimatic Cash Transactions Network.com, Inc. dated
January 15, 1999
2.3 Bylaws of Schimatic Cash Transactions Network.com, Inc. dated
January 15, 1999
3.1 Form of Common Stock Certificate
6.1 Marketing Agreement between IC One, Inc. and Global Capital Limited,
LLC dated August 6, 1999
6.2 Letter Agreement between IC One, Inc. and IBM dated August 4, 1999
6.3 Marketing Agreement between IC One, Inc. and eExpo, Inc. dated
June 22,1999
6.4 Building Purchase and Sale agreement between SCTN and LK Fox
Charitable Remainder Unitrust and JK Family Partnership dated
December 29, 1999
27 Financial Data Schedule
21
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC.
(Registrant)
By: /s/ David J. Simon
-------------------------------
David J. Simon, President/CEO
Date: April 13, 2000
22
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
October 4, 1996
CAPITAL CONNECTION
417 E. VIRGINIA ST.
SUITE 1
TALLAHASSEE, FL 32301
The Articles of Incorporation for APPLE TREE CAPITAL CORP. were filed on October
4, 1996 and assigned document number P96000082100. Please refer to this number
whenever corresponding with this office regarding the above corporation. The
certification you requested is enclosed.
PLEASE NOTE: COMPLIANCE WITH THE FOLLOWING PROCEDURES IS ESSENTIAL TO
MAINTAINING YOUR CORPORATE STATUS. FAILURE TO DO SO MAY RESULT IN DISSOLUTION OF
YOUR CORPORATION.
A CORPORATION ANNUAL REPORT MUST BE PILED WITH THIS OFFICE BETWEEN JANUARY 1 AND
MAY 1 OF EACH YEAR BEGINNING WITH THE CALENDAR YEAR FOLLOWING THE YEAR OF THE
FILING DATE NOTED ABOVE AND EACH YEAR THEREAFTER. FAILURE TO FILE THE ANNUAL
REPORT ON TIME MAY RESULT IN ADMINISTRATIVE DISSOLUTION OF YOUR CORPORATION.
A FEDERAL EMPLOYER IDENTIFICATION (FEI) NUMBER MUST BE SHOWN ON THE ANNUAL
REPORT FORM PRIOR TO ITS RUNG WITH THIS OBE. CONTACT THE INTERNAL REVENUE
SERVICE TO RECEIVE THE PEI NUMBER IN TIME TO FILE THE ANNUAL REPORT AT
1-800-8293676 AND REQUEST FORM SS-4.
SHOULD YOUR CORPORATE MAILING ADDRESS CHANGE, YOU MUST NOTIFY THIS OFFICE IN
WRITING, TO INSURE IMPORTANT MAILINGS SUCH AS THE ANNUAL REPORT NOTICES REACH
YOU.
Should you have any questions regarding corporations, please contact this office
at the address given below.
Teresa Brown, Corporate Specialist
New Filing Section Letter Number: 596A00045423
Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314
<PAGE>
[OMITTED DOCUMENT #P96000082100 (4) - PROFIT CORPORATION ANNUAL REPORT FOR 1998]
<PAGE>
ARTICLES OF INCORPORATION
OF
APPLE TREE CAPITAL CORP.
The undersigned, desiring to form a corporation (the "Corporation")
under the laws of Florida, hereby adopts the following Articles of
Incorporation:
ARTICLE I
CORPORATE NAME
The name of the Corporation is Apple Tree Capital Corp.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000
shares of common stock, $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The initial address of the principal place of business of this
corporation in the State of Florida shall be 1428 Brickell Avenue, 8th Floor,
Miami, FL 33131. The Board of Directors may at any time and from time to time
move the principal office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less man one (1) and,
subject to such minimum
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may be increased or decreased from time to time in the manner provided in the
By-Laws. The number of persons constituting the initial Board of Directors shall
be 1. The Board of Directors shell be elected by the Stockholders of the
corporation at such time and in such manner as provided in the By-Laws. The name
and addresses of the initial Board of Directors and officers are as follows:
Eric P. Littman President/Director
1428 Brickell Avenue, 8th Floor
Miami, FL 33131
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other
securities of the Corporation except to the extent such right may be granted by
an amendment to these Articles of Incorporation or by a resolution of the board
of Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act not with standing, bylaws shall not be adopted, modified,
amended or repealed by the shareholders of the Corporation except upon the
affirmative vote of a simple majority vote of the holders of ail the issued and
outstanding shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1. Inspection of Books. The board of directors shall make reasonable
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2. Control Share Acquisition. The provisions relating to any control
share acquisition as mined in Florida Statutes now, or hereinafter amended, and
any successor provision shall not apply to the Corporation.
9.3. Quorum. The holders of shares entitled to one-third of the votes
at a meeting of shareholder's shall constitute a quorum.
9.4. Required Vote. Acts of shareholders shall require the approval of
holders of 50.01% of the outstanding votes of shareholders.
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ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed b the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
ARTICLE XI
SUBSCRIBER
The name and address of the person signing these Articles of
Incorporation as subscriber is:
Eric P. Littman
8th Floor
1428 Brickell Avenue
Miami, FL 33131
ARTICLE XII
CONTRACTS
No contract a other transaction between this corporation and any
person, firm or corporation shall be affected by the fact that any officer or
director of this corporation is such other party or is, or at some time in the
future becomes, an officer, director or partner of such other contracting party,
or has now a hereafter a direct or indirect interest in such contract.
ARTICLE XIII
RESIDENT AGENT
The name and address of the initial resident agent of this corporation
is:
Eric P. Littman
1428 Brickell Avenue
8th Floor
Miami, FL 33131
IN WITNESS WHEREOF, I have hereunto subscribed to and executed these
Articles of Incorporation this on September 25, 1996.
/s/ Eric P. Littman
----------------------------
Eric P. Littman, Subscriber
Subscribed and Sworn on September 25, 1996 Before me:
/s/ Isabel J. Cantera
- ----------------------------------------
Isabel Cantera, Notary Public
My Commission Expires:
3
FLORIDA DEPARTMENT OF STATE
Katherine Harris
Secretary of State
January 15, 1999
CAPITAL CONNECTION, INC.
TALLAHASSEE, FL
Re: Document Number P96000082100
The Articles of Amendment to the Articles of Incorporation of SCHIMATI
TECHNOLOGIES, INC. which changed its name to SCHIMATI CASH TRANSACTIONS
NETWORK.COM INC., a Florida corporation, were flied on January 14, 1999.
Should you have any questions regarding this matter, please telephone (850)
487-6050, the Amendment Filing Section.
Teresa Brown
Corporate Specialist
Division of Corporations Letter Number: 099A00002062
Division of Corporations - P.O. BOX 6327 - Tallahassee, Florida 32314
<PAGE>
ARTICLES OF AMENDMENT TO
SCHIMATIC TECHNOLOGIES, INC.
THE UNDERSIGNED, being the CEO and Chairman of the Board of SCHIMATIC
TECH NOLOGIES, INC. does hereby amend its Articles of Incorporation as follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation shall be of SCHIMATIC Cash Transactions
Network.com, Inc.
I hereby certify that the following was adopted by a majority vote of
the shareholders and directors of the corporation on January 12, 1999 and that
the number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on January 12, 1999.
/s/ John Lamb
- ---------------------------------------
John Lamb CEO and Chairman of the Board
The foregoing instrument was acknowledged before me on January 12,
1999, by John Lamb, who is personally known to me.
/s/ Dawn S. Buchan
--------------------------
Notary Public
My commission expires:
3-18-00 [NOTARY SEAL]
DAWN S. BUCHAN
Notary Public - Nevada
My appt. exp. Mar. 18, 2000
No. 92-0168-1
<PAGE>
State of Florida
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of APPLE TREE CAPITAL CORP., a Florida corporation, filed on
October 4, 1996, as shown by the records of this office.
The document number at this corporation is P96000082100.
Given under my hand and the Great
Seal of the State of Florida, at
Tallahassee, the Capitol, this
the Fourth day of October, 1996
/s/ Sandra B. Mortham
[STATE SEAL] Sandra B. Mortham
Secretary of State
BY-LAWS
OF
SCHIMATIC CASH TRANSACTIONS NETWORK.COM, INC.
ARTICLE I. MEETING OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of
this corporation shall be held on the 30th day of June of each year or at such
other time and place designated by the Board of Directors of the corporation.
Business transacted at the annual meeting shall include the election of
directors of the corporation. If the designated day shall fall on a Sunday or
legal holiday, then the meeting shall be held on the first business day
thereafter.
Section 2. Special Meetings. Special meeting of the shareholders shall
be held when directed by the President or the Board of Directors, or when
requested in writing by the holders of not less than 10% of all the shares
entitled to vote at the meeting. A meeting requested by shareholders shall be
called for a date not less than 3 nor more than 30 days after the request is
made, unless the shareholders requesting the meeting designated a later date.
The call for the meeting shall be issued by the Secretary, unless the President,
Board of Directors, or shareholders requesting the meeting shall designate
another person to do so.
Section 3. Place. Meeting of shareholder shall be held at the principal
place of business of the corporation or at such other place as may be designated
by the Board of
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Directors.
Section 4. Notice. Written notice stating the place, day and hour of
the meeting and in the case of a special meeting, the purpose or purposes for
which the meeting is called, shell be delivered not less than 3 nor more than 30
days before the meeting, either personally or by first class mail, or by the
direction of the President, the Secretary or the officer or persons calling the
meeting to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meeting When a meeting is adjourned to
another time a piece, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been transacted on the
original date of the meeting. If, however, after the adjournment the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given as provided in this Article to each shareholder
of record on a now record date entitled to vote at such meeting.
Section 6. Shareholder Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the at of the shareholders unless otherwise provided by
law.
Section 7. Voting of Shares. Each outstanding share shall be entitled
to one vote
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on each matter submitted to a vote at a meeting of shareholders.
Section 8. Proxies. A shareholder may vote either in person or by proxy
executed in writing by the shareholder or his duly authorized attorney in-fad.
No proxy shall be valid after the duration of 11 months from the date thereof
unless otherwise provided in the proxy.
Section 9. Action by Shareholders Without a Meeting. Any action
required by law or authorized by these by-laws or the Articles of Incorporation
of this corporation or taken or to be taken at any annual or special meeting of
shareholders, or any action which may be token at any annual or special meeting
of shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
ARTICLE II. DIRECTORS
Section 1. Function. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors.
Section 2. Qualification. Directors need not be residents of this state
or shareholders of this corporation.
Section 3. Compensation. The Board of Directors shall have authority to
fix the Compensation of directors.
Section 4. Presumption of ALL A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall
3
<PAGE>
be presumed to have assented to the action taken unless he votes against such
action or abstains from voting in respect thereto because of an asserted
conflict of interest.
Section 5. Number. This corporation shall have a minimum of 1 director
but no more than 7.
Section 6. Election and Term. Exit person named in the Articles of
Incorporation as a member of the initial Board of Directors shall hold office
until the next shareholder meeting or until his earlier resignation, removal
from office or death. If no shareholder meeting takes place, each director shall
continue serve until such meeting takes place. At each shareholder the
shareholders shall elect directors to hold office until the next succeeding
shareholder meeting. Each director shall hold office for a term for which he is
elected end until his successor shall have been elected and qualified or until
his earlier resignation, removal from office or death.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
Directors, may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the neat election of
directors by the shareholders.
Section 8. Removal of Directors. At a meeting of shareholders called
expressly for that purpose, any director or the entire Board of Directors may be
removed, with or without cause, by a vote of the holders of a majority of the
shares then entitled to vote at an election of directors.
Section 9. Quorum and Voting. A majority of the number of directors
fixed by these by-laws shall constitute a quorum for the transaction of
business. The act of a majority of
4
<PAGE>
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 10. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members an executive committee and one a more other committees
each of which, to the extent provided in such resolution shall have and may
excise all the authority of the Board of Directors, except as is provided by
law.
Section 11. Place Meeting. Regular end special meetings of the Board of
Directors shall be held at the principal place of business of the corporation or
as otherwise determined by the Directors.
Section 12. Time, Notice and Call of Meetings. Regular meetings of the
Board of Directors shall be hold without notice on the first Monday of the
calendar month two (2) months following the end of the corporation's fiscal, or
if the said first Monday is a legal holiday, then on the next business day.
Written notice of the time and place of special meetings of the Board of
Directors shall be given to each director by either personal delivery, telegram
or cablegram at least three (3) days before the meeting or by notice mailed to
the director at least 3 days before the meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully
5
<PAGE>
called or convened.
Neither the business to be transacted at, nor the purpose, of any
regular or special meeting of the Board of Directors need be specified in the
notice of waiver of notice of such meeting. A majority of the directors present,
whether or not a quorum exists, may adjourn any meeting of the Board of
Directors to another time and place. Notice of any such adjourned meeting shall
be given to the directors who were not present at the time of the adjournment,
and unless the time and place of adjourned meeting are announced at the time of
the adjournment, to the other directors. Meetings of the Board of Directors may
be called by the chairman of the board, by the president of the corporation or
by any two directors.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 13. Action Without a Meeting. Any action, required to be taken
at a meeting of the Board of Directors, or any action which may be taken at a
meeting of the Board of Directors or a committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action so to be taken, is
signed by such number of the directors, or such number or the members of the
committee, as the case may be, as would constitute the requisite majority
thereof for the taking of such actions, is filed in the minutes of the
proceedings of the board or of the committee. Such actions shall then be doomed
taken with the same force and effect as though taken at a meeting of such board
or committee whereat all members were present and voting throughout and those
who signed such
6
<PAGE>
action shall have voted in the affirmative and all others shall have voted in
the negative. For informational purposes, a copy of such signed actions shall be
mailed to all members of the board or committee who did not sign said action,
provided however, that the failure to mail said notices shall in no way
prejudice the actions of the board or committee.
ARTICLE III. OFFICERS
Section 1. Officers. The officers of this corporation shall consist of
a president, a secretary and a treasurer, each of whom shall be elected by the
Hoard of Directors. Such other officers and assistant officers and agents as may
be deemed necessary may be elected or appointed by the Board of Directors from
time to time. Any two or more offices may be held by the same person.
Section 2. Duties. The officers of this corporation shall have the
following duties: The President shall be the chief executive officer of the
corporation, shall have general and active management of the business and
affairs of the corporation subject to the directions of the Board of Directors,
and shall preside at all meetings of the shareholders and Board of Directors.
The Secretary shall have custody of, and maintain, all of the corporate
records except the financial records; shall record the minutes of ail meetings
of the shareholders and Board of directors, send all notices of all meetings and
perform such other duties as may be prescribed by the Board of Directors or the
President
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board
7
<PAGE>
of Directors or the President, and shall perform such other duties as may be
prescribed by the Board of Directors or the President.
Section 3. Removal of Officers. An officer or agent elected or
appointed by the Board of Directors may be removed by the board whenever in its
judgment the best interests of the corporation will be served thereby. Any
vacancy in any office may be filed by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
Section 1. Issuance. Every holder of shares in this corporation shall
be entitled to have a certificate representing all shares to which he is
entitled. No certificate shall be issued for any share until such share is fully
paid.
Section 2. Form. Certificates representing shares in this corporation
shall be signed by the President or Vice President and the Secretary or an
Assistant Secretary and may be sealed with the seal of this corporation or a
facsimile thereof
Section 3. Transfer of Stock. The corporation shall register a stock
certificate presented to it for transfer if the certificate is properly endorsed
by the holder of record or by his duly authorized attorney.
Section 4. Lost. Stolen or Destroyed Certificates. If the shareholder
shall claim to have lost or destroyed a certificate of shares issued by the
corporation, a new certificate shall be issued upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other Indemnity in such amount and with such sureties, if any, as
the board may reasonably require.
8
<PAGE>
ARTICLE V. BOOKS AND RECORDS
Section 1. Books and Records. This corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of its shareholders, Board of Directors and committee of directors.
This corporation shall keep at its registered office, or principal
place of business a record of its shareholders, giving the names and addresses
of all shareholders and the number of the shares held by each.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
Section 2. Shareholders' Inspection Rights. Any person who shall have
been a holder of record of shares of voting trust certificates therefor at least
six months immediately preceding his demand or shall be the holder of record of,
or the holder of record of voting trust certificates for, at least five percent
of the outstanding shares of the corporation, upon written demand stating the
purpose thereof, shall have the right to examine, in person or by agent or
attorney, at any reasonable time or times, for any proper purpose its relevant
books and records of accounts, minutes and records of shareholders and to make
extracts therefrom.
Section 3. Financial Information. Not later than four months after the
close of each fiscal year, this corporation shall prepare a balance sheet
showing in reasonable detail the financial condition of the corporation as of
the close of its fiscal year, and a profit and loss statement showing the
results of the operations of the corporation during the fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for shares of the corporation, the corporation shall mail to each
shareholder or holder of voting
9
<PAGE>
trust certificates a copy of the most recent such balance shit and profit and
Ions statement. The balance sheets and profit and loss statements shall be filed
in the registered office of the corporation in this state, shall be kept for at
least five years, and shall be subject to inspection during business hours by
any shareholder or holder of voting trust certificates, in person or by agent.
ARTICLE VI. DIVIDENDS
The Board of Directors of this corporation may, from time to time,
declare and the corporation may pay dividends on its shares in cash, property or
its own shares, except when the corporation is insolvent or when the payment
thereof would under the corporation insolvent subject to the provisions of the
Florida Statutes.
ARTICLE VII. CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be in
circular form. ARTICLE
ARTICLE VIII. AMENDMENT
These by-laws may be altered, amended or repealed, and new by-laws may
be adopted by the a majority vote of the directors of the corporation.
DATED is 15th day of January, 1999.
Signed: /s/ David J. Simon
10
[THIS SECTION IS ONE THIRD, IN THE SHADED AREA, ON THE LEFT HAND SIDE OF THE
CERTIFICATE]
- - NUMBER -
675
"The shares represented by this certificate have not been registered under the
Securities Act of 1933 (The "Act") and are restricted securities as that term is
defined in Rule 144 under the Act. The shares may no be offered for sale, sold
or otherwise transferred except pursuant to an effective registration statement
under the act or pursuant to an exemption from registration under the act, the
availability of which is to be established to the satisfaction of the Company."
[END OF SHADED AREA]
SCHIMATIC Cash Transactions COMMON STOCK
Network.com, Inc. - SHARES -
INCORPORATED UNDER THE LAWS *****2,5000**
OF THE STATE OF FLORIDA
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 806732 10 3
This Certifies That *** Michael G Jackson***
is the owner of ** TWO THOUSAND FIVE HUNDRED**
Fully paid and Non-Assessable Shares of Common Stock, Par Value of $0.001, of
SCHIMATIC Cash Transactions Network.com, Inc.
transferable on the books of the Corporation by the holder hereof, in person or
duly authorized attorney, upon surrender of this Certificate properly endorsed
or accompanied by a proper assignment. This certificate and the shares
represented hereby are issued and shall be held subject to all of the provisions
of the Articles of Incorporation and the Bylaws of the Corporation, and all
amendments thereto, copies of which are on file at the principal office of the
Corporation, to all of which the holder of this Certificate by acceptance hereof
assents. This Certificate is not valid unless countersigned by the Transfer
Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED: November 4, 1999
/s/ David J. Simon COUNTERSIGNED:
- ------------------------ Standard Registrar & Transfer Agency
David J. Simon, President P.O. Box 14411, Sta. "G"
Albuquerque, New Mexico 87111
[COMPANY SEAL]
By /s/ Mary C. Fernandez
/s/ Bry Bahrmann ------------------------------
- ----------------------- Transfer Agent and Registrar
Bry Bahrmann, Secretary Authorized Signature
<PAGE>
[THIS IS THE BACK OF THE CERTIFICATE]
SCHIMATIC Cash Transactions Network. Com, Inc.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIF MIN ACT - Custodian
TEN ENT - as tenants by the entireties ------------------
JT TEN - as joint tenants with right of (Cust) (Minor)
survivorship and not as under Uniform Gifts to Minors
tenants in common
ACT _______________________
(State)
Additional abbreviations may also be used though not in the above list.
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[-----------------------------------]
For Value Received, ___________________ hereby sell, assign and transfer unto
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING POSTAL ZIP COSE AND ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate and do hereby
irrevocably constitute and appoint Attorney to transfer the said stock on the
books of the within-named Corporation, with full power of substitution in the
premises.
Dated: ________________________ X______________________________________
X_____________________________________
Signature Guaranteed: NOTICE: The signature(s) to this assignment
must correspond with the name(s) as
NOTICE: written upon the face of the
Certificate in every particular,
without alternation or enlargement or
any change whatsoever.
IMPORTANT: SIGNATURE(S) MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF A
REGISTERED NATIONAL STOCK EXCHANGE, OR BY A COMMERICAL BANK OR A TRUST COMPANY.
IC One/GC-Apt
MARKETING AGREEMENT
THIS MARKETING AGREEMENT (the "Agreement"), dated effective as of August 6, 1999
(the "Effective Date") is by and between IC One, Inc., a Delaware corporation
with its principal place of business at 205 West 700 South, Suite 200 ("IC One")
and Global Capital Limited, a Nevada Limited Liability Company, and/or its
assigns with its principal place of business at 3717 S. Rosecrest, Las Vegas,
Nevada 89121 ("Global").
RECITALS:
A. IC One is in the business of research, development, and implementation of
loyalty and incentive purchase programs, card enhancement and value added card
services, utilizing smart card funds transfer technology ("IC One Systems and
Services").
B. Global is in the business of the development and implementation of
advertising concepts that effectively lower the two highest costs for apartment
owners and property management firms: tenant acquisition and tenant-turn-over.
C. Global is interested in incorporating into a "Business Case" the IC One
Systems and Services specific to Global's current and prospective apartment
communities as described in the attached Appendix A which is made a part hereof.
D. Global does not currently own any "Business Cases" or technology relating to
smart cards or "loyalty"-incentive programs.
AGREEMENTS:
In consideration of the mutual covenants and agreements set forth herein, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Definitions.
1.1 "Marketing Rights" shall mean the right to use, incorporate,
integrate, and/or engage the business of companies specific to Global's
apartment communities who are interested in benefiting from IC One
Systems and Services.
1.2 "Business Case" shall mean any "loyalty"-incentive program
developed and owned by Global for installation in an apartment
community for the purpose of lowering the two highest costs for
apartment owners and property management firms: tenant acquisition and
tenant-turn-over; and promoting use of the card, including monthly-rent
payments by tenants; or for any other "Business Case" or application
developed and implemented by Global for the express purpose of
increasing IC One Smart Card distribution and usage.
<PAGE>
1.3 All other initially capitalized terms shall have the meanings
assigned to them in this Agreement.
2. Consideration. In consideration of the covenants, warranties and
commitments made by IC One and Global in this Agreement, the Parties agree as
follows:
2.1 Marketing Performance Obligations. IC One agrees to provide Global
the necessary portions of IC One Systems and Services for Global's
current and prospective apartment communities, for the purpose of
providing IC One and Global with viable economic benefit. IC One has
agreed to enter into this Marketing Agreement with Global, based upon
Global's representation of its ability to deliver to IC One
economically viable business opportunities In the event Global is
unable to deliver to IC One, within 120 days of the Effective Date of
this agreement an economically viable business opportunity, or is
unable to perform in accordance with the performance criteria as
outlined in the attached Appendix B, which is made a part hereof, IC
One has the right, unilaterally, to void this Agreement. Every 90 days
thereafter, the Parties shall mutually determine, using reasonable
standards, Global's performance under this Agreement.
2.2 IC One Performance Obligations. IC One agrees to make available,
following reasonable time to develop, the necessary technology,
including reasonable support and service required to allow Global to
create its own proprietary Business Case applications. Any such
technology made available to Global will remain the sole property of IC
One, and all smart-card transactions resulting from the use of IC One's
technology, whether directly or indirectly, will be processed by IC
One, unless otherwise mutually agreed by both parties. IC One also
agrees to make available the necessary marketing support to Global,
including but not limited to training, customer service, marketing
materials, and program endorsement references. Any costs associated
with marketing materials, support, or development of Global's programs
will be born by Global. Certain mutually determined development will be
billed to Global on a cost plus basis with a portion to be paid up
front. IC One excludes and disclaims all warranties, whether express or
implied, including without limitation, warranties of merchantability
and fitness of IC One Systems and Services for a particular purpose.
2.3 Card and Equipment Purchase Obligations. Global agrees to purchase
from or through IC One, as defined in Appendix B, all cards and card
acceptance devices (CADs) required for each business application Global
engages the IC One Systems and Services. Global shall install and
service all CADs required for each business application Global engages
the IC One Systems and Services. Global and IC One agree to cooperate
in a spirit of teamwork in the purchase, development
<PAGE>
and implementation of cards and CADS, includingg PC access devices and
tv-set top boxes.
2.4 Compensation Schedule. IC One and Global agree to share fees
charged to Global's Clients in accordance with the schedule as outlined
in the attached Appendix C, which is made a part hereof. Any additional
revenue opportunities not addressed in Appendix C, shall be arranged
and mutually agreed upon by both parties prior to receipt thereof All
payments shall be accompanied by a reasonably detailed report,
describing the services and/or products employed in the transaction(s)
as well as the calculation used to determine the payment.
2.5 Payment. IC One and Global shall determine compensation by way of
mutual written agreement subject to and prior to each business
opportunity brought to IC One by Global. In the event Global or IC One
agrees to pay the other in a transaction(s), the paying party's payment
shall be accompanied by a reasonably detailed report, describing the
services and/or products employed in the transaction(s) as well as the
calculation used to determine the payment. Settlement and payments
under all programs shall occur at least every 30 days.
2.6 Audit Rights. The Parties shall keep accurate books of account and
records covering all transactions relating to this Agreement. The party
receiving a payment from the other party shall have the right, upon ten
(10) business days prior written notice and during reasonable business
hours, to have a certified public accounting firm examine the paying
party's records relating to the transaction(s). The receiving party
shall bear the cost of such inspection and audit unless the results of
such audit indicate underpayments of more than five percent (5%) for
the period under review, in which case the reasonable cost of the audit
will be borne by the paying party. Such audits may be made no more
frequently than once every three (3) months, unless the preceding audit
revealed a material underpayment. All relevant records including
Global's client base and database records shall be kept available for
at least two (2) years after the calendar month to which they relate.
2.7 Term. The term of this Agreement shall be three (3) years from the
Effective Date, unless either party fails to perform their obligations
under this Agreement, in which case, the party that has not failed may
terminate this Agreement. The Term shall be automatically extended for
consecutive one-year periods following the end of the first three-year
term if Global demonstrates, and IC One agrees, that Marketing
Performance Obligations of Global have been met or exceeded.
3. Covenant Not to Compete. The parties hereby covenant and agree that for the
term of this Agreement, and for a period of one (1) year thereafter, they will
not, directly or indirectly, without the prior written consent of the other
party, develop, market, sell, or assist in the development, marketing or sale,
of any product or technology that competes with the other party, as relating to
existing clients under contract at the expiration of this
<PAGE>
noncompete period (a "Competitive Product"), including without limitation,
providing consultative services, owning, managing, operating, participating in,
controlling, or being, connected as a majority stockholder, partner, or
otherwise with any business, individual or entity that creates, develops or
markets a Competitive Product, including any such actions by its officers,
directors and/or key employee(s). If the agreement is terminated, the parties
may continue in their respective businesses as constituted at the time of
termination.
4. IC One/Global ("the Parties'") Warranties.
4.1 Corporate Power, Etc. The Parties hereby represent, warrant, and
covenant to each other that (a) each party has all necessary right and
power to enter into and perform according to the terms and conditions
of this Agreement; (b) all corporate action on the part of the Parties,
its respective directors and its stockholders necessary for the
authorization, execution, delivery and performance of this Agreement
and any other agreements contemplated hereby has been taken: (c) the
terms of this Agreement do not violate or conflict with any other
agreement or obligation of the Parties; and (d) this Agreement is a
valid and binding agreement on the Parties, enforceable in accordance
with its terms.
4.2 Litigation. There is no action, suit, investigation, or other
proceeding pending or, to the Parties' knowledge, threatened against or
materially adversely affecting the Parties' right and ability to
consummate the transactions contemplated by this Agreement; nor do the
Parties know or have reason to know of any basis for the same.
4.3 Infringement. IC One warrants that the Marketing Rights and
elements thereof are solely owned by IC One and do not violate any
rights of any third party, and that it has not received any notice of
such a claim. To IC One's best knowledge, no third party is infringing
or has infringed any rights with respect to the Marketing Rights.
4.4 Survival. The representations, warranties and covenants contained
in or made pursuant to this Agreement shall survive execution and any
termination of this Agreement.
5. Confidentiality. The parties agree to treat as highly confidential, and never
to use, copy or disclose to any third party, except as required by law, any
source code, trade secrets, client or client-database information. IC One agrees
that any intellectual property designed, developed and created by Global to
increase card distribution and promote cardholder usage is the sole property of
Global and its affiliates, including Rent Smart Publications. Notwithstanding
the status of this Agreement, the client base resulting from the distribution
efforts and card-usage promotion of Global is the sole property of Global and is
subject to the confidentiality intent of this paragraph.
<PAGE>
6. Breach of Agreement; Remedies. If either party believes that the other has
materially breached any provision of this Agreement, the party alleging the
breach shall deliver notice to the other party, specifying the nature of the
alleged breach. The party alleged to be in breach shall have sixty (60) days
from the date of mailing of such notice in which to attempt to cure the alleged
breach. During such sixty (60) day period, either party may request a personal
meeting between the parties in which to negotiate in good faith to attempt to
resolve the dispute. If such negotiations are unsuccessful and the alleged
breach has not been cured by the end of such sixty (60) day period, the party
alleging the breach may pursue any and all rights and remedies that it has under
this Agreement, at law or in equity. The parties agree that the remedy at law
for any breach of its covenant not to compete and its covenant of
confidentiality shall be inadequate and that irreparable harm shall be presumed,
and the other party shall be entitled to injunctive relief, in addition to any
other remedy it might have, including damages and the right to recover
reasonable attorneys' fees, if it becomes necessary for the injured party.
7. Rights Reserved; Reasonable Efforts to Market. Global shall have the right to
market the IC One Systems and Services as outlined in Section 2. Nothing in this
Agreement shall impair IC One's right to acquire, license. independently develop
for itself, or have others independently develop for it, similar products
performing the same or similar functions as IC One Systems and Services, or to
provide Marketing Rights to others not infringing upon Global's specific
Apartment communities or other proprietary Business Case programs designed
specifically for implementation by Global. Global is required to use best
efforts to develop business opportunities, market and promote the IC One Systems
and Services, in general, in both U. S. and international markets.
8. LIMITATION OF LIABILITY AND DAMAGES. OTHER THAN AS SET FORTH ELSEWHERE IN
THIS AGREEMENT, EACH PARTY EXPRESSLY EXCLUDES AND DISCLAIMS ALL WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER OR ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THIS AGREEMENT.
9. Miscellaneous.
9.1 Notice. All notices between the parties shall be in writing and
shall be sent by certified or registered mail or commercial overnight
delivery service, with provisions for a receipt, or by confirmed
facsimile transmission, to the address of the other party listed above
(or to such other address as a party may furnish to the other in
writing).
9.2 Entire Agreement, Amendment; Waiver. This Agreement and any
additional documents required to be delivered hereunder, constitutes
the complete
<PAGE>
agreement between the parties and supersedes all previous
representations, written or oral, with respect to the IC One Systems
and Services or other subject matter of this Agreement. Except as
otherwise expressly provided herein, this Agreement may be modified or
amended only by a writing signed by duly authorized representatives of
both parties. The waiver by either party of any default or breach of
this Agreement, or any obligation hereunder, shall be ineffective
unless in writing, and shall not constitute a waiver of any subsequent
breach or default. No failure to exercise any right or power under this
Agreement or to insist on strict compliance by the other party shall
constitute a waiver of the right in the future to exercise such right
or power or to insist on strict compliance.
9.3 Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the internal laws of the state of Utah
and applicable federal laws. The parties consent to the exclusive
jurisdiction and venue of Utah state and federal courts in any action
arising out of this Agreement.
9.4 Attorneys' Fees. In the event of any default under this Agreement,
the defaulting party shall pay all costs incurred by the other party by
reason of the default, including court costs and reasonable attorneys'
fees (whether or not the attorney is a salaried employee of the
non-defaulting party), and also, including such expenses incurred
before legal action or bankruptcy proceeding, during the pendency
thereof; and continuing, to all such expenses in connection with
appeals to higher courts. If the attorney is a salaried employee of the
non-defaulting party, a reasonable attorney fee shall be an amount
charged by similarly qualified attorneys in private practice for
similar services. If a party is accused of default by the other, but
there is a final decision by a court of law, not overturned on appeal.
that the party did not default as alleged, the party wrongly accused of
default shall be entitled to an award of its costs and reasonable
attorneys' fees as described above.
9.5 Cumulative Remedies. All rights and remedies provided in this
Agreement, at law or in equity are cumulative.
9.6 Severability. If any term of this Agreement is held invalid or
unenforceable by a court or arbitrator of competent jurisdiction,
including without limitation the term and geographic scope of the
covenant not to compete, such term shall be reduced or otherwise
modified by such court or arbitrator to the minimum extent necessary to
make it valid and enforceable. If such term cannot be so modified, it
shall be severed and the remaining terms of this Agreement shall be
interpreted in such a way as to give maximum validity and
enforceability to this Agreement.
9.7 Binding Effect, Assignment. This Agreement is binding upon the
parties and their respective successors, representatives and assigns;
however, neither party may assign or transfer this Agreement or any of
his rights or duties hereunder without prior written consent of the
other party, which shall not be unreasonably
<PAGE>
withheld. In the event of bankruptcy by either party, the rights and
privileges provided for in this Agreement shall remain in effect.
9.8 Language. The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and
no rule of strict construction shall be applied against either party.
9.9 Force Majeure. Neither party shall be liable for any failure or
delay in performing, hereunder, if such failure or delay is due to war,
strike, government requirements, acts of nature, acts or omissions of
carrier, or other cause(s) beyond its reasonable control.
9.10 Counterparts. This Agreement may be executed in counterparts, and
all counterparts shall be deemed to be one and the same agreement.
9.11 No Agency. This Agreement shall not be construed to create any,
agency or partnership between the Parties. Neither party has authority
to bind the other, to incur any liability or act on behalf of the
other, or to direct the others employees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
Global Capital Limited, LLC IC One, Inc.
By: /s/ Gregory C. Johnson By: /s/ Skip Bennett
--------------------------- ---------------------
Print Name: Gregory C. Johnson Print Name: Skip Bennett
Title: Managing Director Title: President & CEO
Date: 8/6/99 Date: 8/6/99
<PAGE>
Appendix A
Global Capital Limited (Global) through its affiliate, Rent Smart Publications
is currently performing advertising services for numerous apartment communities.
Tile intent of this Marketing Agreement is to make available to those same
apartment communities and others a Business Case that includes the 'Loyalty'
features of IC One's smart-card technology. Over $1.2 million dollars has been
spent developing and testing the Rent Smart Publication, an advertising medium
for apartment communities in two test markets. Las Vegas and Phoenix, comprising
210 communities at an average of 300 units per community. The Rent Smart
Publication is currently slated to be introduced into 18 additional markets over
the next 36 months. The intent of Global and IC One is to coordinate and
cooperate in the introduction of the Rent Smart Publication along with the `Rent
Smart Card' into the anticipated markets in an attempt to increase the
efficiency of the card distribution and 'merchant sign-up' process in those
markets.
Appendix B
Within the first 12 months Global will produce 150,000-200,000 cards and set top
boxes or other `access devices'; and within the first 36 months, Global will
produce a minimum of 1,500,000-2,000,000 cards and set top boxes or `access
devices'. The cost per card to Global shall be IC Ones total hard costs per card
plus 25 percent. The cost for CADs, set top boxes or any other 'access device'
shall not exceed IC One's total hard costs per CAD or device plus 15 percent.
Thereafter, costs and performance criteria will be reviewed and mutually agreed
upon on an annual basis. Global agrees to keep IC One updated on a monthly basis
the distribution projections for smart cards.
Appendix C
For all Global programs using smart cards, a transaction fee of 1/2 percent of
the total amount of each transaction shall be paid to IC One. In addition, and
in the event Global participates in the IC Kids Card program, IC One shall
receive 11 percent of the total loyalty contribution amount with the balance to
be distributed between Global arid the beneficiaries. Compensation from Global's
participation in all other IC One-sponsored loyalty programs will be determined
mutually between Global and IC One prior to execution. All sign-up fee revenues
shall go to Global. Notwithstanding the status of this Agreement and unless by
the written and mutual consent to the contrary. Global's income rights and
participation from the card usage by Global's clients is perpetual.
IC One
205 WEST 700 SOUTH, SUITE 200 o SALT LAKE CITY UTAH 84101-2736
801-355-0066, FAX 801-355-6633
To: David Asay
From: Skip Bennett and David Simon
Sub: IC One/IBM Partnership
We appreciate IBM's patience and understanding in working with IC One
as to the payment agreed. We feel funding is imminent, but the immediate payable
of 2.17 million dollars due to IBM has negatively impacted our ability to secure
the necessary financing to allow IC One and IBM to move forward in a Smart Card
partnership.
Therefore, we propose the following arrangement to guarantee payment:
1. IC One will place in escrow 1,400,000 shares of IC One restricted
public stock (SCTN), currently valued at over 7 million dollars.
2. IC One will pay $500,000 to IBM at the earlier of: a) upon
receipt of adequate investor funding b) upon receipt of adequate
revenues from Smart Card sales or
transaction fees
c) 30 days after signing the document
3. Thereafter, IC One will make 5 payments of $300,000 and one payment
of $170,000 to IBM at the earlier of:
a) upon receipt of adequate investor funding
b) upon receipt of adequate revenues from Smart Carol sales or
transaction fees
c) 30 days after the previous payment
4. If IC One is unable to make any payment on time, IBM will have the
option to either:
a) extended the time allowed for receipt of payment
b) demand release from the escrow account to IBM of an amount
of IC One stock equal to three times the overdue payment,
in lieu of the payment
We feel this arrangement will have the following advantages:
1. Reduce the amount of immediate payables due on the books of IC One,
thereby facilitating our ability to secure investor funding.
2. Give IBM the option to obtain an equity position in IC One at an
extremely favorable rate of investment.
<PAGE>
IC One
205 WEST 700 SOUTH, SUITE 200 o SALT LAKE CITY UTAH 84101-2736
801-355-0066, FAX 801-355-6633
3. Remove the barriers to establishing the IC One/BM Smart Card
partnership that is currently impeding market entry by both
companies.
Upon your acceptance of this arrangement, we would like to immediately
begin the process of developing and arranging the details of our partnership,
including:
1. Reciprocal licensing agreements
2. Vertical/geographical market determination
3. Levels of exclusivity within each vertical/geographic market 4.
Resource contributions within each market by each partner 5.
Development/rollout strategies 6. Development/rollout lout schedules 7.
Joint marketing plan 8. Revenue sharing arrangements 9. PR/News release
strategy and planning 10. Branding strategies
We feel this arrangement will remove a major stumbling block for both
of our organizations, David, and we are anxious to move forward immediately upon
receipt or your agreement with the terms and conditions herein.
Thank you again for your patience and understanding.
Sincerely,
/s/ Skip Bennett /s/ David Simon
- -------------------- ---------------------------
A.D. "Skip" Bennett David Simon
IC One Inc. IC One Inc.
President and CEO SVP Technology and Chairman
I agree to the terms and conditions on behalf of IBM and look forward
to a long and mutually beneficial partnership with IC One.
/s/ David Asay
- --------------------
David Asay
IBM
Pervasive Computing
IC One/eExpo
MARKETING AGREEMENT
THIS MARKETENG AGREEMENT (the "Agreement"), dated effective as of June 22, 1999
(the "Effective Date") is by and between IC One, Inc., a Delaware corporation
with its principal place of business at 205 West 700 South, Suite 200 ("IC One")
and eExpo, Inc., a Delaware corporation with its principal place of business at
1601 North State Street, Lehi. Utah 84043 ("eExpo").
RECITALS:
A. IC One is in the business of research. development, and implementation of
loyalty and incentive purchase programs, card enhancement and value added card
services, utilizing smart card funds transfer technology ("IC One Systems and
Services").
B. eExpo is in the business of development and implementation of cash and
information processing, registration, communications and loyalty card
applications as well as remote educational courseware for the convention and
tradeshow industries, and specific businesses within the hospitality industry
("eExpo's Industries").
C. eExpo is desirous of receiving Exclusive Marketing Rights to implement IC One
Systems and Services specific to and limited to, eExpo's Industries including
eExpo clients as defined in the attached Appendix A ("eExpo's Clients) which is
made a part hereof.
AGREEMENTS:
In consideration of the mutual covenants and agreements set forth herein. the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Definitions.
1.1 The "Marketing Rights" shall mean the right to use, incorporate,
integrate, and/or engage the business of companies specific to eExpo's
Industries who are interested in benefiting from IC One Systems and Services.
1.2 All other initially capitalized terms shall have the meanings
assigned to them in this Agreement.
2. Consideration. In consideration of the covenants, warranties and
commitments made by IC One and eExpo in this agreement, the Parties agree as
follows:
2.1 Marketing Performance Obligations. IC One agrees to provide eExpo
with the
1
<PAGE>
Exclusive Marketing Rights to the IC One Systems and Services for eExpo's
Industries and eExpo's Clients, for the purpose of providing IC One and eExpo
with viable economic benefit. IC One has agreed to enter into this Marketing
Agreement with eExpo, based upon eExpo's representation of its ability to
deliver to IC One economically viable business opportunities. In the event eExpo
is unable to deliver to IC One, within 120 days of the Effective Date of this
Agreement, an economically viable business opportunity, or is unable to perform
in accordance with the performance criteria as outlined in the attached Appendix
B which is made a part hereof, IC One has the right. unilaterally, to void this
Agreement. Every 90 days thereafter, the Parties shall mutually determine. using
reasonable standards, eExpo's performance under this Agreement.
2.2 IC One Performance Obligations. IC One agrees to provide directly
or indirectly (following reasonable time to develop, as needed) the technology
(hardware and software along with reasonable support, installation. and service)
required for the various viable business opportunities brought to IC One by
eExpo, in which IC One agrees to engage. IC One also agrees to provide, directly
or indirectly the necessary marketing support to eExpo including but not limited
to training, customer service, marketing materials, and program endorsement
references. IC One excludes and disclaims all warranties, whether express or
implied, including without limitation, warranties of merchantability and fitness
of IC One Systems and Services for a particular purpose.
2.3 Card and Equipment Purchase Obligations. eExpo shall have the
option to purchase from or through IC One, all cards and card acceptance devices
(CADs) required for each business application eExpo engages the IC One Systems
and Services. eExpo also shall have the option to purchase, install and service
all CADs required for each business application eExpo engages the IC One Systems
and Services. eExpo and IC One agree to cooperate in a spirit of teamwork in the
purchase, development and implementation of cards and CADs.
2.4 Compensation Schedule. IC One and eExpo agree to share fees charged
to eExpo's Clients in accordance with the schedule as outlined in the attached
Appendix C, which is made a part hereof. Any additional revenue opportunities
which are not addressed in Appendix C, shall be arranged and mutually agreed
upon by both parties prior to receipt thereof. All payments shall be accompanied
by a reasonably detailed report, describing the services and/or products
employed in the transaction(s) as well as the calculation used to determine the
payment.
2.5 Payment. IC One and eExpo shall determine compensation by way of
mutual written agreement subject to and prior to each business opportunity
brought to IC One by eExpo. In the event eExpo or IC One agrees to pay the other
in a transaction(s), the paying party's payment shall be accompanied by a
reasonably detailed report, describing the services and/or products employed in
the transaction(s) as well as the calculation used to determine the payment.
2.6 Audit Rights. The Parties shall keep accurate books of account and
records covering all transactions relating to this Agreement. The party
receiving a payment from the other party shall have the right, upon ten (10)
business days prior written notice and during
2
<PAGE>
reasonable business hours, to have a certified public accounting firm examine
the paying party's records relating to the transaction(s). The receiving party
shall bear the cost of such inspection and audit unless the results of such
audit indicate underpayments of more than five percent (5%) for the period under
review, in which case the reasonable cost of the audit will be borne by the
paying party. Such audits may be made no more frequently than once every three
(3) months, unless the preceding audit revealed a material underpayment. All
relevant records shall be kept available for at least two (2) years after the
calendar month to which they relate.
2.7 Term. The term of this Agreement shall be five (5) years from the
Effective Date, unless either party fails to perform their obligations under
this Agreement, in which case, the party which has been failed may terminate
this Agreement. The Term shall be automatically extended for consecutive one
year periods following the end of the first five year term if eExpo demonstrates
and IC One agrees, that Marketing Performance Obligations of eExpo have been met
or exceeded.
3. Covenant Not to Compete. The parties hereby covenants and agree that for the
term of this Agreement and for a period of five (5) years thereafter, they will
not, directly or indirectly, without the prior written consent of the other
party, develop, market or sell, or assist in the development, marketing or sale
of, any product or technology that competes with the other party in the United
States and any other geographic areas in which their Systems and Services are
marketed (a "Competitive Product"); including without limitation providing
consultative services, owning, managing, operating, participating in,
controlling, or being connected as a majority stockholder, partner, or otherwise
with any business, individual or entity that creates, develops or markets a
Competitive Product, and including any such actions by its officers, directors
and/or key employee(s). If the agreement is terminated, the parties may continue
in their respective businesses as constituted at the time of termination.
4. IC One/eExpo ("the Parties") Warranties.
4.1 Corporate Power. Etc. The Parties hereby represent, warrant. and
covenant to each other that (a) each party has all necessary right and power to
enter into and perform according to the terms and conditions of this Agreement;
(b) all corporate action on the part of the Parties, its respective directors
and its stockholders necessary for the authorization, execution. delivery and
performance of this Agreement and any other agreements contemplated hereby has
been taken; (c) the terms of this Agreement do not violate or conflict with any
other agreement or obligation of the Parties; and (d) this Agreement is a valid
and binding agreement on the Patties, enforceable in accordance with its terms.
4.2 Litigation. There is no action, suit, investigation, or other
proceeding pending or, to the Parties' knowledge, threatened against or
materially adversely affecting the Parties' right and ability to consummate the
transactions contemplated by this Agreement; nor do the Parties know or have
reason to know of any basis for the same.
3
<PAGE>
4.3 Infringement. IC One warrants that the Marketing Rights and
elements thereof are solely owned by IC One and do not violate any rights of any
third party, and that it has not received any notice of such a claim. To IC
One's best knowledge, no third party is infringing or has infringed any rights
with respect to the Marketing Rights.
4.4 Survival. The representations, warranties and covenants contained
in or made pursuant to this Agreement shall survive execution and any
termination of this Agreement.
5. Confidentiality. The parties agree to treat as highly confidential, and never
to use. copy or disclose to any third party, except as required by law, any
source code or trade secrets which should reasonably be understood to be
confidential to the other party.
6. Breach of Agreement; Remedies. If either party believes that the other has
materially breached any provision of this Agreement, the party alleging the
breach shall deliver notice to the other party, specifying the nature of the
alleged breach. The party alleged to be in breach shall have sixty (60) days
from the date of mailing of such notice in which to attempt to cure the alleged
breach. During such sixty (60) day period, either party may request a personal
meeting between the parties in which to negotiate in good faith to attempt to
resolve the dispute. If such negotiations are unsuccessful and the alleged
breach has not been cured by the end of such sixty (60) day period, the party
alleging the breach may pursue any and all rights and remedies that it has under
this agreement, at law or in equity. The parties agree that the remedy at law
for any breach of its covenant not to compete and its covenant of
confidentiality shall be inadequate and that irreparable harm shall be presumed,
and the other party shall be entitled to injunctive relief, in addition to any
other remedy it might have, including damages and the right to recover
reasonable attorneys' fees, if it becomes necessary for the injured party.
7. Rights Reserved; Reasonable Efforts to Market. eExpo shall have the right to
market the IC One Systems and Services as outlined in Section 2. Nothing in this
Agreement shall impair IC One's right to acquire, license, independently develop
for itself or have others independently develop for it similar products
performing the same or similar functions as IC One Systems and Services, or to
provide Marketing Rights to others not infringing upon eExpo's Industries. eExpo
is required to use reasonable efforts to develop business opportunities, market
and promote the IC One Systems and Services, in general, in both U. S. and
international markets within eExpo's Industries.
8. LIMITATION OF LIABILITY AND DAMAGES. OTHER THAN AS SET FORTH ELSEWHERE IN
THIS AGREEMENT, EACH PARTY EXPRESSLY EXCLUDES AND DISCLAIMS ALL WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF'
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER OR ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THIS AGREEMENT.
4
<PAGE>
9. Miscellaneous.
9.1 Notice. All notices between the parties shall be in writing and
shall be sent by certified or registered mail or commercial overnight delivery
service, with provisions for a receipt. or by confirmed facsimile transmission,
to the address of the other party listed above (or to such other address as a
party may furnish to the other in writing).
9.2 Entire Agreement; Amendment; Waiver. This Agreement and any
additional documents required to be delivered hereunder, constitutes the
complete agreement between the parties and supersedes all previous
representations, written or oral, with respect to the IC One Systems and
Services or other subject matter of this Agreement. Except as otherwise
expressly provided herein, this Agreement may be modified or amended only by a
writing signed by duly authorized representatives of both parties. The waiver by
either party of any default or breach of this Agreement, or any obligation
hereunder, shall be ineffective unless in writing, and shall not constitute a
waiver of any subsequent breach or default. No failure to exercise any right or
power under this Agreement onto insist on strict compliance by the other party
shall constitute a waiver of the right in the future to exercise such right or
power or to insist on strict compliance.
9.3 Governing Law and Jurisdiction. This Agreement shall be Governed by
and construed in accordance with the internal laws of the state of Utah and
applicable federal laws. The parties consent to the exclusive jurisdiction and
venue of Utah state and federal courts in any action arising out of this
Agreement.
9.4 Attorneys' Fees. In the event of any default under this Agreement,
the defaulting party shall pay all costs incurred by the other party by reason
of the default, including court costs and reasonable attorneys' fees (whether or
not the attorney is a salaried employee of the non-defaulting party), and also
including such expenses incurred before legal action or bankruptcy proceeding,
during the pendency thereof, and continuing to all such expenses in connection
with appeals to higher courts. If the attorney is a salaried employee of the
non-defaulting party, a reasonable attorney's fee shall be an amount charged by
similarly qualified attorneys in private practice for similarly services. If a
party is accused of default by the other, but there is a final decision by a
court of law, not overturned on appeal, that the party did not default as
alleged. the party wrongly accused of default shall be entitled to an award of
its costs and reasonable attorneys' fees as described above.
9.5 Cumulative Remedies. All rights and remedies provided in this
Agreement, at law or in equity are cumulative.
9.6 Severability. If any term of this Agreement is held invalid or
unenforceable by a court or arbitrator of competent jurisdiction, including
without limitation the term and geographic scope of the covenant not to compete,
such term shall be reduced or otherwise modified by such court or arbitrator to
the minimum extent necessary to make it valid and enforceable. If such term
5
<PAGE>
cannot be so modified, it shall be severed and the remaining terms of this
Agreement shall be interpreted in such a way as to give maximum validity and
enforceability to this Agreement.
9.7 Binding Effect; Assignment. This Agreement is binding upon the
parties and their respective successors, representatives and assigns; however,
neither party may not assign or transfer this Agreement or any of his rights or
duties hereunder without prior written consent of the other party, which shall
not be unreasonably withheld. In the event of bankruptcy by either party, the
rights and privileges provided for in this Agreement shall remain in effect.
9.8 Language. The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against either party.
9.9 Force Majeure. Neither party shall be liable for any failure or
delay in performing hereunder, if such failure or delay is due to war, strike,
government requirements, acts of nature, acts or omissions of carriers, or other
cause(s) beyond its reasonable control.
9.10 Counterparts. This agreement may be executed in counterparts, and
all counterparts shall be deemed to be one and the same agreement.
9.11 No Agency. This Agreement shall not be construed to create any
agency or partnership between the Parties. Neither party has authority to bind
the other, to incur any liability or act on behalf of the other, or to direct
the others' employees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
eExpo, Inc. IC One, Inc.
By: /s/ Edgar Bolton By: /s/ A. D. Bennett
---------------------- ------------------------
Print Name: Edgar Bolton Print Name: A. D. Bennett
Title: President Title: President
Date: 6/23/99 Date: 6/23/99
6
<PAGE>
Appendix A
eExpo Clients:
Storage Technology
Novell *
Glaxo-Wellcome
Compaq
3 Com
Nortel
Lucent *
Cisco Systems *
Microsoft *
Park-Davis
Hewlett Packard *
* Companies which IC One has engaged or with which IC One is currently engaging
in business dealings. IC One shall have the right to continue its business
dealings with these companies without infringing upon eExpo's Exclusive
Marketing rights as defined in this Agreement.
eExpo's Industries shall include cash and information processing, registration,
communications and loyalty card applications as well as remote educational
courseware for the convention and tradeshow industries, and the following
specific sectors of or businesses within the hospitality industry:
1. Marriott Corporation
2. Non-exclusive marketing rights for hotels
3. Exclusive marketing rights for smart cards issued through trade
shows or convention centers for Hotels which are members of convention
and visitors bureaus or associated with the convention and trade show
industry
7
<PAGE>
Appendix B
In exchange for the specific performance for the Marketing Rights, within the
first l2 months. eExpo will produce 1/2 million cards, and within the First 36
months, eExpo will produce 5 million cards. The cost per card to eExpo shall not
exceed $4. Thereafter, the performance will be reviewed and mutually agreed upon
on a yearly basis.
Appendix C
For all eExpo programs using smart cards, a transaction fee of 1/2% of the total
transaction amount shall be paid to IC One. In addition and in the event eExpo
participates in the IC Kids Card program, IC One shall receive 11% of the total
loyalty contribution amount with the balance to be distributed between eExpo and
the beneficiaries. Compensation from eExpo's participation in all other IC One
sponsored loyalty programs will be determined mutually between eExpo and IC One
prior to execution. All sign-up fee revenues and card production revenues will
go to eExpo.
8
<PAGE>
1 September, 1999
Addendum 1
To IC One and eExpo Agreement dated 22 June 1999
eExpo has disclosed it's unique business model and approach using some of the
features of the IC One Kid's card, to IC One, for the purpose of pursuing
business for eExpo, and IC One, in several different markets. This includes the
use of the organizational sponsor approach (for example: where an organization
such as Compaq sponsors the eExpo smart cards which when used by the cardholders
provides for income for the sponsoring organization, Compaq, to be used for
educational purposes such as, in Compaq's case, computers for local and long
distance learning applications). IC One and eExpo agree that this organizational
sponsor business model concept is proprietary to eExpo and will not be used by
IC One in competition with eExpo, or disclosed to any third party.
The Houston Independent School District is added as a client exclusive to eExpo.
IC One and eExpo agree that eExpo will have the right to defend eExpo's
exclusive marketing rights, under IC One's Smart Card Loyalty patent when it is
deemed that an infringement has occurred that would be in conflict with eExpo's
exclusive marketing rights.
IC One and eExpo agree that if either party declares bankruptcy or is unable or
unwilling to continue to provide the necessary support to continue to sell to
and develop the markets covered by this agreement that the technical
specifications and descriptions, software source code and other tools of the
party unable or unwilling to continue to provide the support will be provided to
the other party for it's use in sales to, and development of, the markets
covered by this agreement. Both parties agree that they will not restrict the
employees, or former employees, of the other party, from assisting the other
party in implementing the necessary capabilities to continue to develop and sell
their respective services in the covered markets. The rights of IC One and
eExpo, covered by this agreement, shall survive and continue in force after any
declaration of bankruptcy or substantial sale of assets or change in ownership
or majority control of either party.
When work is performed by the employees of either party, for the benefit of the
other party, and authorized in writing by the other party, the benefiting party
shall pay the fees, which must be mutually agreed upon in advance, to the party
providing the work. The specific work performed, which shall not be construed to
include preexisting products, shall be owned by the party paying the fees,
unless otherwise agreed to in writing by both parties.
eExpo agrees that IC One will receive from eExpo, for all eExpo smart card
loyalty applications, where IC One provides the communications, reporting and/or
data base transaction services for eExpo, the fees specified in Appendix C of
the 22 June 1999 agreement. For eExpo Smart Card Loyalty applications, that are
covered by IC One's patent, and the application has been approved by IC One,
where IC One does not provide any promise to eExpo, IC One will receive 2% of
the loyalty contributions.
<PAGE>
Agreed to:
eExpo, Inc. IC One, Inc.
By: /s/ Edgar Bolton By: /s/ Douglas Lloyd
--------------------- ------------------------
Print Name: Edgar Bolton Print Name: Douglas Lloyd
Title: President Title: Sr. V.P.
Date: 9/1/99 Date: 9/1/99
<PAGE>
10 November, 1999
Addendum 2
To IC One and eExpo Agreement dated 22 June 1999
IC One, Inc. and Electronic Exposition Information Technologies, Inc. (eExpo)
desire that eExpo acquire from IC One the world wide exclusive marketing and
business development rights to the IC One Kid's Card program and the eExpo
eduSmartCard program. The IC One Kid's Card program will be incorporated into
the eExpo eduSmartCard program.
These exclusive world wide rights, granted to eExpo by IC One under it's patent,
will allow eExpo to provide smart cards, smart card readers, cash handling,
information processing and data management to all those who currently
participate, and all those who may participate in the future, in the educational
loyalty, or charity, programs as defined by, and included in, the IC One Kid's
Card program and the eExpo eduSmartCard program.
The IC One Kid's Card program provides a smart card to parents, students, or
other cardholders, that they can use when they shop at participating merchants,
that is used to raise money for education. With each purchase the merchant
contributes a percentage of the purchase amount to the schools of the
cardholder's choice. The schools have agreed to allow the first $12 to $20 be
withheld from merchant contributions (cash or equivalent), and 11% thereafter,
by IC One to pay for the cost of card issuance and other aspects of the program.
The merchants have also agreed to pay IC One 1/2% of the gross sale amount,
prior to discount, for administration of the program. This program is in
operation in Cache and Utah Counties, in Utah, and is being considered in other
States and countries.
The eExpo eduSmartCard program will provide a smart card to cardholders
participating in all segments of the education, or charity, market, that they
can then use when they shop at participating merchants. With each purchase the
merchant contributes a percentage of the purchase amount to be used for
education or charity (cause marketing funds) as defined by the eExpo
educational/charity (cause marketing) foundation. As an option, part of the
contribution is allocated to the school or educational function specified by the
cardholder in agreement with the eExpo foundation, and the remainder is
allocated by the eExpo foundation. The primary use will be for leases of
computers with educational learning, software to be supplied to students,
teachers, and schools. Basically the smart cards are used for cause marketing,
with education being the first "cause" in the eduSmartCard program. In addition
the eduSmartCard program involves organizational sponsors that pay eExpo to
advertise on the smart cards, and, in some cases, the terminals provided to the
merchants, in the different geographic areas of the program, and for marketing
access to the cardholders of the eduSmartCards. The eduSmartCard program also
allows electronic "loyalty coupons" to be issued for the smart cards of the
cardholders by suppliers to merchants, "loyalty credits" being put on the smart
cards by manufactures, and "loyalty points" being put on the smart cards by
manufactures, service organizations, merchants, and suppliers to merchants. The
eduSmartCard will also be
<PAGE>
used for storage of cardholder credit card information to be used as an optional
method of payment by the cardholder.
For the projects covered by this Addendum 2, eExpo will include the IC One logo
on the smart cards issued and the terminals installed, when they are used in
conjunction with these projects. The logo's will be unobtrusive, with the size
being defined by eExpo, in order to allow eExpo to market the projects in
accordance with the eduSmartCard plan. eExpo will provide it's best effort to
have the IC One logo over the smart chip on the smart card.
On the 15th of November, 1999. eExpo will assume responsibility for supporting
and expanding the current IC One Kid's Card project. Any work performed by IC
One. or it's employees, on the IC One Kid's Card project, after this date must
be approved and authorized, in advance, in writing, by eExpo. By the 15th of
November, 1999, and thereafter as needed, IC One will provide eExpo with all the
equipment, supplies, tools, software, information, employee knowledge, customer
lists, rights (as they pertain to the Kid's Card program), and any other items
owned and used by IC One on the Kid's Card project, that are needed by eExpo to
assume responsibility for this project, free and clear of any encumbrances, for
eExpo to use and own in expanding and supporting the, Kid's Card program.
Other Smart Card loyalty, or charity, programs, that IC One becomes aware of,
outside the exclusive marketing area of eExpo, but within the educational
segment of the market, will be offered by IC One to eExpo. If eExpo declines the
business opportunity then IC One is free to follow up and pursue the
opportunity. On a case by case basis, for these other business opportunities
outside the exclusive marketing rights covered by this Addendum 2, when eExpo
accepts the opportunity, IC One and eExpo will modify and adjust the payment
arrangements of this agreement as appropriate.
IC One will continue to provide "Loyalty Central" communications services for
the merchants and cardholders, and the backend database processing services
needed for the IC One Kid's Card and eExpo eduSmartCard programs (which may be
physically located at IC One or at eExpo). For this IC One will continue to
receive it's customary fees, but no greater than 1/2% of the total transaction
amount and 11% of the total loyalty (or charity) contribution amount. In the
event that IC One is unable or unwilling to provide the services and support
needed to continue the IC One Kid's Card and the eExpo eduSmartCard projects, IC
One will provide eExpo with the rights and assets currently owned by IC One that
are necessary to continue the support, development and expansion of the IC one
Kid's Card project and the eExpo eduSmartCard project.
Beginning on l1/15/99 all of the remaining fees and benefits that IC One is
entitled to under the current, and future expanded, IC One Kid's Card program,
other than the above mentioned fees, will be paid to eExpo. When IC One receives
any of the fees that are to be paid to eExpo, IC One will immediately transfer
the fees to eExpo in the most expeditious way possible.
<PAGE>
Agreed to:
eExpo, Inc. IC One, Inc.
By: /s/ Edgar Bolton By: /s/ Skip Bennett
-------------------- -----------------------
Print Name: Edgar Bolton Print Name: Skip Bennett
Title: President / CEO Title: President / CEO
Date: 11/10/99 Date: 11/10/99
<PAGE>
When eExpo requests a change to the IC One "Loyalty Central" communications and
data base handling services. and it is agreed by IC One and eExpo that it is not
a general capability that should normally be included in a "Loyalty Central"
communications and data processing system. eExpo will request a quote from IC
One to make the agreed upon changes. If eExpo accepts the bid and agrees to pay
for the changes. IC One will make the changes and bill eExpo for the changes.
When eExpo pays for the changes, they will become the property of eExpo and
cannot be used by any other client of IC One, except eExpo.
As soon as possible eExpo will modify the IC One Kid's Card program to
incorporate it into the eExpo eduSmartCard program (business mode). This may
involve substantial change in the way the current beneficiaries, cardholders,
and merchant participate in the program and may include having the merchant
terminals initially communicate with the eExpo server/switcher, which will then
communicate with the IC One "Loyalty Central" data base processing system. IC
One agrees that it will allow eExpo to make the changes and support these
changes with the needed modifications and enhancements of IC One's "Loyalty
Central" systems and services, as required and defined by eExpo.
When the merchant terminals communicate first, as described above, with the
eExpo server/switcher, and the software that is used to communicate with these
merchant terminals is hosted on the eExpo server/switcher, which in turn
communicates with the IC One data base processor system for loyalty and
accounting processing, the 1/2 % transaction fee paid by the merchants will be
split as follows: 1/4% to IC One and 1/4% to eExpo, and the charity contribution
will be split as follows: 3/4 of the 11% of the contribution made by the
merchant to IC One and1/4 of the 11% of the contribution made by the merchant to
eExpo. When all of the communications and data base processing is done by, and
all of the needed software is provided by and hosted on the, IC One system, IC
One will be entitled to the fees specified in paragraph 8 of this Addendum 2.
When all of the communications and data base processing is done by, and all of
the needed software is provided by eExpo and hosted on the, eExpo
server/switcher, the fees paid by eExpo to IC One will be as specified in
paragraph 6 of Addendum 1, of the agreement dated 22 June 1999.
eExpo will offer IC One first right of refusal to furnish the smart card stock
and merchant terminals, to eExpo, for the projects covered by this Addendum 2,
provided IC One meets, or improves upon, the technical specifications, prices,
terms and delivery requirements, which is offered to eExpo through other
sources.
IC One and eExpo agree that all the prior terms and conditions specified and
defined in the 22 June agreement, with it's accompanying appendices A, B and C,
as well as it's accompanying Addendum 1, dated 1 September, 1999, to which this
addendum applies, shall remain in force and effect, except as specified and
defined in this Addendum 2.
Prudential
Realty Associates, Inc.
240 N. Orem Blvd. o Orem, UT 84057 o Bus. (801) 224-9011 o Fax (801) 764-2333
COMMERCIAL - INDUSTRIAL - INVESTMENT
REAL ESTATE PURCHASE CONTRACT
This is a legally binding Contract. It has been prepared for the use of its
members only by the UTAH ASSOCIATION OF REALTORS(R) in transactions involving
member's clients or customer; as such, the interests of Buyer and Seller.
Nonetheless the Buyer and the Seller may legally agree on writing to alter a
delete provision of this form. Seek legal advice from your attorney or tax
advisor before entering into a binding Contract.
- --------------------------------------------------------------------------------
EARNEST MONEY RECEIPT
The Buyer
Big M Investment & SCTN or Assigns
offers to purchase the Property described below and delivers as Earnest Money
Deposit $5,000 in the form of 1031 Deposit to:
[ ] the Brokerage, to be deposited within three business days after Acceptance
of this Offer to Purchase by all parties,
[X] the Title/Escrow Company identified below.
Brokerage or Title/Escrow Company Mt. West Title Address 961 S. Orem Blvd. Orem,
Utah
Received by Mt. West Title on December 26, 1999 (date) Phone Number 225-2857
(if Title/Escrow Company) for deposit no later than (date) n/a.
[X] Earnest Monies are on hold with a 1031 exchange in the name of Big M
Investments
- --------------------------------------------------------------------------------
OFFER TO PURCHASE
1. PROPERTY:
Three Story office building of approximately 10,000 Sq. ft.
Address 740 East 3900 South City Salt Lake City County SLC State Ut For legal
description, see [ ] attached Addendum # n/a [X] preliminary title report when
available as provided below.
1.1 INCLUDED ITEMS: Unless excluded herein, this sale shall include all
fixtures presently attached to the Property. The following personal property
shall also be included in this sale and conveyed under separate Bill of Sale
with warranties as to title:
Janitorial Supplies
1.2 EXCLUDED ITEMS: These items are excluded from this sale:
None
2. PURCHASE PRICE AND FINANCING. .Buyer agrees to pay for the Property as
follows:
$ 5,000 Earnest Money Deposit
$ 500,000.00 Loan Proceeds:
[ ] Representing the liability to be assumed by Buyer under an
existing assumable loan ([ ] with [ ] without Seller being
released of liability) in this approximate amount with [ ] Buyer
[ ] Seller agreeing to pay any loan transfer and assumption fees.
Any net differences between the approximate balance of the loan
shown above and the actual balance at Closing shall then be
adjusted in [ ] cash [ ] other n/a [ ] From new institutional
financing on tam no less favorable to the Buyer than the
following: n/a (interest rate for first period prior to
adjustment, if any); n/a (amortization period); n/a (term). Other
than these, the loan terms shall be the best obtainable under the
loan for which the Buyer applies below. [X] From Seller-held
financing, as described in the attached Seller Financing
Addendum.
$ 255,250.00 Other: Note #1 $135,000 Due to Sellers January 3, 2000. (by
- ------------ separate agreement) Note #2 Due to JK Family Partnership in the
amount of $120,250 less expenses of closing. Note #2 is payable
on January 3, 2000.
$ 134,750.00 Balance of Purchase Price in cash at closing
- -------------
$ 895,000.00 TOTAL PURCHASE PRICE
- -------------
3. CLOSING. This transaction shall be closed on or before 12/30/99. Closing
shall occur when: (a) Buyer and Seller have signed and delivered to each other
(or to the escrow/title company) , all documents required by this Contract, by
the Lender, by written escrow instructions signed by the Buyer and the Seller,
and by applicable law; (b) the moneys required to be paid under these documents
have been delivered to the escrow/title company in the form of collected or
cleared funds; and (c) the deed which the Seller has agreed to deliver under
Section 6 has been recorded. Seller and Buyer shall each pay one-half of the
escrow Closing fee, unless otherwise agreed by the parties in writing. Taxes and
assessments for the current year, rents, and interest on assumed obligations
shall be prorated as set forth in this Section. All deposits on tenancies shall
be transferred to Buyer at Closing. Prorations set forth in this Section shall
be made as of [X] date of Closing; [ ] date of possession; [ ] other n/a. 4.
POSSESSION. Seller shall deliver possession to Buyer within 24 hours after
Closing. 5. CONFIRMATION OF AGENCY DISCLOSURE. At the signing of this Contract
the Listing Agent Dan Fish represents [X] Seller [ ] Buyer, and the Selling
Agent Dan Fish, Paul Christensen represents [ ] Seller [X] Buyer. Buyer and
Seller confirm that prior to signing this Contract written disclosure of the
agency relationship was provided to him/her. ( ) Buyer's initials ( ) Seller's
initials.
6. TITLE TO PROPERTY AND TITLE INSURANCE. (a) Seller has, or shall have at
Closing, fee title to the Property and agrees to convey such title to Buyer by
[X] general [ ] special warranty deed, free of financial encumbrances as
warranted under Section 10.6; (b) Seller agrees to pay for, and furnish Buyer at
Closing with, a current standard fort Owner's policy of title insurance in the
amount of the Total Purchase Price; (c) the title policy shall conform with
Seller's obligations under subsections (a) and (6). Unless otherwise agreed
under Section 8.4, the commitment shall conform with the title insurance
commitment provided under Section 7.1. [ ] The Buyer elects to obtain a
full-coverage extended ALTA policy of title insurance under 6(b). The cost of
this coverage, above that of a standard
Real Estate Purchase Contract UAR Form 3 (5/94)
Buyer(s)______ Seller(s)_____ RealFA$T(R) Forms, Box 4700, Frisco, CO 80443,
Version 6.00, (C)RealFA$T(R), 1999; Reg# LUTUAR225136
Completed by - Dan Fish, Realtor, Prudential Realty Associates
12/24/99 07:50:45 Page 1 of 3
<PAGE>
Owner's policy, shall be paid for by the [ ] Buyer [ ] Seller. Also, the cost of
a full-coverage ALTA survey, shall be paid for by the [ ] Buyer [ ] Seller.
7. SPECIFIC UNDERTAKINGS OF SELLER AND BUYER
7.1 SELLER DISCLOSURES. The Seller will deliver to the Buyer the following
Seller Disclosures no later than the number of calendar days indicated below
which shall be days after Acceptance: (days) [X] (a) a Seller Property Condition
Disclosure for the Property, signed and dated by Seler: 2 [X] (b) a commitment
for the policy of title insurance required under Section 6, to be issued by the
title insurance company chosen by Seller, including copies of all documents
listed as Exceptions on the Commitment: 2 [ ] (c) a copy of all loan documents
relating to any loan now existing which will encumber the Property after
Closing: n/a [X] (d) a copy of all leases and rental agreements now in effect
with regard to the Property together with a current rent roll: 2 [X] (e)
operating statements of the Property for its last n/a full fiscal years of
operation plus the current fiscal year through 11/30/99, certified by the Seller
or by an independent auditor: 2 [ ] (f) tenant Estoppel agreements: n/a Seller
agrees to pay any charge for cancellation of the title commitment provided under
subsection (b).
If Seller does not provide any of the Seller Disclosures within the time
periods agreed above, the Buyer may either waive the particular Seller
Disclosure requirement by taking no timely action or the Buyer may notify the
Seller in writing within 10 calendar days after the expiration of the particular
disclosure time period that the Seller is in Default under this Contract and
that the remedies under Section 16 are at the Buyer's disposal. The holder of
the Earnest Money Deposit shall, upon receipt of a copy of Buyer's written
notice, return to the Buyer the Earnest Money Deposit without the requirement of
further written authorization from the Seller.
7.2 BUYER UNDERTAKING. The Buyer agrees to: I II
[ ] (a) Apply for approval of the assumption or funding
of the loan proceeds described in Section 2 by
completing, signing, and delivering to the Lender the
initial loan application and documentation requited by
the Lender and by paying all fees as required by the
Lender (including appraisal fee) no later than n/a
calendar days after Acceptance; and _______ _______
[ ] (b) No later than n /a calendar days after
Acceptance, obtain from the Lender to whom application is
made under subsection (a) a written commitment to approve
the assumption of the existing loan or to fund the new
loan subject only to changes of conditions in Buyer's
credit worthiness and to normal loan dosing procedures;
or, if Buyer elects, providing the Seller with absolute
assurances within the same tithe frame, that the proceeds
required for funding the Total Purchase Price are
available. _______ _______
These Buyer Undertakings are at the sole expense of the Buyer and are material
elements of this Contract for the bent of both the Buyer and the Seller.
If Buyer does not initiate any Buyer Undertaking and provide Seller with
written confirmation in the time agreed above, the Seller may either waive the
particular Buyer Undertaking requirement by taking no timely action or the
Seller may notify the Buyer in writing withinn/a calendar days of the expiration
of the particular undertaking tithe period that the Buyer is in Default under
this Contract and that the remedies under Section 16 are at the Seller's
disposal. The holder of the Earnest Money Deposit shall, upon receipt of a copy
of Seller's written notice, deliver to the Seller the Earnest Money Deposit
without the requirement of further written authorization from the Buyer.
7.3 ADDITIONAL DUE DILIGENCE. The Buyer shall undertake the following
Additional Due Diligence dements at its own expense and for its own benefit for
the purpose of complying with the Contingencies under Section 8:
[ ] (a) Ordering and obtaining an appraisal of the Property if one is not
otherwise required under Section 7.2;
[ ] (b) Ordering and obtaining a survey of the Property if one is tort
otherwise required under Section 6;
[ ] (c) Ordering and obtaining any environmentally related study of the
Property;
[X] (d) Ordering and obtaining a physical inspection report regarding, and
completing a personal inspection of the Property;
[X] (e) Requesting and obtaining verification that the Property complies with
all applicable federal, state, and local laws, ordinances, and regulations with
regard to zoning and permissible use of the Property. Seller agrees to cooperate
fully with Buyer's completing these Due Diligence matters and to make the
Property available as reasonable and necessary for the same. 8. CONTINGENCIES.
This offer is subject to the Buyer's approving to its sole discretion the better
Disclosures, the Buyer Undertakings, and Additional Due Diligence matters in
Section 7. However, the Buyer's discretion in approving the terms of the loan
under subsection 7.2 (b) is subject to Buyer's covenant with regard to minimally
acceptable financing terms tinder Section 2.
8.1 Buyer shall have 10 calendar days after the times specified in Section
7.1 and 7.2 for receipt of Seller Disclosures and for completion of Buyer
Undertakings to review the content of the disclosures and the outcome of the
undertakings. The latest applicable date under Section 7.1 and 7.2 applies for
completing a review of Additional Due Diligence matters under Section 7.3.
8.2 If Buyer does not deliver a written objection to Seller regarding a
Seller Disclosure, Buyer Undertaking, or Due Diligence matter within the time
provided in Section 8.1, that item will be deemed approved by Buyer.
8.3 If Buyer objects, Buyer and Seller shall have 2 calendar days after
receipt of the objections to resolve Buyer's objections. Seller may, but shall
not be required to, resolve Buyer's objections. Likewise, the Buyer is under no
obligation to accept any resolution proposed by the Seller. If Buyer's
objections are not resolved within the stated time, Buyer may void this Contract
by providing written notice to Seller within the same stated time. The holder of
the Earnest Money Deposit shall, upon receipt of a copy of Buyer's written
notice, return to Buyer the Earnest Money Deposit without the requirement of any
further written authorization from Seller. If this Contract is not voided by
Buyer, Buyer's objection is deemed to have been waived However, this waiver does
not affect warranties under Section l0.
8.4 Resolution of Buyer's objections under Section 8.3 shall be in writing
and shall become part of this Contract. 9. SPECIAL CONTINGENCIES. This offer is
made subject to: The term of attached Addendum # 1 are incorporated into this
Contract by this reference. 10. SELLER'S LIMITED WARRANTIES. Seller's warranties
to Buyer regarding the Property are limited to the following:
10.1 When Seller delivers possession of the Property to Buyer, it will be
broom-dean and free of debris and personal belongings;
10.2 Seller will deliver possession of the Property to Buyer with the
plumbing, plumbed fixtures, heating, cooling, ventilating, electrical and
sprinkler (indoor and outdoor) systems, appliances, arid fireplaces in working
order;
10.3 Seller will deliver possession of the Property to Buyer with the roof
and foundation free of leaks known to Seller;
10.4 Seller will deliver possession of the property to Buyer with any private
well or septic tank serving the Property in working order and in compliance with
governmental regulations;
10.5 Seller will be responsible for repairing arty of Seller's moving-related
damage to the Property;
10.6 At Closing, Seller will bring current ail financial obligations
encumbering the Property which are assumed in writing by Buyer and wilt
discharge all such obligations which Buyer has not so assumed;
10.7 As of Closing, Seller has no knowledge of any claim or notice of an
environmental, building, or zoning code violation regarding the Property which
has not been resolved. 11. VERIFICATION OF WARRANTED AND INCLUDED ITEMS. After
all contingencies have beat removed and before Closing, the Buyer may conduct a
"walk-through" inspection of the Property to determine whether or riot items
warranted by Seller in Section 10.1, 10.2, 10.3 and 10.4 are in the warranted
condition and to verify that items included in Section 1.1 are presently on the
Property. If any item is not in the warranted condition, Seller will correct,
repair
Real Estate Purchase Contract UAR Form 3 (5/94)
Buyer(s)______ Seller(s)_____ RealFA$T(R) Forms, Box 4700, Frisco, CO 80443,
Version 6.00, (C)RealFA$T(R), 1999; Reg# LUTUAR225136
Completed by - Dan Fish, Realtor, Prudential Realty Associates
12/24/99 07:50:45 Page 2 of 3
<PAGE>
or replace it as necessary or, with the consent of Buyer and (if required)
Lender, escrow an amount at Closing to provide for such repair or replacement.
The Buyer's failure to conduct a "walk-through" inspection or to claim during
the "walk-through" inspection that the Property does not include all items
referenced in Section 1.1 or is not in the condition warranted in Section 10,
shall constitute a waiver of Buyers rights under Section 1.1 and of the
warranties contained in Section 10. 12. CHANGES DURING TRANSACTION. Seller
agrees that no changes in any existing leases shall be made, no new leases
entered into, and no substantial alterations or improvements to the , Property
shall be undertaken without the written consent of the Buyer. 13. AUTHORITY OF
SIGNERS. If Bayer or Seller is a corporation, partnership, trust, estate, or
other entity, the person signing this Contract on its behalf warrants his or her
authority to do so and to bind Buyer or Seller and the heirs or successors in
interest to Buyer or Seller. If the Seller is not the vested Owner of the
Property but has control over the vested Owner's disposition of the Property,
the Seller agrees to exercise this control and deliver title under this Contract
as if it bad ban signed by the vested Owner. 14. COMPLETE CONTRACT. This
instrument (together with its Addenda, any attached Exhibits, and Seller
Disclosures ) constitutes the entire Contract between the parties and supersedes
all prior dealings between the parties. This Contract cannot be changed except
by written agreement of the parties. 15. DISPUTE RESOLUTION. The parties agree
that any dispute or claim relating to this Contract, including but not limited
to the disposition of the Earnest Money Deposit and the breach or termination of
this Contract, shall first be submitted to mediation in accordance with the Utah
Real Estate Buyer/Seller Mediation Rules of the American Arbitration
Association. Each party agrees to bear its own costs of mediation. Any Agreement
signed by the parties pursuant to the mediation shall be finding If mediation
fails, the procedures applicable and remedies available under this Contract
shall apply. Nothing in this Section shall prohibit the Buyer from seeking
specific performance by the Seller by filing a complaint with the court, serving
it on the Seller by means of summons or as otherwise permitted by law, and
recording a lis pendens with regard to the action provided that the Buyer
permits the Seller to regain from answering the complaint pending mediation.
Also the parties may agree in writing to waive mediation 16. DEFAULT. If Buyer
defaults, Seller may elect to either retain the Earnest Money Deposit as
liquidated damages or to return the Earnest Money Deposit and sue Buyer to
enforce Seller's rights. If Seller defaults, in addition to =turn of the Earnest
Money Deposit, Buyer may elect to either accept from Seller as liquidated
damages a sum equal to the Earnest Money Deposit or sue Seller for specific
performance and/or damages. If Buyer elects to accept the liquidated damages,
Seller agrees to pay the liquidated damages to Buyer upon demand Where a Section
of this Contract provides a specific remedy, the parties intend that the remedy
shall be exclusive regardless of rights which might otherwise be available under
common law. 17. ATTORNEY'S FEES. In any action arising out of this Contract, the
prevailing party shall be entitled to costs and reasonable attorney's fees. 18.
DISPOSITION OF EARNEST MONEY. The Earnest Money Deposit shall not be released
unless it is authorized by: (a) Sections 7.1, 7.2 and 8.3; (b) separate written
agreement of the patties, including an agreement under Section 15 if (a) does
not apply; or (c) court order. 19. ABROGATION. Except for express warranties
made in this Contract, the provision of this Contract shall not apply after
Closing. 20. RISK OF LOSS. All risk of lass or damage to the Property shall be
borne by Seller until Closing. 21. TIME IS OF THE ESSENCE. Time is of the
essence regarding the dates set forth in this transaction Extensions must be
agreed to in writing by all parties. Performance under each Section of this
Contract which references a date shall be required absolutely by 5:00 P.M.,
Mountain Time on the stated data 22. COUNTERPARTS AND FACSIMILE (FAX) DOCUMENTS.
This Contract may be signed in counterparts, and each counterpart beating an
original signature shall be considered one document with all others bearing
original signature. Also, facsimile transmission of any signed original document
and re-transmission of any signed facsimile transmission shall be the same as
delivery of an original. 23. ACCEPTANCE. Acceptance occurs when Seller or Buyer,
responding to an offer or counteroffer of the other. (a) signs the offer or
counteroffer where noted to indicate acceptance; and (b) communicates to the
other party or the other party's agent that the offer or counteroffer has been
signed as required. 24. OFFER AND TIME FOR ACCEPTANCE. Buyer offers to purchase
the Property on the above terms and conditions. If Seller does not accept this
offer by [ ]AM [X] PM Mountain Time, December 27, 1999 , this offer shall lapse,
and the holder of the Earnest Money Deposit shall return it to the Buyer.
Big M Investment & SCTN or Assigns
205 W. 700 South, Salt Lake City, UT 84101
Bus.#: 801-355-0066
BUYER'S SIGNATURE_______________________________ DATE ____________
By: Mike Murphy and David Simon Pres. & CEO
ACCEPTANCE/REJECTION/COUNTEROFFER
[ ] Acceptance of Offer to purchase: Seller Accepts the foregoing offer on the
terms and conditions specified above.
LK Fox Chariable Remainder Unitrust and JK Family Partnership
4582 W. Dundee Circle, Highland, UT 84004
Home #:763-7951
SELLER'S SIGNATURE __________________________ DATE ___________ TIME ___________
By: Eldred Kaye Fox, Co-Trustee and Kenneth N. Fox
[X] Rejection: Seller Rejects the foregoing offer.
______________(Seller's initials) ________________(Date) ___________ (Time)
[ ]Counter Offer: Seller presents for Buyers Acceptance the terms of Buyers
offer subject to the exceptions or modifications as specified in the attached
Counter Offer # n/a.
Real Estate Purchase Contract UAR Form 3 (5/94)
RealFA$T(R) Forms, Box 4700, Frisco, CO 80443, Version 6.00, (C)RealFA$T(R),
1999; Reg# LUTUAR225136
Completed by - Dan Fish, Realtor, Prudential Realty Associates
12/24/99 07:50:45 Page 3 of 3
<PAGE>
Prudential
Realty Associates, Inc.
240 N. Orem Blvd. o Orem, UT 84057 o Bus. (801) 224-9011 o Fax (801) 764-2333
ADDENDUM NO. 1
TO
REAL ESTATE PURCHASE CONTRACT
THIS IS AN [X] ADDENDUM [ ] COUNTEROFFER to that REAL ESTATE PURCHASE CONTRACT
(the "REPC") with an Offer Reference Date of December 26, 1999 , Including all
prior addenda and counteroffers, between
Mike Murphy & SCTN or Assigns
as Buyer, and
LK Fox Chariable Remainder Unitrust and JK Family Partnership as Seller,
regarding the Property; located at 740 East 3900 South Salt Lake City, Utah
(three Story Office Building) The following terms are hereby Incorporated as
part of the REPC:
1). The Trust Deed Note shall have a rent assignment clause in favor of the
Note holder in the event the buyer doesn't pay loan payments as per the
contract.
2). Buyers shall have the time noted in item 8.1 of the Real Estate
Purchase Contract to complete its Due-Diligence and Buyers shall accept
the building thereafter in an "AS IS" condition.
3). Seller shall have the option of placing their proceeds into a 1031 tax
deferred exchange and shall have Buyers cooperation to complete said
exchange. Seller shall also cooperate with Buyers in a 1031 tax
deffered exchange.
To the extent the terms of this ADDENDUM modify or conflict with any provisions
of the REPC, Including all prior addenda and counteroffers, these terms shall
control. All other terms of the REPC, Including prior addenda and counteroffers,
not modified by this ADDENDUM shall remain the same.
[ ] Seller [X] Buyer shall have until 5:00 [ ] A.M. [X] P.M. Mountain Time
December 27 , 1999 (Date) , to accept the terms of this ADDENDUM In accordance
with the provisions of Section 23 of the REPC. Unless so accepted, the offer as
set forth In this ADDENDUM shall lapse.
- ------------------------------------------------------------
[ ] Buyer [ ] Seller Signature Date Time
- ------------------------------------------------------------
[ ] Buyer [ ] Seller Signature Date Time
ACCEPTANCE/REJECTION/COUNTER OFFER
CHECK ONE:
[ ] ACCEPTANCE: [ ] Seller [ ] Buyer hereby accepts the term of this ADDENDUM
NO. n/a.
[ ]COUNTER OFFER: [ ] Seller [ ] Buyer presents as a counter offer the terms set
forth on the attached ADDENDUM NO. n/a.
- --------------------------------------------------------------------------------
(Signature) (Date) (Time) (Signature) (Date) (Time)
[ ]REJECTION: [ ] Seller [ ] Buyer rejects the foregoing ADDENDUM.
- --------------------------------------------------------------------------------
(Signature) (Date) (Time) (Signature) (Date) (Time)
THIS FORM APPROVED BY THE UTATH AREAL ESTATE COMMISION AND THE OFFIC E OF THE
UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 17, 1998. IT REPLACES AND SUPERCEDES
ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.
Addendum to Real Estate Purchase Contract UAR Form 2 (8/98)
Buyer(s)______ Seller(s)_____ RealFA$T(R) Forms, Box 4700, Frisco, CO 80443,
Version 6.00, (C)RealFA$T(R), 1999; Reg# LUTUAR225136
Completed by - Dan Fish, Realtor, Prudential Realty Associates
12/24/99 07:36:16 Page 1 of 1
<PAGE>
Prudential
Realty Associates, Inc.
240 N. Orem Blvd. o Orem, UT 84057 a Bus. (801) 224-9011 o Fax (801) 764-2333
SELLER FINANCING ADDENDUM
TO
REAL ESTATE PURCHASE CONTRACT
THIS SELLER FINANCING, ADDENDUM is made a part of that REAL ESTATE PURCHASE
CONTRACT (the "REPC") with an Offer Reference Date of December 26, 1999 ,
between
Big M Investment & SCTN or Assigns
as Buyer, and
LK Fox Chariable Remainder Unitrust and JK Family Partnership
as Seller, regarding the Property located at
740 East 3900 South, Salt Lake City, Utah 84107
The terms of this ADDENDUM are hereby incorporated as part of the REPC.
1. CREDIT DOCUMENTS. Seller's extension of credit to Buyer shall be evidenced
by: [X] Note and Deed of Trust [ ] Note and All-Inclusive Deed of Trust [ ]
Other: n/a
2. CREDIT TERMS. The terms of the credit documents referred to in Section 1
above are as follows: $ 500.000.00 principal amount of the note(the "Note");
interest at 8.5% per annum; payable at approximately $ 3, 844.57 per month. The
entire unpaid balance of principal plus accrued interest is due in 84 months
from date of the Note. First payment due February 1, 2000. Additional principal
payments, balloon payments or other terms as follows: Loan is based on 30 years
amortization with balance due after 84 months.
The credit documents referenced In Section 1 of this ADDENDUM will contain a
due-on-sale clause in favor of Seller. Seller agrees to provide to Buyer at
Settlement: (a) an amortization schedule based on the above terms; (b) a written
disclosure of the total interest Buyer will pay to maturity of the Note; and (c)
the annual percentage rate on the Note based on loan closing costs.
3. TAXES AND ASSESSMENTS. In addition to the payments referenced in Section 2
above, Buyer shall also be responsible for: (a) property taxes; (b) homeowners
association dues; (c) special assessments; and (d) hazard insurance premiums on
the Property. These obligations will be paid: [ ] directly to Seller/Escrow
Agent on a monthly basis [ ] directly to the applicable county treasurer,
association, and insurance company as required by those entities.
4. PAYMENT. Buyer's payments under Sections 2 and 3 above will be made to: [ ]
Seller [ ] an Escrow Agent. If an Escrow Agent, NONE will act as Escrow Agent
and will be responsible for disbursing payments on any underlying mortgage or
deed of trust (the "underlying mortgage") and to the Seller. Cost of setting up
the escrow account shall be paid by: [ ] Buyer [ ] Seller [ ] split evenly
between the parties.
5. LATE PAYMENT/PREPAYMENT. Any payment not made within 10 days after it is due
is subject to a late charge of $100.00 or n /a % of the installment due,
whichever is greater. Amounts in default shall bear interest at a rate of 18.00%
per annum. All or part of the principal balance on the Note maybe paid prior to
maturity without penalty.
6. DUE-ON-SALE. As part of the Seller Disclosures referenced in Section 7 of the
REPC, Seller shall provide to Buyer a copy of the underlying mortgage, the note
secured thereby, and the amortization schedule. Buyer's obligation to purchase
under this Contract is conditioned upon Buyer's approval of the content of those
documents, in accordance with Section 8 of the REPC. If the holder of the
underlying mortgage calls the loan due as a result of this transaction, Buyer
agrees to discharge the underlying loan as required by the mortgage lender. In
such event, Seller's remaining equity shall be paid as provided in the credit
documents.
7. BUYER DISCLOSURES. Buyer has provided to Seller, as a required part of this
ADDENDUM, the attached Buyer Financial Information Sheet. Buyer may use the
Buyer Financial Information Sheet approved by the Real Estate Commission and the
Attorney General's Office, or may provide comparable written information in a
different format, together with such additional information as Seller may
reasonably require. Buyer [ ] WILL [X] WILL NOT provide Seller with copies of
IRS returns for the two preceding tax years. Buyer acknowledges that Seller may
contact Buyer's current employer for verification of employment as represented
by Buyer in the Buyer Financial Information Sheet.
8. SELLER APPROVAL. By the Seller Disclosure Deadline referenced in Section
24(b) of the REPC, Buyer shall provide to Seller, at Buyer's expense, a current
credit report on Buyer from a consumer credit reporting agency. Seller may use
the credit report and the information referenced in Section 7 of this Addendum
("Buyer Disclosures") to evaluate the credit-worthiness of Buyer.
8.1 Seller Review. By the Evaluations & Inspections Deadline referenced in
Section 24(c) of the REPC, Seller shall review the credit report and the Buyer
Disclosures to determine if the content of the credit report, and the Buyer
Disclosures, is acceptable. If the content of the credit report or the Buyer
Disclosures is not acceptable to Seller, Seller may elect to either: (a) provide
written objections to Buyer as provided in Section 8.2 of this ADDENDUM; or (b)
immediately cancel the REPC by providing written notice to Buyer by the
Evaluations & Inspections Deadline referenced in Section 24(c) of the REPC. The
THIS FORM APPROVED BY THE UTATH AREAL ESTATE COMMISION AND THE OFFIC E OF THE
UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 17, 1998. IT REPLACES AND SUPERCEDES
ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.
Addendum to Real Estate Purchase Contract UAR Form 11 (Rev.8/98)
Buyer(s)______ Seller(s)_____ RealFA$T(R) Forms, Box 4700, Frisco, CO 80443,
Version 6.00, (C)RealFA$T(R), 1999; Reg# LUTUAR225136
Completed by - Dan Fish, Realtor, Prudential Realty Associates
12/24/99 08:10:11 Page 1 of 2
<PAGE>
Brokerage, upon receipt of a copy of Seller's written notice of cancellation,
shall return to Buyer the Earnest Money Deposit.
8.2 Seller Objections. If Seller does not immediately cancel the REPC as
provided above, Seller may, by the Evaluations & Inspections Deadline referenced
in Section 24(c) of the REPC, provide Buyer with written objections. Buyer and
Seller shall have seven calendar days after Buyer's receipt of the objections
(the "Response Period") in which to agree in writing upon the manner of
resolving Seller's objections. Buyer may, but shall not be required to, resolve
Seller's objections. If Seller and Buyer have not agreed in writing upon the
manner of resolving Seller's objections, Seller may cancel the REPC by providing
written notice to Buyer no later than three calendar days after expiration of
the Response Period. The Brokerage, upon receipt of a copy of Seller's written
notice of cancellation, shall return to Buyer the Earnest Money Deposit.
8.3 Failure to Object. If Seller does not deliver a written objection to
Buyer regarding the credit report or a Buyer Disclosure by the Evaluations &
Inspections Deadline referenced in Section 24(c) of the REPC or cancel the REPC
as provided in Sections 8.1 or 8.2 of this ADDENDUM, the credit report and Buyer
Disclosures will be deemed approved by Seller.
9. TITLE INSURANCE. Buyer [X] SHALL [ ] SHALL NOT provide to Seller a lender's
policy of title insurance in the amount of the indebtedness to the Seller, and
shall pay for such policy at Settlement.
10. DISCLOSURE OF TAX IDENTIFICATION NUMBERS. By no later than the Settlement
Deadline referenced in Section 24(e) of the REPC, Buyer and Seller shall
disclose to each other below their respective Social Security Numbers or other
applicable tax identification numbers so that they may comply with federal laws
on reporting mortgage interest in filings with the Internal Revenue Service.
To the extent the terms of this ADDENDUM modify or conflict with any provisions
of the REPC, including all prior addenda and counteroffers, these terms shall
control. All other terms of the REPC, including all prior addenda and
counteroffers, not modified by this ADDENDUM shall remain the same. [X] Seller [
] Buyer shall have until Dec 27,1999 [ ] AM [X] PM Mountain Time 5: 00 PM, to
accept these terms in accordance with Section 23 of the REPC. Unless so
accepted, this offer shall lapse.
- -------------------------------------------------- ------------------------
[ ]Buyer [ ] Seller Signature Date Time Social Security Number
- -------------------------------------------------- ------------------------
[ ]Buyer [ ] Seller Signature Date Time Social Security Number
ACCEPTANCE/COUNTEROFFER/REJECTION
CHECK ONE:
[ ]ACCEPTANCE: [ ] Seller [ ] Buyer hereby accepts these terms.
[ ] COUNTEROFFER: [ ] Seller [ ] Buyer presents as a counteroffer the terms set
forth on the attached ADDENDUM NO. n/a.
- --------------------------------------------------------------------------------
(Signature) (Date) (Time) (Signature) (Date) (Time)
[ ] REJECTION: [ ] Seller [ ] Buyer rejects these terms.
- --------------------------------------------------------------------------------
(Signature) (Date) (Time) (Signature) (Date) (Time)
THIS FORM APPROVED BY THE UTATH AREAL ESTATE COMMISION AND THE OFFIC E OF THE
UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 17, 1998. IT REPLACES AND SUPERCEDES
ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.
Addendum to Real Estate Purchase Contract UAR Form 11 (Rev.8/98)
Buyer(s)______ Seller(s)____ RealFA$T(R) Forms, Box 4700, Frisco, CO 80443,
Version 6.00, (C)RealFA$T(R), 1999; Reg# LUTUAR225136
Completed by - Dan Fish, Realtor, Prudential Realty Associates
12/24/99 08:10:11 Page 2 of 2
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 6,002
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,002
<PP&E> 342,638
<DEPRECIATION> 164,426
<TOTAL-ASSETS> 624,572
<CURRENT-LIABILITIES> 2,860,424
<BONDS> 0
0
0
<COMMON> 63,390
<OTHER-SE> (2,299,242)
<TOTAL-LIABILITY-AND-EQUITY> 624,572
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,960,664
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 238,928
<INCOME-PRETAX> (5,199,592)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,199,592)
<DISCONTINUED> 0
<EXTRAORDINARY> 300,000
<CHANGES> 0
<NET-INCOME> (5,499,592)
<EPS-BASIC> (0.16)
<EPS-DILUTED> (0.54)
</TABLE>