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As filed with the Securities and Exchange Commission on February 11, 2000
SEC Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
NMXS.com, INC.
(Name of small business issuer in its charter)
DELAWARE 7389 91-1287406
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Number) Identification No.)
incorporation or
organization)
5041 INDIAN SCHOOL ROAD NE, SUITE 200, ALBUQUERQUE, NM 87110
(505) 255-1999
(Address and Telephone Number of Principal Executive Offices)
5041 INDIAN SCHOOL ROAD NE, SUITE 200, ALBUQUERQUE, NM 87110
(Address of Principal Place of Business)
RICHARD GOVATSKI, PRESIDENT, NMXS.com, INC.
5041 INDIAN SCHOOL ROAD NE, SUITE 200, ALBUQUERQUE, NM 87110
(505) 255-1999
(Name, Address and Telephone Number of Agent for Service)
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Copies to:
Ronald N. Vance, Esq.
57 West 200 South
Suite 310
Salt Lake City, UT 84101
(801) 359-9300
(801) 359-9310 - FAX
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] __________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Unit(1) Price(1) Fee
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series A Warrants
and Common Stock,
$.001 par value
per share 1,000,000 $1.25 $1,250,000 $348
Common Stock
$.001 par value
per share 20,000 $3.00 $60,000 $16
----
TOTAL $364
----
----
</TABLE>
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- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457 under the Securities Act of 1933.
(2) Estimated solely for purpose of calculating the registration fee
pursuant to Rule 457. This amount is based upon the average of the bid and asked
prices ($3.00) of the common stock of the Registrant as of February 7, 2000.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2000
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
NMXS.com, INC.
1,000,000 Warrants and Underlying Shares
Exercise Price: $1.25 Per Share
We are distributing 1,000,000 Series A Warrants to our shareholders
of record as of the beginning of business on August 3, 1999. Each warrant
entitles the holder to purchase one share of common stock. Each warrant is
exercisable at $1.25. Our stock is quoted on the Pink Sheets under the symbol
"NMXS." We may redeem the warrants for $.01 per warrant on 30 days notice.
The warrants will expire three years following the date of this prospectus.
The warrants are being distributed to our shareholders without the
payment of any consideration. The shares of stock are being offered only to
holders of the warrants and these shares of stock will be issued upon exercise
of the warrants. The offering price of the shares is payable in cash upon
exercise of the warrants. No minimum number of warrants must be exercised, and
we cannot assure you that any warrants will be exercised. We will not pay any
underwriting discounts or other commissions in connection with the exercise of
the warrants. The only proceeds we could receive in this offering will be from
the exercise of the warrants. If all of the warrants were exercised, we would
receive $1,250,000.
Concurrently with this offering, we are registering for resale 20,000
shares to be offered by a selling security holder.
THIS OFFERING IS HIGHLY SPECULATIVE AND INVOLVES SPECIAL RISKS
CONCERNING THE COMPANY AND ITS BUSINESS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
________, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary 6
Risk Factors 7
Forward Looking Statements 11
Use of Proceeds 12
Dilution 12
Management's Discussion and Analysis of Financial Condition and
Results of Operation 13
Business 15
Management 21
Certain Transactions 25
Market Information 25
Principal Shareholders 26
Selling Shareholder 27
Description of Securities 28
Dividend Policy 30
Plan of Distribution 30
Shares Eligible For Future Sale 31
Legal Matters 32
Experts 32
Financial Statements 32
</TABLE>
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PROSPECTUS SUMMARY
OUR COMPANY
We create software solutions for the management of large volumes of
media or digital material, such as graphic images, video clips, or audio files,
over the Internet or via internal business intranets. In addition, our products
can also be used in any business sector that must deal with the management of
large volumes of graphic images, such as medicine, scientific environments, and
law enforcement.
Our principal executive offices are located at 5041 Indian School Road
NE, Suite 200, Albuquerque, NM 87110, and our telephone number at these offices
is (505) 255-1999
THE OFFERING
<TABLE>
<S> <C>
Securities offered 1,000,000 warrants, each exercisable at $1.25 per
share for three years from the date of this prospectus
Shares outstanding at February 8, 2000 20,733,836
Shares outstanding after maximum exercise 21,733,836
Proceeds from exercise of warrrants $1,250,000
Estimated offering expenses $60,000
Net proceeds to us $1,190,000
Plan of distribution The warrants will be distributable to, and exercisable
by, shareholders of record on August 3, 1999
</TABLE>
We intend to use the net proceeds, if any, to:
- Expand sales and advertising efforts; and
- Fund research and development of existing and new products.
The following summary financial information has been derived from our
consolidated financial statements which appear later in this prospectus and
should be read in conjunction with those consolidated financial statements and
related notes.
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<TABLE>
<CAPTION>
For the nine months For the years
ended September ended December 31
(unaudited)
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Consolidated Statement of Operations Data:
Revenues $231,000 $150,000 $196,000 $ 77,000
Operating expenses 1,332,000 230,000 310,000 154,000
Net loss (1,090,000) (80,000) (114,000) (77,000)
Loss per share (.11) (.01) (.02) (.01)
Consolidated Balance Sheet Data:
Current assets $1,509,000 $72,000
Total assets 1,612,000 91,000
Current liabilities 168,000 116,000
Stockholders' equity 1,444,000 (25,000)
</TABLE>
RISK FACTORS
WE ARE MUCH LIKE A START UP COMPANY AND HAVE A LIMITED OPERATING HISTORY ON
WHICH TO EVALUATE OUR POTENTIAL FOR FUTURE SUCCESS. OTHER, BETTER FINANCED
COMPANIES MAY BE DEVELOPING SIMILAR PRODUCTS AS OURS WHICH COULD COMPETE WITH
OUR PRODUCTS. SUCH COMPETITION COULD MATERIALLY ADVERSELY AFFECT OUR FINANCIAL
CONDITION.
Although we have been established for three years, we remain a
development stage enterprise and our product was not completed and sold until
1998. We, therefore, have a limited operating history upon which you can
evaluate our business prospects. You must consider the risks and uncertainties
frequently encountered by early stage companies in new and rapidly evolving
markets. For example, we believe there may exist better-capitalized companies on
a parallel development path with similar products addressing our target markets.
While the Internet technology marketplace is extremely competitive, we have
anticipated a first-to-market advantage with our products. However, other highly
capitalized companies that have recognized the absence of digital image
management products could overwhelm our first-to-market advantage with expensive
and expansive media blitzes that create the perception of a dominant market
presence and/or superior products. If we are unsuccessful in addressing these
risks and uncertainties, our business, results of operations and financial
condition will be materially and adversely affected.
WE HAVE EXPERIENCED LOSSES OF $1,090,000 FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999 AND WE EXPECT LOSSES FOR THE FORESEEABLE FUTURE. ALSO OUR OPERATING RESULTS
MAY FLUCTUATE FROM QUARTER TO QUARTER.
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To date we have incurred net losses, resulting primarily from costs
related to developing our product and attempting to establish ourselves in
the marketplace. Our short-term plans include hiring additional engineers to
improve our existing products and develop new products, hiring additional
marketing personnel, and investing in administrative personnel. We feel that
these expenses are necessary to build an organization which is capable of
establishing and maintaining a strong market position and operating
effectively in that environment. However, we will be subject to continued
risks, expenses and difficulties in our continuing software development and
growth efforts. Product development difficulties could limit sales of our
product and could cause a bad reputation in the marketplace. When a product
gains a reputation for containing operating bugs, it is often difficult to
recover credibility. Additional risks and difficulties include, but are not
limited to, the following situations:
- Difficulty recruiting and retaining staff of sufficient
technical caliber to provide adequate and on-going customer
support and product maintenance and development;
- Failure to successfully market our products through the
Internet and company representatives; and
- Catastrophic and universal hardware failure.
We offer no assurance that we will be successful in addressing or
responding to such risks and the failure to do so could have a material adverse
effect on our business, operations and financial condition. Our operating
history and the uncertain and volatile nature of the markets make predictions of
future results of operations difficult and should not be taken as indicative of
revenue growth, if any, that can be expected in the future. There is no firm
basis to estimate our expenses or the amount of revenues that planned operations
will generate and there can be no assurance that we will ever achieve
significantly increased revenues or profitable operations. Comparisons to our
previous ability to attract customers and sell products may not necessarily be
an indication of future performance.
WE MAY ENCOUNTER DIFFICULTY RECRUITING AND RETAINING STAFF. WITHOUT HIGHLY
TRAINED TECHNICAL PERSONNEL, WE MAY FIND IT MORE DIFFICULT TO COMPETE WITH OTHER
COMPANIES IN OUR FIELD.
We must attract and retain highly qualified technical personnel to both
maintain the current product and customer support levels and to update and
improve our products. Competition for highly qualified technical personnel,
particularly those with Internet technology-related programming skills, is
intense and there is no assurance that we will be able to attract and retain
personnel of the skill level and caliber we need to accomplish our goals.
Because they are in high demand, such technical personnel often demand large
salaries and comprehensive benefits packages that could strain our financial
resources. Technology companies generally have a higher employee turnover rate
than non-technology companies due to intense competition to attract the
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most qualified personnel. We may also be at slightly more of a disadvantage
than other software development companies because technical personnel with
the Internet technology expertise that we seek might be reluctant to relocate
away from the more financially lucrative West Coast technology centers such
as Silicon Valley.
WE MAY FACE A NEED FOR ADDITIONAL FINANCING, ESPECIALLY IF OUR ESTIMATES TO
OBTAIN NEW STAFF OR IF OUR PROJECTED COSTS OF PRODUCT DEVELOPMENT ARE INCORRECT.
IF SUCH ADDITIONAL FINANCING IS REQUIRED, BUT UNAVAILABLE, WE MAY NOT BE ABLE TO
DEVELOP MARKETS FOR OUR PRODUCTS BEFORE OTHERS INTRODUCE COMPETING PRODUCTS.
There is no assurance that the equity funding obtained will be
adequate. Substantial additional equity or debt financing may be necessary.
In such an event, we intend to seek additional financing in order to hire
more technical or sales staff or to expand our promotional capabilities. We
could seek such additional financing from a number of sources including, but
not limited to, possible further sales of equity or debt securities, bank
loans, affiliates, or other financial institutions. We have no arrangements
with respect to, or sources of, additional financing. Failure to obtain
additional financing in the future could have an adverse effect on us,
including advancement of our business plan. For example, if a significant
portion of our financial resources were exhausted in recruiting and hiring
highly skilled staff and by greater than anticipated product development
costs, we would be left with inadequate funding for developing markets for
our products. We can offer no assurance that we will be able to sell any such
securities, or obtain such financing, on terms and conditions acceptable, or
favorable to us, or at all, if and when needed by us. Any equity financing
may involve substantial dilution of the interests of the current
stockholders. Any debt financing would subject us to the risks associated
with leverage, including the possible risk of an inability to repay the debt
as it comes due.
WE HAVE DEVELOPED OUR CORE PRODUCTS USING A MIX OF READILY AVAILABLE OPEN SOURCE
SOFTWARE DEVELOPMENT TOOLS. KNOWLEDGEABLE COMPETITORS MAY BE ABLE TO DEDUCE HOW
WE HAVE ASSEMBLED OUR CODE BASE AND BE ABLE TO DEVELOP COMPETING PRODUCTS
The principal advantage in utilizing open source tools is the extremely
high degree of portability they ensure. Migrating our products from one
operating system or hardware base to another is more easily accomplished by
avoiding proprietary development tools. The risk factor inherent in the use of
such freely available tools is the fact that a sophisticated competitor might be
able to reverse engineer our work and produce similar functionality.
Our product has two unique and highly desirable feature for e-commerce,
medical, and other commercial applications . Our product offers the ability to
magnify details in high-resolution graphic images. Our product also allows rapid
transmission of a portion of such an image based on user input, significantly
enhancing the responsiveness of the system to deliver images over the Internet.
The ability to perform these operations is based on a specific graphic image
file format. This file format is universally available, as it has recently been
published as an open source specification. The risk, as discussed above, is
mitigated by the five years we have spent
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developing our unique applications and we have made modifications to this
code that very significantly enhance its capabilities and flexibility. We
recognize that these significant features of our product could be a target
for imitation. Any such imitation, should it occur, could have material
adverse effects on our business, operations and financial condition.
BRAND IDENTITY PROBLEMS COULD STALL OR COMPROMISE OUR MARKET PENETRATION.
We believe that establishing and maintaining brand identity of our
products and services is critical to attracting new customers and retaining our
customer base of large corporations. The importance of brand recognition will
continue to increase as new competitors enter the digital asset management
marketplace. Promotion and enhancement of our brands will depend largely on our
success in continuing to provide high quality service and leading edge products
and this cannot be assured. If businesses do not associate our product names or
brands with high quality, or if we introduce new products or services that are
not favorably received, we will run the risk of compromising our product line
and decreasing the attractiveness of our products to potential new customers. In
addition, to attract and maintain customers and to promote our products in
response to competitive pressures, we may find it necessary to increase our
financial commitment substantially to create and maintain product loyalty among
our customers. If we are unable to provide high quality services, or otherwise
fail to promote and maintain our products, or if we incur excessive expenses in
an attempt to improve our services, or promote and maintain our products, our
business, results of operations and financial condition could be adversely
affected.
WHILE WE HAVE COMMENCED THE PROCESS TO PROTECT OUR TRADE NAMES, WE HAVE NOT
COMPLETED THE PROCESS. THUS, OTHERS COULD ATTEMPT TO USE TRADE NAMES WHICH WE
HAVE SELECTED. SUCH MISAPPROPRIATION OF OUR BRAND IDENTITY COULD CAUSE
SIGNIFICANT CONFUSION IN THE HIGHLY COMPETITIVE INTERNET TECHNOLOGY MARKETPLACE
AND LEGAL DEFENSE AGAINST SUCH MISAPPROPRIATION COULD PROVE COSTLY AND
TIME-CONSUMING.
As part of the brand identity creation process that defines our
products to be unique in the Internet technology marketplace and proprietary in
nature, we have begun the process to protect certain product names and slogans
as registered trademarks to designate exclusivity and ownership. We have a
trademark attorney to complete searches on the uniqueness of some of these brand
names and slogans and she has concluded that the following names and slogans
qualify for registered trademark status and has begun the process to register
them: "AssetWare," "Zoombox," "The Look and Feel of E-commerce," "Real Time,"
"Real Organized," and "Real Simple."
Although trademarked in the U.S., effective trademark, copyright or
trade secret protection may not be available in every country in which our
products may eventually be distributed. There can also be no assurance that the
steps taken by us to protect our rights to use these trademarked names and
slogans and any future trademarked names or slogans will be adequate, or that
third parties will not infringe or misappropriate our copyrights, trademarks,
service marks, and similar proprietary rights.
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WE HAVE BEEN DELISTED FROM THE OTC ELECTRONIC BULLETIN BOARD WHICH HAS CAUSED
OUR STOCK TO BE LESS LIQUID.
We have been unable to meet the requirements necessary to remain
eligible for quotation on the OTC Electronic Bulletin Board. Consequently, our
common stock has been delisted from the Bulletin Board and is now being traded
on the electronic pink sheets which we believe to be a much less suitable system
for people to trade our stock.
THE DESIGNATION OF OUR STOCK AS "PENNY STOCK" WILL MEAN THAT IT WILL BE MORE
DIFFICULT TO SELL YOUR SHARES. OUR STOCK CURRENTLY TRADES AT LESS THAN $5.00 PER
SHARE AND IS DESIGNATED AS "PENNY STOCK."
Initially our shares will be subject to Rule 15g-9 under the Exchange
Act. That rule imposes additional sales practice requirements on broker-dealers
that sell low-priced securities designated as "penny stocks" to persons other
than established customers and institutional accredited investors. The SEC's
regulations define a "penny stock" to be any equity security that has a market
price less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions. Initially our stock will be penny stock.
We cannot assure you that our shares will ever qualify for exemption from these
restrictions. For transactions covered by this rule, a broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, the
rule may affect the ability of broker-dealers to sell our shares and may affect
the ability of holders to sell their shares in the secondary market.
YOUR STOCK WILL BE DILUTED 89.5% FROM THE EXERCISE PRICE.
Warrant holders who exercise their warrants will experience
immediate and substantial dilution of $1.12 in net tangible book value per
share, or approximately 89.5% of the exercise price of $1.25 per share.
FORWARD LOOKING STATEMENTS
This prospectus contains statements that plan for or anticipate the
future. Forward-looking statements include statements about the future of
operations involving the management of large volumes of media or digital
material, statements about our future business plans and strategies, and most
other statements that are not historical in nature. In this prospectus
forward-looking statements are generally identified by the words "anticipate,"
"plan," "believe," "expect," "estimate," and the like. Although we believe that
any forward-looking statements we make in this prospectus are reasonable,
because forward-looking statements involve future risks and uncertainties, there
are factors that could cause actual results to differ materially from those
expressed or implied. For example, a few of the uncertainties that could affect
the accuracy of forward-looking statements, besides the specific factors
identified in the Risk Factors section of this prospectus, include the
following:
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- Rapid changes in technology relating to the Internet;
- the continued growth and use of the Internet;
- changes in government regulations
- changes in our business strategies;
- market acceptance of our products; and
- hardware failure of a catastrophic proportion;
In light of the significant uncertainties inherent in the
forward-looking statements made in this prospectus, particularly in view of our
early stage of operations, the inclusion of this information should not be
regarded as a representation by us or any other person that our objectives and
plans will be achieved.
The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by existing public companies, does not
apply to our offerings.
USE OF PROCEEDS
The net proceeds we may receive from the sale of the shares underlying
the warrants will vary depending upon the total number of warrants exercised,
and the timing of when they are exercised. We can give no assurances that any
warrants will be exercised or that we will obtain any net proceeds from exercise
of the warrants if offering expenses exceed proceeds received. Regardless of the
timing and number of warrants exercised, we expect to incur offering expenses
estimated at $60,000 for legal, accounting, printing and other costs in
connection with the offering pursuant to this prospectus.
The uses of any proceeds that we may receive from exercise of the
warrants will depend on the amounts received and the timing of their receipt. We
will have broad discretion in applying proceeds and we have presently identified
the following categories of expenditure to be allocated approximately pro rata
as follows:
- expansion of sales and advertising efforts; and
- funding of research and development of existing and new products.
DILUTION
This dilution calculation does not give effect to the issuance of
equity instruments in January and February, 2000. Our financial statements at
September 30, 1999, show a net tangible book value of $1,444,000 or $.07 per
share. Net tangible book value per share represents the amount of our
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tangible assets (total assets less intangible assets), less total
liabilities, divided by the number of shares of common stock outstanding.
Without taking into account any further adjustments in net tangible book
value after September 30, 1999, other than to give effect to the exercise of
the 1,000,000 warrants (after deduction of offering expenses) the pro forma
our net tangible book value at September 30, 1999, would have been $2,694,000
or approximately $.13 per share of common stock, representing an increase in
net tangible book value of approximately $1,250,000 to existing shareholders
and a dilution of approximately $1.12 per share to new investors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
GENERAL
The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and notes
thereto appearing elsewhere in this registration statement. The matters
discussed in this registration statement contain forward-looking statements that
involve risk and uncertainties. Our actual results may differ materially from
those discussed herein.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999, COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998
Revenues for the nine months ended September 30, 1999, of $231,000
represent a 54% increase over the same period in 1998. In 1998, our image
management software prototype was completed and we commenced beta testing at
customer sites. The 1999 period reflects not only the impact of the addition
of new customers' installations and monthly service, but also a full nine
months of service on those accounts which were installed at various times
during 1998.
Operating costs and expenses for the nine months ended September 30,
1999, were $1,332,000, an increase of $1,102,000, from the nine months ended
September 30, 1998. This increase is the result of our focused efforts on
developing, selling, installing and servicing our unique product. The data
management software was developed by Richard Govatski, the company's chief
executive, a staff of one systems development engineer, and the limited use
of a number of independently contracted software developers.
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A permanent engineering, administrative and sales staff was hired beginning
in July 1999. This staff has now grown to 18 employees and Mr. Govatski is
our President and CEO. No legal or accounting fees were incurred in 1998;
legal and accounting fees of approximately $58,000 have been incurred in 1999
through September. In addition, common stock and common stock options valued
at approximately $652,000 were distributed during 1999 to various individuals
as compensation for services they provided to the organization and $90,000
was recognized as the fair value of services which had been provided by Mr.
Govatski. All of these costs, except for 50% of Mr. Govatski's compensation,
were recorded as research and development expenses. Office and occupancy
expenses, consisting of office rent, utilities, office supplies, office
equipment maintenance, copying and fax costs, and advertising have increased
from approximately $16,300 for the nine months ended September 30, 1998, to
approximately $44,400 for that same period in 1999. Research and development
expenses have continued to increase in the effort to develop new products. As
a result, the research and development expenses for the nine months ended
September 30, 1999, increased approximately $33,000 from that same period in
1998, an increase of 40%. Depreciation expense also increased substantially
due to the purchase of computer hardware during the first half of 1999.
YEAR ENDED DECEMBER 31, 1998, COMPARED TO YEAR ENDED DECEMBER 31,
1997
Revenues for the year ended December 31, 1998, were $196,000,
representing a 155% increase over the 1997 revenues of $77,000. This increase
was the result of increased customer beta test site revenue. Total operating
cost and expenses increased by $156,000. This was due primarily to hiring a
systems engineer and the use of outside contractors. The above factors
resulted in a loss of $114,000 in 1998 compared to a loss of $77,000 in 1997.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1999, the company had a
net cash increase of $1,356,000. For the comparable period in 1998, there was
a net cash decrease of $30,000.
Operating activities for 1999 resulted in a net cash decrease of
$339,000, due to the net loss from operations and increases in receivables,
inventory, and prepaid expenses, and a decrease in deferred revenue. Accounts
payable and accrued expenses increased during the nine month period.
Operating activities for 1998 resulted in a cash decrease of $30,000.
Investing activities resulted in cash decreases due to property
purchases in both the nine months ended September 30, 1999 and 1998 of
$99,000 and $6,000, respectively.
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Financing activities during the nine months ended September 30, 1999,
resulted in a cash increase of $1,817,000 from the sale of the company's common
stock, and was decreased by a $23,000 repayment of a note payable.
Cash requirements for the year ended December 31, 2000 will be
largely dependent on our success in selling our products and services. We
estimate that product development and support, the implementation of our
marketing plan, and the general and administrative expense to support the
operation will require approximately $1,400,000. Additional funds of
$1,090,000 have been obtained as a result of a private placement sale during
January and February 2000 of units consisting of stock and warrants. We
estimate that these funds, together with existing cash balances, will provide
the funding needed for anticipated operations through September 30, 1999.
However, should anticipated revenues not be achieved, we would be required to
expend our current cash balances, reduce our expenses and possibly restrict
or eliminate planned product development and marketing. This could also
hamper our ability to take advantage of potential business opportunities or
respond to competitive pressures. Should our cash requirements exceed our
current cash reserves, there is no assurance that additional financing would
be available to us. Should these situations occur, they could have a material
adverse effect on our operations and financial condition.
BUSINESS
OUR HISTORY AND BACKGROUND
We were originally incorporated under the laws of the State of Utah
on August 12, 1983, under the name "Raddatz Exploration, Inc." The name was
changed to "Renaissance Guild, Inc." on February 16, 1984, and to
"C.O.N.S.E.R.V.E Corporation" on October 3, 1985. On April 28, 1997, we
changed domicile to the State of Delaware by merging into a Delaware
corporation incorporated on October 14, 1980, under the name "Costs of Owning
the Newest Systems of Energy Reduction are Virtually Eliminated, Inc." The
name was changed to "Conserve, Inc." on May 11, 1999.
Our company was originally formed to engage in the business of
manufacturing and selling solar systems (reverse refrigeration) for
residential homes. In November 1985, an involuntary bankruptcy proceeding was
filed against us. The Court dismissed the involuntary petition in August
1986. In late 1986 we ceased operations. On December 5, 1989, we renounced
all of our rights to the collateral (virtually all assets, except its
patents) under the Uniform Commercial Code and transferred our interest
therein to a financial institution, the major creditor which was in
bankruptcy proceedings from May 1986 until early 1992, in satisfaction of the
related debt. However, a full release from the debt was not obtained until
April 1994. On July 8, 1988, the patents were sold. Other than as stated
above we conducted no business activity until the reverse acquisition by New
Mexico Software.
On or about August 3, 1999, we entered into an agreement with New
Mexico Software, Inc., a privately-held New Mexico corporation (hereinafter
"New Mexico Software"), and the shareholders of this entity. The agreement
provided that on the closing date the shareholders of
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New Mexico Software would exchange all of their shares for 11,880,000
post-reverse split shares of our company, such that New Mexico Software would
become a wholly owned subsidiary and the shareholders of New Mexico Software
would own approximately 60.7% of the outstanding stock of our company. The
closing of the reorganization agreement was held on August 3, 1999.
Also in connection with a reorganization agreement with New Mexico
Software, we reverse split the outstanding shares at the rate of one-for-1.5,
canceled 5,725,435 outstanding shares, and issued 2,360,500 shares in a
private offering at $0.75 per share. We received gross proceeds of $1,770,375
from this offering. As a result of the closing of the reorganization
agreement, old management resigned in favor of the current directors and
officers who were designated by New Mexico Software. The name of the company
was changed to NMXS.com, Inc. on August 3, 1999.
Unless otherwise indicated, all references to our outstanding shares
give effect to all previous stock splits.
In conjunction with the closing of the reorganization agreement with
New Mexico Software, we declared a distribution of 1,000,000 warrants at the
rate of one-for-5.3 to all of the shareholders of record as of the beginning
of business on August 3, 1999.
In January and February 2000, we issued 1,090,000 units in a private
offering consisting of one share of common stock and a Series B Warrant to
purchase one share of common stock through January 17, 2005, at $1.00 per
share. We received gross proceeds of $1,090,000 from the offering.
Through our wholly owned subsidiary, we provide Internet
technology-based digital asset management software that is a
business-to-business solution for the efficient organization, storage, rapid
retrieval and transmission of digital assets.
HISTORY OF NEW MEXICO SOFTWARE
With the explosive growth of the Internet, e-commerce, and even the
availability of low-cost scanners, businesses have begun a mass migration of
visual images to digital formats. These graphic images, along with video and
audio clips, are collectively called digital assets. Businesses that rely on
them have a significant investment in their creation, maintenance and ability
to reproduce these assets for other uses. The growing importance of digital
assets has produced a large demand for efficient organization tools and rapid
distribution methods. New Mexico Software's software products were designed
to address this growing market need.
New Mexico Software was founded in 1994 by Richard Govatski and
incorporated in 1996. With the anticipation that digital asset management
would emerge as a crucial factor in the growth of the Internet, he and a
small team of engineers began the development of a core system that addressed
the most important requirements for a comprehensive digital asset management
system.
<PAGE>
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Although the company has been in existence for five years, it was
not until very recently that we began as a start-up company in the
marketplace. Our first product, Image Assets, became operationally viable in
1998. It was not until 1999, however, that a sales effort was undertaken and
an internal engineering, sales, and administrative staff was put into place.
WHAT NEW MEXICO SOFTWARE PRODUCTS PROVIDE CUSTOMERS
While organization and distribution of images are the core features
of our products, these capabilities are further enhanced with security and
e-commerce features to provide customers with what can be described as
Internet enabling capabilities. Our software performs all functions which are
necessary for efficient, effective digital asset management, including the
following:
- High-speed transfer of high-resolution graphic images;
- Ability to use a single image in multiple resolutions;
- Modest media storage requirements for images;
- Digital branding for security of images as intellectual
property;
- Compatibility of images with all computer platforms;
- Efficient and flexible use of one graphic image for multiple
purposes (screen viewing, direct printing, color separations,
etc.);
- Resources to build restricted access viewing salons on the
Internet;
- Search engine capable of locating and retrieving images by
color, shape, brightness, structure or texture;
- Ability to convert existing images in all graphic formats,
including medical and CAD images; and
- Photographic quality printing directly from a web site.
What makes New Mexico Software's products unique is that they are
based on Internet technology. This provides flexibility for the software to
be used in practically any business environment-single desktop computer,
workgroup, enterprise-level networks-and on all types of computers, in any
combination of configurations: PC, Mac, or Sun Unix workstations. There are
no complicated time-consuming applications for users to learn, so there is no
protracted learning curve that proceeds productivity. Operation of the easily
customizable, turn-key product is completely transparent at the desktop
because it uses the common web browsers Netscape and Internet Explorer as the
user interface.
OUR TECHNOLOGY
Organization and distribution of images are the core features of our
products. These are further enhanced with security and e-commerce features to
provide customers with what can be described as Internet enabling
capabilities. Using the technology of the Internet provides flexibility for
the software to be used in practically any business environment - single
desktop computer, workgroup, enterprise-level networks - and on all types of
computers in any combination of configurations: PC, Mac, or Sun Unix
workstations. There are no applications for
<PAGE>
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consumers to learn and operation of the easily customizable, turn-key product
is completely transparent at the desktop because it uses the common web
browsers Netscape and Internet Explorer as the user interface. Our software
provides capabilities that significantly reduce the time required to display
graphic images on the Internet. Viewing a 90MB file (such as an X-Ray) in a
standard browser window takes approximately 20 hours to transmit from the
source on a conventional 56k modem using conventional methods. Our software
allows the image to be viewed in 27 seconds. We are an authorized Sprint
sales agent, and by using Sprint ION, actually downloading a 90MB file takes
only 2.5 minutes. We also have available a low cost Netra T1 server which can
be remotely monitored at our facility in Albuquerque from any place on the
Net. The T1 server can be located on the Sprint ION network and at the
customer's facilities using the digital asset management software for even
faster uploading of files.
We currently employ eight programmers and engineers tasked with
adding new features to our products and fixing any problems users might
encounter. There are risks inherent in software development including
unanticipated delays, technical problems that could mean significant
deviation from original product specifications, and hardware problems. In
addition, once improvements and bug fixes are deployed there is no assurance
that they will work as anticipated or that they will be durable in actual use
by customers.
MARKETING
Our marketing effort, including print, direct mail, web advertising,
cross-linking and participation in key industry events, is being primarily
directed to advertising-associated industries, including corporate accounts
and stock photo houses. Other areas in which the management of large graphic
image and media files is a significant problem include medical and x-ray
imaging, architectural and engineering firms and various forms of e-commerce.
Our senior management have appeared as industry experts at
significant industry events including Seybold, XPlor International, Photo
Marketing Association conferences and others. We had a principal speaking
engagement at the first annual Digital Asset Management Conference (DAM) held
in Orlando, FL, in January, 2000. This semi-annual event will become the
premier conference event in the emerging asset management market.
OUR INTELLECTUAL PROPERTIES
We have several proprietary aspects to our software which we believe
make our products unique and desirable in the marketplace. Consequently, we
regard protection of the proprietary elements of our products to be of
paramount importance and we attempt to protect them by relying on trademark,
service mark, trade dress, copyright and trade secret laws, and restrictions
on disclosure and transferring of title. We have entered into confidentiality
and non- disclosure agreements with our employees and contractors in order to
limit access to, and disclosure of, our proprietary information. There can be
no assurance that
<PAGE>
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these contractual arrangements or the other steps taken by us to protect our
intellectual property will prove sufficient to prevent misappropriation of
our technology or to deter independent third-party development of similar
technologies.
Although we do not believe that we infringe the proprietary rights
of third parties, there can be no assurance that third parties will not claim
infringement by us with respect to past, current, or future technologies. We
expect that participants in our markets will be increasingly subject to
infringement claims as the number of services and competitors in our industry
grows. Any such claim, whether meritorious or not, could be time-consuming,
result in costly litigation, cause service upgrade delays, or require us to
enter into royalty or licensing agreements. Such royalty or licensing
agreements may not be available on terms acceptable to us or at all. As a
result, any such claim could have a material adverse effect upon our
business, results of operations and financial condition.
GOVERNMENT REGULATION
Our company, operations, products, and services are all subject to
regulations set forth by various federal, state and local regulatory
agencies. We take measures to ensure our compliance with all such regulations
as promulgated by these agencies from time to time. The Federal
Communications Commission sets certain standards and regulations regarding
communications and related equipment.
There are currently few laws and regulations directly applicable to
the Internet. It is possible that a number of laws and regulations may be
adopted with respect to the Internet covering issues such as user privacy,
pricing, content, copyrights, distribution, antitrust and characteristics and
quality of products and services. The growth of the market for online
commerce may prompt calls for more stringent consumer protection laws that
may impose additional burdens on companies conducting business online. Tax
authorities in a number of states are currently reviewing the appropriate tax
treatment of companies engaged in online commerce, and new state tax
regulations may subject us to additional state sales and income taxes.
Because our services are accessible worldwide, other jurisdictions
may claim that we are required to qualify to do business as a foreign
corporation in a particular state or foreign country. Our failure to qualify
as a foreign corporation in a jurisdiction where it is required to do so could
<PAGE>
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subject us to taxes and penalties for the failure to qualify and could result
in our inability to enforce contracts in such jurisdictions. Any such new
legislation or regulation, or the application of laws or regulations from
jurisdictions whose laws do not currently apply to our business, could have a
material adverse effect on our business, results of operations and financial
condition.
POSSIBLE COMPETITORS
Competition at this time is broad, with a number of vendors offering
single user, client/server, and intra-Internet based systems. To the best of
our knowledge, most competitive offerings provide the cataloging and
searching functionalities also found in our products, but are unable to
address the security, encryption, intellectual property protection and
electronic commerce functionalities built into our products. We believe that
no competitor combines the broad spectrum of interlocking functionalities
with access to Sprint's nationwide fiber optic network and industry-standard
hardware support offered through our relationship with Sun Microsystems.
The digital asset management market is one of the newest in the
Information Services industry. We anticipate that, if our products become
better known as a result of our advertising efforts, competition will become
more intense as other companies seek to match our services and features.
While we have one of the longest histories of development effort behind our
products, we anticipate that other, better-capitalized companies will begin
intense development efforts to bring similar products to parity with ours. In
addition to being better capitalized, some of these companies also have much
greater brand/company recognition as well as a substantial existing customer
base.
OFFICE FACILITIES AND EQUIPMENT
We lease a 3,116 square foot facility in Albuquerque, New Mexico, at
a cost of approximately $3,895 per month, increasing to approximately $4,414
over the term of the lease. The lease expires approximately July 31, 2004.
The facility provides both administration and engineering offices. It is in
close proximity to the location of the servers, and the two locations are
networked together by fiber optics. The current space provides adequate room
for expansion. It also contains an advanced telephone system which will
provide the capability needed to provide adequate customer telephone support.
We also lease a Sun Solaris computer network under a master lease
which has an option to purchase the equipment at the end of the individual
leases at the then fair market value. Monthly payments are approximately
$3,000.
EMPLOYEES
As of January 31, 2000, we had 18 employees, including 8 in systems
engineering; 5 in administration; 2 in sales; and 3 in advertising. We offer
and share in the cost of health and dental insurance. A stock option plan for
employees and others was adopted on August 3, 1999. The
<PAGE>
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competition for qualified personnel in our industry and geographic location
is intense, and there can be no assurance that we will be successful in
attracting, integrating, retaining and motivating a sufficient number of
qualified personnel to conduct its business in the future. We have never had
a work stoppage, and no employees are represented under collective bargaining
agreements. We consider our relations with our employees to be good. From
time to time, we also utilize services of independent contractors for
specific projects or to support our research and development effort.
REPORTS TO OUR SECURITY HOLDERS
Our fiscal year ends on December 31st. We do not intend to furnish
our shareholders annual reports containing audited financial statements and
other appropriate reports. However, we intend to become a reporting company
and file annual, quarterly and current reports, and other information with
the SEC. You may read and copy any reports, statements or other information
we file at the SEC's public reference room at 450 fifth Street, N.W.,
Washington D.C. 20549. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC
Internet site at http://www.sec.gov.
MANAGEMENT
GENERAL
The following table sets forth our directors and executive officers,
their ages, and all offices and positions held with our company. A director
holds office until his successor is elected and qualified. Annual meetings to
elect directors are scheduled to be held on the 5th day of April in each year
if not a legal holiday, and if a legal holiday, then on the next succeeding
day that is not a holiday, at 10:00 am. Officers are chosen by the Board of
Directors and hold office until their successors are chosen and qualified.
Officers may be removed with or without cause by the affirmative vote of a
majority of the whole Board of Directors.
<TABLE>
<CAPTION>
Name Age Position Director Since
---- --- -------- --------------
<S> <C> <C> <C>
Richard Govatski 55 Chairman, President & CEO 1999
Marvin Maslow 62 Director 1999
Scott L. Bach 37 Director 1999
Marc Orchant 41 Vice President Marketing
Susan Blumenthal 49 Vice President Communications
Teresa B. Dickey 55 Secretary & Treasurer
</TABLE>
Set forth below is certain biographical information regarding the
Company's executive officers and directors:
<PAGE>
Page 22 of 38
RICHARD GOVATSKI has been the chairman, CEO, and president of New
Mexico Software, Inc., since 1996.
MARVIN MASLOW has been the president and chairman of Manhattan
Scientifics Inc., a shareholder of the Company, a high technology and
commercialization company, since January 1998. From September 1988 until
April 1999, he was the chairman and CEO of Projectavision, Inc., a high
technology video projection manufacturing company.
SCOTT BACH has been a practicing attorney since 1987. He has been
the owner of Bach & Associates, a law firm located in New York since
September 1995. He is also a director of Manhattan Scientifics Inc., a
shareholder of the Company, and Tamarack Storage Devices, inc., a wholly
owned subsidiary of Manhattan Scientifics.
MARC ORCHANT has been employed as the vice-president of marketing for
New Mexico Software since August 1999. From March 1998 until August 1999 he was
employed by AGFA Corporation as a market development manager. From February 1989
until March 1998 he was employed by Aibus Corp., doing business as Subia, as
director of training and as operations manager.
SUSAN BLUMENTHAL has been employed by us since August 1999. From 1992
until 1999 she was employed as a consultant to StarTree, Inc. which contracted
work for us.
TERESA B. DICKEY has been the secretary/treasurer of our company since
August 1999. From 1988 until 1999 she was employed by Sandia National Labs as
art director.
The Board of Directors has no nominating or compensation committee.
There are no arrangements or understandings between any of the officers or
directors and any other person(s) pursuant to which such officer or director
was selected as an officer or director. There are no family relationships
between any of the officers or directors of the Company.
COMPENSATION OF EXECUTIVE OFFICERS
Except for the options granted to Mr. Govatski set forth below, no
compensation was awarded to, earned by, or paid to Mr. Govatski, our chief
executive officer, by our company or its subsidiary since inception through July
1999. No other executive officer received in excess of $100,000 in total annual
salary and bonuses since inception.
As of January 14, 2000, we had granted a total of 1,029,760 options.
The following grants of stock options, through January 14, 2000, were made to
the named executive officers:
<PAGE>
Page 23 of 38
<TABLE>
<CAPTION> Number of
Securities Percent of
Underlying Total Exercise Expiration
Name Options Options Price Date
----- ----------- -------- -------- ----------
<S> <C> <C> <C> <C>
Richard Govatski 380,000 36.9% $0.75 9/30/04
120,000 11.65% $0.825 9/30/04
Teresa Dickey 56,000 5.44% $2.125 12/31/09
Marc Orchant 62,000 6.02% $2.125 12/31/09
Susan Blumenthal 56,000 5.44% $2.125 12/31/09
</TABLE>
The options granted to Mr. Govatski will vest and become exercisable at
the rate of 20% per year commencing August 4, 2000. The options granted to the
other persons set forth in the above table will vest and become exercisable at
the rate of 50% per year commencing January 2, 2001.
We have a three-year employment contract with Mr. Govatski to act as
our chief executive officer. The annual salary is $120,000. We also purchased an
automobile for approximately $36,000 which we provide to him at no cost. We also
pay his health insurance premiums and one-half of his dental insurance premiums.
We have entered into an arrangement with Marvin Maslow to pay him an
annual salary of $60,000 to work part-time as a consultant for us. We have also
leased a car for him. This arrangement can be terminated by the Board of
Directors at any time.
COMPENSATION OF DIRECTORS
Directors are permitted to receive fixed fees and other compensation
for their services as directors. The Board of Directors has the authority to fix
the compensation of directors. No amounts have been paid to, or accrued to,
directors in such capacity.
STOCK OPTION PLAN
As of the closing of the reverse acquisition with New Mexico Software,
we adopted a stock option plan, pursuant to which we are authorized to grant
options to purchase up to 3,000,000 shares of our common stock to our key
employees, officers, directors, consultants, and other agents and advisors.
Awards under the plan consist of both incentive and non-qualified options.
The plan is administered by the Board of Directors which will determine
the persons to whom awards will be granted, the number of awards to be granted
and the specific terms of each grant, including the vesting thereof, subject to
the provisions of the plan.
<PAGE>
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Persons who are eligible to participate in the plan include the
following:
- Employees, as to both incentive and non-qualified options;
- Non-employee members of the Board, as to non-qualified
options; and
- Consultants and other independent advisors, as to
non-qualified options.
In connection with qualified stock options, the exercise price of each
option may not be less than 100% of the fair market value of the common stock on
the date of grant, or 110% of the fair market value in the case of a grantee
holding more than 10% of our outstanding stock. The aggregate fair market value
of shares for which qualified stock options are exercisable for the first time
by such employee, or 10% shareholder, during any calendar year may not exceed
$100,000. Non-qualified stock options granted under the plan may be granted at a
price determined by the Board of Directors, not to be less than the fair market
value of the common stock on the date of grant.
No option may be granted to be exercised more than 10 years after the
grant date. The terms of options outstanding at the time of a persons cessation
of service, death, permanent disability, or misconduct are reduced to the
following periods, but not to exceed the original term:
- Three months after cessation of services, except by reason of
death, permanent disability, or misconduct;
- Twelve months after the optionee's death or permanent
disability; and
- Immediately upon termination for misconduct.
The plan also contains provisions affecting outstanding options in the
case of certain corporate transactions or in the event of a change of control.
If we should enter into a merger or consolidation, or in the event of a tender
or exchange offer, in which securities representing more than 50% of the voting
control are transferred to an outside party, or if we should sell, transfer, or
dispose of all, or substantially all of our assets, we could accelerate the
vesting and termination dates of these options. We could also elect to terminate
outstanding purchase rights associated with the options. In the alternative, the
options could be assumed and adjusted for the particular corporate transaction.
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND OTHERS
Section 145 of the General Corporation Law of the State of Delaware
expressly authorizes a Delaware corporation to indemnify its officers,
directors, employees, and agents against claims or liabilities arising out of
such persons' conduct as officers, directors, employees, or agents for the
corporation if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the Company. Neither the
articles of incorporation nor the Bylaws of the Company provide for
indemnification of the directors, officers, employees, or agents of the Company.
The Company has not adopted a policy about indemnification. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") may
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be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
The eighth article of our Certificate of Incorporation includes
provisions to eliminate, to the fullest extent permitted by Delaware General
Corporation Law as in effect from time to time, the personal liability of our
directors for monetary damages arising from a breach of their fiduciary duties
as directors.
CERTAIN TRANSACTIONS
Richard Govatski, our president, director, and principal shareholder,
may be deemed a promoter in relation to the organization of our business. In
connection with the acquisition of New Mexico Software, Mr. Govatski exchanged
all of his shares of New Mexico Software for 5,597,000 shares in the public
company.
MARKET INFORMATION
The Common Stock of the Company did not commence trading either on the
OTC Electronic Bulletin Board or in the Pink Sheets until approximately August
1999. We were delisted from the Bulleting Board on October 21, 1999. Our stock
is currently quoted on the Pink Sheets under the symbol "NMXS." The table below
sets forth for the periods indicated the high and low bid quotations as reported
on the Internet. These quotations reflect inter-dealer prices, without retail
mark-up, markdown, or commission and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
Quarter High Low
------- ---- ---
<S> <C> <C> <C>
FISCAL YEAR ENDED
DECEMBER 31, 1999 Third $3.375 $2.187
Fourth $2.25 $1.00
</TABLE>
OUTSTANDING OPTIONS, WARRANTS, AND CONVERTIBLE INSTRUMENTS
At February 8, 2000, we had outstanding 1,029,760 options which we
had granted pursuant to our stock option plan. In addition to the 1,000,000
Series A Warrants set forth in this prospectus, we also have outstanding
1,090,000 warrants designated as Series B Warrants to purchase 1,090,000
shares of stock at $1.00 per share, exercisable commencing August 1, 2000,
until January 17, 2005. We have also granted registration rights to our
securities counsel to register up 20,000 of the outstanding restricted shares.
<PAGE>
Page 26 of 38
RECORD HOLDERS OF STOCK; TRANSFER AGENT
At February 8, 2000, we had approximately 391 shareholders of record as
reported by our transfer agent. Our transfer agent for our common stock and our
Series A Warrants is Interwest Transfer Company, Inc., 1981 East 4800 South,
Suite 100, Salt Lake City, UT 84117.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning the stock
ownership as of February 8, 2000, of each person who is known by us to be the
beneficial owner of more than five percent of our stock; by each of our
executive officers and directors; and by our executive officers and directors as
a group. Such information was furnished to us by these persons or was obtained
from information provided by the transfer agent.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
- ------------------- ------------------- ----------------
Before Exercise After Exercise
--------------- --------------
<S> <C> <C> <C>
Richard Govatski 5,597,000 26.99% 25.75%
5041 Indian School Rd NE
Albuquerque, NM 87110
Manhattan Scientifics, Inc. 5,416,300(1) 26.12% 24.92%
Olympic Tower
641 5th Ave.
Suite 36 F
New York, NY 10022
Marvin Maslow(1) -0- -0- -0-
Olympic Tower
641 5th Ave.
Suite 36 F
New York, NY 10022
Scott L. Bach 40,000 * *
1 Rockefeller Plaza
New York NY 10020
Marc Orchant 30,000 * *
5041 Indian School Rd NE
Albuquerque, NM 87110
<PAGE>
Page 27 of 38
Susan Blumenthal 170,000 * *
5041 Indian School Rd NE
Albuquerque, NM 87110
Teresa B. Dickey 52,000 * *
5041 Indian School Rd NE
Albuquerque, NM 87110
Executive officers and
directors as a group
(6 persons) 5,889,000 28.4% 27.1%
</TABLE>
- -------------
*Represents less than 1%.
(1) These shares are held directly in the name of Manhattan
Scientifics, Inc. Mr. Maslow, one of our directors, is an officer and director
of Manhattan Scientifics, Inc., but has no beneficial interest in these shares.
SELLING SHAREHOLDER
Up to 20,000 shares issued previously by us may be offered for resale
by Ronald N. Vance, P.C. We will not receive any of the proceeds from the sale
of these securities. Mr. Vance is acting as counsel for us in this offering and
the shares previously issued to him are for services rendered in connection with
this offering. Mr. Vance beneficially owns no other shares and will not
beneficially own any of our securities if these shares are sold.
The sale of the shares by the selling security holder may be effected
from time to time in transactions in the over-the-counter market or in
negotiated transactions or otherwise. These transactions may include block
transactions by or for the account of the selling security holders. Sales may be
made at fixed prices which may be changed, at market prices, if any, prevailing
at the time of sale, or at negotiated prices.
The selling security holder may effect these transactions by selling
his shares directly to purchasers, through broker-dealers acting as agents for
him or to broker-dealers who may purchase the securities as principals and
thereafter sell the securities from time to time in the over-the-counter
market, if any, in negotiated transactions or otherwise. These broker-dealers,
if any, may receive compensation in the form of discounts, concessions or
commissions from the selling security holder or the purchasers for whom the
broker dealers may act as agents or to whom they may sell as principals or
otherwise, which compensation as to a particular broker-dealer may exceed
customary commissions.
Under applicable rules and regulations under the Securities Exchange
Act, any person engaged in the distribution of the selling security holder's
shares may not simultaneously engage
<PAGE>
Page 28 of 38
in market making activities with respect to any of our securities for a period
of at least two, and possibly nine, business days prior to the start of any
distribution.
The selling security holder and broker-dealers, if any, acting in
connection with these sales might be deemed to be underwriters within the
meaning of Section 2(11) of the Securities Act and any commission received by
them and any profit on the resale of the securities might be deemed to be
underwriting discounts and commissions under the Securities Act.
DESCRIPTION OF SECURITIES
COMMON STOCK
We are presently authorized to issue 50,000,000 shares of $.001 par
value common stock. At February 8, 2000, we had 20,733,836 shares of common
stock outstanding. The holders of our common stock are entitled to equal
dividends and distributions when, as, and if declared by the Board of Directors
from funds legally available therefor. No holder of any shares of common stock
has a preemptive right to subscribe for any of our securities, nor are any
common shares subject to redemption or convertible into other of our securities,
except for outstanding options described above. Upon liquidation, dissolution or
winding up, and after payment of creditors and preferred stockholders, if any,
the assets will be divided pro-rata on a share-for-share basis among the holders
of the shares of common stock. All shares of common stock now outstanding are
fully paid, validly issued and non-assessable. Each share of common stock is
entitled to one vote with respect to the election of any director or any other
matter upon which shareholders are required or permitted to vote. Holders of our
common stock do not have cumulative voting rights, so the holders of more than
50% of the combined shares voting for the election of directors may elect all of
the directors if they choose to do so, and, in that event, the holders of the
remaining shares will not be able to elect any members to the Board of
Directors.
PREFERRED STOCK
We are authorized to issue up to 500,000 shares of $.001 par value
preferred stock. Under our Certificate of Incorporation, the Board of Directors
will have the power, without further action by the holders of the common stock,
to designate the relative rights and preferences of the preferred stock, and to
issue the preferred stock in one or more series as designated by the Board of
Directors. The designation of rights and preferences could include preferences
as to liquidation, redemption and conversion rights, voting rights, dividends or
other preferences, any of which may be dilutive of the interest of the holders
of the common stock or the preferred stock of any other series. The issuance of
preferred stock may have the effect of delaying or preventing a change in
control of our company without further shareholder action and may adversely
affect the rights and powers, including voting rights, of the holders of common
stock. In certain circumstances, the issuance of preferred stock could depress
the market price of the common stock.
<PAGE>
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SERIES A WARRANTS
We declared a warrant distribution of common stock purchase warrants to
all stockholders of record as of the beginning of business on August 3, 1999, a
date immediately preceding closing the acquisition with New Mexico Software. The
warrants will be distributed on the effective date of this prospectus. We will
distribute a total of 1,000,000 warrants PRO RATA to these shareholders who
owned shares on August 3, 1999. The warrants will be distributed on the basis of
one warrant for each 5.3 shares owned on this date and will be exercisable for
one share of common stock. The warrants will be exercisable for a period of
three years from the date of this prospectus, subject to redemption by us. The
distribution of the warrants and the purchase of the shares of common stock
underlying the warrants must be registered with the Securities and Exchange
Commission prior to the warrants becoming exercisable. Therefore, we have filed
the registration statement of which this prospectus is a part. The warrants are
exercisable at $1.25 per share subject to our right to lower the price at any
time.
Only stockholders of record as of the Warrant Record Date are entitled
to the distribution of the warrants, which distribution is being made to said
stockholders without monetary consideration. The warrants are nontransferable.
The warrants are redeemable by the Company at any time regardless of
whether a registration statement has been filed or declared effective and
regardless of whether the registration statement is then current, upon thirty
(30) days written notice, at a price of $.01 per warrant. Any warrant holder who
does not exercise his warrants prior to the redemption date, as set forth on our
notice of redemption, will forfeit his right to purchase the shares underlying
the warrants. After the redemption date, any outstanding warrants referred to in
the notice of redemption will become void and will be canceled. If we do not
redeem the warrants, they will expire at the conclusion of the exercise period,
unless we extend the period.
We may extend the exercise period of the Warrants at any time provided
we give written notice of the extension to the warrant holders prior to their
expiration date. We do not presently contemplate any extensions of the exercise
period.
The Warrants contain anti-dilution provisions with respect to the
occurrence of certain events, such as stock splits or stock dividends. The
anti-dilution provisions do not apply in the event of a merger or acquisition.
In the event of a liquidation, dissolution or winding-up of our company, warrant
holders will not be entitled to participate in our assets. Warrant holders have
no voting, preemptive, liquidation or other rights of a stockholder, and no
dividends may be declared on the warrants.
The Warrants may be exercised by surrendering the warrant certificate
evidencing the warrants to be exercised, with the exercise form included therein
duly completed and executed, and paying to us the exercise price per share in
cash or check. Stock certificates will be issued as soon thereafter as
practicable.
<PAGE>
Page 30 of 38
The Warrants are not exercisable unless the warrants and the shares of
stock underlying the warrants are registered. We have filed with the Securities
and Exchange Commission a registration statement with respect to the issuance of
the stock underlying the warrants. This prospectus is part of such registration
statement and the date of this prospectus is the effective date of the
registration statement. The effective date of the registration statement is the
commencement date for determining the exercise period of the warrants. We will
also seek to register or qualify the common stock issuable upon the exercise of
the warrants under the Blue Sky laws of all states in which holders of the
warrants may reside.
The warrants will not be exercisable by, and may not be distributed to,
stockholders residing in states where the distribution or exercise is prohibited
without registration in said states and where we are unable to meet the
registration requirements of the state.
DIVIDEND POLICY
We have not declared or paid any cash dividends as yet on the common
stock and the Board of Directors has not yet decided on a dividend policy.
Whether dividends will be paid will be determined by the Board of Directors and
will necessarily depend on our earnings, financial condition, capital
requirements and other factors. The Board of Directors has no current plans to
declare any dividends in the foreseeable future.
PLAN OF DISTRIBUTION
This prospectus relates to the distribution of 1,000,000 redeemable
warrants and 1,000,000 shares of our common stock underlying these warrants. As
soon as practicable after the date of this prospectus, the warrants will be
distributed to the record holders of our common stock as of the beginning of
business on August 3, 1999. The warrants were not distributed and did not
constitute an offer by us to sell the shares of common stock prior to the date
of this prospectus.
The distribution of the warrants will be managed without an
underwriter, and the shares of stock to be issued upon exercise of the warrants
will be issued by our officers without any discount, sales commissions or other
compensation being paid to anyone in connection with the distribution. In
connection therewith, we will pay the costs of preparing, mailing and
distributing this prospectus to the holders of our common stock. Brokers,
nominees, fiduciaries and other custodians will be requested to forward copies
of this prospectus to the beneficial owners of securities held of record by them
on August 3, 1999, and such custodians will be reimbursed for their expenses.
There is no assurance that any of the warrants will be exercised and
that any of the shares of common stock will be sold. All funds received upon the
exercise of any warrants will be immediately available to us for our use.
<PAGE>
Page 31 of 38
Our transfer agent will act as the warrant agent for the Series A
Warrants. Warrants may be exercised in whole or in part by presentation of the
warrant certificate, with the purchase form on the reverse side thereof filled
out and signed at the bottom thereof, together with payment of the exercise
price and any applicable taxes at the principal office of Interwest Transfer
Co., Inc., 1981 East 4800 South, Suite 100, Salt Lake City, Utah 84117. Payment
of the exercise price shall be made in lawful money of the United States of
America by wire transfer or check payable to the order of "Interwest Transfer
Co.--NMXS.com, Inc. Escrow Account." All holders of warrants will be given an
independent right to exercise their purchase rights. If, as, and when properly
completed and duly executed notices of exercise are received by the warrant
agent, together with the warrant certificates being surrendered and full payment
of the exercise price in cleared funds, the checks or other funds will be
delivered to us, and the warrant agent will promptly issue certificates for the
underlying common stock. It is presently estimated that certificates for the
shares of common stock will be available for delivery in Salt Lake City, Utah,
at the close of business on the tenth business day after the receipt of all
required documents and funds.
SHARES ELIGIBLE FOR FUTURE SALE
At February 8, 2000, we had 20,733,836 outstanding shares. In addition,
if all of the 1,000,000 warrants being issued were exercised, the shares issued
upon exercise will, subject to any applicable state law restrictions on
secondary trading, be freely tradeable without restriction under the Securities
Act, except that any shares purchased by our affiliates will be subject to the
resale limitations of Rule 144.
Of the shares outstanding at February 8, 2000, approximately 18,145,514
shares are "restricted" within the meaning of Rule 144 under the Securities Act,
and only 20,000 are being registered for resale. Of this number, approximately
131,242 shares may be eligible for immediate sale in the public market without
restriction under Rule 144(k). In the reverse acquisition transaction between us
and New Mexico Software which closed on August 3, 1999, we issued 11,880,000
restricted shares to the shareholders of New Mexico Software. These shares will
be available for resale beginning approximately August 3, 2000.
In general, under Rule 144, as currently in effect, any person who has
beneficially owned restricted shares for at least one year, is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of 1% of our then outstanding shares, or the average weekly trading
volume of our stock during the four calendar weeks immediately preceding the
date on which notice of the sale is filed with the Commission. Sales pursuant to
Rule 144 are also subject to certain requirements relating to manner of sale,
notice and availability of current public information about us. A person who is
not deemed to have been an affiliate at any time during the 90 days immediately
preceding the sale and whose restricted shares have been fully-paid for two
years since the later of the date they were acquired from us, or the date they
were acquired from one of our affiliates, may sell these restricted shares under
Rule 144(k) without regard to the limitations and requirements described above.
Restricted shares may not be resold under Rule
<PAGE>
Page 32 of 38
144 until ninety days from the date of this prospectus, regardless of when the
one year holding period expires.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
us by Ronald N. Vance, Attorney at Law, Salt Lake City, Utah. Mr. Vance is the
selling shareholder set forth in this prospectus. Mr. Vance owns 20,000 shares
of our common stock which is being registered for resale as described above.
EXPERTS
Our financial statements for the years ended December 31, 1998 and
1997, included in this prospectus have been audited by Richard A. Eisner &
Company, LLP, Certified Public Accountants. The financial statements audited
by the Certified Public Accountants have been included in reliance upon their
audit report as experts in accounting and auditing.
FINANCIAL STATEMENTS
We have attached to this prospectus copies of our audited financial
statements as of December 31, 1998 and 1997. We have also included unaudited
financial statements for the nine months ended September 30, 1999 and 1998.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
NMXS.COM, Inc.
We have audited the accompanying consolidated balance sheet of NMXS.COM, Inc.
(formerly Conserve, Inc.) (a development stage enterprise) as of December 31,
1998, and the related consolidated statements of operations, stockholders'
equity (capital deficiency) and cash flows for the years ended December 31,
1998 and 1997 and the amounts for each of the years ended December 31, 1998,
1997 and 1996, included in the cumulative amounts for the period from April
2, 1996 (inception) through December 31, 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements enumerated above
present fairly, in all material respects, the consolidated financial position
of NMXS.COM, Inc. as of December 31, 1998 and the consolidated results of
their operations and their consolidated cash flows for the years ended
December 31, 1998 and 1997 and the amounts for each of the years ended
December 31, 1998, 1997 and 1996, included in the cumulative amounts for the
period from April 2, 1996 (inception) through December 31, 1998, in
conformity with generally accepted accounting principles.
Florham Park, New Jersey
October 15, 1999
F-1
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,388,000 $ 32,000
Accounts receivable 58,000 24,000
Inventory 7,000
Prepaid expenses 11,000
Officer advances 45,000 16,000
----------- ---------
Total current assets 1,509,000 72,000
Furniture and equipment - net 103,000 19,000
----------- ---------
$ 1,612,000 $ 91,000
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable and accrued expenses $ 164,000 $ 55,000
Deferred revenue 4,000 38,000
Loan payable 23,000
----------- ---------
Total current liabilities 168,000 116,000
----------- ---------
Commitments
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Capital stock $.001 par value:
Preferred stock, authorized 500,000 shares; issued and
outstanding - none
Common stock, authorized 50,000,000 shares; 19,573,833 and
118,800 shares deemed issued and outstanding as of
September 30, 1999 and December 31, 1998, respectively 19,000
Additional paid-in capital 2,706,000 166,000
Deficit accumulated during the development stage (1,281,000) (191,000)
----------- ---------
Total stockholders' equity (capital deficiency) 1,444,000 (25,000)
----------- ---------
$ 1,612,000 $ 91,000
=========== =========
</TABLE>
F-2
The accompanying notes are an integral part of these financial statements
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
NINE MONTHS ENDED YEAR ENDED (APRIL 2, 1996)
SEPTEMBER 30, DECEMBER 31, THROUGH
----------------------- ----------------------- SEPTEMBER 30,
1999 1998 1998 1997 1999
------ ------ ------ ------ -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues $ 231,000 $ 150,000 $ 196,000 $ 77,000 $ 504,000
------------ ---------- ---------- ---------- -----------
Operating costs and expenses (including
equity related charges):
Cost of services 98,000 89,000 119,000 9,000 226,000
General and administrative 1,118,000 58,000 100,000 54,000 1,272,000
Research and development 116,000 83,000 91,000 91,000 298,000
------------ ---------- ---------- ---------- -----------
Total operating costs
and expenses 1,332,000 230,000 310,000 154,000 1,796,000
------------ ---------- ---------- ---------- -----------
Other income (expense):
Interest income - net 11,000 11,000
------------ -----------
NET LOSS/COMPREHENSIVE LOSS $ (1,090,000) $ (80,000) $ (114,000) $(77,000) $(1,281,000)
============ ========== ========== ========== ===========
Basic and diluted loss per share:
Weighted average number of
common shares outstanding 9,819,000 5,737,700 5,737,700 5,737,700
============ ========== ========== ==========
Basic and diluted loss per
share $ (.11) $ (.01) $ (.02) $ (.01)
============ ========== ========== ==========
</TABLE>
F-3
The accompanying notes are an integral part of these financial statements
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
(NOTES A AND D)
<TABLE>
<CAPTION>
DEFICIT
COMMON STOCK ACCUMULATED
$.001 PAR VALUE ADDITIONAL DURING THE
--------------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
---------- ---------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C>
Initial issuance of shares to founder
for $1,000 118,800 $ 1,000 $ 1,000
------------ ------------ -----------
BALANCE, DECEMBER 31, 1996 118,800 1,000 1,000
Fair value of services provided by founder 75,000 75,000
Net loss/comprehensive loss $ (77,000) (77,000)
------------ ------------ ----------- -----------
BALANCE, DECEMBER 31, 1997 118,800 76,000 (77,000) (1,000)
Fair value of services provided by founder 90,000 90,000
Net loss/comprehensive loss (114,000) (114,000)
------------ ------------ ----------- -----------
BALANCE, DECEMBER 31, 1998 118,800 $ 0 166,000 (191,000) (25,000)
Issuance of shares - June 5,416,300 5,000 95,000 100,000
Special distribution of shares to
founder - June 5,618,900 6,000 (6,000)
Issuance of shares at $.75
per share for services - July 726,000 1,000 544,000 545,000
Shares deemed issued in connection
with reverse acquisition - August 5,333,333 5,000 (5,000)
Issuance of shares at $.75 per share,
net of issuance costs - August 2,360,500 2,000 1,715,000 1,717,000
Issuance of stock options at fair value
for services - August 107,000 107,000
Fair value of services provided by founder 90,000 90,000
Net loss/comprehensive loss (1,090,000) (1,090,000)
------------ ---------- ------------ ----------- -----------
BALANCE, SEPTEMBER 30, 1999 (unaudited) 19,573,833 $ 19,000 $ 2,706,000 $(1,281,000) $ 1,444,000
============ ========== ============ =========== ===========
</TABLE>
F-4
The accompanying notes are an integral part of these financial statements
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
NINE MONTHS ENDED (APRIL 2, 1996)
SEPTEMBER 30, YEAR ENDED THROUGH
--------------------- DECEMBER 31, SEPTEMBER
1999 1998 ----------------------- 30, 1999
------ ------ 1998 1997 ---------------
(UNAUDITED) -------- -------- (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,090,000) $(80,000) $(114,000) $(77,000) $(1,281,000)
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Common stock issued for services 545,000 545,000
Stock options issued for services 107,000 107,000
Fair value of services provided by
founder 90,000 68,000 90,000 75,000 255,000
Depreciation 15,000 2,000 3,000 2,000 20,000
Changes in:
Accounts receivable (34,000) (2,000) (24,000) (58,000)
Inventory (7,000) (7,000)
Prepaid expenses (11,000) (11,000)
Officer advances (29,000) (10,000) (11,000) (5,000) (45,000)
Accounts payable and
accrued expenses 109,000 (2,000) 20,000 35,000 164,000
Deferred revenue (34,000) 38,000 4,000
----------- -------- --------- -------- -----------
Net cash (used in) provided
by operating activities (339,000) (24,000) 2,000 30,000 (307,000)
----------- -------- --------- -------- -----------
CASH FLOWS FROM INVESTING ACTIVITY:
Acquisition of fixed assets (99,000) (6,000) (9,000) (15,000) (123,000)
----------- -------- --------- -------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan from (repayment to) stockholder (23,000) 6,000 17,000
Net proceeds from issuance of
common stock 1,817,000 1,818,000
----------- -------- --------- -------- -----------
Net cash provided by
financing activities 1,794,000 6,000 17,000 1,818,000
----------- -------- --------- -------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,356,000 (30,000) (1,000) 32,000 1,388,000
Cash and cash equivalents, beginning of period 32,000 33,000 33,000 1,000
----------- -------- --------- -------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,388,000 $ 3,000 $ 32,000 $ 33,000 $ 1,388,000
=========== ======== ========= ======== ===========
</TABLE>
F-5
The accompanying notes are an integral part of these financial statements
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE A - ORGANIZATION AND OPERATIONS
NMXS.COM, Inc. (formerly Conserve, Inc.) ("Conserve") and its wholly-owned
subsidiary New Mexico Software, Inc. (collectively "the Company"), a
development stage enterprise, operates in a single business segment that
develops and markets proprietary internet technology-based software for the
management of digital high-resolution graphic images, video clips and audio
recordings. The Company believes that its software has major applications for
the media, advertising, publishing, medical, entertainment, e-commerce and
university markets.
In August 1999, NMXS.COM, Inc., then a non-operating public corporation with
nominal net assets (a development state enterprise) acquired all of the
outstanding common stock of New Mexico Software, Inc. (a development
enterprise) ("NMS") in a transaction that gave the stockholders of NMS actual
control of the combined company. For accounting purposes, the acquisition has
been treated as a capital stock transaction rather than a business
combination. This transaction has been recorded as a recapitalization of NMS
with NMS as the acquiror ("Reverse Acquisition") and no goodwill or other
intangible was recognized. The historical financial statements prior to the
date of the reverse acquisition are those of NMS with the accounting
acquior's capital deficiency prior to the acquisition having been
retroactively restated (i.e. recapitalized) for the equivalent number of
shares received in the transaction and the difference between the par value
of Conserve's and NMS's stock recorded as an offset to additional paid-in
capital. The historical deficit accumulated during the development stage of
NMS is being carried forward after the acquisition. Loss per share has
similarly been restated for all periods prior to the acquisition to include
the number of equivalent shares received by NMS's stockholders.
Conserve was incorporated in the State of Utah on August 12, 1983 under the
name Raddatz Exploration, Inc. The Company changed its corporate domicile on
April 28, 1997, when it merged into a Delaware corporation. The Company has
had several name changes since its inception. The last name change prior to
the reverse acquisition occurred on May 11, 1999. Conserve was initially
formed to engage in the business of manufacturing and selling solar systems
(reverse refrigeration) for residential homes. In November 1985, an
involuntary bankruptcy proceeding was filed against the Company which was
dismissed by the Court in April 1986. In late 1986, the Company ceased
operations. The full release from the debt recorded on the Company's books
was not obtained until April 1994. Other than as stated above, the Company
has conducted no business activity.
NMS, a development stage enterprise and a New Mexico corporation, was formed
in April 1996. NMS was formed to develop and market proprietary internet
technology-based software as currently conducted by the Company.
On August 3, 1999, Conserve issued to the stockholders of NMS 11,880,000
shares of Conserve's common stock in exchange for all of the shares of NMS
with NMS becoming a wholly-owned subsidiary of Conserve. In connection with
this transaction, Conserve changed its name to NMXS.COM, Inc. on August 3,
1999.
The Company has commenced principal business operations. However, the Company
has not achieved a level of sales that it deems significant relative to its
business plan. Since its inception, NMS, and more recently, the Company, has
been engaged in developing sales channels for its existing products as well
as coordinating research and development efforts in the continuing
development of its products and raising funds. The Company conducts its
operations primarily in the United States.
There is no assurance that the Company's research and development and
marketing efforts will be successful, or that the Company will achieve
significant sales of any such products. The Company has incurred net losses
since its inception. In addition, the Company operates in an environment of
rapid change in technology and is dependent upon the services of its
employees and its consultants. If the Company is unable to successfully bring
its technologies to commercialization, it is unlikely that the Company could
continue its business. As further described in Note I [4], the Company
subsequently raised $1,090,000 in a private placement offering. The proceeds
from the offering along with the existing cash balance is estimated to
provide sufficient liquidity to meet the working capital requirements of the
Company through September 30, 2000.
F-6
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary. All material intercompany
accounts and transactions have been eliminated.
[2] REVENUE RECOGNITION:
The Company recognizes revenue principally from the licensing of its
software, and from consulting and maintenance services rendered in
connection with such licensing activities. Revenue from software
package license agreements without significant vendor obligations is
recognized upon delivery of the software. If installation or other
obligations are applicable, then revenue is recognized
when such obligations are satisfied. Information processing
revenues are recognized in the period in which the service is provided.
Maintenance contract revenue is recognized on a straight-line basis
over the life of the respective contract. The Company also derives
revenue from the sale of third party hardware and software. Consulting
revenue is recognized when the services are rendered. No revenue is
recognized prior to obtaining a binding commitment from the customer.
Software development revenue from time-and-materials contracts are
recognized as services are performed. Revenue from fixed price software
development contracts and revenue under license agreements which
require significant modification of the software package to the
customer's specifications, are recognized on the estimated
percentage-of-completion method. Using the units-of-work performed
method to measure progress towards completion, revisions in cost
estimates and recognition of losses on these contracts are reflected in
the accounting period in which the facts become known. Contract terms
provide for billing schedules that differ from revenue recognition and
give rise to costs and estimated profits in excess of billings, and
billings in excess of costs and estimated profits, classified as
deferred revenue.
The cost of maintenance revenue, which consists solely of staff
payroll, outside services and supplies is expensed as incurred.
[3] CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid instruments purchased with a
maturity of three months or less to be cash equivalents. Cash
equivalents totaled approximately $1,388,000, and $-0- as of September
30, 1999 and December 31, 1998, respectively.
[4] INVENTORY:
Inventory consists primarily of finished goods. Inventory is stated at
the lower of cost (first-in, first-out method) or market.
[5] FURNITURE AND EQUIPMENT:
Furniture and equipment are recorded at cost. The cost of maintenance
and repairs is charged against results of operations as incurred.
Depreciation is charged against results of operations using the
straight-line method over the estimated economic useful life.
F-7
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[6] INCOME TAXES:
The Company recognizes deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in
the financial statements or tax returns. Under this method, deferred
tax liabilities and assets are determined on the basis of the
differences between the tax basis of assets and liabilities and their
respective financial reporting amount ("temporary differences") at
enacted tax rates in effect for the years in which the differences are
expected to reverse.
Prior to the acquisition of NMS by NMXS.COM, Inc., NMS was an S
corporation as defined in the Internal Revenue Code. Upon the
consummation of this transaction, NMS Subchapter S status was
terminated. The accumulated losses through the date of acquisition
which amounted to $32,000 will be passed through to the former
stockholder of NMS with no direct benefit to the Company.
[7] PER SHARE DATA:
The basic and diluted per share data has been computed on the basis of
the net loss available to common stockholders for the period divided by
the historic weighted average number of shares of common stock
outstanding plus an adjustment for the retroactive treatment of common
shares issued to the founder immediately prior to the reverse acquisition.
All potentially dilutive securities (see Note D) have been excluded from
the computations since they would be antidilutive.
[8] RESEARCH AND DEVELOPMENT EXPENSES:
Costs of research and development activities are expensed as incurred.
[9] ADVERTISING EXPENSES:
The Company expenses advertising costs which consist primarily of
promotional items and print media, as incurred. Advertising expenses
amounted to $14,000, for both the nine month period ended September 30,
1999 and for the cumulative period April 2, 1996 (inception) through
September 30, 1999.
[10] 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 amount of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period.
[11] INTERIM FINANCIAL STATEMENTS:
Financial statements as of September 30, 1999 and for the nine months
ended September 30, 1999 and 1998 and for the period from inception
April 2, 1996 through September 30, 1999 are unaudited however, in the
opinion of management, the financial statements include all adjustments
consisting of normal recurring accruals necessary for a fair
presentation of the Company's financial position and results of
operations. Results of operations for interim periods are not
necessarily indicative of those to be achieved or expected for the
entire year.
F-8
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[12] STOCK-BASED COMPENSATION:
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("FAS 123") allows companies to either
expense the estimated fair value of stock options and warrants, or to
continue following the intrinsic value method set forth in Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees"
("APB 25") but disclose the pro forma effects on net income had the
fair value of the options and warrants been expensed. The Company has
elected to apply APB 25 in accounting for its stock based incentive
plans. Equity instruments issued to non-employees are measured based on
their fair values.
[13] SOFTWARE DEVELOPMENT:
The Company accounts for computer software development costs in
accordance with Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed. As such, all costs incurred prior to
the product achieving technological feasibility are expensed as research
and development costs. Technological feasiblity is generally achieved
upon satisfactory beta test results. Upon achieving technological
feasibility, programming costs are capitalized and amortized over the
economic useful life which is estimated to be two years.
NOTE C - FURNITURE AND EQUIPMENT
Furniture and equipment as of September 30, 1999 and December 31, 1998 consists
of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
Computers $ 55,000 $ 24,000
Furniture, fixtures and equipment 62,000
Leasehold improvements 6,000
-------- --------
123,000 24,000
Accumulated depreciation (20,000) (5,000)
-------- --------
$103,000 $ 19,000
======== ========
</TABLE>
NOTE D - CAPITAL TRANSACTIONS
COMMON STOCK:
The following common stock transactions include the effects of restating of
stockholders' equity for the shares received in the recapitalization as a
result of the reverse acquisition. The exchange rate of such shares was 118.8
Conserve common shares for each New Mexico common share. Accordingly, there
were 11,880,000 common shares outstanding immediately prior to consummating
the reverse acquisition.
Effective April 2, 1996, the Company issued 118,800 shares of common stock to
the founder for a capital contribution.
During 1999, the Company effected the following stock transactions:
In June 1999, in contemplation of the anticipated reverse acquisition, the
Company adjusted its capitalization in order to facilitate the exchange
of shares required as part of the acquisition transaction. Prior to this
adjustment, the founding shareholder owned 100% (1,000 pre-exchange common
shares) (118,800 shares giving effect to the exchange) of NMS. In connection
with this adjustment, the Company distributed 47,297 pre-exchange common
shares (5,618,900 shares giving effect to the exchange) to the founding
stockholder. As a result of this distribution, the founding shareholder's
overall ownership percentage did not change. This event resulted in no
charge and has been recorded in a manner similar to a recapitalization.
In June 1999, issued 5,416,300 shares of common stock for $100,000 in
accordance with a stock purchase agreement.
F-9
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE D - CAPITAL TRANSACTIONS (CONTINUED)
In July 1999, issued 726,000 shares of common stock at $.75 per share for
fair value of services.
In August 1999, in accounting for the reverse acquisition transaction, the
Company was deemed to have issued 5,333,333 million common shares for the net
monetary assets of Conserve which was nominal. These shares represented the
common shares outstanding immediately prior to the reverse acquisition.
In August 1999, issued 2,360,500 shares of its common stock at $.75 per share
in a private placement offering, net of issuance costs of $53,000.
STOCK OPTIONS:
On August 3, 1999, the Company adopted its 1999 Stock Option Plan (the
"Plan"). Under the Plan, incentive and non-qualified stock options may be
granted to key employees and consultants at the discretion of the Board of
Directors. Any incentive option granted under the Plan will have an exercise
price of not less than 100% of the fair market value of the shares on the
date on which such option is granted. With respect to an incentive option
granted to a Participant who owns more than 10% of the total combined voting
stock of the Company or of any parent or subsidiary of the Company, the
exercise price for such option must be at least 110% of the fair market value
of the shares subject to the option on the date on which the option is
granted. A non-qualified option granted under the Plan (i.e., an option to
purchase the common stock that does not meet the Internal Revenue Code's
requirements for incentive options) must have an exercise price of not less
than 100% of the fair market value of the stock on the date of grant. A
maximum of 3,000,000 options can be awarded under the Plan. The terms of
grant permit a noncash exercise.
Disclosures required by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), including pro
forma operating results had the Company prepared its financial statements in
accordance with the fair value based method of accounting for stock-based
compensation prescribed therein are shown below.
Exercise prices and weighted-average contractual lives of stock options
outstanding as of September 30, 1999 are as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------- -------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICE OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- ---------- ------------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
$.75 452,000 4.8 $.75 15,000 $.75
$.825 120,000 4.8 $.825 4,000 $.825
</TABLE>
During the nine month period ended September 30, 1999, the Company issued
572,000 options. The most recent quoted market price of the Company's common
shares was $3 per share at the date of grant. The total fair value of such
options approximated $1,385,000. There were no options outstanding prior to
August 3, 1999. The fair value of the 19,000 options that vested during 1999
approximated $107,000 which are reflected in the statement of operations for
the nine months ended September 30, 1999 in general and administrative
expense.
The fair value of each option granted has been estimated on the date of grant
using the Black-Scholes option pricing model. The weighted average fair value
of the options granted during 1999 was $2.42. The following weighted average
assumptions were used in computing the fair value of option grants for 1999.
Weighted average risk-free interest rate of 5.50%; zero dividend yield,
volatility of the Company's common stock of 40% and an expected life of the
options of five years. The options vest equitably over a five year period.
F-10
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE E - INCOME TAXES
The Company has a deferred tax asset as of September 30, 1999 of $486,000
which was calculated using a statutory rate of 34%. The deferred tax asset
represents a benefit from net operating loss carryforwards of $185,000, and
deferred compensation of $301,000, which is reduced by a valuation allowance
of $486,000 since the future realization of such tax benefit is not presently
determinable.
As of September 30, 1999, the Company has a net operating loss carryforward
of $397,000 expiring in 2019 for federal income tax purposes. In the event of
potential future ownership changes (Note A), internal revenue code Section
382 limits the amount of such net operating loss carryforward available to
offset future taxable income.
NOTE F - RELATED PARTY TRANSACTIONS
OFFICER ADVANCES:
Represents non-interest bearing advances to the chief executive officer and a
principal stockholder of the Company. Amount is to be repaid by September 30,
2000.
OFFICER COMPENSATION:
During 1997, 1998 and for the nine months ended September 30, 1999, the
Company has recorded the fair value of services provided by the Company's
chief executive officer in the amounts of $75,000, $90,000 and $90,000,
respectively in the statement of operations with a corresponding increase to
additional paid in capital. As more fully described in Note I [2], the
officer has not received any cash compensation since inception.
In August 1999, the Company agreed to issue 50,000 common shares to an
officer of the Company when granted. The fair value of such shares amounting
to $146,000 has been recorded in the statement of operations for the nine
months ended September 30, 1999.
MANAGEMENT SERVICES:
An officer and stockholder of a significant stockholder provides management
and consulting services to the Company at an annual rate of $60,000. The
amount charged to operations for the nine months ended September 30, 1999
amounted to $20,000.
NOTE G - COMMITMENTS
LEASES:
The Company leases office space and office equipment under operating leases.
Future minimum lease payments as of September 30, 1999 and December 31, 1998
are as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDING DECEMBER 31, SEPTEMBER 30,
- -------------- ------------ -------------
<S> <C> <C>
1999 $ 28,000
2000 91,000 $ 87,000
2001 83,000 88,000
2002 50,000 50,000
2003 50,000 50,000
2004 29,000 42,000
</TABLE>
Rent expense for the nine months ended September 30, 1999 and for the years
ended December 31, 1998 and 1997 amounted to $9,000, $5,000 and $5,000,
respectively.
F-11
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE G - COMMITMENTS (CONTINUED)
WARRANTS:
In conjunction with the closing of the reverse merger, the Company declared a
distribution of 1,000,000 warrants at the rate of one warrant for each 5.3
common shares held by the stockholders of record as of the beginning of
business on August 3, 1999. The warrants have an exercise price of $1.25 per
share and a three year contractual life from date of issuance. The warrants
are redeemable by the Company for $.01 per warrant subject to 30 days written
notice at any time the closing bid price of the stock equals or exceeds 300%
of the exercise price of the warrant for ten consecutive trading days. The
warrants will be issued upon the Company's Form SB-2 filing being declared
effective. The value ascribe to these warrants will be determined utilizing
the Black-Scholes model and recorded as a dividend distribution at the
effective date of the registration statement.
NOTE H - MAJOR CUSTOMERS
During the nine months ended September 30, 1999, four customers accounted for
42%, 22%, 19%, and 16% of the Company's revenue. During the year ended
December 31, 1998, one customer accounted for 82% of the Company's revenue.
During the year ended December 31, 1997, four customers accounted for 32%,
22%, 20% and 14% of the Company's revenue.
As of December 31, 1998, balances due from two customers comprised 50% and
46% of total accounts receivable.
As of September 30, 1999, balances due from three customers comprised 49%,
24% and 23% of total accounts receivable.
NOTE I - SUBSEQUENT EVENTS
[1] COMMON STOCK:
On December 28, 1999, the Company issued 20,000 shares of common stock
valued at $45,000 in exchange for services.
[2] EMPLOYMENT AGREEMENT:
On December 10, 1999, the Company entered into an employment and
noncompetition agreement with a stockholder to act in the capacity of
President and Chief Executive Officer. The term of the employment
agreement is for three years and the noncompetition agreement is for
one year with both agreements commencing on January 1, 2000. The
agreement allows for a one year renewal option unless terminated by
either party. Base salary is $120,000 per annum with available
additional cash compensation as defined n the agreement. In addition,
the employee received stock options to purchase 380,000 shares of
common stock at $.75 per share and 120,000 shares at $.825 per share
pursuant to this agreement.
[3] STOCK OPTIONS:
In January 2000, the Company granted approximately 308,000 stock
options with an exercise price of $2.125, a contractual life of ten
years and a two year vesting period to employees.
[4] CAPITAL TRANSACTIONS:
The Company issued, in January and February 2000, 1,090,000 units at
$1 per unit consisting of one share of common stock and one Series B
warrant to purchase one share of common stock at $1.00 per share
exercisable for a period of up to five years from date of issuance.
F-12
<PAGE>
NMXS.COM, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1999 AND 1998
NOTE I - SUBSEQUENT EVENTS (CONTINUED)
[5] COMMITMENT:
Effective January 1, 2000, the Company entered into an agreement with
a third party to provide legal services to the Company in exchange for an
initial grant of 150,000 options at an exercise price similar to prices
for employee grants. In accordance with the agreement, legal counsel
will earn as a retainer fee an automatic vesting of 1,000 options each
month services are rendered and will earn additional vesting of stock
options for services rendered based on a calculation defined in the
agreement. A charge for the fair value of such options will be
determined when services are rendered.
F-13
<PAGE>
Page 33 of 38
[OUTSIDE BACK COVER]
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary 6
Risk Factors 7
Forward Looking Statements 11
Use of Proceeds 12
Dilution 12
Management's Discussion and Analysis of Financial Condition and
Results of Operation 13
Business 15
Management 21
Certain Transactions 25
Market Information 25
Principal Shareholders 26
Selling Shareholder 27
Description of Securities 28
Dividend Policy 30
Plan of Distribution 30
Shares Eligible For Future Sale 31
Legal Matters 32
Experts 32
Financial Statements 32
</TABLE>
Until _____, 2000, (ninety days after the date of this prospectus) all
dealers that effect transactions in these securities may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
Page 34 of 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 1. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
expressly authorizes a Delaware corporation to indemnify its officers,
directors, employees, and agents against claims or liabilities arising out of
such persons' conduct as officers, directors, employees, or agents for the
corporation if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the Company. Neither the
articles of incorporation nor the Bylaws of the Company provide for
indemnification of the directors, officers, employees, or agents of the Company.
The Company has not adopted a policy about indemnification.
The eighth article of our Certificate of Incorporation includes
provisions to eliminate, to the fullest extent permitted by Delaware General
Corporation Law as in effect from time to time, the personal liability of our
directors for monetary damages arising from a breach of their fiduciary duties
as directors.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
Item 2. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses in connection
with the offering described in the registration statement:
<TABLE>
<S> <C>
Registration Fee $359
Blue Sky Fees $3,000
Accounting Fees and Expenses $25,000
Legal Fees and Expenses $20,000
Printing and Engraving $5,000
Transfer Agent Fees $3,000
Miscellaneous $3,641
------
Total Expenses $60,000
=======
</TABLE>
Item 3. Undertakings
(a) The Company hereby undertakes that it will:
<PAGE>
Page 35 of 38
(1) File, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to (i) include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration statement;
and (iii) include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) For the purpose of determining liability under the Securities
Act of 1933, treat each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities at that time shall
be the initial BONA FIDE offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) The Company will provide to the underwriter at the closing specified in
the underwriting agreement certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The Company will:
(1) For determining any liability under the Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of a
prospectus filed by the Company under Rule 424(b) (1) or (4) or 497(h) under the
Act as part of this registration statement as of the time the Commission
declared it effective.
(2) For any liability under the 1933 Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the
<PAGE>
Page 36 of 38
registration statement, and that the offering of the securities at that time as
the initial bona fide offering of those securities.
Item 4. Unregistered Securities Issued or Sold Within Three Years
In August 1999, the Company issued 11,880,000 shares of Common Stock
of the Company to the shareholders of New Mexico Software, Inc. The shares
were issued in a reverse acquisition transaction between the Company and New
Mexico Software, in which such shareholders exchanged all of their shares for
the shares of the Company. Such securities were issued without registration
under the Securities Act by reason of the exemption from registration
afforded by the provisions of Section 4(2) thereof, and Rule 506, as
transactions by an issuer not involving any public offering. Each of the
shareholders of New Mexico Software delivered appropriate investment
representations to the Company with respect to such transaction and consented
to the imposition of restrictive legends upon the certificates evidencing
such securities. No underwriting discounts or commissions were paid in
connection with such issuance.
Also in August 1999 the Company issued 2,360,500 shares to 44
accredited investors in a private placement of its shares. Such securities were
issued without registration under the Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, and Rule 506,
as transactions by an issuer not involving any public offering. Such investors
delivered appropriate investment representations to the Company with respect to
such transaction and consented to the imposition of restrictive legends upon the
certificates evidencing such securities. No underwriting discounts or
commissions were paid in connection with such issuance.
Also in August 1999 the Company granted options to purchase 572,000
shares pursuant to the Company's stock option plan. The options were granted to
seven persons without registration under the Act by reason of the exemption from
registration afforded by the provisions of Rule 701 promulgated by the
Securities and Exchange Commission. Each of these persons was either an employee
of the Company or a business consultant who provided bona fide services which
were not in connection with the offer or sale of securities in a capital raising
transaction and not directly or indirectly to promote or maintain a market for
the Company's securities. No underwriting discounts or commissions were paid in
connection with such issuances.
In January 2000 the Company granted options to purchase 457,760 shares
pursuant to the Company's stock option plan. The options were granted to 15
persons without registration under the Act by reason of the exemption from
registration afforded by the provisions of Rule 701 promulgated by the
Securities and Exchange Commission. Each of these persons was an employee of the
Company. No underwriting discounts or commissions were paid in connection with
such issuances.
In January 2000 the Company issued 50,000 shares to James Kurzmack in
settlement of termination of his employment with the Company. Such securities
were issued without registration under the Act by reason of the exemption from
registration afforded by the provisions
<PAGE>
Page 37 of 38
of Section 4(2) thereof as a transaction by an issuer not involving any
public offering. Mr. Kurzmack delivered appropriate investment
representations to the Company with respect to such transaction and consented
to the imposition of restrictive legends upon the certificates evidencing
such securities. No underwriting discounts or commissions were paid in
connection with such issuance. Mr. Kurzmack was deemed to be a sophisticated
investor.
In January and February 2000 the Company sold 1,090,000 units at
$1.00 per unit to 24 accredited investors in a private placement of its
shares. The units consisted of one share of common stock and one Series B
Warrant to purchase one share of stock at $1.00, exercisable commencing
August 1, 2000, through January 17, 2005. Such securities were issued without
registration under the Act by reason of the exemption from registration
afforded by the provisions of Section 4(2) thereof, and Rule 506, as
transactions by an issuer not involving any public offering. Such investors
delivered appropriate investment representations to the Company with respect
to such transaction and consented to the imposition of restrictive legends
upon the certificates evidencing such securities. No underwriting discounts
or commissions were paid in connection with such issuance.
Item 5. Exhibits
The exhibits set forth in the following index of exhibits are filed as
a part of this registration statement.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Location
<S> <C> <C>
2.1 Reorganization agreement dated August 3, 1999
3.1 Articles of Incorporation, as amended
3.2 By-Laws of the Company currently in effect
4.1 Form of Common Stock Certificate
4.2 Form of Series A Warrant Certificate
4.3 Form of Warrant Agency Agreement for Series A Warrants
4.4 Form of Series B Warrant Certificate
5.1 Opinion re Legality
10.1 Sun Microsystems Lease
10.2 Building Lease
10.3 Form of Employee Confidentiality Agreement
10.4 Stock Option Plan
21.1 List of subsidiaries
23.1 Consent of Richard A. Eisner & Company, LLP
23.2 Consent of Ronald N. Vance (contained in
Exhibit 5.1 above) --
</TABLE>
<PAGE>
Page 38 of 38
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the city of
Albuquerque, State of New Mexico, on the 9th day of February 2000.
NMXS.com, Inc.
By: /s/ Richard Govatski, President and Chief
Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Date: February 9, 2000 /s/ Richard Govatski, Director
Date: February 9, 2000 /s/ Marvin Maslow, Director
Date: February 9, 2000 /s/ Scott L. Bach, Director
Date: February 9, 2000 /s/ Teresa Dickey, Principal Financial Officer
Date: February 9, 2000 /s/ Robert A. Armstrong, Controller
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement")
is entered into effective as of this 3rd day of August, 1999, by and among
Conserve, Inc., a Delaware corporation (hereinafter "Conserve"); Richard G.
Southwick, the sole officer and director of Conserve (hereinafter "Southwick");
New Mexico Software, Inc., a New Mexico corporation (hereinafter "NMS"), and the
owners of all the outstanding shares of common stock of NMS (hereinafter the
"NMS Stockholders").
RECITALS:
WHEREAS, the NMS Stockholders own all of the issued and outstanding
common stock of NMS which comprises 100,000 shares (the "NMS Common Stock").
Conserve desires to acquire the NMS Common Stock solely in exchange for voting
common stock of Conserve, making NMS a wholly-owned subsidiary of Conserve; and
WHEREAS, the NMS Stockholders (as set forth on the attached Exhibit "A")
desire to acquire voting common stock of Conserve in exchange for the NMS Common
Stock, as more fully set forth herein.
NOW THEREFORE, for the mutual consideration set out herein and other
good and valuable consideration, the legal sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. Plan of Reorganization. It is hereby agreed that all of the
NMS Common Stock shall be acquired by Conserve in exchange solely for
Conserve common voting stock (the "Conserve Shares"). It is the intention of
the parties hereto that all of the issued and outstanding shares of capital
stock of NMS shall be acquired by Conserve in exchange solely for Conserve
common voting stock and that this entire transaction qualify as a corporate
reorganization under Section 368(a)(1)(B) and/or Section 351 of the Internal
Revenue Code of 1986, as amended, and related or other applicable sections
thereunder.
2. Exchange of Shares. Conserve and NMS Stockholders agree that
on the Closing Date or at the Closing as hereinafter defined, the NMS Common
Stock shall be delivered to Conserve in exchange for the Conserve Shares,
after giving effect to a 1.5 to 1 reverse stock split (the "Conserve Reverse
Stock Split") as to all presently outstanding shares of Conserve common
stock, as follows:
(a) At Closing, Conserve shall, subject to the conditions set forth
herein, issue an aggregate of 11,880,000 shares of Conserve common stock
(after giving effect to the Conserve Reverse Stock Split) for immediate
delivery to the NMS Stockholders in exchange for the Conserve Shares.
<PAGE>
(b) Each NMS Stockholder shall execute this Agreement or a written
consent to the exchange of their NMS Common Stock for Conserve Shares.
(c) Unless otherwise agreed by Conserve and NMS, this transaction
shall close only in the event Conserve is able to acquire at least 80% of the
outstanding NMS Common Stock; however, it is the intent of the parties to
have Conserve acquire all of the NMS Common Stock.
3. Pre-Closing Events. The Closing is subject to the completion
of the following:
(a) Conserve shall have authorized 50,000,000 shares of $.001 par
value common stock and 500,000 shares of $.001 par value preferred stock.
The preferred stock shall be subject to issuance in such series and with such
rights, preferences and designations as determined in the sole discretion of
the board of directors.
(b) Lynn Dixon shall have contributed 8,587,948 shares of Conserve
Common Stock to Conserve for cancellation, leaving 7,999,999 shares issued
and outstanding prior to the Conserve Reverse Stock Split.
(c) Conserve shall effectuate the Conserve Reverse Stock Split at
or about the time of Closing, and shall have 5,333,333 shares of its common
stock issued and outstanding and no other shares of capital stock issued or
outstanding not taking into effect the shares to be issued under this
Agreement.
(d) Conserve shall demonstrate to the reasonable satisfaction of
NMS that it has no material assets and no liabilities contingent or fixed
other than the proceeds of the Conserve Financing as described herein.
4. Exchange of Securities. As of the Closing Date each of the
following shall occur:
(a) All shares of NMS Common Stock issued and outstanding
immediately prior to the Closing Date shall be exchanged for the Conserve
Shares (up to an aggregate amount of 11,880,000 Conserve Shares to be
delivered at Closing). All such outstanding shares of NMS Common Stock shall
be deemed, after Closing, to be owned by Conserve. The holders of such
certificates previously evidencing shares of NMS Common Stock outstanding
immediately prior to the Closing Date shall cease to have any rights with
respect to such shares of NMS Common Stock except as otherwise provided
herein or by law;
(b) Any shares of NMS Common Stock held in the treasury of NMS
immediately prior to the Closing Date shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto;
(c) The 5,333,333 shares of Conserve common stock previously issued
and outstanding prior to the Closing, after giving effect to the Conserve
Reverse Split, will remain outstanding.
<PAGE>
5. Other Events Occurring at Closing. At Closing, the following
shall be accomplished:
(a) Conserve shall file an amendment to its Certificate of
Incorporation with the Secretary of State of the State of Delaware in
substantially the form attached hereto as Exhibit "B" effecting an amendment
to its Certificate of Incorporation to reflect a name change to a new name as
selected by NMS as set forth in the attached Exhibit "B".
(b) The resignation of the existing Conserve officer and director
and appointment of new officers and directors as directed by NMS.
(c) Conserve shall have completed a private offering under
Regulation D, Rule 506, as promulgated by the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended, of 2,000,000
shares of its common stock at $.75 per share. The gross proceeds of this
offering (the "Conserve Financing") shall be $1,500,000, which amount, less
agreed upon costs, shall be delivered to the control of new management of
Conserve at Closing in good funds or shall be represented by the conversion
of previous loans to NMS arranged for by Conserve. The Conserve Financing
shall have been completed in compliance with all applicable state and federal
securities laws and the securities sold shall be delivered at Closing to the
investors in the Conserve Financing. Persons who have made bridge loans to
NMS pursuant to arrangements made by Conserve, shall be given the opportunity
to convert the principal of said loans to the purchase of shares in the
private offering prior to Closing upon the same terms as other investors in
the private offering.
(d) Conserve shall adopt a Stock Option Plan at Closing to include
up to 3,000,000 shares of its common stock. The Plan shall include
"incentive" stock options under Section 422 of the Internal Revenue Code of
1986, as amended and other options and similar rights. Conserve shall grant
options under said plan to employees and others, at Closing, exercisable at
$.75 per share, as designated by NMS subject to the reasonable approval of
Conserve.
(e) Conserve shall announce the declaration of a distribution of
Series A Warrants to the shareholders of record as of a date to be announced
but which shall be as of a date prior to closing. The Series A Warrants
shall be distributed on the basis of one Series A Warrant for each 5.333
shares of post-split common stock held by each shareholder of record. There
shall be 1,000,000 Series A Warrants distributed, subject to the terms and
conditions set forth in the attached Exhibit "D".
6. Delivery of Shares. On or as soon as practicable after the
Closing Date, NMS will use its best efforts to cause the NMS Stockholders to
surrender certificates for cancellation representing their shares of NMS
Common Stock, against delivery of certificates representing the Conserve
Shares for which the shares of NMS Common Stock are to be exchanged at
Closing.
7. Representations of NMS Stockholders. Each NMS Stockholder
hereby represents and warrants each only as to its own NMS Common Stock,
effective this date and the Closing Date as follows:
<PAGE>
(a) Except as may be set forth in Exhibit "A", the NMS Common Stock
is free from claims, liens, or other encumbrances, and at the Closing Date
said NMS Stockholder will have good title and the unqualified right to
transfer and dispose of such NMS Common Stock.
(b) Said NMS Stockholder is the sole owner of the issued and
outstanding NMS Common Stock as set forth in Exhibit "A";
(c) Said NMS Stockholder has no present intent to sell or dispose
of the Conserve Shares and is not under a binding obligation, formal
commitment, or existing plan to sell or otherwise dispose of the Conserve
Shares.
8. Representations of NMS. NMS hereby represents and warrants as
follows, which warranties and representations shall also be true as of the
Closing Date:
(a) Except as noted on Exhibit "A", the NMS Stockholders listed on
the attached Exhibit "A" are the sole owners of record and beneficially of
the issued and outstanding common stock of NMS.
(b) NMS has no outstanding or authorized capital stock, warrants,
options or convertible securities other than as described in the NMS
Financial Statements or in Exhibit "A", attached hereto.
(c) The unaudited financial statements as of and for the period
ended March 31, 1999, which have been delivered to Conserve (hereinafter
referred to as the "NMS Financial Statements" are complete and accurate in
all material respects and fairly present the financial condition of NMS as of
the date thereof and the results of its operations for the period covered.
There are no material liabilities or obligations, either fixed or contingent,
not disclosed in the NMS Financial Statements or notes thereto which are
required to be disclosed therein; NMS has no contracts or obligations in the
ordinary course of business which constitute liens or other liabilities which
materially alter the financial condition of NMS as reflected in the NMS
Financial Statements. NMS has good title to all assets shown on the NMS
Financial Statements subject only to dispositions and other transactions in
the ordinary course of business, the disclosures set forth therein and liens
and encumbrances of record. The NMS Financial Statements have been prepared
in accordance with generally accepted accounting principles consistently
applied (except as may be indicated therein or in the notes thereto).
(d) Since the date of the NMS Financial Statements, there have not
been any material adverse changes in the financial position of NMS except
changes arising in the ordinary course of business, which changes will in no
event materially and adversely affect the financial position of NMS.
(e) NMS is not a party to any material pending litigation or, to
its best knowledge, any governmental investigation or proceeding, not
reflected in the NMS Financial Statements, and to its best knowledge, no
material litigation, claims, assessments or any governmental proceedings are
threatened against NMS.
<PAGE>
(f) NMS is in good standing in its jurisdiction of incorporation,
and is in good standing and duly qualified to do business in each
jurisdiction where required to be so qualified except where the failure to so
qualify would have no material negative impact on NMS.
(g) NMS has (or, by the Closing Date, will have filed) all material
tax, governmental and/or related forms and reports (or extensions thereof)
due or required to be filed and has (or will have) paid or made adequate
provisions for all taxes or assessments which have become due as of the
Closing Date.
(h) NMS has not materially breached any material agreement to which
it is a party. NMS has previously given Conserve copies or access thereto of
all material contracts, commitments and/or agreements to which NMS is a party
including all relationships or dealings with related parties or affiliates.
(i) NMS has no subsidiary corporations except as described in
writing to Conserve.
(j) NMS has made all material corporate financial records, minute
books, and other corporate documents and records available for review to
present management of Conserve prior to the Closing Date, during reasonable
business hours and on reasonable notice.
(k) The execution of this Agreement does not materially violate or
breach any material agreement or contract to which NMS is a party and has
been duly authorized by all appropriate and necessary corporate action under
New Mexico of other applicable law and NMS, to the extent required, has
obtained all necessary approvals or consents required by any agreement to
which NMS is a party.
(l) All disclosure information regarding NMS which is to be set
forth in disclosure documents of Conserve or otherwise delivered to Conserve
by NMS for use in connection with the transaction (the "Acquisition")
described herein is true, complete and accurate in all material respects.
9. Representations of Conserve and Southwick. Conserve, and
Southwick to the best of his knowledge, hereby jointly and severally
represent and warrant as follows, each of which representations and
warranties shall continue to be true as of the Closing Date:
(a) As of the Closing Date, the Conserve Shares, to be issued and
delivered to the NMS Stockholders hereunder will, when so issued and
delivered, constitute, duly authorized, validly and legally issued shares of
Conserve common stock, fully-paid and nonassessable. Conserve shall have
completed its reverse stock split wherein each holder of Conserve Shares
shall have received one share of the Conserve Shares for each three Conserve
Shares previously held. The total number of Conserve Shares outstanding shall
be 5,333,333 without giving effect to shares issued in the Conserve
Financing. No shares of Conserve's preferred stock, $0.001 par value, to be
authorized at Closing, shall be outstanding.
<PAGE>
(b) At Closing, all of the issued and outstanding common stock of
Conserve, including shares issued in the Conserve Financing, shall be duly
authorized, validly issued, fully-paid and nonassessable and shall have been
issued in compliance with all applicable corporate and securities laws.
(c) Conserve has the corporate power to enter into this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the board of directors of Conserve. The execution
and performance of this Agreement will not constitute a material breach of
any agreement, indenture, mortgage, license or other instrument or document
to which Conserve is a party and will not violate any judgment, decree,
order, writ, rule, statute, or regulation applicable to Conserve or its
properties. The execution and performance of this Agreement will not violate
or conflict with any provision of the Certificate of Incorporation or by-laws
of Conserve.
(d) Conserve has delivered to NMS a true and complete copy of its
audited financial statements for the years ended December 31, 1996, 1997, and
1998, (the "Conserve Financial Statements"). The Conserve Financial
Statements are complete, accurate in all material respects and fairly present
the financial condition of Conserve as of the dates thereof and the results
of its operations for the periods then ended. There are no material
liabilities or obligations either fixed or contingent not reflected therein.
The Conserve Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes thereto).
(e) Since December 31, 1998, there have not been any material
adverse changes in the financial condition of Conserve except with regard to
disbursements to pay reasonable and ordinary expenses in connection with
maintaining its corporate status and pursuing the matters contemplated in
this Agreement. Prior to Closing, all accounts payable and other liabilities
of Conserve shall be paid and satisfied in full and Conserve shall have no
liabilities either contingent or fixed.
(f) Neither Southwick nor Conserve is a party to or the subject of any
pending litigation, claims, or governmental investigation or proceeding not
reflected in the Conserve Financial Statements or otherwise disclosed herein,
and there are no lawsuits, claims, assessments, investigations, or similar
matters, to the best knowledge of Southwick, threatened or contemplated
against or affecting Conserve, its management or its properties or Southwick.
(g) Conserve is duly organized, validly existing and in good
standing under the laws of the State of Delaware; has the corporate power to
own its property and to carry on its business as now being conducted and is
duly qualified to do business in any jurisdiction where so required except
where the failure to so qualify would have no material negative impact on it.
(h) Conserve has filed all federal, state, county and local income,
excise, property and other tax, governmental and/or related returns, forms,
or reports, which are due or required to be filed by it prior to the date
hereof, except where the failure to do so would have no material
<PAGE>
adverse impact on Conserve, and has paid or made adequate provision in the
Conserve Financial Statements for the payment of all taxes, fees, or
assessments which have or may become due pursuant to such returns or pursuant
to any assessments received. Conserve is not delinquent or obligated for any
tax, penalty, interest, delinquency or charge.
(i) There are no existing options, calls, warrants, preemptive
rights, registration rights or commitments of any character relating to the
issued or unissued capital stock or other securities of Conserve, except as
contemplated in this Agreement.
(j) The corporate financial records, minute books, and other
documents and records of Conserve have been made available to NMS prior to
the Closing and shall be delivered to new management of Conserve at Closing.
(k) Conserve has not breached, nor is there any pending, or to the
knowledge of management, any threatened claim that Conserve has breached, any
of the terms or conditions of any agreements, contracts or commitments to
which it is a party or by which it or its assets are is bound. The execution
and performance hereof will not violate any provisions of applicable law or
any agreement to which Conserve is subject. Conserve hereby represents that
it has no business operations or material assets and it is not a party to any
material contract or commitment other than appointment documents with its
transfer agent, and that it has disclosed to NMS all relationships or
dealings with related parties or affiliates.
(l) Conserve common stock is currently approved for quotation on
the OTC Bulletin Board under the symbol "CNSR" and there are no stop orders
in effect with respect thereto and Conserve has made all filings currently
required to maintain its listing.
(m) All information regarding Conserve which has been provided to
NMS or otherwise disclosed in connection with the transactions contemplated
herein, is true, complete and accurate in all material respects. Conserve
and Southwick specifically disclaim any responsibility regarding disclosures
as to NMS, its business or its financial condition.
10. Closing. The Closing of the transactions contemplated herein
shall take place on such date (the "Closing") as mutually determined by the
parties hereto when all conditions precedent have been met and all required
documents have been delivered, which Closing is expected to take place on or
about August 3, 1999, but no later than August 16, 1999, unless extended by
mutual consent of all parties hereto. The "Closing Date" of the transactions
described herein (the "Acquisition"), shall be that date on which all
conditions set forth herein have been met and the Conserve Shares are issued
in exchange for the NMS Common Stock.
11. Conditions Precedent to the Obligations of NMS. All
obligations of NMS under this Agreement are subject to the fulfillment, prior
to or as of the Closing and/or the Closing Date, as indicated below, of each
of the following conditions:
(a) The representations and warranties by or on behalf of Southwick
and Conserve contained in this Agreement or in any certificate or document
delivered pursuant to the provisions
<PAGE>
hereof shall be true in all material respects at and as of the Closing and
Closing Date as though such representations and warranties were made at and
as of such time.
(b) Conserve shall have performed and complied with all covenants,
agreements, and conditions set forth in, and shall have executed and
delivered all documents required by this Agreement to be performed or
complied with or executed and delivered by it prior to or at the Closing.
(c) On or before the Closing, the board of directors, and
shareholders representing a majority interest the outstanding common stock of
Conserve, shall have approved in accordance with applicable state corporation
law the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.
(d) On or before the Closing Date, Conserve shall have delivered to
NMS certified copies of resolutions of the board of directors and
shareholders of Conserve approving and authorizing the execution, delivery
and performance of this Agreement and authorizing all of the necessary and
proper action to enable Conserve to comply with the terms of this Agreement
including the election of NMS's nominees to the Board of Directors of
Conserve and all matters outlined herein.
(e) The Acquisition shall be permitted by applicable law and
Conserve shall have sufficient shares of its capital stock authorized to
complete the Acquisition.
(f) At Closing, the existing sole officer and director of Conserve
shall have resigned in writing from all positions as director and officer of
Conserve effective upon the election and appointment of the NMS nominees.
(g) At the Closing, all instruments and documents delivered to NMS
and NMS Stockholders pursuant to the provisions hereof shall be reasonably
satisfactory to legal counsel for NMS.
(h) The shares of restricted Conserve capital stock to be issued to
NMS Stockholders and in the Conserve Financing at Closing will be validly
issued, nonassessable and fully-paid under Delaware corporation law and will
be issued in compliance with all federal, state and applicable corporation
and securities laws.
(i) NMS and NMS Stockholders shall have received the advice of
their tax advisor, if deemed necessary by them, as to all tax aspects of the
Acquisition.
(j) NMS shall have received all necessary and required approvals
and consents from required parties and its shareholders.
(k) Conserve shall have completed the Conserve Financing.
<PAGE>
(l) At the Closing, Conserve shall have delivered to NMS an opinion of
its counsel dated as of the Closing to the effect that:
(i) Conserve is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
(ii) This Agreement has been duly authorized, executed and
delivered by Conserve and is a valid and binding obligation of Conserve
enforceable in accordance with its terms;
(iii) Conserve through its board of directors and stockholders
has taken all corporate action necessary for performance under this
Agreement;
(iv) The documents executed and delivered by Conserve to NMS and
NMS Stockholders hereunder are valid and binding in accordance with their
terms and vest in NMS Stockholders, as the case may be, all right, title
and interest in and to the Conserve Shares to be issued pursuant to the
terms hereof, and the Conserve Shares when issued will be duly and
validly issued, fully-paid and nonassessable;
(v) Conserve has the corporate power to execute, deliver and
perform under this Agreement;
(vi) Legal counsel for Conserve is not aware of any liabilities,
claims or lawsuits involving Conserve;
12. Conditions Precedent to the Obligations of Conserve. All
obligations of Conserve under this Agreement are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions:
(a) The representations and warranties by NMS and NMS Stockholders
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of the
Closing as though such representations and warranties were made at and as of
such time.
(b) NMS shall have performed and complied with, in all material
respects, all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing;
(c) NMS shall deliver on behalf of the NMS Stockholders a letter
commonly known as an "Investment Letter," signed by each of said
shareholders, in substantially the form attached hereto as Exhibit "C",
acknowledging that the Conserve Shares are being acquired for investment
purposes.
(d) NMS shall deliver an opinion of its legal counsel to the effect
that:
<PAGE>
(i) NMS is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and
is duly qualified to do business in any jurisdiction where so required
except where the failure to so qualify would have no material adverse
impact on NMS;
(ii) This Agreement has been duly authorized, executed and
delivered by NMS.
(iii) The documents executed and delivered by NMS and NMS
Stockholders to Conserve hereunder are valid and binding in accordance
with their terms and vest in Conserve all right, title and interest in
and to the NMS Common Stock, which stock is duly and validly issued,
fully-paid and nonassessable.
13. Indemnification. For a period of one year from the Closing,
Conserve and Southwick agree to jointly and severally indemnify and hold
harmless NMS, and NMS agrees to indemnify and hold harmless Conserve, at all
times after the date of this Agreement against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses including attorney's fees incident
to any of the foregoing, resulting from any misrepresentations made by an
indemnifying party to an indemnified party, an indemnifying party's breach of
covenant or warranty or an indemnifying party's nonfulfillment of any
agreement hereunder, or from any misrepresentation in or omission from any
certificate furnished or to be furnished hereunder.
14. Nature and Survival of Representations. All representations,
warranties and covenants made by any party in this Agreement shall survive
the Closing and the consummation of the transactions contemplated hereby for
one year from the Closing. All of the parties hereto are executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement and not upon any investigation upon which it might have made or any
representation, warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set
forth herein.
15. Documents at Closing. At the Closing, the following documents
shall be delivered:
(a) NMS will deliver, or will cause to be delivered, to Conserve the
following:
(i) a certificate executed by the President and Secretary of
NMS to the effect that all representations and warranties made by NMS
under this Agreement are true and correct as of the Closing, the same as
though originally given to Conserve on said date;
(ii) a certificate from the jurisdiction of incorporation of NMS
dated at or about the Closing to the effect that NMS is in good standing
under the laws of said jurisdiction;
<PAGE>
(iii) Investment Letters in the form attached hereto as Exhibit
"C" executed by each NMS Stockholder;
(iv) such other instruments, documents and certificates, if any,
as are required to be delivered pursuant to the provisions of this
Agreement;
(v) certified copies of resolutions adopted by the shareholders
and directors of NMS authorizing this transaction; and
(vi) all other items, the delivery of which is a condition
precedent to the obligations of Conserve as set forth herein.
(vii) the legal opinion required by Section 12(d) hereof.
(b) Conserve will deliver or cause to be delivered to NMS:
(i) stock certificates representing the Conserve Shares to be
issued as a part of the stock exchange as described herein;
(ii) a certificate of the President of Conserve, to the effect
that all representations and warranties of Conserve made under this
Agreement are true and correct as of the Closing, the same as though
originally given to NMS on said date;
(iii) certified copies of resolutions adopted by Conserve's board
of directors and Conserve's Stockholders authorizing the Acquisition and
all related matters described herein;
(iv) certificate from the jurisdiction of incorporation of
Conserve dated at or about the Closing Date that Conserve is in good
standing under the laws of said state;
(v) opinion of Conserve's counsel as described in Section 11(1)
above;
(vi) good funds representing the net proceeds of the Conserve
Financing;
(vii) resignation of the existing officer and director of
Conserve;
(viii) all corporate and financial records of Conserve; and
(ix) all other items, the delivery of which is a condition
precedent to the obligations of NMS, as set forth in Section 12 hereof.
16. Finder's Fees. Conserve represents and warrants to NMS, and
NMS represents and warrants to Conserve that neither of them, or any party
acting on their behalf, has incurred any liabilities, either express or
implied, to any "broker" of "finder" or similar person in connection with
this Agreement or any of the transactions contemplated hereby other than
<PAGE>
arrangements, if any, disclosed to NMS by Conserve to compensate any person
who introduced the parties, which obligation shall be the sole responsibility
of Conserve. In this regard, Conserve, on the one hand, and NMS on the other
hand, will indemnify and hold the other harmless from any claim, loss, cost
or expense whatsoever (including reasonable fees and disbursements of
counsel) from or relating to any such express or implied liability other than
as disclosed herein.
17. Miscellaneous.
(a) Further Assurances. At any time, and from time to time, after
the Closing Date, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply
with any of its obligations, agreements or conditions hereunder may be waived
in writing by the party to whom such compliance is owed.
(c) Amendment. This Agreement may be amended only in writing as
agreed to by all parties hereto.
(d) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given if delivered in person
or sent by prepaid first class registered or certified mail, return receipt
requested.
(e) Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(g) Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Delaware.
(h) Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors and assigns.
(i) Entire Agreement. This Agreement and the attached Exhibits
constitute the entire agreement of the parties covering everything agreed
upon or understood in the transaction. There are no oral promises,
conditions, representations, understandings, interpretations or terms of any
kind as conditions or inducements to the execution hereof.
(j) Time. Time is of the essence.
<PAGE>
(k) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
CONSERVE, INC.
By: /s/ Richard G. Southwick
President and Secretary
/s/ Lynn Dixon (as to Section 3(b)) /s/ Richard G. Southwick, individually
NEW MEXICO SOFTWARE, INC.
By: By: Richard Govatski
Secretary President
SHAREHOLDERS OF NEW MEXICO
SOFTWARE, INC.
/s/ Richard Govatski
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
of
Costs of Owning the Newest Systems of Energy Reduction are
Virtually Eliminated, Inc.
(C.O.N.S.E.R.V.E.)
FIRST. The name of this corporation is Costs of Owning the Newest
Systems of Energy Reduction are Virtually Eliminated, Inc. (C.O.N.S.E.R.V.E.)
SECOND. Its registered office in the State of Delaware is to be
located at 290 Churchman Road in the City of New Castle, County of New
Castle. The registered agent in charge thereof is Costs of Owning the Newest
Systems of Energy Reduction are Virtually Eliminated, Inc. (C.O.N.S.E.R.V.E.)
THIRD. The nature of the business and, the objects and purposes proposed
to be transacted, promoted and carried on, are to do any or all the things
herein mentioned, as fully and to the same extent as natural persons might or
could do, and in any part of the world, viz:
"The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized
under the General Corporation Law of Delaware."
FOURTH. The amount of the total authorized capital stock of this
corporation is 1,000 shares of no Par Value.
FIFTH. The name and mailing address of the incorporator is as follows:
Name: Address:
Alison David 290 Churchman Road, New Castle, DE 19720
SIXTH. The powers of the incorporator are to terminate upon filing of
the certificate of incorporation, and the name(s) and mailing address(es) of
persons who are to serve as directors until the first annual meeting of
stockholder or until their successors are elected and qualify are as follows:
Name and address of director(s):
Alison David, 35 Cheswald Blvd., Apt. #1A, Newark, DE 19713
SEVENTH. The Directors shall have power to make and to alter or amend
the By-Laws, to fix the amount to be reserved as working capital, and to
authorize and cause to be executed, mortgages and liens without limit as to the
amount, upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holder of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
<PAGE>
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholders and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law or the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meeting and
keep the books, documents and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in
the Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from the
terms of any other clause or paragraph in this certificate of incorporation, but
that the objects, purposes and powers specified in the Third paragraph and in
each of the clauses or paragraphs of this charter shall be regarded as
independent object, purposes and powers.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the
laws of the State of Delaware, do make, file and record this Certificate and do
certify that the facts herein are true, and I have accordingly hereunto set my
hand.
DATED AT: 10/14/80
State of Delaware
County of New Castle /s/ Alison David
<PAGE>
CERTIFICATE OF MERGER
of
C.O.N.S.E.R.V.E. CORPORATION
(a Utah corporation)
into
COSTS OF OWNING THE NEWEST SYSTEMS OF ENERGY
REDUCTION ARE VIRTUALLY ELIMINATED, INC.
(a Delaware corporation)
In order to consummate the merger of C.O.N.S.E.R.V.E. Corporation (a Utah
corporation hereinafter sometimes referred to as "CONSERVE") into Costs of
Owning the Newest Systerms of Energy Reduction Are Virtually E1iminated, Inc. (a
Delaware corporation hereinafter sometimes referred to as "SURVIVOR"), said
corporations hereby agree and certify as follows:
(1) the names and states of incorporation of the two constituent
corporations to the merger provided for hereby are specified above;
(2) the plan and agreement of merger provided for hereby has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the provisions of Section 252(c) of
the Delaware General Corporation Act and the Utah Revised Business Corporation
Act;
(3) the surviving corporation is Costs of Owning The Newest Systems of
Energy Reduction Are Virtually Eliminated, Inc.;
(4) the FOURTH Article of SURVIVOR's Certificate of Incorporation is
amended in connection with the merger to provide, in its entirety:
"FOURTH: the corporation shall have authority to issue 50,000,000
shares of $.001 par value common stock."
As so amended, the Certificate of Incorporation of Costs of Owning The
Newest Systems of Energy Reduction Are Virtually Eliminated, Inc. shall be the
Certificate of Incorporation of the surviving corporation;
(5) the plan and agreement of merger provided for hereby is that on
the Effective Date and Time hereinafter provided for CONSERVE shall be merged
into SURVIVOR, the manner and basis of converting the issued shares of CONSERVE
into shares of SURVIVOR being as follows:
(a) the total shares represented by each outstanding CONSERVE
certificate shall be deemed to be automatically converted into one-third
the number of shares of common stock of SURVIVOR, with all resulting
fractional shares being rounded up (by way of
<PAGE>
example certificates completed to represent 90 and 100 shares of CONSERVE
will following the merger represent, respectively, 30 and 34 shares of
SURVIVOR);
(b) holders of CONSERVE certificates issued prior to the merger shall
not be required to surrender such certificates for conversion into
certificates reflecting the SURVIVOR's name, but may do so to SURVIVOR's
duly appointed transfer agent which shall in the ordinary course of its
business (and provided that its regular and usual requirements regarding
negotiability and payment of its fees are met) reissue certificates
representing the number of shares in SURVIVOR to which said holders may
be entitled as provided above;
(6) the principal office of SURVIVOR is located at 1084 North Hughes,
Centerville, Utah 84014, and a copy of the executed agreement of merger is on
file at said office;
(7) a copy of the agreement of merger will be furnished by SURVIVOR,
on request and without cost, to any stockholder of CONSERVE (it being the only
stockholder of SURVIVOR);
(8) the authorized capital stock of CONSERVE is 50,000,000 shares of
$0.001 par value common stock;
(9) as the corporation surviving from the merger is a Delaware
corporation no agreement is required by Section 252(c)(9) of the Delaware
General Corporation Law;
(10) the merger was approved by the shareholders of both constituent
corporations, CONSERVE having 8,203,232 shares of common stock outstanding and
entitled to be cast (its sole voting group) at the time of approval - 6,392,895
shares of which were represented at the meeting in question and voted for the
plan (there being no CONSERVE shares voted against the plan), and SURVIVOR
having 1000 shares of common stock outstanding and entitled to be cast (its sole
voting group) at the time of approval - all of which shares were represented at
the meeting in question and voted for the plan.
(11) the Effective Date and Time of the merger provided for hereby
shall be on April 30, 1997, at 11:59 a.m, or at such earlier date and time as a
counterpart hereof is delivered by the SURVIVOR for filing to the Delaware
Secretary of State or to the Utah Division of Corporations, whichever is last
(that is, the Effective Date and Time hereof shall be the moment at which a
counterpart hereof has been filed with both the Delaware Secretary of State and
the Utah Division of Corporations).
EXECUTED on this 28th day of April, 1997 by;
C.O.N.S.E.R.V.E. CORPORATION COSTS OF OWNING THE NEW NEWEST
SYSTEMS OF ENERGY REDUCTION ARE
VIRTUALLY ELIMINATED
By /s/ R. G. Southwick /s/ R. G. Southwick
its President its President
<PAGE>
COSTS OF OWNING THE NEWEST SYSTEMS OF ENERGY
REDUCTION ARE VIRTUALLY ELIMINATED, INC.
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
Costs of Owning The Newest Systems of Energy Reduction Are Virtually
Eliminated, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
1st: That by unanimous written consent of the Board of Directors of
Costs of Owning the Newest Systems of Energy Reduction are Virtually Eliminated,
Inc., a resolution was duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and proposing approval by the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the FIRST and FOURTH articles thereof
and by adding an EIGHTH article, so that, as amended, said Articles shall
read as set forth below:
FIRST: The name of this corporation shall be: Conserve,
Inc.
FOURTH: The total number of shares of stock which this
corporation is authorized to issue is:
(a) Common. 50,000,000 shares of Common Stock having a par
value of $.001 per share;
(b) Preferred. 500,000 shares of Preferred stock having a par
value of $.001 per share and to be issued in such series and to have such
rights, preferences, and designation as determined by the Board of Directors of
the Corporation.
EIGHTH: No director shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such director as a director. Notwithstanding the foregoing, a director
shall be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have any effect on the liability or alleged liability of
<PAGE>
any director of the Corporation for or with respect to any acts or omissions
of such director occurring prior to such amendment.
2nd: That thereafter, pursuant to resolution of its Board of Directors,
a written approval by majority consent of the stockholders of said Corporation
was duly received in accordance with the General Corporation law of the State of
Delaware, by which consent the necessary number of shares as required by statute
were voted in favor of the amendment.
3rd: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware, and the necessary number of shares as required by statute were voted
in favor of the amendment.
IN WITNESS WHEREOF, said Costs of Owning the Newest Systems of Energy
Reduction are Virtually Eliminated, Inc., has caused this certificate to be
signed by Richard G. Southwick, its President and its Secretary-Treasurer, this
10th day of May, 1999.
By: /s/ Richard G. Southwick
President and Secretary - Treasurer
<PAGE>
CONSERVE, INC.
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
Conserve, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
1st: That by unanimous written consent of the Board of Directors of
Conserve, Inc., a resolution was duty adopted setting forth a proposed amendment
to the Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and proposing approval by the stockholders of said
corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the FIRST article thereof so that, as
amended, said Article shall read as set forth below:
FIRST: The name of this corporation shall be: NMXS.com,
Inc.
2nd: The Corporation has effectuated a 1.5 to 1 reverse stock split
effective with the commencement of business on August 4, 1999, as to shares
outstanding at the opening of business on August 3, 1999. Said reverse split
reduces the outstanding shares from 7,999,999 shares to 5,333,333 shares but
does not reduce the Corporation's authorized shares of common stock.
3rd: That thereafter, pursuant to resolution of its Board of Directors,
a written approval by majority consent of the stockholders of said Corporation
was duly received in accordance with the General Corporation law of the State of
Delaware, by which consent the necessary number of shares as required by statute
were voted in favor of the amendment.
4th: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware, and the necessary number of shares as required by statute were voted
in favor of the amendment.
IN WITNESS WHEREOF, said Conserve, Inc., has caused this certificate to
be signed by Richard G. Southwick, its President and Secretary-Treasurer, this
2nd day of August, 1999.
/s/ Richard G. Southwick
President and Secretary - Treasurer
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
COSTS OF OWNING THE NEWEST SYSTEMS OF ENERGY
REDUCTION ARE VIRTUALLY ELIMINATED, INC.
OFFICES
1. The registered office of the corporation shall be in the city of
Hockessin, Delaware and the resident agent in charge thereof shall be The
Incorporators Ltd. The corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may from
time to time determine or the business of the corporation may require.
CORPORATE SEAL
2. The corporation may transact any and all business without the need
for a corporate seal. If a seal is required by law, the corporation may use a
facsimile where inscribed therein is the name of the corporation, the year of
its incorporation, and the words "Corporate Seal, Delaware". In its discretion,
the Board is permitted to acquire and use a true seal setting forth the
information noted above.
MEETING OF STOCKHOLDERS
3. The annual meeting of stockholders for the election of directors
shall be held on the 5th day of April in each year, or if that day be a legal
holiday, on the next succeeding day not a legal holiday, at 10:00 o'clock A.M.,
at which meeting the stockholders shall elect by plurality vote, a Board of
Directors, and may transact such other business as may come before the meeting.
4. Special meetings of the stockholders may be called at any time by
the President and shall be called by the President or Secretary on the request
in writing of a majority of the directors or at the request in writing of a
majority of stockholders entitled to vote.
5. All meetings of the stockholders for the elections of directors
shall be held at the office of the corporation in the City of Hockessin, State
of Delaware, or at such other place as may be fixed by the Board of Directors,
provided that at least ten days' notice be given to the stockholders of the
place so fixed. All other meetings of the stockholders shall be held at such
place or places, within or without the State of Delaware, as may from time to
time be fixed in the respective notices or waivers of notice thereof.
6. Stockholders of the corporation entitled to vote shall be such
persons as are registered on the stock transfer books of the corporation as
owners of stock. The Board of Directors may set a record date for annual
meetings, but such record date may not be more than 45 days prior to the annual
meeting.
<PAGE>
7. A complete list of stockholders entitled to vote, arranged in
alphabetical order, and showing the address of each stockholder shall be
prepared by the Secretary and shall be open to the examination of any
stockholder at the place of election, for ten days prior thereto, and during
the whole time of the election.
8. Each stockholder entitled to one vote shall, at every meeting
of the stockholders, be entitled to one vote for each share held in person or
by proxy signed by the stockholder, but no proxy shall be voted on or after
three years from its date, unless it provides for a longer period. Such
right to vote shall be subject to the right of the Board of Directors to fix
a record date for stockholders as provided by these By-Laws.
9. The holders of a majority of the stock issued and outstanding
and entitled to vote at a meeting of the stockholders, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote at the meeting, present in person or represented by proxy,
shall have the power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than
30 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
10. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question properly brought before such
meeting, unless the question is one which by express provision of the
statutes of the State of Delaware or of the Certificate of Incorporation, a
different vote is required in which case such express provision shall govern
and control the decision of such question.
11. Notice of all meetings shall be mailed by the Secretary to each
stockholder of record entitled to vote at his last known post office address,
for annual meetings fifteen days and for special meetings ten days prior
thereto.
12. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
13. Unless otherwise provided in the Certificate of Incorporation,
any action required to be taken at any annual or special meeting of
stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if 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 voters 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. Prompt notice of the
taking of the
<PAGE>
corporate action without a meeting by less than unanimous written consent,
shall be given to those stockholders who have not consented in writing.
DIRECTORS
14. The property and business of the corporation shall be managed and
controlled by the Board of Directors.
15. The directors shall hold office until the next annual election and
until their successors are elected and qualified. Directors shall be elected by
the stockholders, except that if there be any vacancies on the Board of
Directors by reason of death, resignation, or otherwise, or if there be any
newly created directorships resulting from any increase in the number of
directors, such vacancies or newly created directorships may be filled for the
unexpired term by a majority of the directors then in office, though less than a
quorum.
POWERS OF DIRECTORS
16. The Board of Directors shall have all such powers as may be
exercised by directors of a Delaware corporation, subject to the provisions of
the statutes of Delaware, the Certificate of Incorporation, and the By-Laws.
MEETINGS OF DIRECTORS
17. After each annual election of directors, the newly elected
directors may meet for the purpose of organization, the election of officers,
and the transaction of other business, at such time and place as shall be fixed
by the stockholders at the annual meeting, and, if a majority of the directors
be present at such place and time, no prior notice of such meeting will be
required to be given to the directors. The place and time of such meeting may
also be fixed by written consent of the directors.
18. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board.
19. Special meetings of the directors may be called by the president
on two days' notice in writing or on one days' notice by telegram to each
director and shall be called by the president in like manner on the written
request of two directors.
20. Special meetings of the directors may be held within or without
the State of Delaware at such place as is indicated in the notice or waiver of
notice thereof.
21. A majority of the directors in office at the time of any regular
or special meeting shall constitute a quorum unless the By-Laws specify a single
director in which case a single director shall constitute a quorum.
<PAGE>
22. Any action required or permitted to be taken at any meeting of
the Board of Directors may be taken without a meeting, if all members of the
Board consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board.
23. Members of the Board of Directors may participate in a meeting
of the Board of Directors by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting may hear one another, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES
24. The Board of Directors may, by resolution, create committees
from time to time, which committees shall have the power or authority to
amend the Certificate of Incorporation, adopt an agreement of merger or
consolidation, recommend to the stockholders of the sale, lease, or exchange
of all or substantially all of the corporation's property and assets,
recommend to the stockholders a dissolution of the corporation or a
revocation of a dissolution, amend the By-Laws of the corporation, or, unless
the resolution or the Certificate of Incorporation expressly so provides,
declare a dividend or authorize the issuance of stock.
OFFICERS OF THE CORPORATION
25. The officers of the corporation shall be a president, a
secretary, a treasurer, and such other officers as may from time to time be
chosen by the Board of Directors. All offices may be held by the same person.
26. The officers of the corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer chosen or
appointed by the Board of Directors may be removed either with or without
cause at any time by the affirmative vote of a majority of the whole Board of
Directors. If the office of any officer or officers becomes vacant for any
reason, the vacancy shall be filled by the affirmative vote of a majority of
the whole Board of Directors.
27. In case of the absence or disability of any officer of the
corporation, or for any other reason deemed sufficient by a majority of the
whole board, the Board of Directors may delegate his powers or duties to any
other officer or to any director.
SECRETARY
28. The secretary shall attend all meetings of the corporation, the
Board of Directors, and committees. He shall act as clerk thereof and shall
record all of the proceedings of such meetings in a book kept for that
purpose. He shall have custody of the corporate seal of the corporation and
shall have authority to affix the seal to any instrument requiring it and
when so affixed, it may be attested by his signature. He shall give proper
notice of meetings of stockholders and directors and shall perform other such
duties as shall be assigned to him by the president or the Board of Directors.
<PAGE>
TREASURER
29. The treasurer shall have custody of the funds and securities of
the corporation and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors.
30. The treasurer shall disburse the funds of the corporation as
may be ordered by the Board or the president, taking proper vouchers for such
disbursements and shall render to the president and directors, whenever they
may require it, an account of all his transactions as treasurer and of the
financial condition of the corporation, and at the regular meeting of the
board next preceding the annual members meeting, a like report for the
preceding year.
31. The treasurer shall keep an account of stock registered and
transferred in such manner subject to such regulations as the Board of
Directors may prescribe.
32. The treasurer shall give the corporation a bond if required by
the Board of Directors in such sum and with security satisfactory to the
Board of Directors for the faithful performance of the duties of his office
and the restoration to the corporation, in the case of his death,
resignation, or removal from office, of all books, paper, vouchers, money and
other property of whatever kind in his possession, belonging to the
corporation. He shall perform such other duties as the Board of Directors or
executive committee may from time to time prescribe or require.
PRESIDENT
33. The president shall be the chief executive officer of the
corporation. He shall preside at all meetings of the stockholders and the
Board of Directors, and shall have general and active management of the
business of the corporation, and shall see that all orders and resolutions of
the Board of Directors are carried into effect.
34. The president shall execute bonds, mortgages, and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed, and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other office or agent of the corporation.
STOCKS
35. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
president or secretary of the corporation, certifying the number of shares
owned by him in the corporation. Certificates may be issued for partly paid
shares, and in such case upon the face or back of the certificates issued to
represent any such partly paid shares, the total amount of the consideration
to be paid therefore, and the amount paid thereon, shall be specified.
<PAGE>
36. Any or all of the signatures on the certificates may be
facsimile.
37. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person
claiming their certificate of stock to be lost, stolen or destroyed. The
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates to give the corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost,
stolen, or destroyed.
CHECKS
38. All checks, drafts, or orders for the payment of money shall be
signed by the treasurer or by such other officer or officers as the Board of
Directors may from time to time designate. No check shall be signed in blank.
BOOKS AND RECORDS
39. The Books, accounts, and records of the corporation, except as
otherwise required by the laws of the State of Delaware, may be kept within
or without the State of Delaware, at such place or places as may from time to
time be designated by the By-Laws or by the resolutions of the directors.
NOTICES
40. Notice required to be given under the provisions of these
By-Laws to any director, officer or stockholder, shall not be construed to
mean personal notice, but may be given in writing by depositing the same in a
post office or letter box, in a post-paid sealed wrapper, addressed to such
stockholder, officer, or director at such address as appears on the books of
the corporation, and such notice shall be deemed to be given at the time when
the same shall thus be mailed. Any stockholder, officer, or director, may
waive, in writing, any notice required to be given under these By-Laws,
whether before or after the time stated therein.
DIVIDENDS
41. Dividends upon the capital stock of the corporation, subject to
the Certificate of Incorporation, may be declared by the Board of Directors
at any regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock of the corporation,
subject to the provisions of the Certificate of Incorporation.
42. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
<PAGE>
purposes as the directors shall think conducive to the best interest of the
corporation. The directors may modify or abolish any such reserve in the
manner by which it was created.
FISCAL YEAR
43. The fiscal year of the corporation shall be determined by the
Board of Directors.
AMENDMENT OF BY-LAWS
44. These By-Laws may be amended, altered, repealed, or added to at
any regular meeting of the stockholders or of the Board of Directors, or at any
special meeting called for that purpose, by affirmative vote of a majority of
the stockholders entitled to vote, or by affirmative vote of a majority of the
whole board, as the case may be.
45. Any and all disputes and controversies by and between the
shareholders or the directors arising out of or with respect to the business of
or affecting the affairs of the corporation, which disputes and controversies
cannot be resolved under the terms of the corporate By-Laws or Certificate of
Incorporation, because of a tie vote or deadlock between the directors and
shareholders shall be settled by arbitration in the following manner. Each side
of the dispute shall be entitled to name one arbitrator and both arbitrators so
named shall together agree upon a third arbitrator, with the findings of the
arbitration panel to be binding upon all parties of the dispute. Unless
otherwise mutually agreed by the parties the arbitration shall take p lace in
accordance with and subject to the provisions of the Delaware Uniform
Arbitration Act, 10 Del.C. "5701 et. seq.
RESOLVED, that the Corporation adopt new By-laws as attached.
Dated: 10/9/80 /s/ Alison David
<PAGE>
EXHIBIT 4.1
[Front of Certificate]
Not valid unless countersigned by transfer agent
Incorporated Under the Laws of the State of Delaware
CUSIP NO. 629300 10 4
NMXS.com
Number Shares
Authorized common stock: 50,000,000 shares
Par Value: $.001 per share
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
Shares of NMXS.COM, INC. Common Stock
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signature
of its duly authorized officers.
Dated:
/s/ Teresa Dickey /s/ Richard Govatski
Secretary President
NMXS.com, Inc.
Corporate
Seal
Delaware
Interwest Transfer Co., Inc., P.O. Box 17136/Salt Lake City, Utah 84117
Countersigned & Registered
[Back of Certificate]
NOTICE: Signature must be guaranteed by a firm which is a member of a
registered national stock exchange, or by a bank (other than a saving
bank), or a trust company. 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 UNI GIFT MIN ACT . . . Custodian . . .
TEN ENT as tenants by the entireties (Cust) (Minor)
JT TEN as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as Act . . . . . . . . . . .
tenants in common (State)
<PAGE>
Additional abbreviations may also be used though not in the above list.
For Value Received, _____________________ hereby sell, assign and transfer
unto
Please insert social security or other
identifying number of assignee
_______________________________________________________________________
(Please print or typewrite name and address, including zip code, of assignee)
_______________________________________________________________________
_______________________________________________________________________
______________________________________________________ Shares of the
capital 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
Notice: The signature of this assignment must correspond with the name as
written upon the face of the certificate in every particular
without alteration or enlargement or any change whatever
<PAGE>
EXHIBIT 4.2
COMMON STOCK PURCHASE WARRANT
SERIES A
NMXS.com, INC.
(A DELAWARE CORPORATION)
Dated: ____________, 2000
CERTIFICATE NUMBER: _______ _______ WARRANTS
THIS CERTIFIES THAT ______________ (hereinafter called the "Holder")
will in the future during the period hereinafter specified, upon fulfillment
of the conditions and subject to the terms hereinafter set forth, be entitled
to purchase from NMXS.com, Inc., a Delaware corporation (the "Company"),
____________ shares (the "Shares") of the Company's common stock, par value
$.001 per share ("Common Stock"), at an exercise price of $1.25 per Share
(the "Exercise Price"), on the basis of one share for each warrant (the
"Warrant") indicated on the face hereof.
1. Commencing _________, 2000, and ending on the date three years
later, unless extended by the Company in its sole discretion ("Expiration
Date"), the Holder shall have the right to purchase the Shares hereunder at
the Exercise Price. After the Expiration Date, the Holder shall have no
right to purchase any Shares hereunder and this Warrant shall expire thereon
effective at 5:00 p.m., Mountain Standard Time.
2. The rights represented by this Warrant may be exercised at any
time within the period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to
the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price then in effect
for the number of Shares specified in the above-mentioned purchase form
together with applicable stock transfer taxes, if any; and (iii) delivery to
the Company, if the Company so requires, of a duly executed agreement signed
by the Holder to the effect that such person agrees to be bound by all
provisions hereof. This Warrant shall be deemed to have been exercised, in
whole or in part to the extent specified, immediately prior to the close of
business on the date this Warrant is surrendered and payment is made in
accordance with the foregoing provisions of this Paragraph 2, and the person
or persons in whose name or names the certificates for Shares shall be
issuable upon such exercise shall become the holder or holders of record of
such Shares at that time and date. The certificates for the Shares so
purchased shall be delivered to the Holder within a reasonable time after the
rights represented by this Warrant shall have been exercised.
3. This Warrant may not be exercised or sold, transferred,
assigned, or otherwise disposed of at any time by the Holder unless the
transaction is registered under the Securities Act of 1933, as amended (the
"Act") or, in the opinion of the Company (which may in its discretion require
the Holder to furnish it with an opinion of counsel in form and substance
satisfactory to
<PAGE>
it), such exercise, sale, transfer, assignment, or other disposition does not
require registration under the Act and a valid exemption is available under
applicable federal and state securities laws. Any permitted transfer or
assignment shall be effected by the Holder (i) completing and executing the
form of assignment at the end hereof and (ii) surrendering this Warrant with
such duly completed and executed assignment form for cancellation,
accompanied by funds sufficient to pay any transfer tax, at the principal
executive office of the Company, accompanied by a written representation from
each such assignee addressed to the Company stating that such assignee agrees
to be bound by the terms of this Warrant; whereupon the Company shall issue,
in the name or names specified by the Holder (including the Holder) a new
Warrant or Warrants of like tenor with appropriate legends restricting
transfer under the Act and representing in the aggregate rights to purchase
the same number of Shares as are purchasable hereunder.
4. The Company covenants and agrees that all Shares purchased
hereunder will, upon issuance, be duly and validly issued, fully paid, and
non-assessable and no personal liability will attach to the Holder thereof.
The Company further covenants and agrees that during the period within which
this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.
5. This Warrant shall not entitle the Holder to any voting rights
or other rights as a stockholder of the Company, either at law or in equity,
and the rights of the Holder are limited to those expressed in this Warrant
and are not enforceable against the Company except to the extent set forth
herein.
6. In the event that the Company shall at any time subdivide or
combine into a greater or lesser number the number of outstanding shares of
Common Stock, the number of Shares purchasable upon exercise of the Warrant
shall be proportionately increased and the Exercise Price proportionally
decreased in the case of subdivision or, in the case of combination, the
number of Shares purchasable upon the exercise of the Warrant shall be
proportionately decreased and the Exercise Price proportionately increased.
Irrespective of any adjustments in the Exercise Price or the number of Shares
purchasable upon exercise of the Warrant, the Warrant theretofore or
thereafter issued may continue to express the same price and number and kind
of Shares as are stated in the Warrant initially issued.
7. The Warrants represented by this certificate are subject to
redemption by the Company at $.01 per Warrant, at any time after the date
hereof, upon thirty days notice. The terms of the redemption and other terms
of these Warrants are set forth in a Warrant Agency Agreement between the
Company and its Warrant Agent, which agreement shall control the terms and
conditions of this Warrant.
8. This Warrant Certificate does not constitute an offer to sell,
nor does it confer any right to purchase, securities of the Company until
such time as the conditions precedent to its exercisability have been
fulfilled.
<PAGE>
9. This Warrant shall be governed by and be in accordance with the
laws of the State of Delaware and may not be amended other than by written
instrument executed by the parties hereto except as provided in the Warrant
Agency Agreement between the Company and the Warrant Agent.
IN WITNESS WHEREOF, NMXS.com, Inc. has caused this Warrant to be signed
by its duly authorized officer.
NMXS.com, Inc.
By
Richard Govatski, President
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of Warrant)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the purchase rights represented by such
Warrant for, and to purchase thereunder, Shares of the Common Stock of
NMXS.com, Inc., and herewith makes payment of $__________ therefore, and
requests that the share certificates be issued in the name(s) of, and
delivered to_______________________________________________________________
whose address(es) is (are)_________________________________________________.
Dated:
(Signature)
Name (Print or Type)
Address:
TRANSFER FORM
(To be signed only upon transfer of the Warrant)
For value received, the undersigned hereby assigns and transfers unto
_____________________________________________ the right to purchase shares of
the Common Stock of NMXS.com, Inc. represented by the foregoing Warrant to the
extent of________ Shares, and appoints ___________________________, attorney to
transfer such rights on the books of________________________________________,
with full power of substitution in the premises.
Dated:
(Signature)
Name (Print or Type)
Address:
<PAGE>
EXHIBIT 4.3
NMXS.COM, INC.
AND
INTERWEST TRANSFER COMPANY, INC., WARRANT AGENT
WARRANT AGENCY AGREEMENT
Dated as of ___________, 2000
<PAGE>
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 1. Appointment of Warrant Agent . . . . . . . . . . . . . . . . .4
Section 2. Form of Warrant. . . . . . . . . . . . . . . . . . . . . . . .4
Section 3. Countersignature and Registration. . . . . . . . . . . . . . .4
Section 4. Transfers and Exchanges. . . . . . . . . . . . . . . . . . . .4
Section 5. Exercise of Warrants . . . . . . . . . . . . . . . . . . . . .5
Section 6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . .5
Section 7. Mutilated or Missing Warrants. . . . . . . . . . . . . . . . .6
Section 8. Reservation of Common Stock. . . . . . . . . . . . . . . . . .6
Section 9. Warrant Price. . . . . . . . . . . . . . . . . . . . . . . . .6
Section 10. Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 11. Fractional Interest. . . . . . . . . . . . . . . . . . . . . .9
Section 12. Notice to Warrant holders. . . . . . . . . . . . . . . . . . .9
Section 13. Disposition of Proceeds on Exercise of Warrants. . . . . . . 10
Section 14. Redemption of Warrants . . . . . . . . . . . . . . . . . . . 10
Section 15. Merger or Consolidation or Change of Name of Warrant Agent . 10
Section 16. Duties of Warrant Agent. . . . . . . . . . . . . . . . . . . 11
Section 17. Change of Warrant Agent. . . . . . . . . . . . . . . . . . . 12
Section 18. Identity of Transfer Agent . . . . . . . . . . . . . . . . . 13
Section 19. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
Section 20. Supplements and Amendments. . . . . . . . . . . . . . . . . 13
Section 21. Successors. . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 22. Utah Contract . . . . . . . . . . . . . . . . . . . . . . . 13
Section 23. Benefits of this Agreement. . . . . . . . . . . . . . . . . 14
Section 24. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 14
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
EXHIBIT A . . . . . (Form of Redeemable Common Stock Purchase Warrant,
Election to Purchase and Assignment)
</TABLE>
- ------------------
*This Table of Contents shall not be deemed a part of this Agreement and has no
bearing upon the interpretation of any of its terms and provisions.
<PAGE>
WARRANT AGENCY AGREEMENT
WARRANT AGENCY AGREEMENT dated as of ________, 2000, between NMXS.com,
Inc., a Delaware corporation having an address at 5041 Indian School Road NE,
Albuquerque, NM 87110 (the "Company"), and Interwest Transfer Company, Inc.,1981
East 4800 South, Suite 100, Salt Lake City, UT 84117 as warrant agent (the
"Warrant Agent").
WHEREAS, the Company proposes to distribute to its shareholders 1,000,000
series A stock purchase warrants (the "Warrants"), each Warrant entitling the
registered holder thereof to purchase one share of Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth in this Agreement, and the Warrant Agent hereby accepts
such appointment.
Section 2. Form of Warrant. The text of the Warrants and of the form
of election to purchase shares on the reverse thereof shall be substantially
as set forth in Exhibit "A" attached hereto and made a part hereof. The per
share warrant exercise price and the number of shares issuable upon exercise
of the Warrants are subject to adjustment upon the occurrence of certain
events, all as hereinafter provided. The Warrants shall be executed on
behalf of the Company by the manual or facsimile signature of the present or
any future Chairman of the Board, President or Vice president of the Company,
attested by the manual or facsimile signature of the present or any future
Secretary or Assistant Secretary of the Company.
Warrants shall be dated as of the date of issuance by the Warrant Agent
either upon initial issuance or upon transfer or exchange.
Section 3. Countersignature and Registration. The Warrant Agent shall
maintain books for the transfer and registration of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register the
Warrants in the names of the respective holders thereof. The Warrants shall be
countersigned manually or by facsimile by the Warrant Agent (or by any successor
to the Warrant Agent then acting as warrant agent under this Agreement) and
shall not be valid for any purpose unless so countersigned. Warrants may be so
countersigned, however, by the Warrant Agent (or by its successor as warrant
agent) and be delivered by the Warrant Agent, notwithstanding that the persons
whose manual or facsimile signatures appear thereon as proper officers of the
Company shall have ceased to be such officers at the time of such
countersignature or delivery.
<PAGE>
Section 4. Transfers and Exchanges. The Warrant Agent shall
transfer, from time to time, any outstanding Warrants upon the books to be
maintained by the Warrant Agent for that purpose, upon surrender thereof for
transfer properly endorsed or accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be canceled by the Warrant
Agent. Warrants so canceled shall be delivered by the Warrant Agent to the
Company from time to time upon request. Warrants may be exchanged at the
option of the holder thereof, when surrendered at the office of the Warrant
Agent, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like
number of shares of Common Stock.
Section 5. Exercise of Warrants. Subject to the provisions of this
Agreement, each registered holder of Warrants shall have the right which may
be exercised commencing at the opening of business on _______, 2000, and
terminating at 5:00 p.m., Mountain time, on _______, 2003, (the "Expiration
Date") to purchase from the Company (and the Company shall issue and sell to
such registered holder of Warrants) the number of fully paid and
non-assessable shares of Common stock specified in such Warrants, upon
surrender to the Company at the office of the Warrant Agent of such Warrants,
with the form of election to purchase on the reverse thereof duly filled in
and signed, and upon payment to the Company of the Warrant Price, as defined
and determined in accordance with the provisions of Sections 9 and 10 of this
Agreement, for the securities in respect of which such Warrants are then
exercised. Payment of such Warrant Price shall be made in cash or by
certified check or bank draft to the order of the Company. No adjustment
shall be made for any cash dividends on any shares of Common Stock issuable
upon exercise of a Warrant. Subject to Section 6 hereof, upon such surrender
of Warrants, and payment of the Warrant Price as aforesaid, a certificate or
certificates for the number of full shares of Common Stock so purchased upon
the exercise of such Warrants shall be issued to the registered holder of
such Warrants or, upon the written order of such registered holder, in such
name or names as such registered holder may designate. Such certificate or
certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
securities as of the date of the surrender of such Warrants and payment of
such Warrant Price as aforesaid; provided, however, that if at the date of
surrender of such Warrants and payment of such Warrant Price, the transfer
books for the shares of Common Stock or other class of securities purchasable
upon the exercise of such Warrant shall be closed, the certificates for the
shares of Common Stock and Warrants, if any, in respect of which such
Warrants are then exercised shall be issuable as of the date on which such
books shall be opened (whether before, on, or after, the Expiration Date),
and until such date the Company shall be under no duty to deliver any
certificate for such securities; provided, further, however, that such
transfer books, unless otherwise required by law or by applicable rule of any
national securities exchange, shall not be closed at any one time for a
period longer than twenty (20) days. The rights of purchase represented by
the Warrants shall be exercisable, at the election of the registered holders
thereof, either as an entirety or from time to time for part only of the
securities specified therein and, in the event that any Warrant is exercised
in respect of less than all of the securities specified therein at any time
prior to the date of expiration of the Warrant, a new Warrant or Warrants
will be issued to such registered holder of the remaining number of
securities specified in the Warrant so surrendered, and the Warrant Agent is
hereby irrevocably authorized to countersign and to deliver the required new
Warrants pursuant to the provisions of this Section
<PAGE>
5 and of Section 3 hereof, and the Company, whenever requested by the Warrant
Agent, will supply the Warrant Agent with Warrants duly executed on behalf of
the Company for such purpose.
Section 6. Payment of Taxes. The Company will pay any documentary
stamp taxes attributable to the initial issuance of securities issuable upon
the exercise of the Warrants; provided, however, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of any certificates for securities
in a name other than that of the registered holder of Warrants in respect of
which such securities are issued, and in such case neither the Company nor
the Warrant Agent shall be required to issue or deliver any certificate for
securities or any Warrant until the person requesting the same has paid to
the Company the amount of such tax or has established to the Company's
satisfaction that such tax has been paid.
Section 7. Mutilated or Missing Warrants. In case any of the
Warrants shall be mutilated, lost stolen or destroyed, the Company may in its
discretion issue and the Warrant Agent shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and substitution for the Warrant lost, stolen or destroyed, a
new Warrant of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company and the Warrant
Agent of such loss, theft or destruction of such Warrant and, in the case of
a lost, stolen or destroyed Warrant, indemnity, if requested, also
satisfactory to them. Applicants for such substitute Warrants shall also
comply with such other reasonable regulations and pay such reasonable charges
as the Company or the Warrant Agent may prescribe.
Section 8. Reservation of Common Stock. There have been reserved,
and the Company shall at all times keep reserved, out of the Company's
authorized and unissued shares of Common Stock, a number of shares sufficient
to provide for the exercise of the right of purchase represented by the
Warrants, and the transfer agent for the share's of Common Stock and every
subsequent transfer agent for the shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid are
hereby irrevocably authorized and directed at all times to reserve such
number of authorized and unissued shares as shall be required for such
purpose. The Company agrees that all shares of Common Stock issued upon
exercise of the Warrants shall be, at the time of delivery of the
certificates for such shares of Common Stock, validly issued and outstanding,
fully paid and non-assessable and shall be listed on any national securities
exchange upon which the other shares of Common Stock are then listed. So long
as any unexpired Warrants remain outstanding, the Company will file such
post-effective amendments to the Registration Statement on Form SB-2
(Registration No. 33-_____) filed pursuant to the Securities Act of 1933, as
amended, with respect to the Warrants (or such other registration statements
or post-effective amendments or supplements) as may be necessary to permit it
to deliver to each person exercising a Warrant, a Prospectus meeting the
requirements of Section 10(a) of such Act and otherwise complying therewith,
and will deliver such a Prospectus to each such person. The Company will keep
a copy of this Agreement on file with the transfer agent for the shares of
Common Stock and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by
<PAGE>
the Warrants. The Warrant Agent is hereby irrevocable authorized to
requisition from time to time from such transfer agent stock certificates
required to honor outstanding Warrants. The Company will supply such transfer
agent with duly executed stock certificates for such purpose. All Warrants
surrendered in the exercise of the rights thereby evidenced shall be canceled
by the Warrant Agent and shall thereafter be delivered to the Company, and
such canceled Warrants shall constitute sufficient evidence of the number of
shares of Common Stock and other securities which have been issued upon the
exercise of such Warrants. Promptly after the date of expiration of the
Warrants, the Warrant Agent shall certify to the Company the total aggregate
amount of unexpired Warrants then outstanding, and thereafter no shares of
Common Stock shall be subject to reservation in respect to such Warrants
which shall have expired.
Section 9. Warrant Price. The Warrant price (the "Warrant Price") at
which shares of Common Stock shall be purchasable pursuant to the Warrants
shall be $3.00 per share unless reduced by the Company and shall be subject
to adjustment, as provided in Section 10 hereof. After the expiration date,
any Warrants which have not been exercised will be void.
Section 10. Adjustments. Subject and pursuant to the provisions of
this Section 10, the Warrant Price and number and kind of securities
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time if any of the following circumstances shall occur after the
initial issuance of the Warrants, all as hereinafter set forth:
(a) If the Company shall at any time subdivide its outstanding
shares of Common Stock by recapitalization, reclassification or split-up
thereof, or if the Company shall declare a stock dividend or distribute
shares of Common Stock to its stockholders, the number of shares of Common
Stock purchasable upon exercise of the Warrants immediately prior to such
subdivision shall be proportionately increased in each instance, and if the
Company shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the number of
shares of Common Stock purchasable upon exercise of the Warrants immediately
prior to such combination shall be proportionately decreased in each
instance. Any such adjustment and adjustment to the Warrant Price pursuant
to Section 10(b) hereof shall be effective at the close of business on the
effective date of such subdivision or combination or, if any adjustment is
the result of a stock dividend or distribution, then the effective date for
such adjustment based thereon shall be the record date therefor.
(b) If the Company after the date hereof shall distribute to
all of the holders of its shares of Common Stock any security (except as
provided in the preceding paragraph of this Section 10) or other assets
(other than a distribution made as a dividend payable out of earnings or out
of any earned surplus legally available for dividends under the laws of the
jurisdiction of incorporation of the Company), the Board of Directors shall
be required to make such equitable adjustment in the Warrant Price in effect
immediately prior to the record date of such distribution as may be necessary
to preserve to the holders of the Warrants rights substantially proportionate
to those enjoyed hereunder by such holder immediately prior to the happening
of such distribution. Any such adjustment shall become effective as of the
day following the record date for such distribution.
<PAGE>
(c) Whenever the number of shares of Common Stock purchasable
upon the exercise of any of the Warrants is required to be adjusted as
provided in this Section 10, the Warrant Price shall be adjusted (to the
nearest cent) in each instance by multiplying such Warrant Price immediately
prior to such adjustment by a fraction (x) the numerator of which shall be
the number of shares of Common Stock purchasable upon the exercise of the
Warrants immediately prior to such adjustment, and (y) the denominator of
which shall be the number of shares of Common Stock so purchasable
immediately thereafter.
(d) In case of any reclassification of the outstanding shares
of Common Stock, other that a change covered by Section 10(a) hereof or which
solely affects the par value of such shares of Common Stock, or in the case
of any merger or consolidation of the Company with or into another
corporation (other that a consolidation merger in which the Company is the
continuing corporation and which does not result in any reclassification or
capital reorganization of the outstanding shares of Common Stock), or in the
case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety in connection with
which the Company is dissolved, the holders of the Warrants shall have the
right thereafter (until the expirations of the respective rights of exercise
of the Warrants) to receive upon the exercise thereof, for the same aggregate
Warrant Price payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property receivable upon
such reclassification, capital reorganization, merger or consolidation, or
upon the dissolution following any sale or other transfer, which a holder of
the number of shares of Common Stock of the Company would obtain upon
exercise of the Warrants immediately prior to such event; and if any
classification also results in a change in shares of Common Stock covered by
Section 10(a) hereof, then such adjustment shall be made pursuant to both
Section 10(a) hereof and this Section 10(d). The provisions of this Section
10(d) shall similarly apply to successive reclassifications, or capital
reorganizations, mergers or consolidations, sales or other transfers.
(e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under any of the Warrants not redeemed or expired by
their terms shall terminate on a date fixed by the Company, such date so
fixed to be not earlier than the date of the commencement of the proceedings
for such dissolution, liquidation or winding-up and not later than thirty
(30) days after such commencement date. Notice of such termination or
purchase rights shall be given to the registered holder of the Warrants as
the same shall appear on the books of the Company maintained by the Warrant
Agent, by certified or registered mail at least thirty (30) days prior to
such termination date.
(f) In case the Company shall, at any time prior to the
Expiration Date of the Warrants, and prior to the exercise thereof, offer to
the holders of its Common Stock any right to subscribe for additional shares
of any class of the Company, then the Company shall give written notice
thereof to the registered holders of the Warrants not less than thirty (30)
days prior to the date on which the books of the Company are closed or a
record date fixed for the determination of stockholders entitled to such
subscription rights. Such notice shall specify the date as to which the
books shall be closed or record date be fixed with respect to such offer or
subscription, and
<PAGE>
the right of the holders to participate in such offer or subscription shall
terminate if the Warrants shall not be exercised on before the date of such
closing of the books or such record date.
(g) If the Company after the date hereof shall take any action
affecting the shares of its Common Stock, other than that action described in
this Section 10, which, in the opinion of the Board of Directors of the
Company, would materially affect the rights of the holders of the Warrants or
the Warrant Price, the number of shares of Common Stock purchasable on
exercise of the Warrants shall be adjusted in each instance and at such time
as the Board of Directors of the Company, in good faith, may determine to be
equitable under the circumstances.
(h) The form of Warrants need not be changed because of any
change pursuant to this Section 10, and Warrants issued after any such change
may state the same nominal Warrant Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Agreement, without
altering the rights of registered holders of the Warrants to claim the
benefit of changes pursuant to this Agreement, without altering the rights of
registered holders of the Warrants to claim the benefit of changes pursuant
to this Section 10. However, the Company may at any time in its sole
discretion (which shall be conclusive) make any change in the form of
Warrants that the Company may deem appropriate and that does not affect the
substance thereof; and any Warrants thereafter issued or countersigned,
whether to exchange or in substitution of any outstanding Warrants or
otherwise, may be in the form as so changed.
(i) Any changes or adjustments in the number of shares of
Common Stock purchasable upon the exercise of the Warrants or in the exercise
price of Warrants, as required or authorized by this Section 10, shall be
made with respect to all authorized Warrants whether or not they have yet
been issued or outstanding at the time of the occurrence of the circumstance
leading to such change or adjustment.
Section 11. Fractional Interest. The Company shall not be required
to issue fractions of shares of Common Stock on the exercise of Warrants.
Final fractions of shares amounting to less than one-half of a share shall be
disregarded. Final fractions of a share amounting to one-half a share or
more shall be rounded to the nearest whole share.
Section 12. Notice to Warrantholders.
(a) Upon any adjustment of the Warrant Price and the number of
shares issuable on exercise of a Warrant, then and in each such case the
Company shall give written notice thereof to the Warrant Agent, which notice
shall state the Warrant Price resulting form such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon
the exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(b) In case at any time:
(i) the Company shall pay any dividends payable in
stock upon its Common Stock or make any distribution (other than regular cash
divides) including any
<PAGE>
distribution of assets as a liquidating or partial liquidating dividend to
the holders of its Common Stock;
(ii) the Company shall offer for subscription pro rate
to the holders of its Common Stock any additional shares of stock of any
class or other rights;
(iii) there shall be any capital reorganization, any
stock distribution, combination or reclassification of the capital stock of
the Company, or any consolidation or merger of the Company with or sale of
all or substantially all of its assets to, another corporation; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation, or winding-up of the Company; then, in any one or
more such cases, the Company shall give written notice to each registered
holder of Warrants, and publish the same in the manner set forth in this
Section 12, of the date on which (i) the books of the Company shall close or
record shall be taken for purposes of any such dividend, distribution, stock
split, or subscription rights, or (ii) such reorganization, reclassification,
consolidation, merger, sale dissolution, liquidation, or winding-up shall
take place, as the case may be. Such notice shall also specify the date as
of which the holders of Common Stock of record shall participate in such
dividend, distribution, or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up, as the case may be. Such notice
shall be given at least thirty (30) days prior to the action in question and
not less than thirty (30) days prior to the record date or the date on which
the Company's transfer books are closed in respect thereof. Failure to give
such notice, or any defect therein, shall not affect the legality or validity
of any of the matters set forth in this Section 12 inclusive.
(c) The Company shall cause copies of all financial statements
and reports, proxy statements and other documents as it shall send to its
stockholders to be sent by fist-class mail, postage prepaid, on the date of
mailing to such stockholders, to each registered holder of Warrants at his
address appearing on the Warrant register as of the record date for the
determination of the stockholders entitled to such documents.
Section 13. Disposition of Proceeds on Exercise of Warrants.
(a) The Warrant Agent shall promptly forward to the Company
all monies received by the Warrant Agent for the purchase of shares of Common
Stock through the exercise of the Warrants.
(b) The Warrant Agent shall keep copies of this Agreement
available for inspection by holders of Warrants during normal business hours.
Section 14. Redemption of Warrants. The Warrants are redeemable by
the Company at any time prior to the Expiration Date on not less than thirty
(30) days prior written notice, at a redemption price of $.01 per Warrant.
If the Company shall elect to redeem Warrants as
<PAGE>
permitted by this Section 14, notice of redemption shall be given to the
holders of all outstanding Warrants to whom the redemption shall apply by
mailing by first-class mail a notice of such redemption, not less than thirty
(30) nor more than sixty (60) days prior to the date fixed for redemption, to
their last addresses as they shall appear upon the registry books, but
failure to give such notice by mailing to the holder of any Warrants, or any
defect therein, shall not affect the legality or validity of the proceedings
for the redemption of any other Warrants. The notice of redemption to each
holder of Warrants shall specify the date fixed for redemption and the
redemption price at which Warrants are to be redeemed, and shall state that
payment of the redemption price of the Warrants will be made at the office of
the Warrant Agent upon presentation and surrender of such Warrants, and shall
also state that the right to exercise the Warrants so redeemed will terminate
as provided in this Agreement (stating the date of such termination) and
shall state the then current Warrant Price. If the giving of notice of
redemption shall have been completed as above provided, and if funds
sufficient for the redemption of the Warrants shall have been deposited with
the Warrant Agent for such purpose, the right to exercise the Warrants shall
terminate at the close of business on the business day proceeding the date
fixed for redemption, and the holder of each Warrant shall thereafter be
entitled upon surrender of his Warrants only to receive the redemption price
thereof, without interest.
Section 15. Merger or Consolidation or Change of Name of Warrant
Agent. Any corporation or company which may succeed to the business of the
Warrant Agent by any merger consolidation or otherwise to which the Warrant
Agent shall be a party, or any corporation or company succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent
under the provision of Section 17 hereof. In case, at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, any of the Warrants shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrants so
countersigned; and in case at that time any of the Warrants shall not have
been countersigned, any successor to the Warrant Agent may countersign such
Warrants; and in all such cases such Warrants shall have the full force
provided in the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrants so countersigned; and in case at the time any of
the Warrants shall not have been countersigned, the Warrant Agent may
countersign such Warrants either in its prior name or in its changed name;
and in all such cases such Warrants shall have the full force provided in the
Warrants and in this Agreement.
Section 16. Duties of Warrant Agent. The Warrant Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Warrants, by
their acceptance thereof, shall be bound:
<PAGE>
(a) The statements of fact and recitals contained herein and
in the Warrants shall be taken as statements of the Company, and the Warrant
Agent assumes no responsibility for the correctness of any of the same except
such as describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of
the Warrants except as herein expressly provided.
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this
Agreement or in the Warrants to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrants in respect of an action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability or
responsibility to the Company or with respect to any notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by
the proper party or parities.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution
of this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement, and to indemnify the
Warrant Agent and save it harmless against any and all liabilities, including
judgments, costs and reasonable counsel fees for any thing done or omitted by
the Warrant Agent in the execution of this Agreement except as a result of
the Warrant Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expenses unless the Company or one or more registered
holders of Warrants shall furnish the Warrant Agent with reasonable security
and indemnity for any cost and expense which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such action
as the Warrant Agent may consider proper, whether with or without any such
security or indemnity. All rights of action under this Agreement or under any
of the Warrants may be enforced by the Warrant Agent without the possession
of any oft he Warrants or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant
Agent, and any recovery of judgement shall be for the ratable benefit of the
registered holders of the Warrants, as their respective right of interest may
appear.
(g) The Warrant Agent and any stockholder, director, officer,
partner or employee of the Warrant Agent and any stockholder, director,
officer, partner or employee of the Warrant Agent may buy, sell or deal in
any of the Warrants or other securities of the Company or become
<PAGE>
pecuniarily interested in any transaction which the Company may be
interested, or contract with or lend money to or otherwise act as fully and
freely as though it were not Warrant Agent under this Agreement. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent and
not in a ministerial capacity, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except for its own negligence, willful misconduct or bad faith.
(i) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees, and the Warrant
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees or for any loss to the
Company resulting from such neglect or misconduct, provided reasonable care
has been exercised in the selection and continued employment thereof.
(j) Any request, direction, election, order or demand of the
Company shall be sufficiently evidenced by an instrument signed in the name
of the Company by its Chairman of the Board, President or a Vice President or
its Secretary or an Assistant Secretary or its Treasurer or an Assistant
Treasurer (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Warrant Agent by a copy thereof certified by the Secretary or an
Assistant Secretary of the Company.
Section 17. Change of Warrant Agent The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Company
notice in writing, and to the holders of the Warrants notice by mailing such
notice to holders at their addresses appearing on the Warrant register, of
such resignation, specifying a date when such resignation shall take effect.
The Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and by like mailing of notice to the holders of Warrants. If the
Warrant Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Warrant Agent. If
the Company shall fail to make such appointment within a period of thirty
(30) days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent or
by the registered holder of a Warrant (who shall, with such notice, submit
his Warrants for inspection by the Company), then the registered holder of
any Warrant may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Any successor warrant
agent, whether appointed by the Company or by such a court, shall be a bank
or trust company, in good standing, incorporated under the laws of any state
or the United States of America. After appointment the successor warrant
agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as warrant agent without
further act or deed; but the former Warrant Agent shall deliver and transfer
to the successor warrant agent all canceled Warrants, records and property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to file or mail
any notice provided for in this Section, however, or any defect therein,
shall not affect the legality or validity
<PAGE>
of the resignation or removal of the Warrant Agent or the appointment of the
successor warrant agent, as the case may be.
Section 18. Identity of Transfer Agent. Forthwith upon the
appointment of any transfer agent for the shares of Common Stock or of any
subsequent transfer agent for shares of Common Stock or other shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants, the Company will file with the Warrant Agent a
statement setting forth the name and address of such transfer agent.
Section 19. Notice. Any notice pursuant to this Agreement to be
given or made by the Warrant Agent or by the registered holder of any
Warrants to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed
in writing by the Company with the Warrant Agent) as follows:
NMXS.com, Inc.
Attn: Richard Govatski, President
5041 Indian School Road NE
Albuquerque, NM 87110
with a copy to Ronald N. Vance
Attorney at Law
57 West 200 South, Suite 310
Salt Lake City, Utah 84101
Any notice pursuant to this Agreement to be given or made by the Company or by
the registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:
Interwest Transfer Company, Inc.
Attn: Kurtis D. Hughes, Vice President
1981 East 4800 South, Suite 100
Salt Lake City, UT 84117
Section 20. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement in order to cure
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not be inconsistent with the provisions of the Warrants and which shall not
adversely affect the interest of the holders of Warrants.
Section 21. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
<PAGE>
Section 22. Utah Contract. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
Utah and for all purposes shall be construed in accordance with the laws of said
state.
Section 23. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrants any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent and the registered
holders of the Warrants.
Section 24. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NMX.com, Inc.
Richard Govatski, President
Interwest Transfer Company,
Inc.,Warrant Agent
Kurtis D. Hughes, Vice President
<PAGE>
EXHIBIT 4.4
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM
REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT OF 1933 AND RULE 506
PROMULGATED THEREUNDER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
OTHER AUTHORITY HAS PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE
ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED TO THE INVESTORS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INVESTORS MUST RELY ON
THEIR OWN EXAMINATION OF THE COMPANY, AND THE RISKS, MERITS AND TERMS OF THIS
OFFERING IN MAKING AN INVESTMENT DECISION.
COMMON STOCK PURCHASE WARRANT
SERIES B
NMXS.com, INC.
(A DELAWARE CORPORATION)
Dated: ____________, 2000
CERTIFICATE NUMBER: _______ _______ WARRANTS
THIS CERTIFIES THAT ______________ (hereinafter called the "Holder") will
in the future during the period hereinafter specified, upon fulfillment of the
conditions and subject to the terms hereinafter set forth, be entitled to
purchase from NMXS.com, Inc., a Delaware corporation (the "Company"),
____________ shares (the "Shares") of the Company's common stock, par value
$.001 per share ("Common Stock"), at an exercise price of $1.00 per Share (the
"Exercise Price"), on the basis of one share for each warrant (the "Warrant")
indicated on the face hereof.
1. Commencing August 1, 2000, and ending on the date five years
later, unless extended by the Company in its sole discretion ("Expiration
Date"), the Holder shall have the right to purchase the Shares hereunder at the
Exercise Price. After the Expiration Date, the Holder shall have no right to
purchase any Shares hereunder and this Warrant shall expire thereon effective at
5:00 p.m., Mountain Standard Time.
2. The rights represented by this Warrant may be exercised at any
time within the period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Company); (ii)
payment to the Company of the Exercise Price then in effect for the number of
Shares specified in the above-mentioned purchase form together with applicable
stock transfer taxes, if any; and (iii)
<PAGE>
delivery to the Company, if the Company so requires, of a duly executed
agreement signed by the Holder to the effect that such person agrees to be
bound by all provisions hereof. This Warrant shall be deemed to have been
exercised, in whole or in part to the extent specified, immediately prior to
the close of business on the date this Warrant is surrendered and payment is
made in accordance with the foregoing provisions of this Paragraph 2, and the
person or persons in whose name or names the certificates for Shares shall be
issuable upon such exercise shall become the holder or holders of record of
such Shares at that time and date. The certificates for the Shares so
purchased shall be delivered to the Holder within a reasonable time after the
rights represented by this Warrant shall have been exercised.
3. This Warrant may not be exercised or sold, transferred,
assigned, or otherwise disposed of at any time by the Holder unless the
transaction is registered under the Securities Act of 1933, as amended (the
"Act") or, in the opinion of the Company (which may in its discretion require
the Holder to furnish it with an opinion of counsel in form and substance
satisfactory to it), such exercise, sale, transfer, assignment, or other
disposition does not require registration under the Act and a valid exemption
is available under applicable federal and state securities laws. Any
permitted transfer or assignment shall be effected by the Holder (i)
completing and executing the form of assignment at the end hereof and (ii)
surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer
tax, at the principal executive office of the Company, accompanied by a
written representation from each such assignee addressed to the Company
stating that such assignee agrees to be bound by the terms of this Warrant;
whereupon the Company shall issue, in the name or names specified by the
Holder (including the Holder) a new Warrant or Warrants of like tenor with
appropriate legends restricting transfer under the Act and representing in
the aggregate rights to purchase the same number of Shares as are purchasable
hereunder.
4. The Company covenants and agrees that all Shares purchased
hereunder will, upon issuance, be duly and validly issued, fully paid, and
non-assessable and no personal liability will attach to the Holder thereof.
The Company further covenants and agrees that during the period within which
this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.
5. This Warrant shall not entitle the Holder to any voting rights
or other rights as a stockholder of the Company, either at law or in equity,
and the rights of the Holder are limited to those expressed in this Warrant
and are not enforceable against the Company except to the extent set forth
herein.
6. In the event that the Company shall at any time subdivide or
combine into a greater or lesser number the number of outstanding shares of
Common Stock, the number of Shares purchasable upon exercise of the Warrant
shall be proportionately increased and the Exercise Price proportionally
decreased in the case of subdivision or, in the case of combination, the
number of Shares purchasable upon the exercise of the Warrant shall be
proportionately decreased
<PAGE>
and the Exercise Price proportionately increased. Irrespective of any
adjustments in the Exercise Price or the number of Shares purchasable upon
exercise of the Warrant, the Warrant theretofore or thereafter issued may
continue to express the same price and number and kind of Shares as are
stated in the Warrant initially issued.
7. The Warrants represented by this certificate are subject to
redemption by the Company at $.01 per Warrant, at any time after the date
hereof, upon thirty days notice if the closing bid price of the Company's
Common Stock equals or exceeds 300% of the exercise price hereof for ten
consecutive trading days at any time prior to notice of redemption. The
terms of the redemption and other terms of these Warrants are set forth in a
Warrant Agency Agreement between the Company and its Warrant Agent, which
agreement shall control the terms and conditions of this Warrant.
8. This Warrant Certificate does not constitute an offer to sell,
nor does it confer any right to purchase, securities of the Company until
such time as the conditions precedent to its exercisability have been
fulfilled.
9. This Warrant shall be governed by and be in accordance with the
laws of the State of Delaware and may not be amended other than by written
instrument executed by the parties hereto except as provided in the Warrant
Agency Agreement between the Company and the Warrant Agent.
IN WITNESS WHEREOF, NMXS.com, Inc. has caused this Warrant to be
signed by its duly authorized officer.
NMXS.com, Inc.
By
------------------------------
Richard Govatski, President
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of Warrant)
The undersigned, the Holder of the foregoing Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, Shares of the Common Stock of NMXS.com, Inc., and herewith
makes payment of $__________ therefore, and requests that the share certificates
be issued in the name(s) of, and delivered to _________________________________
whose address(es) is (are)____________________________________________________.
Dated:
------------------------------
(Signature)
------------------------------
Name (Print or Type)
Address:
------------------------------
------------------------------
TRANSFER FORM
(To be signed only upon transfer of the Warrant)
For value received, the undersigned hereby assigns and transfers unto
_____________________________________________ the right to purchase shares of
the Common Stock of NMXS.com, Inc. represented by the foregoing Warrant to the
extent of________ Shares, and appoints ___________________________, attorney to
transfer such rights on the books of__________________________________________,
with full power of substitution in the premises.
Dated:
------------------------------
(Signature)
------------------------------
Name (Print or Type)
Address:
------------------------------
------------------------------
<PAGE>
EXHIBIT 5.1
RONALD N. VANCE, P.C.
Attorney at Law
57 West 200 South
Suite 310
Salt Lake City, Utah 84101
February 8, 2000
Richard Govatski, President
NMXS.com, Inc.
5041 Indian School Road NE
Albuquerque, NM 87110
Re: Registration Statement on Form SB-2
Dear Mr. Govatski:
You have requested my opinion as to whether or not the securities to
be issued by NMXS.com, Inc. (the "Company") in the above-referenced
registration statement will be legally issued and, when issued, will be fully
paid and non-assessable shares of the Company. In connection with this
engagement I have examined the form of the registration statement to be filed
by the Company; the Articles of Incorporation of the Company; the By-laws of
the Company currently in effect; and the minutes of the Company relating to
the registration statement and the issuance of the warrants and the shares of
common stock by the Company.
Based upon the above-referenced examination, I am of the opinion that
pursuant to the corporate laws of the State of Delaware, the warrants and the
shares of common stock to be issued by the Company and to be registered
pursuant to said registration statement will be legally issued and, when
issued, will be fully paid and non-assessable.
I hereby consent to being named in the registration statement as
having rendered the foregoing opinion and as having represented the Company
in connection with the registration statement.
Sincerely,
/s/ Ronald N. Vance
<PAGE>
EXHIBIT 10.1
Sun Microsystems
SUN MICROSYSTEMS FINANCE MASTER LEASE AGREEMENT
Master Lease #
Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor,
subject to the following terms of this Master Lease Agreement ("Master
Lease") and any Lease Schedule ("Schedule"), collectively referred to as the
Lease ("Lease"), the personal property described in any Schedule together
with attachments, replacements, parts, substitutions, additions, upgrades,
accessories, software licenses and operating manuals (the "Product"). Each
Schedule shall constitute a separate, distinct, and independent Lease and
contractual obligation of Lessee.
1. Commencement Date And Term
The initial lease term ("Initial Term") and Lessee's rental obligations shall
begin on the Commencement Date and continue for the number of Rental Periods
specified in the Lease as set forth in Section 2 below and shall renew
automatically thereafter until terminated by either party upon not less them
ninety (90) days prior written notice. The Commencement Date with respect to
each item of Product shall be the 16th day after date of shipment to Lessee.
2. Rent and Rental Period
All rental payments and any other amounts payable under a Lease are collectively
referred to as "Rent". The Rental Period shall mean the rental payment period
of either calendar months, quarters, or as otherwise specified in each Schedule.
Rent for the specified Rental Period is due and payable in advance, to the
address specified in Lessor's invoice, on the first day of each Rental Period
during the Initial Term and any extension (collectively, the "Lease Term"),
provided, however, that Rent for the period of time (if any) from the
Commencement Date to the first day of the first Rental Period shall begin to
accrue on the Commencement Date. If any Rent is not paid when due, Lessee will
pay a service fee equal to five percent (5%) of the overdue amount plus interest
at the rate of one and one half percent (1.5%) per month or the maximum legal
interest rate, whichever is less.
3. Net Lease, Taxes and Fees
Each Schedule shall constitute a net lease and payment of Rent shall be absolute
and unconditional, and shall not be subject to any abatement, reduction, set
off, defense, counterclaim, interruption, deferment or recoupment for any reason
whatsoever. Lessee agrees to pay Lessor when due shipping charges, fees,
assessments and all taxes (municipal, state and federal) imposed upon a Lease or
the Product or its ownership, leasing, renting, possession or use except for
taxes based on Lessor's income.
4. Title
Product shall always remain personal property. Lessee shall have no right or
interest in the Product except as provided in this Master Lease and the
applicable Schedule and shall hold the Product subject and subordinate to the
rights of Lessor. Lessee agrees to execute UCC financing
<PAGE>
statements as and when requested by Lessor and hereby appoints Lessor as its
attorney-in-fact to execute such financing statements. Lessor may file a
photocopy of any Lease as a financing statement.
Lessee will, at its expense, keep the Product free and clear from any liens
or encumbrances of any kind (except any caused by Lessor) and will indemnify
and hold Lessor harmless from and against any loss or expense caused by
Lessee's failure to do so. Lessee shall give Lessor immediate written notice
of any attachment or judicial process affecting the Product or Lessor's
ownership. If requested, Lessee shall label the Product as the property of
Lessor and shall allow, subject to Lessee's reasonable security requirements,
the inspection of the Product during regular business hours.
5. Use, Maintenance And Repair
Lessee, at its own expense, shall keep the Product in good repair, appearance
and condition other than normal wear and tear and shall obtain and keep in
effect throughout the term of the Schedule a hardware and software maintenance
agreement with the manufacturer or other party acceptable to Lessor. All parts
furnished in connection with such repair and maintenance shall be manufacturer
authorized parts and shall immediately become components of the Product and the
property of Lessor. Lessee shall use the Product in compliance with the
manufacturer's or supplier's suggested guidelines.
6. Delivery And Return of Product
Lessee assumes the full expense of transportation, insurance, and installation
to Lessee's site. Upon termination of each Schedule, Lessee will provide Lessor
a letter from the manufacturer certifying that the Product is in good operating
condition and is eligible for continued maintenance and that the operating
system is at the then current level, unless under a Sun service contract during
the Lease Term. Lessee, at its expense, shall de-install, pack and ship the
Product to a U.S. Location identified by Lessor. Lessee shall remain obligated
to pay Rent on the Product until the Product and certification are received by
Lessor.
7. Assignment And Relocation
Lessee may sublease or assign its rights under this agreement with Lessor's
prior written consent, which consent shall not be unreasonably withheld,
subject, however, to any terms and conditions which Lessor may require. No
permitted assignment or sublease shall relieve Lessee of any of its obligations
hereunder.
Lessee acknowledges Lessor may sell and/or assign its interest or grant
a security interest in each Lease and/or the Product to an assignee
("Lessor's Assignee"), so long as Lessee is not in default hereunder. Lessor
or Lessor's Assignee shall not interfere with Lessee's right of quiet
enjoyment and use of the product. Upon the assignment of each Lease, Lessor's
Assignee shall have any and all discretions, rights and remedies of Lessor
and all references to Lessor shall mean Lessor's Assignee. In no event shall
any assignee of Lessor be obligated to perform any duty, covenant or
condition under this Lease and Lessee agrees it shall pay such assignee
without any defense, rights of set-off or counterclaims and shall not hold or
attempt to hold such assignee liable for any of
<PAGE>
Lessor's obligations hereunder.
Lessee, at its expense, may relocate Product (after packing it for shipment
in accordance with the manufacturer's instructions) to a different address
with thirty (30) days prior written notice to Lessor. The Product shall at
all times be used solely within the United States.
8. Upgrades And Additions
Lessee may affix or install any accessory, addition, upgrade, equipment or
device on the Product ("Additions") provided that such Additions (i) can be
removed without causing material damage to the Product, (ii) do not reduce the
value of the Product and (iii) are obtained from or approved by Sun Microsystems
Computer Corporation and are not subject to the interest of any third party
other than Lessor. Any other Additions may not be installed without Lessor's
prior written consent. At the end of the Schedule Term, Lessee shall remove any
Additions which (i) were not leased by Lessor and (ii) are readily removable
without causing material damage or impairment of the intended function, use, or
value of the Product and restore the Product to its original configuration. Any
Additions which are not so removable will become the Lessor's property (lien
free).
9. Lease End Options
Upon written notice given at least ninety (90) days prior to expiration of the
Lease Term, and provided Lessee is not in default under any Schedule Lessee may
(i) exercise any purchase option set forth on the Schedule, or (ii) renew the
Schedule for a minimum extension period of twelve (12) months, or (iii) return
the Product to Lessor at the expiration date of the Schedule pursuant
to Section 6 above.
10. Insurance, Loss Or Damage
Effective upon shipment of Product to Lessee and until Product is received by
Lessor, Lessee shall provide at its expense (i) insurance against the loss or
theft or damage to the Product for the full replacement value, and (ii)
insurance against public liability and property damage. Lessee shall provide a
certificate of insurance that such coverage is in effect, upon request by
Lessor, naming Lessor as loss payee and/or additional insured as may be
required.
Lessee shall bear the entire risk of loss, theft, destruction of or damage to
any item of Product. No loss or damage shall relieve Lessee of the obligation
to pay Rent or any other obligation under the Schedule. In the event of loss
or damage, Lessee shall promptly notify Lessor and shall, at Lessor's option,
(i) place the Product in good condition and repair, or (ii) replace the
Product with lien free Product of the same model, type and configuration in
which case the relevant Schedule shall continue in full force and effect and
clear title in such Product shall automatically vest in Lessor, or (iii) pay
Lessor the present value of remaining Rent plus the buyout purchase option
price provided for in the applicable Schedule.
11. Selection, Warranties And Limitation Of Liability
Lessee acknowledges that it has selected the Product and disclaims any reliance
upon statements made by Lessor. Lessee acknowledges and agrees that use and
possession of the Product by Lessee shall be subject to and controlled by the
terms of any manufacturer's or, if appropriate,
<PAGE>
supplier's warranty, and Lessee agrees to look solely to the manufacturer or,
if appropriate, supplier with respect to all mechanical, service and other
claims, and the right to enforce all warranties made by said manufacturer are
hereby assigned to Lessee for the term of the Schedule.
EXCEPT AS SPECIFICALLY PROVIDED HEREIN, LESSOR HAS NOT MADE AND DOES NOT MAKE
ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO ANY
MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, NONFRINGEMENT, THE DESIGN,
QUALITY, CAPACITY OR CONDITION OF THE PRODUCT, ITS MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE. IT BEING AGREED THAT AS THE LESSEE SELECTED BOTH
THE PRODUCT AND THE SUPPLIER, NO DEFECT, EITHER PATENT OR LATENT SHALL
RELIEVE LESSEE OF ITS OBLIGATION HEREUNDER. LESSEE AGREES THAT LESSOR SHALL
NOT BE LIABLE FOR SPECIFIC PERFORMANCE OR ANY LIABILITY, LOSS, DAMAGE OR
EXPENSE OF ANY KIND INCLUDING, WITHOUT LIMITATION, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY NATURE, DAMAGES ARISING FROM THE LOSS
OF USE OF PRODUCT, LOST DATA, LOST PROFITS, OR FOR ANY CLAIM OR DEMAND.
12. Indemnity
Lessee shall indemnify and hold harmless Lessor and Lessor's Assignee from and
against any and all claims, actions, suits, proceedings, liabilities, damages,
penalties, costs and expenses (including reasonable attorneys' fees), arising
out of the use, operation, possession, ownership (for strict liability in tort
only), selection, leasing, maintenance, delivery or return of any item of
Product.
13. Default And Remedies
Lessee shall be in default of any Lease if (i) Lessee fails to pay Rent within
ten (10) days of due date; (ii) Lessee fails to perform or observe or breaches
any covenant or condition or any representation or warranty in such Lease and
such failure or breach continues unremitted for a period of ten (10) days after
written notice from Lessor; (iii) Lessee, except as expressly permitted in the
Lease, attempts to move, sell, transfer, encumber, or sublet without consent any
item of Product leased under such Lease; (iv) Lessee files or has filed against
it a petition in bankruptcy or becomes insolvent or makes an assignment for the
benefit of creditors or consents to the appointment of a trustee or receiver or
either shall be appointed for Lessee or for a substantial part of its property
without its consent, or (v) Lessee or any guarantor of Lessee is declared
legally deceased or if Lessee shall terminate its existence by merger,
consolidation, sale of substantially all of its assets or otherwise.
Upon default, Lessor may, at its option, take one or more of the following
actions, (i) declare all sums due and to become due under the Schedule
immediately due and payable, (ii) require Lessee to return immediately all
Product leased under such Schedule to Lessor in accordance with Paragraph 6
hereof, (iii) without breach of the peace take immediate possession of and
remove the Product; (iv) sell any or all of the Product at public or private
sale or otherwise dispose of, hold, use or lease to others, or; (v) exercise
any right or remedy which may be available to Lessor under applicable law,
including the right to recover damages for the breach of the Schedule. In
addition, Lessee shall be liable for reasonable attorney's fees, other costs
and expenses resulting
<PAGE>
from any default, or the exercise of Lessor's remedies, including placing
such Product in the condition required by Paragraph 6 hereof. Each remedy
shall be cumulative and in addition to any other remedy otherwise available
to Lessor at law or in equity. No express or implied waiver of any default
shall constitute a waiver of any of Lessor's other rights.
14. Lessee's Representations
Less represents and warrants for the Master Lease and each Schedule that the
execution, delivery and performance by Lessee have been duly authorized by all
necessary corporate action; the individual executing was duly authorized to do
so; the Master Lease and each Schedule constitute valid, binding agreements of
the Lessee enforceable in accordance with their terms; that all information
supplied by Lessee, including but not limited to the credit application and
other financial information concerning Lessee, is accurate in all material
respects as of the date provided; and if there is any material change in such
information prior to manufacturer's or, if appropriate, supplier's shipment of
Product under the Schedule, Lessee will advise Lessor of such change in writing.
15. Applicable Law
This Master Lease and each Schedule shall in all respects be governed by and
construed in accordance with the laws of the state of California without giving
effect to the principles of conflict of laws.
16. Miscellaneous
Lessee agrees to execute and deliver to Lessor such further documents,
including, but not limited to, financing statements, assignments, and financial
reports and take such further action as Lessor may reasonably request to protect
Lessor's interest in the Product.
The performance of any act or payment by Lessor shall not be deemed a waiver
of any obligation or default on the part of Lessee. Lessor's failure to
require strict performance by Lessee of any of the provisions of this Master
Lease shall not be a waiver thereof. No rights or remedies referred to in
Article 2A of the Uniform Commercial Code will be conferred on Lessee unless
expressly granted in this Master Lease.
This Master Lease together with any Schedule constitutes the entire
understanding between the parties and supersedes any previous representations
or agreements whether verbal or written with respect to the use, possession
and lease of the Product described in that Schedule. In the event of a
conflict the terms of the Schedule shall prevail over the Master Lease.
No amendment or change of any of the terms or conditions herein shall be
binding upon either party unless they are made in writing and are signed by
an authorized representative of each party Each Schedule is non-cancelable
for the full term specified and each Schedule shall be binding upon, and
shall inure to the benefit of Lessor, Lessee, and their respective
successors, legal
<PAGE>
representatives and permitted assigns.
All agreements, representations and warranties contained herein shall be for
the benefit of Lessor and shall survive the execution, delivery and
termination of this Master Lease, any Schedule or related document.
Any provision of this Master Agreement and/or each Schedule which is
unenforceable shall not cause any other remaining provision to be ineffective
or invalid. The captions set forth herein are for convenience only and shall
not define or limit any of the terms hereof. Any notices or demands in
connection with any Schedule shall be given in writing by regular or
certified mail at the address indicated in the Schedule, or to any other
address specified.
THIS MASTER LEASE SHALL BECOME EFFECTIVE ON THE DATE ACCEPTED BY LESSOR.
LESSOR: SUN MICROSYSTEMS FINANCE LESSEE: New Mexico Software,Inc.
A Sun Microsystems, Inc. Business
BY: /s/ Carrie A. Halverson BY: /s/ Richard F. Govatski
--------------------------------- -------------------------------
(Authorized Signature) (Authorized Signature)
NAME: Carries A.Halverson NAME: Richard F. Govatski
------------------------------- -----------------------------
TITLE: TITLE:
------------------------------ ----------------------------
DATE: DATE:
------------------------------- -----------------------------
ADDITIONAL TERMS FOR SMI PRODUCTS
The following additional terms and conditions shall govern the use of Sun
Microsystems Inc. ("SMI") Products leased hereunder.
1.0 USE OF SOFTWARE
Lessee's use of any software Products ("Software") provided under this
Schedule shall be governed by the object code license accompanying such
Software.
2.0 WARRANTY
Product warranties may vary depending on the specific SMI Product leased.
Applicable terms and conditions are as set out in the then current U.S. End
User Price List. Software is warranted to conform to published specifications
for a period of ninety (90) days from the date of delivery.
<PAGE>
SMI does not warrant that: (i) operation of any Software will be
uninterrupted or error free; or (ii) functions contained in Software will
operate in combinations which may be selected for use by the licensee or meet
the licensee's requirements. These warranties extend only to Lessee as an
original Lessee.
Lessee's exclusive remedy and SMI's entire liability under these warranties
will be: (i) with respect to Product, repair or at SMI's option, replacement;
and (ii) with respect to Software, use its best efforts to correct such
Software as soon as practical after licensee has notified SMI of Software's
nonconformance. If such repair, replacement or correction is not reasonably
achievable, SMI will refund the rental fee/license fee. Unless Lessee has
executed an on-site service agreement, repair or replacement will be
undertaken at a service location authorized by SMI.
All Software customization is provided "AS IS," without a warranty of any
kind.
No SMI warranty shall apply to any Software that is modified without SMI's
written consent or any Product or Software which has been misused, altered,
repaired or used with equipment or software not supplied or expressly
approved by SMI.
SMI reserves the right to change these warranties at any time upon Notice and
without liability to Lessee or third parties.
EXCEPT AS SPECIFIED IN THIS AGREEMENT, ALL EXPRESS OR IMPLIED REPRESENTATIONS
AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT, ARE HEREBY DISCLAIMED.
3.0 TRADEMARKS AND OTHER PROPRIETARY RIGHTS
"Trademarks" means all company names, products' names, marks, logos, designs,
trade dress and other designations or brands used by Sun Microsystems, Inc.,
its subsidiaries and affiliates ("Sun") in connection with Products,
including, Sun, Sun Microsystems, the Sun logo, SPARCstation, SPARCserver,
and all Sun product designs.
Lessee is granted no right, title, license or interest in the
Trademarks. Lessee acknowledges Sun's rights in the Trademarks and agrees
that any and all use of the Trademarks by Lessee shall inure to the sole
benefit of Sun.
4.0 HIGH RISK ACTIVITIES
PRODUCTS ARE NOT FAULT-TOLERANT AND ARE NOT DESIGNED, MANUFACTURED OR
INTENDED FOR USE OR RESALE AS ON-LINE CONTROL EQUIPMENT IN HAZARDOUS
ENVIRONMENTS REQUIRING FAIL-SAFE PERFORMANCE, SUCH AS IN THE OPERATION OF
NUCLEAR FACILITIES, AIRCRAFT NAVIGATION OR COMMUNICATION SYSTEMS, AIR TRAFFIC
CONTROL, DIRECT
<PAGE>
LIFE SUPPORT, OR WEAPONS SYSTEMS IN WHICH THE FAILURE OF PRODUCTS COULD LEAD
DIRECTLY TO DEATH, PERSONAL INJURY, OR SEVERE PHYSICAL OR ENVIRONMENTAL
DAMAGE ("HIGH RISK ACTIVITIES"). SMI SPECIFICALLY DISCLAIMS ANY EXPRESS OR
IMPLIED WARRANTY OR FITNESS FOR HIGH RISK ACTIVITIES.
Lessee represents and warrants that it will not use, distribute or resell
Products (including Software) for High Risk Activities and that it will
ensure that its end-users or customers of Products are provided with a copy
of the notice in the previous paragraph.
<PAGE>
EXHIBIT 10.2
Netherwood Commons
OFFICE BUILDING LEASE
This Lease between Pebbles, Ltd. ("Landlord"), and New Mexico Software
("Tenant"), is dated August 4, 1999
1. LEASE OF PREMISES.
In consideration of the Rent (as defined at Section 5.3) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown by diagonal lines on the floor plan attached hereto as Exhibit
"A," and further described at Section 13. The Premises are located within the
Building and Project described in Section 2m. Tenant shall have the
non-exclusive right (unless otherwise provided herein) in common with Landlord,
other tenants, subtenants and invitees, to use of the Common Areas (as defined
at Section 2e).
2. DEFINITIONS
As used in this Lease, the following terms shall have the following meanings:
a. Base Rent (initial): See Paragraph 2j.
b. Base Year: The calendar year of 1999
c. Broker(s) Landlord's: CL Richard Ellis. Inc.
Tenant's: N/A
d. Commencement Date: Later of August 6, 1999 or ten (10) days after Tenant
receives final notice from Landlord of completion of Tenant Improvements
and receipt of a Certificate of Occupancy for the Building. In the event
that the Commencement Date is delayed, Landlord will provide Tenant with
written notice of the actual commencement date in the form of Exhibit "E".
The first month's rent and security deposit is due upon Lease execution.
e. Common Areas: the building lobbies, common corridors and hallways,
restrooms, garage and parking areas, stairways, elevators, sidewalks,
landscaped areas, and other generally understood public or common areas.
Landlord shall have the right to regulate or restrict the use of the Common
Areas.
f. Common Area Expenses: (fill in if applicable): $ Tenant will be on a 1999
base year for operating expenses excluding gas and electric expenses which
Tenant will pay direct each year of the Lease. For all other operating
expenses excluding gas and electric, Tenant will pay its prorata share of
excess over base expenses in subsequent years of the Lease.
g. Expiration Date: Sixty (60) months from commencement date which is
estimated to be July 31, 2004 unless otherwise sooner terminated in
accordance with the provisions of
<PAGE>
this lease.
h. Index: United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index for All Urban Consumers, n/a Average, Subgroup "All
Items" (1967-100).
i. Landlord's Mailing Address: P.O. Box 90096. Albuquerque, New Mexico 87119
Tenant's Mailing Address: 5041 Indian School Rd. #200, Albuquerque, N.M.
87110.
j. Monthly Installments of Base Rent (initial):
Office Space:
<TABLE>
<CAPTION>
Year Per Sq. Ft. Monthly Rent
<S> <C>
1 $15.00 $3,895.00
2 $15.50 $4,024.83
3 $16.00 $4,154.67
4 $16.50 $4,284.50
5 $17.00 $4,414.33
</TABLE>
Tenant will be responsible for paying for the costs of gas and electric
charges for their unit during the Lease term. These charges will be billed
directly to Tenant by the local utility company and Tenant's space will be
separately submetered.
k. Parking: Tenant shall be permitted to park Twelve (12) cars for employees
on a non-exclusive basis in the area(s) designated by Landlord for parking.
Tenant shall abide by any and all parking regulations and rules established
from time to time by Landlord or Landlord's parking operator provided they
shall not deprive Tenant of the use and enjoyment of parking adjacent to
the premises. In addition, Landlord will allow Tenant to park an additional
ten (10) spaces on the adjacent Church of Christ parking lot.
l. Premises: that portion of the Building containing approximately 3,116
square feet of Rentable Area, for office space, as shown by diagonal lines
on Exhibit "A,"- and known as Suite 200
m. Project: the building of which the Premises are a part (the "Building") and
any other buildings or improvements on the real property (the "Property")
located at Netherwood Commons - 5041 Indian School Road NE, Albuquerque,
New Mexico 87110.
n. Rentable Area: as to both the Premises and the Project, the respective
measurements of floor area as may from time to time be subject to lease by
Tenant and all tenants of the Project, respectively, as determined by
Landlord and applied on a consistent basis throughout the Project. The
square footage is based on actual useable square footage as this is a
single-tenant building.
o. Security Deposit (Section 7): $3,895.00
<PAGE>
p. State: the State of New Mexico
q. Tenant's Proportionate Share: 3.38 %. Such share is a fraction, the
numerator of which is the Rentable Area of the Premises, and the
denominator of which is the Rentable Area of the Project. The Project
consists of five (5) building(s) containing a total Rentable Area of 92,256
square feet.
r. Tenant's Use Clause (Article 8): General office and computer programming.
s. Term: the period commencing on the Commencement Date and expiring at
midnight on the Expiration Date.
t. ADA Compliance: Netherwood Commons was built in 1997-1998 and as such is
fully ADA compliant.
3. EXHIBITS AND ADDENDA. The exhibits and addenda listed below (Unless lined
out) are incorporated by reference in this Lease:
a. Exhibit "A" - Floor Plan showing the Premises.
b. Exhibit "B" - Site Plan of the Project.
c. Exhibit "C" - Building Standard Tenant Improvements/Tenant Requirements
d. Exhibit "D" - Rules and Regulations.
e. Exhibit "E" - Commencement Letter.
f. Exhibit "F" - Lease Guarantee/Addendum
4. DELIVERY OF POSSESSION.
If for any reason Landlord does not deliver possession of the Premises to
Tenant on the Commencement Date, Landlord shall not be subject to any
liability for such failure, the Expiration Date shall not change and the
validity of this Lease shall not be impaired, but Rent shall be abated
until delivery of possession. "Delivery of possession" shall be deemed to
occur ten days after notice from Landlord as to the date Landlord completes
Landlord's Work as defined in Exhibit"C." and all inspections have been
completed with a Certificate of Occupancy issues. If Landlord permits
Tenant to enter into possession of the Premises before the Commencement
Date, such possession shall be subject to the provisions of this Lease,
except for the payment of Rent. Landlord will complete the Lease space to
the best of their ability but cannot warrant a possession date due to
delays on the Tenant's behalf.
5. RENT.
5.1 Payment of Base Rent. Tenant agrees to pay the Base Rent for the
Premises. Monthly Installments of Base Rent shall be payable in advance on
the first day of each calendar month of the Term. If the Term begins (or
ends) on other than the first (or last) day of a calendar month, the Base
Rent for the partial month shall be prorated on a per diem basis. Tenant
shall pay Landlord the first Monthly Installment of Base Rent when Tenant
executes the Lease.
<PAGE>
5.2 ADDITIONAL CHARGES - COMMON AREA MAINTENANCE CHARGES
(a) In addition to the Minimum Rent provided in Section 2 (j) herein
above, and commencing at the same time as any rental commences under
this Lease, Tenant shall pay to Landlord the following items, herein
called Common Area Maintenance Charges ("CAM") in excess of the 1999
base year operating charges less gas/electric which will be paid
directly by the Tenant.
(1) All real estate taxes and insurance premiums relating to the
Premises, including land, building, and improvements thereon. Said
real estate taxes shall include all real estate taxes and assessments
that are levied upon and/or assessed against the Premises, including
any taxes which may be levied on rents. Said insurance shall include
all insurance premiums for fire, extended coverage, liability, and any
other insurance that Landlord deems necessary on the Project excluding
life insurance. Such taxes and insurance premiums for purposes of this
Section 5.2 (a)(1) shall be reasonably apportioned in accordance with
the total rentable area of the Premises as it relates to the total
rentable area of the Project (provided, however, that if any tenants
pay taxes directly to any taxing authority or carry their own
insurance, as may be provided in their leases, their square footage
shall not be deemed a part of the rentable area).
(2) Tenant's Proportionate Share of:
(i) All real estate taxes, including assessments, all insurance
costs, water and sewer charges, governmental charges levied on
or attributable to the Project and all costs to maintain,
repair, service and replace the Common Areas; however, the
portion of the aforesaid mentioned items (real estate taxes,
including assessments, all insurance costs, and all costs to
maintain, repair, service, and replace the Common Areas)
related to any undeveloped portion of the Project shall not be
included in Tenant's proportionate share, but shall be borne by
Landlord
(ii) Reasonable reserves for the costs of repairing, painting and
resurfacing the Common Area;
(iii) Reasonable costs to supervise and administer the Project. Said
costs shall include a third party property management fee in
connection with same and shall also include a fee to Landlord
to supervise and administer same in a combined amount not to
exceed ten percent (10%) of the total costs of Section 5.2
(a)(2)(i) and (2)(ii) above;
(iv) Any parking charges, utilities surcharges, or any other costs
levied, assessed or imposed by, or at the direction of, or
resulting from statutes or regulations, or interpretations
thereof, promulgated by any governmental authority in
connection with the use or occupancy of the Premises or the
parking facilities serving the Premises; and
<PAGE>
(v) Any costs to inspect, repair, maintain or replace the heating,
air conditioning and fire protection systems and equipment
(including fire sprinklers) serving the Premises, including the
cost of a preventive maintenance contract providing for the
regular inspection and maintenance of same. Landlord shall be
responsible for obtaining a service contract for repairs and
maintenance of the heating and air conditioning system serving
the Premises.
(b) Upon the Lease Term Commencement Date, Landlord shall submit to Tenant
a statement of the anticipated monthly CAM charges for the period
between the Lease Term Commencement Date and the following January and
Tenant shall pay the CAM on a monthly basis concurrently with the
payment of Minimum Rent. Tenant shall continue to make said monthly
payments until notified by Landlord of a change thereof. By April 1 of
each year Landlord shall endeavor to give Tenant a statement showing
the total CAM charges for the Project for the prior calendar year and
Tenant's allocable share thereof, prorated from the Lease Term
Commencement Date. In the event the total of the monthly payments
which Tenant has made for the prior calendar year is less than
Tenant's actual share of such CAM charges then Tenant shall pay the
difference in a lump sum within thirty (30) days after receipt of such
statement from Landlord. Tenant shall concurrently pay the difference
in monthly payments made in the then calendar year and the amount of
monthly payments which are then calculated as monthly CAM based on the
prior year's experience. Any over-payment by Tenant shall be credited
towards the monthly CAM next coming due. Tenant will be provided with
copies of invoices upon request.
(c) The actual CAM for the prior year shall be used for purposes of
calculating the anticipated monthly CAM for the then current year with
actual determination of such CAM after each calendar year as above
provided; excepting that in any year in which Parking Lot resurfacing
is contemplated Landlord shall be permitted to include the anticipated
cost of same as part of the estimated monthly CAM. Even though the
Lease Term has expired and Tenant has vacated the Premises, when the
final determination is made of Tenant's share of said CAM for the year
in which this Lease terminates, Tenant shall immediately pay an
increase due over the estimated CAM previously paid and, conversely,
any overpayment made shall be immediately rebated by Landlord to
Tenant, provided however in no event shall payments representing
reserves be required to be rebated. Failure of Landlord to submit
statement as called for herein shall not be deemed to be a waiver of
Tenant's requirement to pay sums as herein provided. Common area
expenses will be grossed up to 95% occupancy.
(d) All CAM reserves shall be deposited in a trust account and shall not
be commingled with funds of the Landlord.
5.3 Definition of Rent. All costs and expenses which Tenant assumes or
agrees to pay
<PAGE>
to Landlord under this Lease shall be deemed additional rent (which,
together with the Base Rent is sometimes referred to as the "Rent").
The Rent shall be paid to the Building manager (or other person) and
at such place, as Landlord may from time to time designate in
writing, without any prior demand therefor and without deduction or
offset, in lawful money of the United States of America.
5.4 Rent Control. If the amount of Rent or any other payment due under
this Lease violates the terms of any governmental restrictions on such
Rent or payment, then the Rent or payment due during the period of
such restrictions shall be the maximum amount allowable under those
restrictions. Upon termination of the restrictions, Landlord shall, to
the extent it is legally permitted, recover from Tenant the difference
between the amounts received during the period of the restrictions,
and the amounts Landlord would have received had there been no
restrictions.
5.5 Taxes Payable by Tenant. In addition to the Rent and any other charges
to be paid by Tenant hereunder, Tenant shall reimburse Landlord upon
demand for any and all taxes payable by Landlord (other than net
income taxes) which are not otherwise reimbursable under this Lease,
whether or not now customary or within the contemplation of the
parties, where such taxes are upon, measured by or reasonably
attributable to (a) the cost or value of Tenant's equipment,
furniture, fixtures and other personal property located in the
Premises, or the cost or value of any leasehold improvements made in
or to the Premises by or for Tenant, other than Building Standard Work
made by Landlord, regardless of whether title to such improvements is
held by Tenant or Landlord; (b) the gross or net Rent payable under
this Lease, including, without limitation, any rental or gross
receipts tax levied by any taxing authority with respect to the
receipt of the Rent hereunder; (c) the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises or any portion thereof; or (d) this transaction
or any document to which Tenant is a party creating or transferring an
interest or an estate in the Premises. If it becomes unlawful for
Tenant to reimburse Landlord for any costs as required under this
Lease, the Base Rent shall be revised to net Landlord the same net
Rent after imposition of any tax or other charge upon Landlord as
would have been payable to Landlord but for the reimbursement being
unlawful.
6. INTEREST AND LATE CHARGES.
If Tenant fails to pay when due any Rent or other amounts or charges which
Tenant is obligated to pay under the terms of this Lease, the unpaid
amounts shall bear interest at the maximum rate then allowed by law. Tenant
acknowledges that the late payment of any Monthly Installment of Base Rent
will cause Landlord to lose the use of that money and incur costs and
expenses not contemplated under this Lease, including without limitation,
administrative and collection costs and processing and accounting expenses,
the exact amount of which is extremely difficult to ascertain. Therefore,
in addition to interest, if any such installment is not received by
Landlord within ten (10) days from the date it is due,
<PAGE>
Tenant shall pay Landlord a late charge equal to ten percent (10%) of
such installment. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for the loss suffered from such nonpayment by
Tenant. Acceptance of any interest or late charge shall not constitute
a waiver of Tenant's default with respect to such non-payment by Tenant
nor prevent Landlord from exercising any other rights or remedies
available to Landlord under this Lease.
7. SECURITY DEPOSIT.
Tenant agrees to deposit with Landlord the Security Deposit set forth at
Section 2.0 upon execution of this Lease, as security for Tenant's faithful
performance of its obligations under this Lease. Landlord and Tenant agree
that the Security Deposit may be commingled with funds of Landlord and
Landlord shall have no obligation or liability for payment of interest on
such deposit. Tenant shall not mortgage, assign, transfer or encumber the
Security Deposit without the prior written consent of Landlord and any
attempt by Tenant to do so shall be void, without force or effect and shall
not be binding upon Landlord.
If Tenant fails to pay any Rent or other amount when due and payable under
this Lease, or fails to perform any of the terms hereof, Landlord may
appropriate and apply or use all or any portion of the Security Deposit for
Rent payments or any other amount then due and unpaid, for payment of any
amount for which Landlord has become obligated as a result of Tenant's
default or breach, and for any loss or damage sustained by Landlord as a
result of Tenant's default or breach, and Landlord may so apply or use this
deposit without prejudice to any other remedy Landlord may have by reason
of Tenant's default or breach. If Landlord so uses any of the Security
Deposit, Tenant shall, within ten (10) days after written demand therefor,
restore the Security Deposit to the full amount originally deposited;
Tenant's failure to do so shall constitute an act of default hereunder the
Landlord shall have the right to exercise any remedy provided for at
Article 27 hereof. Within fifteen (15) days after the Term (or any
extension thereof) has expired or Tenant has vacated the Premises,
whichever shall last occur, and provided Tenant is not then in default on
any of its obligations hereunder, Landlord shall return the Security
Deposit to Tenant, or, if Tenant has assigned its interest under this
Lease, to the last assignee of Tenant. If Landlord sells its interest in
the Premises, Landlord may deliver this deposit to the purchaser of
Landlord's interest under this Lease, to the last assignee of Tenant. If
Landlord sells its interest in the Premises, Landlord may deliver this
deposit to the purchaser of Landlord's interest and thereupon be relieved
of any further liability or obligation with respect to the Security
Deposit.
8. TENANT'S USE OF THE PREMISES.
Tenant shall use the Premises solely for the purposes set forth in Tenant's
Use Clause. Tenant shall not use or occupy the Premises in violation of law
or any covenant, condition or restriction affecting the Building or Project
or the certificate of occupancy issued for the Building or Project, and
shall, upon notice from Landlord, immediately discontinue any use of the
Premises which is declared by any governmental authority having
jurisdiction to
<PAGE>
be a violation of law or the certificate of occupancy. Tenant, at Tenant's
own cost and expense, shall comply with all laws, ordinances, regulations,
rules and/or any directions of any governmental agencies or authorities
having jurisdiction which shall, by reason of the nature of Tenant's use
or occupancy of the Premises, impose any duty upon Tenant or Landlord
with respect to the Premises or its use or occupation. A judgment of any
court of competent jurisdiction or the admission by Tenant in any action
or proceeding against Tenant that Tenant has violated any such laws,
ordinances, regulations, rules and/or directions in the use of the
Premises shall be deemed to be a conclusive determination of that a
fact as between Landlord and Tenant. Tenant shall not do or permit to be
done anything which will invalidate or increase the cost of any fire,
extended coverage or other insurance policy covering the building or
Project and/or property located therein, and shall comply with all rules,
order, regulations, requirements and recommendations of the Insurance
Services Office or any other organization performing a similar function.
Tenant shall promptly upon demand reimburse Landlord for any additional
premium charged for such policy by reason of Tenant's failure to comply
with the provisions of this Article.
Tenant shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Building or Project, or injure or annoy them,
or use or allow the Premises to be used for any improper, immoral, unlawful
or objectionable purpose, nor shall Tenant cause, maintain or permit any
nuisance in, on or about the Premises. Tenant shall not commit or suffer to
be committed any waste in or upon the Premises. Tenant shall not store or
dispose of any hazardous materials at this site except in accordance with
applicable laws and regulations. Toxic/hazardous chemicals such as paint
thinner, etc. will cause damage to the site sewer system which is plastic
piping. Any hazardous materials will need to be disposed of in a method
approved by the Environmental Protection Agency.
9. SERVICES AND UTILITIES.
Tenant agrees and covenants with Landlord to pay promptly all charges for
gas, electrical and telephone services or charges for telephone connection
with Tenant's use of the Premises and to pay such charges promptly upon
demand by provider. Landlord shall maintain and keep lighted the common
stairs, common entries and common restrooms in the Project. Landlord shall
not be in default hereunder or be liable for any damages directly or
indirectly resulting from, nor shall the Rent be abated by reason of (i)
the installation, use or interruption of use of any equipment in connection
with the furnishing of any of the foregoing services, (ii) failure to
furnish or delay in furnishing any such services where such failure or
delay is caused by accident or any condition or event beyond the reasonable
control of Landlord, or by the making of necessary repairs or improvements
to the Premises, Building or Project, or (iii) the limitation, curtailment
or rationing of, or restrictions on, use of water, electricity, gas or any
other form of energy serving the Premises, Building or Project. Landlord
shall not be liable under any circumstances for a loss of or injury to
property or business, however occurring, through or in connection with or
incidental to failure to furnish any such services, Tenant shall not,
without the written consent of Landlord, use any apparatus or device in the
Premises, including without limitation, electronic data processing
machines, punch card machines or
<PAGE>
machines using in excess of 120 volts, which consumes more electricity
than is usually furnished or supplied for the use of premises as general
office space, as determined by Landlord. Tenant shall not connect any
apparatus with electric current except through existing electrical
outlets in the Premises. Tenant shall not consume water or electric
current in excess of that usually furnished or supplied for the use of
premises as general office space (as determined by Landlord), without
first procuring the written consent of Landlord, which Landlord shall
not unreasonably withhold, and in the event of consent, Landlord may
have installed a water meter or electrical current meter in the Premises
to measure the amount of water or electric current consumed. The cost of
any such meter and of its installation, maintenance and repair shall be
paid for by the Tenant and Tenant agrees to pay to Landlord promptly
upon demand for all such water and electric current consumed as shown by
said meters, at the rates charged for such services by the local public
utility plus any additional expense incurred in keeping account of the
water and electric current so consumed. If a separate meter is not
installed, the excess cost for such water and electric current shall be
established by an estimate made by a utility company or electrical
engineer hired by Landlord at Tenant's expense. Notwithstanding the
above, Landlord will arrange for separately metering the Premises to
accommodate Tenant's electrical requirements in accordance with the
mutually agreed upon electrical plan. The cost of the submetering will
be at the Landlord's expense.
Nothing contained in this Article shall restrict Landlord's right to
require at any time separate metering of utilities furnished to the
Premises. In the event utilities are separately metered, Tenant shall pay
promptly upon demand for all utilities consumed at utility rates charged by
the local public utility plu~ any additional expense incurred by Landlord
in keeping account of the utilities so consumed. Tenant shall be
responsible for the maintenance and repair of any such meters at its sole
cost.
Landlord shall furnish, lighting replacement for common area lights,
restroom supplies in common area restrooms, and window washing services in
a manner that such services are customarily furnished to comparable office
buildings in the area.
10. CONDITION OF THE PREMISES.
Tenant's taking possession of the Premises shall be deemed conclusive
evidence that as of the date of taking possession the Premises are in good
order and satisfactory condition, except for such matters as to which
Tenant gave Landlord notice on or before the Commencement Date. No promise
of Landlord to alter, remodel, repair or improve the Premises, the Building
or the Project and no representation, express or implied, respecting any
matter or thing relating to the Premises, Building, Project or this Lease
(including, without limitation, the condition of the Premises, the Building
or the Project) have been made to Tenant by Landlord or its Broker or Sales
Agent, other than as may be contained herein or in a separate exhibit or
addendum signed by Landlord and Tenant.
11. CONSTRUCTION, REPAIRS AND MAINTENANCE.
a. Landlord's Obligations. Landlord shall perform Landlord's Work to the
Premises as shown on Exhibit"A" and using materials as described in Exhibit
"C." Landlord shall
<PAGE>
maintain in good order, condition and repair the Building and all
other portions of the Premises not the obligation of Tenant or of any
other tenant in the Building.
b. Tenant's Obligations.
(1) Tenant shall perform Tenant's Work to the Premises as described in
Exhibit "C."
(2) Tenant at Tenant's sole expense shall, except for services furnished
by Landlord pursuant to Article 9 hereof, maintain the Premises in good
order, condition and repair, including the interior surfaces of the
ceilings, walls and floors, all doors, all interior windows, all plumbing,
pipes and fixtures, electrical wiring, switches and fixtures, Building
Standard furnishings and special items and equipment installed by or at the
expense of Tenant.
(3) Tenant shall be responsible for all repairs and alterations in and to
the Premises, Building and Project and the facilities and systems thereof,
the need for which arises out of (i) Tenant's use or occupancy of the
Premises, (ii) the installation, removal, use or operation of Tenant's
Property (as defined in Article 13) in the Premises, (iii) the moving of
Tenant's Property into or out of the Building, or (iv) the act, omission,
misuse or negligence of Tenant, its agents, contractors, employees or
invites.
(4) If Tenant fails to maintain the Premises in good order, condition and
repair, Landlord shall give Tenant notice to do such acts as are reasonably
required to so maintain the Premises. If Tenant fails to promptly commence
such work and diligently prosecute it to completion, then Landlord shall
have the right to do such acts and expend such funds at the expense of
Tenant as are reasonably required to perform such work. Any amount so
expended by Landlord shall be paid by Tenant promptly after demand with
interest at the prime commercial rate then being charged by Bank of America
NT & SA plus two percent (2%) per annum, from the date of such work, but
not to exceed the maximum rate then allowed by law. Landlord shall have no
liability to Tenant for any damage, inconvenience, or interference with the
use of the Premises by Tenant as a result of performing any such work.
c. Compliance with Law. Landlord and Tenant shall each do all acts
required to comply with all applicable laws, ordinances, and rules of any
public authority relating to their respective maintenance obligations as
set forth herein.
d. Load and Equipment Limits. Tenant shall not place a load upon any
floor of the Premises which exceeds the load per square foot which such
floor was designed to carry, as determined by Landlord or Landlord's
structural engineer. The cost of any such determination made by Landlord's
structural engineer shall be paid for by Tenant upon demand. Tenant shall
not install business machines or mechanical equipment which cause noise or
vibration to such a degree as to be objectionable to Landlord or other
Building tenants.
e. Except as otherwise expressly provided in this Lease, Landlord shall
have no
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liability to Tenant nor shall Tenant's obligations under this Lease
be reduced or abated in any manner whatsoever by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord's making any repairs or changes which Landlord is required or
permitted by this Lease or by any other tenant's lease or required by law
to make in or to any portion of the Project, Building or the Premises.
Landlord shall nevertheless use reasonable efforts to minimize any
interference with Tenant's business in the Premises.
f. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part or appurtenance of the Building's mechanical,
electrical, plumbing, HVAC or other systems serving, located in, or passing
through the Premises.
g. Upon the expiration or earlier termination of this Lease, Tenant shall
return the Premises to Landlord clean and in the same condition as on the
date Tenant took possession, except for normal wear and tear. Any damage to
the Premises, including any structural damage, resulting from Tenant's use
or from the removal of Tenant's fixtures, furnishings and equipment
pursuant to Section 13b shall be repaired by Tenant at Tenant's expense.
12. ALTERATIONS AND ADDITIONS.
a. Tenant shall not make any additions, alternations or improvements to
the Premises without obtaining the prior written consent of Landlord.
Landlord's consent may be conditioned on Tenant's removing any such
additions, alterations or improvements upon the expiration of the Term and
restoring the Premises to the same condition as on the date Tenant took
possession. All work with respect to any addition, alteration or
improvement shall be done in a good and workmanlike manner by properly
qualified and licensed personnel approved by Landlord, and such work shall
be diligently prosecuted to completion. Landlord may, at Landlord's option,
require that any such work be performed by Landlord's contractor, in which
case the cost of such work shall be paid for before commencement of the
work. Any improvements will be performed by Landlord's contractor unless
otherwise agreed in writing by Landlord and Tenant at a reasonable profit.
b. Tenant shall pay the costs of any work done on the Premises pursuant
to Section 12a, and shall keep the Premises, Building and Project fee and
clear of liens of any kind. Tenant shall indemnify, defend against and keep
Landlord free and harmless from all liability, loss, damage costs,
attorneys' fees and any other expense incurred on account of claims by any
person performing work or furnishing materials or supplies for Tenant or
any person claiming under Tenant.
Tenant shall keep Tenant's leasehold interest, and any additions or
improvements which are or become the property of Landlord under this Lease,
free and clear of all attachment or judgment liens. Before the actual
commencement of any work for which a claim or lien may be filed, Tenant
shall give Landlord notice of the intended commencement date a sufficient
time before that date to enable Landlord to post notices of non-
responsibility or
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any other notices which Landlord deems necessary for the proper protection
of Landlord's interest in the Premises, Building or the Project, and
Landlord shall have the right to enter the Premises and post such notices
at any reasonable time.
c. Landlord may require, at Landlord's sole option, that Tenant provide
to Landlord, at Tenant's expense, a lien and completion bond in an amount
equal to at least one and one-half (1 1/2) times the total estimated cost
of any additions, alterations or improvements to be made in or to the
Premises, to protect Landlord against any liability for mechanic's and
material men's liens and to insure timely completion of the work. Nothing
contained in this Section 12c shall relieve Tenant of its obligation under
Section 12b to keep the Premises, Building and Project free of all liens.
d. Unless their removal is required by Landlord as provided in Section
12a, all additions, alterations and improvements made to the Premises shall
become the property of Landlord and be surrendered with the Premises upon
the expiration of the Term; provided, however, Tenant's equipment,
machinery and trade fixtures which can be removed without damage to the
Premises shall remain the property of Tenant and may be removed, subject to
the provisions of Section 13b.
13. LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.
a. All fixtures, equipment, improvements and appurtenances attached to or
built into the Premises at the commencement of or during the Term, whether
or not by or at the expense of Tenant ("Leasehold Improvements"), shall be
and remain a part of the Premises, shall be the property of Landlord and
shall not be removed by Tenant, except as expressly provided hl Section
13b.
b. All movable partitions, business and trade fixtures, machinery and
equipment, communications equipment and office equipment located in the
Premises and acquired by or for the account of Tenant, without expense to
Landlord, which can be removed without structural damage to the Building,
and all furniture, furnishings and other articles of moveable personal
property owned by Tenant and located in the Premises (collectively
"Tenant's Property") shall be and shall remain the property of Tenant and
may be removed by Tenant at any time during the Term; provided that if any
of Tenant's Property is removed, Tenant shall promptly repair any damage to
the Premises or to the Building resulting from such removal.
14. RULES AND REGULATIONS.
Landlord reserves the right to establish Rules and Regulations. Tenant
agrees to comply with (and cause its agents, contractors, employees and
invitees to comply with) the rules and regulations attached hereto as
Exhibit "D" and with such reasonable modifications thereof and additions
thereto as Landlord may from time to time make. Landlord shall not be
responsible for any violation of said rules and regulations by other
tenants or occupants of the Building or Project.
15. CERTAIN RIGHTS RESERVED BY LANDLORD.
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Landlord reserves the following rights, exercisable without liability to
Tenant for (a) damage or injury to property, person or business, (b)
causing an actual or constructive eviction from the Premises, or (c)
disturbing Tenant's use or possession of the Premises:
a. To name the Building and Project and to change the name or street
address of the Building or Project;
b. To install and maintain all signs on the exterior and interior of the
Building and Project;
c. To have pass keys to the Premises and all doors within the Premises,
excluding Tenant's vaults, secured areas (sciff rooms) and safes in case of
a fire or flood;
d. At any time during the Term subject to Tenant's security
requirements., and on reasonable prior notice to Tenant, to inspect the
Premises, and to show the Premises to any prospective purchaser or
mortgagee of the Project, or to any assignee of any mortgage on the
Project, or to others having an interest in the Project or Landlord, and
during the last six months of the Term, to show the Premises to prospective
tenants thereof; and
e. To enter the Premises, subject to Tenant's security requirements, for
the purpose of making inspections, repairs, alterations, additions or
improvements to the Premises or the Building (Including, without
limitations, checking, calibrating, adjusting or balancing controls and
other parts of the HVAC system), and to take all steps as may be necessary
or desirable for the safety, protection, maintenance or preservation of the
Premises or the Building or Landlord's interest therein, or as may be
necessary or desirable for the operation or improvement of the Building or
in order to comply with laws, orders or requirements of governmental or
other authority. Landlord agrees to use its best efforts (except in an
emergency) to minimize interference with Tenant's business in the Premises
in the course of any such entry.
16. ASSIGNMENT AND SUBLETTING.
No assignment of this Lease or sublease of all or any part of the Premises
shall be permitted, except as provided in this Article 16.
a. Tenant shall not, without the prior written consent of Landlord which
shall not be unreasonably withheld, assign or hypothecate this Lease or any
interest herein or sublet the Premises or any part thereof, or permit the
use of the Premises by any party other than Tenant. Any of the foregoing
acts without such consent shall be void and shall, at the option of
Landlord, terminate this Lease. This Lease shall not, nor shall any
interest of Tenant herein, be assignable by operation of law without the
written consent of Landlord, whose consent shall not be unreasonably
withheld.
b. If at any time or from time to time during the Term Tenant desires to
assign this Lease or sublet all or any part of the Premises, Tenant shall
give notice to Landlord setting forth the terms and provisions of the
proposed assignment or sublease, and the identity of
<PAGE>
the proposed assignee or subtenant. Tenant shall promptly supply
Landlord with such information concerning the business background and
financial condition of such proposed assignee or subtenant as Landlord
may reasonably request. Landlord shall have the option, exercisable by
notice given to Tenant within ten (10) days after Tenant's notice is
given, either to sublet such space from Tenant at the rental and on the
other terms set forth in this Lease for the term set forth in Tenant's
notice, or, in the case of an assignment, to terminate this Lease. If
Landlord does not exercise such option, Tenant may assign the Lease or
sublet such space to such proposed assignee or subtenant on the
following further conditions:
(1) Landlord shall have the right to approve such proposed assignee or
subtenant, which approval shall not be unreasonably withheld;
(2) The assignment or sublease shall be on the same terms set forth in the
notice given to Landlord;
(3) No assignment or sublease shall be valid and no assignee or sublessee
shall take possession of the Premises until an executed counterpart of such
assignment or sublease has been delivered to Landlord;
(4) No assignee or sublessee shall have a further right to assign or
sublet except on the terms herein contained; and
c. Notwithstanding the provisions of paragraphs a and b above, Tenant may
assign this Lease or sublet the Premises or any portion thereof, without
Landlord's consent and without extending any recapture or termination
option to Landlord, to any entity which controls, is controlled by or is
under common control with Tenant, or to any entity resulting from a merger
or consolidation with Tenant, or to any person or entity which acquires all
the assets of Tenant's business as a going concern, provided that (i) the
assignee or sublessee assumes, in full, the obligations of Tenant under
this Lease, (ii) Tenant remains fully liable under this Lease, and (iii)
the use of the Premises under Article 8 remains unchanged.
d. No subletting or assignment shall release Tenant of Tenant's
obligations under this Lease or alter the primary liability of Tenant to
pay the Rent and to perform all other obligations to be performed by Tenant
hereunder. The acceptance of Rent by Landlord from any other person shall
not be deemed to be a waiver by Landlord of any provision hereof. Consent
to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by an assignee
or subtenant of Tenant or any successor of Tenant in the performance of any
of the terms hereof, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against such assignee, subtenant or
successor. Landlord may consent to subsequent assignments of the Lease or
subletting or amendments or modifications to the Lease with assignees of
Tenant, without notifying Tenant, or any successor of Tenant, and without
obtaining its or their consent thereto only in the event that Tenant is
unavailable to
<PAGE>
gain consent within ten (10) days of written request by Landlord. Any such
actions shall not relieve Tenant of liability under this Lease.
e. If Tenant assigns the Lease or sublets the Premises or requests the
consent of Landlord to any assignment or subletting or if Tenant requests
the consent of Landlord for any act that Tenant proposes to do, then Tenant
shall, upon demand, pay Landlord an administrative fee of One Hundred Fifty
and No/100ths Dollars ($150.00) plus any attorney's fees not to exceed five
hundred dollars ($500.00) reasonably incurred by Landlord in connection
with such act or request.
17. HOLDING OVER.
If after expiration of the Term, Tenant remains in possession of the
Premises with Landlord's permission (express or implied), Tenant shall
become a tenant from month to month only, upon all the provisions of this
Lease (except as to term and Base Rent), but the "Monthly Installments of
Base Rent" payable by Tenant shall be increased to one hundred twenty-five
percent (125%) of the Monthly Installments of Base Rent payable by Tenant
at the expiration of the Term.
Such monthly rent shall be payable in advance on or before the first day of
each month. If either party desires to terminate such month to month
tenancy, it shall give the other party not less than thirty (30) days
advance written notice of the date of termination.
18. SURRENDER OF PREMISES.
a. Tenant shall peaceably surrender the Premises to Landlord on the
Expiration Date, in broom-clean condition and in as good condition as when
Tenant took possession, except for (i) reasonable war and tear, (ii) loss
by fire or other casualty, and (iii) loss by condemnation. Tenant shall, on
Landlord's request, remove Tenant's Property on or before the Expiration
Date and promptly repair all damage to the Premises or Building caused by
such removal.
b. If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any of Tenant's Property left on the Premises
shall be deemed to be abandoned, and, at Landlord's option, title shall
pass to Landlord under this Lease as by a bill of sale. If Landlord elects
to remove all or any part of such Tenant's Property, the cost of removal,
including repairing any damage to the Premises or Building caused by such
removal, shall be paid by Tenant. On the Expiration Date Tenant shall
surrender all keys to the Premises.
19. DESTRUCTION OR DAMAGE.
a. If the Premises or the portion of the Building necessary for Tenant's
occupancy is damaged by fire, earthquake, act of God, the elements of other
casualty, Landlord shall, subject to the provisions of this Article,
promptly repair the damage, if such repairs can, in Landlord's opinion, be
completed within (90) ninety days. If Landlord determines that repairs can
be completed within ninety (90) days, this Lease shall remain in full force
and effect, except that if such damage is not the result of the negligence
or willful misconduct
<PAGE>
of Tenant or Tenant's agents, employees, contractors, licensees or
invitees, the Base Rent shall be abated to the extent Tenant's use of
the Premises is impaired, commencing with the date of damage and
continuing until completion of the repairs required of Landlord under
Section 19d.
b. If in Landlord's opinion, such repairs to the Premises or portion of
the Building necessary for Tenant's occupancy cannot be completed within
ninety (90) days, Landlord and Tenant may elect, upon notice given within
thirty (30) days after the date of such fire or other casualty, to repair
such damage, in which event this Lease shall continue in full force and
effect, but the Base Rent shall be partially abated as provided in Section
19a. If Landlord and Tenant do not allow Landlord to make such repairs,
this Lease shall terminate as of the date of such fire or other casualty.
c. If any other portion of the Building or Project that materially
affects Tenant's business is totally destroyed or damaged to the extent
that in Landlord's opinion repair thereof cannot be completed within ninety
(90) days, Landlord may elect upon notice to Tenant given within thirty
(30) days after the date of such fire or other casualty, to repair such
damage, in which event this Lease shall continue in full force and effect,
but the Base Rent shall be partially abated as provided in Section 19a. If
Landlord does not elect to make such repairs, this Lease shall terminate as
of the date of such fire or other casualty.
d. If the Premises are to be repaired under this Article, Landlord shall
repair at its cost any injury or damage to the Building and Building
Standard Work in the Premises. Tenant shall be responsible at its sole cost
and expense for the repair, restoration and replacement of any other
Leasehold Improvements and Tenant's Property. Landlord shall not be liable
for any loss of business, inconvenience or annoyance arising from any
repair or restoration of any portion of the Premises, Building or Project
as a result of any damage from fire or other casualty.
e. This Lease shall be considered an express agreement governing any case
of damage to or destruction of the Premises, Building or Project by fire or
other casualty, and any present or future law which purports to govern the
rights of Landlord and Tenant in such circumstances in the absence of
express agreement, shall have no application.
20. EMINENT DOMAIN.
a. If the whole of the Building or Premises is lawfully taken by
condemnation or in any other manner for any public or quasi-public purpose,
this Lease shall terminate as of the date of such taking, and Rent shall be
prorated to such date. If less than the whole of the Building or Premises
is so taker), this Lease shall be unaffected by such taking, provided that
(i) Tenant shall have the right to terminate this Lease by notice to
Landlord given within ninety (90) days after the date of such taking if
twenty percent (20%) or more of the Premises is taken and the remaining
area of the Premises is not reasonably sufficient for Tenant to continue
operation of its business, and (ii) Landlord shall have the right to
terminate this Lease by notice to Tenant given within ninety (90) days
after the date of such taking. If either Landlord or Tenant so elects to
terminate this Lease, the
<PAGE>
Lease shall terminate on the thirtieth (30th) day after either such
notice. The Rent shall be prorated to the date of termination. If this
Lease continues in force upon such partial taking, the Base Rent and
Tenant's Proportionate Share shall be equitably adjusted according to
the remaining Rentable Area of the Premises and Project.
b. In the event of any taking, partial or whole, all of the proceeds of
any award, judgment or settlement payable by the condemning authority shall
be the exclusive property of Landlord, and Tenant hereby assigns to
Landlord all of its right, title and interest in any award, judgment or
settlement from the condemning authority. Tenant, however, shall have the
right, to the extent that Landlord's award is not reduced or prejudiced, to
claim from the condemning authority (but not from Landlord) such
compensation as may be recoverable by Tenant in its own right for
relocation expenses and damage to Tenant's personal property.
c. In the event of a partial taking of the Premises which does not result
in a termination of this Lease, Landlord shall restore the remaining
portion of the Premises as nearly as practicable to its condition prior to
the condemnation or taking, but only to the extent of Building Standard
Work as set forth in Exhibits "A" and "C" attached hereto. Tenant shall be
responsible at its sole cost and expense for the repair, restoration and
replacement of Tenant's Property.
21. INDEMNIFICATION.
a. Tenant shall indemnify and hold Landlord harmless against and from
liability and claims of any kind for loss or damage to property of Tenant
or any other person, or for any injury to or death of any person, arising
out of: (1) Tenant's use and occupancy of the Premises, or any work,
activity or other things allowed or suffered by Tenant to be done in, on or
about the Premises; (2) any breach or default by Tenant of any of Tenant's
obligations under this Lease; or (3) any negligent or otherwise tortious
act or omission of Tenant, its agents, employees, invitees or contractors.
Tenant shall at Tenant's expense, and by counsel satisfactory to Landlord,
defend Landlord in any action or proceeding arising from any such claim and
shall indemnify Landlord against all costs, attorneys' fees, expert witness
fees and any other expenses incurred in such action or proceeding. As a
material part of the consideration for Landlord's execution of this Lease,
Tenant hereby assumes all risk of damage or injury to any person or
property, on or about the Premises from any cause, other than the
negligence or intentional acts or omissions of Landlord, its agents,
servants or representatives.
b. Landlord shall not be liable for injury or damage which may be
sustained by the person or property of Tenant, unless due to the negligence
or intentional acts or omissions of Landlord, its employees, invitees or
customers, or any other person in or about the Premises, caused by or
resulting from fire, steam, electricity, gas, water or rain which may leak
or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of pipes, sprinklers, wire,
appliances, plumbing, air conditioning or lighting fixtures, whether such
damage or injury results from conditions arising upon the Premises or upon
other portions of the Building or Project or from other
<PAGE>
sources. Landlord shall not be liable for any damages arising from any
act or omission of any other tenant of the Building or Project.
22. TENANT'S INSURANCE.
a. All insurance required to be carried by Tenant hereunder shall be
issued by responsible insurance companies acceptable to Landlord and
Landlord's lender and qualified to do business in the State. Each policy
shall name Landlord, and at Landlord's request any mortgagee of Landlord,
as an additional insured, as their respective interests may appear. Each
policy shall contain (i) a cross-liability endorsement, (ii) a provision
that such policy and the coverage evidences thereby shall be primary and
non-contributing with respect to any policies carried by Landlord and that
any coverage carried by Landlord shall be excess insurance, and (iii) a
waiver by the insurer of any right of subrogation against Landlord, its
agents, employees and representatives, which arises or might arise by
reason of any payment under such policy or by reason of any act or omission
of Landlord, its agents, employees or representatives. A copy of each paid
up policy (authenticated by the insurer) or certificate of the insurer
evidencing the existence and amount of each insurance policy required
hereunder shall be delivered to Landlord before the date Tenant is first
given the right of possession of the Premises, and thereafter within thirty
(30) days after any demand by Landlord therefor. Landlord may, at any time
and from time to time, inspect and/or copy any insurance policies required
to be maintained by Tenant hereunder. No such policy shall be cancelable
except after twenty (20) days written notice to Landlord and Landlord's
lender. Tenant shall furnish Landlord with renewals or "binders" of any
such policy at least ten (10) days prior to the expiration thereof. Tenant
agrees that if Tenant does not take out an maintain such insurance,
Landlord may (but shall not be required to) procure said insurance on
Tenant's behalf and charge the Tenant the premiums together with up to a
twenty-five percent (25%) handling charge, payable upon demand. Tenant
shall have the right to provide such insurance coverage pursuant to blanket
policies obtained by the Tenant, provided such blanket policies expressly
afford coverage to the Premises, Landlord, Landlord's mortgagee and Tenant
as required by this Lease.
b. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall procure,
pay for and maintain in effect policies of casualty insurance covering (i)
all Leasehold Improvements (including any alterations, additions or
improvements as may be made by Tenant pursuant to the provisions of Article
12 hereof), and (ii) trade fixtures, merchandise and other personal
property from time to time in, on or about the Premises, in an amount not
less than one hundred percent (100%) of their actual replacement cost from
time to time, providing protection against any peril included within the
classification "Fire and Extended Coverage" together with insurance against
sprinkler damage, vandalism and malicious mischief. The proceeds of such
insurance shall be used for the repair or replacement of the property so
insured. Upon termination of this Lease following a casualty as set forth
herein, the proceeds under (i) shall be paid to Landlord, and the proceeds
under (ii) above shall be paid to Tenant.
<PAGE>
c. Beginning on the date Tenant is given access to the Premises for any
purpose and continuing until expiration of the Term, Tenant shall procure,
pay for and maintain in effect workers' compensation insurance as required
by law and comprehensive public liability and property damage insurance
with respect to the construction of improvements on the Premises, the use,
operation or condition of the Premises and the operations of Tenant in, on
or about the Premises, providing personal injury and broad form property
damage coverage for not less than One Million Dollars ($ 1,000,000.00)
combined single limit for bodily injury, death and property damage
liability.
d. Not less than every three (3) years during the Term, Landlord and
Tenant shall mutually agree to increases in all of Tenant's insurance
policy limits for all insurance to be carried by Tenant as set forth in
this Article. In the event Landlord and Tenant cannot mutually agree upon
the amounts of said increases, then Tenant agrees that all insurance policy
limits as set forth in this Article shall be adjusted for increases in the
cost of living in accordance with the changes in the Index cited in Section
2.h hereof.
23. WAIVER OF SUBROGATION.
Landlord and Tenant each hereby waive all rights of recovery against the
other and against the officers, employees, agents and representatives of
the other, on account of loss by or damage to the waiving party of its
property or the property of others under its control, to the extent that
such loss or damage is insured against under any fire and extended coverage
insurance policy which either may have in force at the time of the loss or
damage. Tenant shall, upon obtaining the policies of insurance required
under this Lease, give notice to its insurance carrier or carriers that the
foregoing mutual waiver of subrogation is contained in this Lease.
24. SUBORDINATION AND ATTORNMENT.
Upon written request of Landlord, or any first mortgagee or first deed of
trust beneficiary of Landlord, Tenant shall, in writing, subordinate its
rights under this Lease to the lien of any first mortgage or first deed of
trust, and to all advances made or hereafter to be made thereunder.
However, before signing any subordination agreement, Tenant shall have the
right to obtain from any lender or Landlord requesting such subordination,
an agreement in writing providing that, as long as Tenant is not in default
hereunder, this
Lease shall remain in effect for the full Term. The holder of any security
interest may, upon written notice to Tenant, elect to have this Lease prior
to its security interest regardless of the time of the granting or
recording of such security interest.
In the event of any foreclosure sale, transfer in lieu of foreclosure
Tenant shall attorn to the purchaser or transferee as the case may be, and
recognize that party as Landlord under this Lease, provided such party
acquires and accepts the Premises subject to this Lease.
25. TENANT ESTOPPEL CERTIFICATES.
Within ten (10) days after written request from Landlord, Tenant shall
execute and deliver to Landlord or Landlord's designee, a written statement
certifying (a) that this Lease is
<PAGE>
unmodified and in full force and effect, or is in full force and effect
as modified and stating the modifications; (b) the amount of Base Rent
and the date to which Base Rent and additional rent have been paid in
advance; (c) the amount of any security deposited with Landlord; and (d)
that Landlord is not in default hereunder or, if Landlord is claimed to
be in default, stating the nature of any claimed default. Any such
statement may be relied upon by a purchaser, assignee or lender.
Tenant's failure to execute and deliver such statement within the time
required shall at Landlord's election be a default under this Lease and
shall also be conclusive upon Tenant that: (I) this Lease is in full
force and effect and has not been modified except as represented by
Landlord; (2) there are no uncured defaults in Landlord's performance
and that Tenant has no right of offset, counter-claim or deduction
against Rent; and (3) not more than one month's Rent has been paid in
advance.
26. TRANSFER OF LANDLORD'S INTEREST.
In the event of any sale or transfer by Landlord of the Premises, Building
or Project, and assignment of this Lease by Landlord, Landlord shall be and
is hereby entirely freed and relieved of any and all liability and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Premises, Building, Project or Lease
occurring after the consummation of such sale or transfer, providing the
purchaser shall expressly assume all of the covenants and obligations of
Landlord under this Lease. If any security deposit or prepaid Rent has
been paid by Tenant, Landlord may transfer the security deposit or prepaid
Rent to Landlord's successor and upon such transfer, Landlord shall be
relieved of any and all further liability with respect thereto.
27. DEFAULT.
27.1 Tenant's Default. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant
a. If Tenant abandons or vacates the Premises; or
b. If Tenant fails to pay any Rent or any other charges required to be
paid by Tenant under this Lease and such failure continues for five (5)
days after written notice thereof from Landlord to Tenant that such payment
is due and payable; or
c. If Tenant fails to promptly and fully perform any other covenant,
condition or agreement contained in this Lease and such failure continues
for thirty (30) days after written notice thereof from Landlord to Tenant
without Tenant commencing action to cure such default within ten (10) days
after receipt of Landlord's notice; or
d. If a writ of attachment or execution is levied on this Lease or on
any of Tenant's Property; or
e. If Tenant makes a general assignment for the benefit of creditors, or
provides for an arrangement, composition, extension or adjustment with its
creditors; or
f. If Tenant files a voluntary petition for relief or if a petition
against Tenant in a
<PAGE>
proceeding under the federal bankruptcy laws or other insolvency laws is
filed and not withdrawn or dismissed within forty-five (45) days
thereafter, of if under the provisions of any law providing for
reorganization or winding up of corporations, any court of competent
jurisdiction assumes jurisdiction, custody or control of Tenant or any
substantial part of its property and such jurisdiction, custody or
control remains in force unrelinquished, unstayed or unterminated for a
period of forty-five (45) days; or
g. If in any proceeding or action in which Tenant is a party, a trustee,
receiver, agent or custodian is appointed to take charge of the Premises or
Tenant's Property (or has the authority to do so) for the purpose of
enforcing a lien against the Premises or Tenant's Property; or
h. If Tenant is a partnership or consists of more than one () person or
entity, if any partner of the partnership or other person or entity is
involved in any of the acts or events described in subparagraphs d through
g above.
27.2. Remedies. In the event of Tenant's default hereunder, then in
addition to any other rights or remedies Landlord may have under any law,
Landlord shall have the right, at Landlord's option, without further
notice or demand of any kind to do the following:
a. Terminate this Lease and Tenant's right to possession of the Premises
and reenter the Premises and take possession thereof, and Tenant shall have
no further claim to the Premises or under this Lease; or
b. Continue this Lease in effect, reenter and occupy the Premises for
the account of Tenant, and collect any unpaid Rent or other charges which
have or thereafter become due and payable; or
c. Reenter the Premises under the provisions of subparagraph b, and
thereafter elect to terminate this Lease and Tenant's right to possession
of the Premises.
If Landlord reenters the Premises under the provisions of subparagraphs b
or c above, Landlord shall not be deemed to have terminated this Lease or
the obligation of Tenant to pay any Rent or other charges thereafter
accruing, unless Landlord notifies Tenant in writing of Landlord's election
to terminate this Lease. In the event of any reentry or retaking of
possession by Landlord, Landlord shall have the right, but not the
obligation, to remove all or any part of Tenant's Property in the Premises
and to place such property in storage at a public warehouse at the expense
and risk of Tenant. If Landlord elects to relet the Premises for the
account of Tenant, the rent received by Landlord from such reletting shall
be applied as follows: first, to the payment of any indebtedness other than
Rent due hereunder from Tenant to Landlord; second, to the payment of any
costs of such reletting; third, to the payment of the cost of any
alterations or repairs to the Premises; fourth to the payment of Rent due
and unpaid hereunder; and the balance, if any, shall be held by Landlord
and applied in payment of future Rent as it becomes due. If that portion of
rent received from the reletting which is applied against the Rent due
hereunder is less
<PAGE>
than the amount of the Rent due, Tenant shall pay the deficiency to
Landlord promptly upon demand by Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord, as soon
as determined, any costs and expenses incurred by Landlord in connection
with such reletting or in making alterations and repairs to the
Premises, which are not covered by the rent received from the reletting.
Should Landlord elect to terminate this Lease under the provisions of
subparagraph a or c above, Landlord may recover as damages from Tenant the
following:
1. Past Rent. The worth at the time of the award of any unpaid Rent
which had been earned at the time of termination; plus
2. Rent Prior to Award. The worth at the time of the award of the amount
by which the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided; plus
3. Rent After Award. The worth at the time of the award of the amount by
which the unpaid Rent for the balance of the Term after the time of
award exceeds the rental value of the premises for the balance of the
Lease; plus
4. Proximately Caused Damages. Any other amount necessary to compensate
Landlord for all detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including, but
not limited to, any costs or expenses (including attorneys' fees),
incurred by Landlord in (a) retaking possession of the Premises, (b)
maintaining the Premises after Tenant's default, (c) preparing the
Premises for reletting to a new tenant, including any repairs or
alterations, and (d) reletting the Premises, including broker's
commissions.
"The worth at the time of the award" as used in subparagraphs 1 and 2
above, is to be computed by allowing interest at the rate of ten
percent (10%) per annum. "The worth at the time of the award" as used
in subparagraph 3 above, is to be computed by discounting the amount
at the discount rate of the Federal Reserve Bank situated nearest to
the Premises at the time of the award plus one percent (1%).
The waiver by Landlord of any breach of any term, covenant or
condition of this Lease shall not be deemed a waiver of such term,
covenant or condition or of any subsequent breach of the same or any
other term, covenant or condition. Acceptance of Rent by Landlord
subsequent to any breach hereof shall not be deemed a waiver of any
preceding breach other than the failure to pay the particular Rent so
accepted, regardless of Landlord's knowledge of any breach at the
time of such acceptance of Rent. Landlord shall not be deemed to have
waived any term, covenant or condition unless Landlord gives Tenant
written notice of
<PAGE>
such waiver.
27.3 Landlord's Default. If Landlord fails to perform any covenant,
condition or agreement contained in this Lease within thirty (30) days
after receipt of written notice from Tenant specifying such default, or if
such default cannot reasonably be cured within thirty (30) days, if
Landlord fails to commence to cure within the first ten days of that thirty
(30) day period, then Landlord shall be liable to Tenant for any damages
sustained by Tenant as a result of Landlord's breach; provided, however, it
is expressly understood and agreed that if Tenant obtains a money judgment
against Landlord resulting from any default or other claim arising under
this Lease, that judgment shall be satisfied only out of the rents, uses,
profits, and other income actually received on account of Landlord's right,
title and interest in the Premises, Building or Project, and no other real,
personal or mixed property of Landlord (or of any of the partners which
comprise Landlord, if any) wherever situated, shall be subject to levy to
satisfy such judgment. If, after notice to Landlord of default, Landlord
(or any first mortgagee or first deed of trust beneficiary of Landlord)
fails to cure the default as provided herein, then Tenant shall have the
right to cure that default at Landlord's expense.
Tenant shall not have the right to terminate this Lease or to withhold,
reduce or offset any amount against any payments of Rent or any other
charges due and payable under this Lease except as otherwise specifically
provided herein.
28. BROKERAGE FEES.
Tenant warrants and represents that it has not dealt with any real estate
broker or agent in connection with this Lease or its negotiation except
those noted in ~section 2.c. Tenant shall indemnify and hold Landlord
harmless from any cost, expense or liability (including costs of suit and
reasonable attorneys' fees) for any compensation, commission or tees
claimed by any other real estate broker or agent in connection with this
Lease or its negotiation by reason of any act of Tenant.
29. NOTICES.
All notices, approvals and demands permitted or required to be given under
this Lease shall be in writing and deemed duly served or given if
personally delivered or sent by certified or registered U.S. mail, postage
prepaid, and addressed as follows: (a) if to Landlord, to Landlord's
Mailing Address and to the Building manager, and (b) if to Tenant, to
Tenant's Mailing Address; provided, however, notices to Tenant shall be
deemed duly served or given if delivered or mailed to Tenant at the
Premises so long as Tenant is in possession. Landlord and Tenant may from
time to time by notice to the other designate another place for receipt of
future notices.
30. GOVERNMENT ENERGY OR UTILITY CONTROLS.
In the event of imposition of federal, state or local government controls,
rules, regulations, or restrictions on the use or consumption of energy or
other utilities during the Term, both Landlord and Tenant shall be bound
thereby. In the event of a difference in interpretation by Landlord and
Tenant of any such controls, the interpretation of Landlord shall prevail,
<PAGE>
and Landlord shall have the right to enforce compliance therewith,
including the right of entry into the Premises to effect compliance.
31. RELOCATION OF PREMISES.
Landlord shall have the right to relocate the Premises to another part of
the Building in accordance with the following:
a. The new premises shall be substantially the same in size, dimensions,
configuration, decor and nature as the Premises described in this Lease,
and if the relocation occurs after the Commencement Date, shall be placed
in that condition by Landlord at its cost.
b. Landlord shall give Tenant at least thirty (30) days written notice
of Landlord's intention to relocate the Premises. Landlord may not relocate
tenant during the period from January 15th through April 30th of each year
due to the tax season and the interruption of Tenant's business during that
critical time of year.
c. As nearly as practicable, the physical relocation of the Premises
shall take place on a weekend and shall be completed before the following
Monday. If the physical relocation has not been completed in that time,
Base Rent shall abate in full from the time the physical relocation
commences to the time it is completed. Upon completion of such relocation,
the new premises shall become the "Premises" under this Lease.
d. All reasonable costs incurred by Tenant as a result of the relocation
shall be paid by Landlord. These costs would include moving of furniture,
equipment, phones, and other communications equipment, replacing inventory
of letterhead and other office supplies and other miscellaneous costs
associated with the relocation.
e. If the new premises are smaller than the Premises as it existed
before the relocation, Base Rent shall be reduced proportionately.
f. The parties hereto shall immediately execute an amendment to this
Lease setting forth the relocation of the Premises and the reduction of
Base Rent, if any.
g. In the event that the proposed relocated premises are not
substantially the same as the Premises, the tenant may terminate the Lease
contract.
32. QUIET ENJOYMENT.
Tenant, upon paying the Rent and performing all of its obligations under
this Lease, shall peaceably and quietly enjoy the Premises, subject to the
terms of this Lease and to any mortgage, lease, or other agreement to which
this Lease may be subordinate.
33. OBSERVANCE OF LAW.
Tenant shall not use the Premises or permit anything to be done in or about
the Premises which may hereafter be enacted or promulgated. Tenant shall,
at its sole cost and expense, promptly comply with all laws, statutes,
ordinances and governmental rules, regulations or
<PAGE>
requirements now in force or which may hereafter be in force, and with
the requirements of any board of fire insurance underwriters or other
similar bodies now or hereafter constituted, relating to, or affecting
the condition, use or occupancy of the Premises, excluding structural
changes not related to or affected by Tenant's improvements or acts. The
judgment of any court of competent jurisdiction or the admission of
Tenant in any action against Tenant, whether Landlord is a party thereto
or not, that Tenant has violated any law, ordinance or governmental
rule, regulation or requirement, shall be conclusive of that fact as
between Landlord and Tenant.
34. FORCE MAJEURE.
Any prevention, delay or stoppage of work to be performed by Landlord or
Tenant which is due to strikes, labor disputes, inability to obtain labor,
materials, equipment or reasonable substitutes therefor, acts of God,
governmental restrictions or regulations or controls, judicial orders,
enemy or hostile government actions, civil commotion, fire or other
casualty, or other causes beyond the reasonable control of the party
obligated to perform hereunder, shall excuse performance of the work by
that party for a period equal to the duration of that prevention, delay or
stoppage. Nothing in this Article 34 shall excuse or delay Tenant's
obligation to pay Rent or other charges under this Lease.
35. CURING TENANT'S DEFAULTS.
If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same for the account at the expense of Tenant. Tenant
shall pay Landlord all costs of such performance promptly upon receipt of a
bill therefor.
36. SIGN CONTROL.
Tenant shall not affix, paint, erect or inscribe any sign, projection,
awning, signal or advertisement of any kind to any part of the Premises,
Building or Project, including without limitation, the inside or outside of
windows or doors, without the written consent of Landlord. Landlord shall
have the right to remove any signs or other matter, installed without
Landlord's permission, without being liable to Tenant by reason of such
removal, and to charge the cost of removal to Tenant as additional rent
hereunder, payable within ten (10) days of written demand by Landlord.
Interior building signage and directory signage will be installed by
Landlord in accordance with Landlord's sign regulations at Landlord's
expense. Interior building signage and exterior directory signs will be
installed at Landlord's expenses and in accordance with Landlord's sign
regulations.
37. MISCELLANEOUS.
a. Accord and Satisfaction; Allocation of Payments. No payment by Tenant
or receipt by Landlord of a lesser amount than the Rent provided for in
this Lease shall be deemed to be other than on account of the earliest due
Rent, nor shall any endorsement or statement on any check or letter
accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of the Rent or pursue
any other remedy provided for in this Lease. In connection with the
foregoing, Landlord shall have the absolute right
<PAGE>
in its sole discretion to apply any payment received from Tenant to any
account or other payment of Tenant then not current and due or
delinquent.
b. Addenda. If any provision contained in an addendum to this Lease is
inconsistent with any other provision herein, the provision contained in
the addendum shall control, unless otherwise provided in the addendum.
c. Attorneys' Fees. If any action or proceeding is brought by either
party against the other pertaining to or arising out of this Lease, the
finally prevailing party shall be entitled to recover all costs and
expenses, including reasonable attorneys' fees, incurred on account of such
action or proceeding.
d. Captions, Articles and Section Number. The captions appearing within
the body of this Lease have been inserted as a matter of convenience and
for reference only and in no way define, limit or enlarge the scope or
meaning of this Lease. All references to article and Section numbers refer
to Articles and Sections in this Lease.
e. Changes Requested by Lender. Neither Landlord or Tenant shall
unreasonably withhold its consent to changes or amendments to this Lease
required by the lender on Landlord's interest, so long as these changes do
not alter the basic business terms of this Lease or otherwise materially
diminish any rights or materially increase any obligations of the party
from whom consent to such charge or amendment is requested.
f. Choice of Law. This Lease shall be construed and enforced in
accordance with the laws of the State of New Mexico.
g. Consent. Notwithstanding anything contained in this Lease to the
contrary, Tenant shall have no claim, and hereby waives the right to any
claim against Landlord for money damages by reason of any refusal,
withholding or delaying by Landlord of any consent, approval or statement
of satisfaction, and in such event, Tenant's only remedies therefor shall
be an action for specific performance, injunction or declaratory judgment
to enforce any right to such consent, etc.
h. Corporate Authority. If Tenant is a corporation, each individual
signing this Lease on behalf of Tenant represents and warrants that he is
duly authorized to execute and deliver this Lease on behalf of the
corporation, and that this Lease is binding on Tenant in accordance with
its terms. Tenant shall, at Landlord's request, deliver a certified copy of
a resolution of its board of directors authorizing such execution.
i. Counterparts. This Lease may be executed in multiple counterparts,
all of which shall constitute one and the same Lease.
j. Execution of Lease; No Option. The submission of this Lease to Tenant
shall be for examination purposes only, and does not and shall not
constitute a reservation of or option for Tenant to lease, or otherwise
create any interest of Tenant in the Premises or
<PAGE>
any other premises within the Building or Project. Execution of this
Lease by Tenant and its return to Landlord shall not be binding on
Landlord notwithstanding any time interval, until Landlord has in fact
signed and delivered this Lease to Tenant.
k. Furnishing of Financial Statements; Tenant's Representations. In
order to induce Landlord to enter into this Lease Tenant agrees that it
shall furnish Landlord prior to Landlord's execution of the Lease, with
financial statements reflecting Tenant's current financial condition.
Tenant represents and warrants that all financial statements, records and
information furnished by Tenant to Landlord in connection with this Lease
are true, correct and complete in all respects. Tenant shall furnish
financial statements to Landlord upon Landlord's request in connection with
an expansion or other material changes in the status of the Lease.
Notwithstanding the provisions above, Tenant's furnishing of financial
statements does not obligate Tenant to enter into a lease with Landlord.
1. Further Assurances. The parties agree to promptly sign all documents
reasonably requested to give effect to the provisions of this Lease.
m. Mortgagee Protection. Tenant agrees to send by certified or
registered mail to any first mortgagee or first deed of trust beneficiary
of Landlord whose address has been furnished to Tenant, a copy of any
notice of default served by Tenant on Landlord. If Landlord fails to cure
such default within the time provided for in this Lease, such mortgagee or
beneficiary shall have an additional thirty (30) days to cure such default;
provided that if such default cannot reasonably be cured within that thirty
(30) day period, then such mortgagee or beneficiary shall have such
additional time to cure the default as is reasonably necessary under the
circumstances.
n. Prior Agreements; Amendments. This Lease contains all of the
agreements of the parties with respect to any matter covered or mentioned
in this Lease, and no prior agreement or understanding pertaining to any
such matter shall be effective for any purpose. No provisions of this Lease
may be amended or added to except by an agreement in writing signed by the
parties or their respective successors in interest.
o. Recording. Tenant shall not record this Lease without the prior
written consent of Landlord. Tenant upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for
recording purposes.
p. Severability. A final determination by a court of competent
jurisdiction that any provision of this Lease is invalid shall not affect
the validity of any other provision, and any provision so determined to be
invalid shall, to the extent possible, be construed to accomplish its
intended effect.
q. Successors and Assigns. This Lease shall apply to and bind the heirs,
personal representatives, and permitted successors and assigns of the
parties.
r. Time of the Essence. Time is of the essence of this Lease.
<PAGE>
s. Waiver. No delay or omission in the exercise of any right or remedy
of Landlord upon any default by Tenant shall impair such right or remedy or
be construed as a waiver of such default.
The receipt and acceptance by Landlord of delinquent Rent shall not
constitute a waiver of any other default; it shall constitute only a waiver
of timely payment for the particular Rent payment involved.
No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises, shall constitute an acceptance of the
surrender of the Premises by Tenant before the expiration of the Term. Only
a written notice from Landlord to Tenant shall constitute acceptance of the
surrender of the Premises and accomplish a termination of the Lease.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to waive or render unnecessary
Landlord's consent to or approval of any subsequent act by Tenant.
Any waiver by Landlord of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision of
the Lease.
The parties hereto have executed this Lease as of the dates set forth below.
Date: 8-9-99 Date: 8-5-99
Landlord: Pebbles. Ltd. Tenant: New Mexico Software
By: /s/ Tony Pisto By: Richard F. Govatski
Title: co-manager Title: CEO
<PAGE>
Exhibit A
(layout of offices)
Exhibit B
(Site Plan - Netherwood Commons)
Exhibit C
BUILDING STANDARD TENANT IMPROVEMENTS
The Premises, as defined in Section 2.1 of the Lease, will be built out in
accordance with the space plan listed as Exhibit "A" with the following
clarifications: Landlord will provide Tenant with standard building signage.
For security purposes, Building D will have a proximity card reader system to
control after-hours building access. Tenant will be charged a $15.00 deposit
for each access card issued. Landlord will provide Tenant with up to a $15.00
Tenant Improvement allowance. Any unused allowance will be retained by
Landlord. Landlord will provide Tenant with Building signage High Desert
Medical's signage and signage o the north face of Building C facing
Interstate 40 at the Landlord's expense.
The following represent Building Standard Leasehold Improvements:
Partitions All required partitions will be 5/8" gypsum board, painted with
Building Standard colors to be provided by Landlord.
Ceilings Fissured type mineral fiber acoustical ceiling time, 24" x 48" x
5/8" thick mechanically suspended on a concealed grid throughout
the Leased Premises.
Lighting
Fixtures One (1) 2' x 4' recessed three-tube fluorescent lighting
fixture with
plastic pebble surface covering per one hundred (100) square feet
of Usable Area.
Duplex
Electric
Outlets One (1) duplex wall-mounted convenience outlet for each sixty
(60) square feet of Usable Area.
Telephone
Outlets One (1) telephone wall outlet for each two hundred (200) square
feet of Usable Area
Floor
Covering Building Standard commercial grade carpeting, minimum 28
<PAGE>
ounces, throughout the Leased Premises. Vinyl floor covering can
be substituted in heavy work areas as designated by Tenant.
Doors Full height, solid core hardwood doors with a metal frame and
lever handle latch set hardware to be used for interior doors.
Heating &
Cooling Gas-fired combination roof-mounted units provide heat and
refrigerated cooling controlled from the Leased Premises.
Window
Coverings One inch (1") horizontal aluminum slat mini-blinds for exterior
windows throughout the Leased Premises.
Fire
Sprinklers Ceiling mounted fire sprinkler heads throughout the Premises to
conform with city code for fire protection to be installed.
Tenant will provide written approval to Exhibit "A" prior to commencement of
lease improvements. Any changes made to the approved space plan will be at
the Tenant's expense.
Exhibit D
to
Office Building Lease
RULES AND REGULATIONS
1. (a) No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside
or inside of the Building without the written consent of Landlord being
obtained first. Landlord shall have the right to remove any such sign,
placard, picture, advertisement, name or notice without notice to and the
expense of Tenant.
(b) All signs or lettering on doors must be approved by Landlord and
shall be printed, painted, affixed or inscribed at the expense of Tenant by a
per son approved by Landlord. Tenant shall not place anything or allow
anything to be placed near the glass of any window, door, partition or wall
which may appear unsightly from outside the Premises
2. The directory of the Building will be provided for the display of the
names and location of Tenant only. Landlord reserves the right to exclude any
other names therefrom.
3. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose other
than for ingress to and egress from the Premises. The halls, passages, exits,
entrances, elevators, stairways, terraces and roof are not for the use of the
general public and Landlord shall in all cases retain the right to control
and prevent access thereto by all persons whose presence in the judgement of
Landlord may be prejudicial to the safety, character, reputation or best
interests of the Building and its tenants; provided that
<PAGE>
nothing herein contained shall be construed to prevent such access to persons
with whom Tenant normally deals in the ordinary course of Tenant's business
unless such persons are engaged in illegal activities. No Tenant and no
employees or invitees of any Tenant shall go upon the roof of the Building.
4. Nothing should be placed on the terraces that exceeds the railing height
of the terraces.
5. Tenant shall not alter any lock or install any new or additional locks
or any bolts on any door of the Premises.
6. The toilet rooms, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were constructed; no
foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the Tenant who, or whose employees or invitees,
caused it.
7. Tenant shall not overload the floor of the Premises. Tenant may hang
pictures and art work on the interior walls of the lease space.
8. No furniture, freight or equipment of any kind shall be brought into the
Building without the consent of Landlord and all moving of the same into or
out of the Building shall be done at such time and in such manner as Landlord
shall designate. Landlord shall have the right to prescribe the weight, size
and position of all safes and other heavy equipment brought into the Building
and also the times and manner of moving the same in and out of the Building.
Safes or other heavy objects shall, if considered necessary by Landlord,
stand on wood strips of such thickness as is necessary to properly distribute
the weight. Landlord will not be responsible for loss of or damage to any
such safe or property from any cause and all damage done to the Building by
moving of maintaining any such safe or other property shall be repaired at
the expense of Tenant.
9. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to
be occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Building by reason of noise, odors and/or vibrations,
or interfere in any way with other Tenants or those having business therein,
nor shall any animals or birds be brought in or about the Premises or the
Building.
10. The Premises shall not be used for the storage of merchandise held for
sale to the general public, or for lodging or for manufacturing of any kind,
nor shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted by Tenant on the Premises,
except that use by the Tenant of Underwriters' Laboratory approved equipment
for brewing coffee, tea, hot chocolate and similar beverages shall be
permitted, provided that such equipment and use is in accordance with all
applicable federal, state and city laws, codes, ordinances, rules and
regulations and/or the use of a microwave oven.
11. Tenant shall not use or keep in the Premises or the Building, any
kerosene, gasoline or
<PAGE>
inflammable or combustible fluid or material, or use any method of heating or
air conditioning other than that supplied by Landlord.
12. Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires is
permitted without the consent of Landlord. The location of telephones, call
boxes and other office equipment affixed to the Premises shall be subject to
the approval of Landlord.
13. Each Tenant, upon termination of its tenancy, shall deliver to Landlord
all keys to the Building and all parts thereof which shall have been
furnished Tenant or which Tenant shall have had made, and in the event of
loss of any keys so furnished, shall pay Landlord therefor.
14. No Tenant shall lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in
any manner except as approved by Landlord. The expense of repairing any
damage resulting from violation of this rule or from removal of any floor
covering shall be borne by the Tenant by whom, or by whose contractors,
employees or invitees, the damage shall have been caused.
15. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down in the elevators, except
between such hours and in such elevators as shall be designated by Landlord.
16. Tenant shall see that the doors of the Premises are closed and securely
locked before leaving the Building and must observe strict care and caution
that all water faucets or water apparatus are entirely shut off before Tenant
or Tenant's employees leave the Building, and that all electricity shall
likewise be carefully shut off, so as to prevent waste or damage, and for any
default or carelessness Tenant shall make good all injuries sustained by
other tenants or occupants of the Building of Landlord.
17. Landlord reserves the right to exclude or expel from the Building, any
person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building.
18. The requirements of Tenant will be attended to only upon application at
the office of the Building. Employees of Landlord will not perform any work
or do anything outside of their regular duties unless under special
instructions from Landlord, and no employee will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.
19. No vending machine or machines of any description shall be installed,
maintained or operated upon the Premises without the written consent of the
landlord.
20. Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name and the street address of the
Building. Without the written consent of Landlord, Tenant shall not use the
name of the Building in connection with or in promoting or advertising the
business of Tenant except as Tenant's address.
<PAGE>
21. Tenant shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent the same.
22. Tenant not conduct any auction on the premises without Landlord's prior
written consent.
LANDLORD: TENANT:
Pebbles, LTD. NEW MEXICO SOFTWARE
By /s/ Tony Pisto By /s/ Richard F. Govatski
Its: co-manager Its CEO
EXHIBIT E
to
OFFICE BUILDING LEASE
COMMENCEMENT DATE ADJUSTMENT NOTICE
THIS AGREEMENT, made as of the 5th day of August, 1999 between Pebbles, Ltd.
as Landlord and New Mexico Software as Tenant.
WHEREAS, by that certain Lease, made the 5th day of August , 1999, (the
"Lease") Landlord demised and leased to Tenant those certain Premises as
described in 2(1) of the Lease for a term of 60 months commencing on/or
about August 6. 1999, and ending on July 31, 2004, unless sooner terminated
or extended as provided therein.
WHEREAS the Tenant did not enter into occupancy of the expansion Premises
until 19 , and
WHEREAS Landlord and Tenant desire to set forth the correct commencement date
of the term and to adjust the expiration date of the term to provide for a
full term of the Lease of _________ (__) years.
NOW, THEREFORE, Landlord and Tenant do hereby agree as follows:
1. The term of the Lease commenced on 1999 And shall continue
until , 19 , unless sooner terminated or extended as provided therein.
2. Except as hereby amended, this Lease shall continue in full force and effect.
3. This agreement shall be binding on the parties hereto and their respective
heirs, devices, personal representatives, executors, successors and assigns.
Note: Do not sign or complete the remaining blanks on this form until the actual
occupancy date is determined.
<PAGE>
LANDLORD: TENANT:
Pebbles, Ltd. New Mexico Software
By: /s/ Tony Pisto By
----------------------------
Its: co-manager Its:
---------------------------
EXHIBIT "F"
GUARANTY OF LEASE
1. Guaranty. To induce PEBBLES, LTD., a New Mexico limited liability
company ("Landlord'), to enter into the Office Building Lease (the "Lease")
dated ______________, 199_ with New Mexico Software, a New Mexico corporation
("Tenant"), the undersigned (the "Guarantor") executes and delivers this
Guaranty of Lease (the "Guaranty") pursuant to which Guarantor guarantees to
Landlord (a) payment to Landlord when due of (i) all Base Rent, CAM and other
charges; (ii) all amounts payable by reason of any indemnity, breach of
warranty, default or breach by Tenant under the Lease; and (iii) all costs
incurred by Landlord in enforcing its rights and remedies under the Lease
and/or this Guaranty, including reasonable attorneys' fees, court costs and
investigation expenses; and (b) performance of all of Tenant's other
obligations under the Lease (collectively, "Guaranteed Obligations"). This is
a guaranty of payment and not of collection and Guarantor's liability is
primary and not secondary. Landlord may, at its option, proceed against
Guarantor without first commencing an action or obtaining a judgment against
Tenant or any other party. Unless otherwise expressly provided in this
Guaranty, all capitalized terms shall have the same meanings as in the Lease.
2. Waivers and Releases.
a. Guarantor waives marshaling of assets and liabilities, sale in
inverse order of alienation, presentment, demand for payment, protest, notice
of acceptance of this Guaranty, notice of nonpayment, notice of dishonor,
notice of acceleration, notice of intent to accelerate and all other notices,
demands, suits or other actions otherwise required as a condition to
Landlord's exercise of its rights under the Lease or this Guaranty.
Guarantor's liability hereunder shall not be released by Landlord's receipt,
application or release of security given for performance of any such
obligations, nor shall Guarantor be released by reason of any lien held or
executed upon Tenant and/or its assets by Landlord.
b. This Guaranty shall in no way be affected by (i) any extension of
time for payment or performance of any Guaranteed Obligations; (Ii)
supplementation or amendment (material or otherwise) of the Lease, or renewal
or extension thereof, or increase in the size of the Premises (whether within
the Building, or the Project); (iii) any failure, omission, delay or lack of
diligence by Landlord or any other person or entity, to enforce, assert or
exercise any right or remedy of Landlord under the Lease or this Guaranty;
(iv) settlement or compromise of any Guaranteed
<PAGE>
Obligation; (v) release or discharge of Tenant in any creditor's
receivership, bankruptcy or other proceedings; (vi) impairment, limitation or
modification of the liability of Tenant (or its estate in bankruptcy), or of
any remedy for the enforcement of Tenant's liability under the Lease,
resulting from the operation of any present or future provision of the United
States Bankruptcy Code or other statute or from the decision of any court;
(vii) rejection or disaffirmance of the Lease in any such proceedings; (viii)
assignment, sublease or other transfer of the Lease or the Premises, or any
interest therein, by Landlord or Tenant; (ix) any disability or other defense
of Tenant; or (x) cessation of Tenant's liability for any cause whatsoever.
c. Until all Guaranteed Obligations are fully performed, Guarantor
(i) has no right of subrogation against Tenant due to any payment or
performance by Guarantor; (ii) waives any right to enforce any remedy
Guarantor may now or hereafter have against Tenant due to any such payment or
performance; and (iii) subordinates any liability or indebtedness of Tenant
now or hereafter held by Guarantor to the Guaranteed Obligations in favor of
Landlord.
3. Representations and Warranties. Guarantor represents and warrants, as a
material inducement to Landlord to enter into the Lease, that (a) this
Guaranty and each instrument securing this Guaranty have been duly executed
and delivered and constitute legally enforceable obligations of Guarantor;
(b) there is no action, suit or proceeding pending or, to Guarantor's
knowledge, threatened against or affecting Guarantor, at law or in equity, or
before or by any governmental authority, which might result in any materially
adverse change in Guarantor's business or financial condition; (c) as of the
date hereof, Guarantor's financial condition is adequate to secure
Guarantor's obligations under this Guaranty; (d) execution of this Guaranty
shall not render Guarantor insolvent; (e) from and after the date hereof,
Guarantor shall not take any action, such as assuming additional liabilities,
divesting assets or otherwise, which would impair Guarantor's ability to
perform its obligations under this Guaranty; and (fl Guarantor has a bona
fide interest in Tenant's financial success.
4. Notice. Any notice or communication hereunder shall be given in writing
by, and deemed received upon, personal delivery, or posting in a U.S. Postal
Service receptacle, postage prepaid, registered or certified mail, return
receipt requested, or delivery by expedited courier, where proof of delivery
can be shown, to Guarantor at:
Richard F. Govatski
Attention:_______________
Telephone: (505) 255-1999
Facsimile:______________
5. Interpretation. This Guaranty shall be governed by and construed in
accordance with New Mexico law, The proper place of venue to enforce payment
or performance under this Guaranty shall be the county or other jurisdiction
in which the Premises are located. The representations, covenants and
agreements set forth herein shall continue and survive the termination of the
Lease and/or this Guaranty. The masculine and neuter genders each include the
masculine, feminine and neuter genders. This instrument may not be changed,
modified, discharged or terminated orally or in any manner other than by an
agreement in writing signed by Guarantor and Landlord. If
<PAGE>
Guarantor consists of more than one person or entity, the word "Guarantor"
shall apply to each such party, each of whom shall be jointly and severally
liable hereunder. The words "Guaranty" and "guarantees" shall not be
interpreted to limit Guarantor's primary obligations and liability hereunder.
6. Consent to Jurisdiction. In any legal proceeding regarding this
Guaranty, including enforcement of any judgments, Guarantor irrevocably and
unconditionally (a) submits to the jurisdiction of the courts of law in the
county or district in which the Project is located; (b) accepts the venue of
such courts and waives and agrees not to plead any objections thereto; and
(c) agrees that (i) service of process may be effected at the address
specified in Paragraph 4 above, or at s such other address of which Landlord
has been properly notified, and (ii) nothing herein shall affect Landlord's
right to effect service or process in any other manner permitted by
applicable law.
7. Successors and Assigns. This Guaranty shall inure to the benefit of
Landlord and its successors and assigns, and shall be binding upon Guarantor
and its executors, administrators, heirs, successors and assigns. Guarantor
shall not assign any obligation hereunder without Landlord's prior written
consent. If any Guarantor who is a living person dies while this Guaranty is
in force, then such deceased Guarantor's heirs, executors administrators and
representatives shall not make any distribution or disposition of assets from
the estate without first making provisions acceptable to Landlord for the
satisfaction of such deceased Guarantor's obligations (and contingent
obligations) hereunder.
IN WITNESS WHEREOF, Guarantor executes this Guaranty as of _______________.
GUARANTOR:
By: /s/ Richard F. Govatski
Name: Richard F. Govatski
Its: CEO
<PAGE>
EXHIBIT 10.3
GENERAL NONDISCLOSURE AGREEMENT
New Mexico Software, Inc.
This is an agreement, effective________________, between New Mexico Software,
Inc. (the "Discloser") and___________________________________the
"Recipient"), in which Discloser agrees to disclose, and Recipient agrees to
receive, certain trade secrets of New Mexico Software, Inc. on the following
terms and conditions:
1. Trade Secrets: Recipient understands and acknowledges that the following
information constitutes trade secrets belonging to New Mexico Software: Image
Assets Toolkit, Code Cryptor, New Mexico Software Streamer, Sure Sign
Fingerprinting, Photoscript Advanced Converter, Excalibur Visual Retrieval
Ware, FlashPix development kit, NMS Lightbox, Web Patrol, NMS E-Commerce Kit:
2. Trade Secrets: Recipient understands and acknowledges that Discloser's
trade secrets consist of information and materials that are valuable and not
generally known by Discloser's competitors. Discloser's trade secrets include:
(a) Any and all information concerning Discloser's current, future or
proposed products, including, but not limited to, unpublished computer code
(both source code and object code), drawings, specifications, notebook
entries, technical notes and graphs, computer printouts, technical
memoranda and correspondence, product development agreements and related
agreements.
(b) Information and materials relating to Discloser's purchasing,
accounting and marketing, including, but not limited to, marketing plans,
sales data, unpublished promotional material, cost and pricing information
and customer lists.
(c) Information of the type described above which Discloser obtained from
another party and which Discloser treats as confidential, whether or not
owned or developed by Discloser.
3. Purpose of Disclosure: Recipient shall make use of Discloser's trade
secrets only for the purpose of technical development of product
functionality, product enhancements, or other contract arrangements.
4. Nondisclosure: In consideration of Discloser's disclosure of its trade
secrets to Recipient, Recipient agrees that it will treat Discloser's trade
secrets with the same degree of care and safeguards that it takes with its
own trade secrets, but in no event less than a reasonable degree of care.
Recipient agrees that, without Discloser's prior written consent, Recipient
will not:
(a) disclose Discloser's trade secrets to any third party;
(b) make or permit to be made espies or other reproductions of Discloser's
trade
<PAGE>
secrets; or computer code, or allow access to New Mexico Software
computer servers with root or client access privileges.
(c) make any commercial use of the trade secrets.
Recipient will not disclose Discloser's trade secrets to Recipient's
employees, agents and consultants unless: (1) they have a need to know the
information in connection with their employment or consultant duties; and (2)
they personally agree in writing to be bound by the terms of this Agreement.
5. Return of Materials: Upon Discloser's request, Recipient shall promptly
(within 30 days) return all original materials provided by Discloser and any
copies, notes or other documents in Recipient's possession pertaining to
Discloser's trade secrets.
6. Exclusions: This agreement does not apply to any information which:
(a) was in Recipient's possession or was known to Recipient, without an
obligation to keep it confidential, before such information was disclosed
to Recipient by Discloser;
(b) is or becomes public knowledge through a source other than Recipient
and through no fault of Recipient;
(c) is independently developed by or for Recipient;
(d) is or becomes lawfully available to Recipient from a source other than
Discloser; or
(e) is disclosed by Recipient with Discloser's prior written approval.
7. Term: This Agreement and Recipient's duty to hold Discloser's trade
secrets in confidence shall remain in effect until the above-described trade
secrets are no longer trade secrets or until Discloser sends Recipient
written notice releasing Recipient from this Agreement, whichever occurs
first.
8. No Rights Granted: Recipient understands and agrees that this Agreement
does not constitute a grant or an intention or commitment to grant any right,
title or interest in Discloser's trade secrets, computer code, computer
technology belonging to New Mexico Software to Recipient. All rights of work
performed by Recipient at the request of New Mexico Software shall become the
intellectual property of New Mexico Software, Inc.
9. Warranty: Discloser warrants that it has the right to make the
disclosures under this Agreement. NO OTHER WARRANTIES ARE MADE BY DISCLOSER
UNDER THIS AGREEMENT. ANY INFORMATION DISCLOSED UNDER THIS AGREEMENT IS
PROVIDED "AS IS."
<PAGE>
10. Injunctive Relief: Recipient recognizes and acknowledges that any breach
or threatened breach of this Agreement by Recipient may cause Discloser
irreparable harm for which monetary damages may be inadequate. Recipient
agrees, therefore, that Discloser shall be entitled to an injunction to
restrain Recipient from such breach or threatened breach. Nothing in this
Agreement shall be construed as preventing Discloser from pursuing any remedy
at law or in equity for any breach or threatened breach of this Agreement.
11. Attorney Fees: If any legal action arises relating to this Agreement,
the prevailing party shall be entitled to recover all court costs, expenses
and reasonable attorney fees.
12. Modifications: All additions or modifications to this Agreement must be
made in writing and must be signed by both parties to be effective.
13. No Agency: This Agreement does not create any agency or partnership
relationship between the parties.
14. Applicable Law: This Agreement is made under, and shall be construed
according to, the laws of the State of New Mexico.
Discloser: New Mexico Software, Inc.
By:
-----------------------
(signature)
- --------------------------
(typed or printed name)
Title:
--------------------
Date:
---------------------
Recipient:
- --------------------------
By:
-----------------------
(signature)
- --------------------------
(typed or printed name)
Title:
--------------------
Date:
---------------------
<PAGE>
EXHIBIT 10.4
NMXS.COM, INC.
STOCK OPTION PLAN
ARTICLE 1.
GENERAL PROVISIONS
1.1. PURPOSE OF THE PLAN
This Stock Option Plan (the "Plan") is intended to promote the interests
of NMXS.COM, INC., a Delaware corporation, (the "Corporation") by providing
eligible persons with the opportunity to acquire or increase their
proprietary interest in the Corporation as an incentive for them to remain in
the Service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.
1.2. ADMINISTRATION OF THE PLAN
a. Prior to the Section 12(g) Registration Date, the Plan shall be
administered by the Board or a committee of the Board.
b. Beginning with the Section 12(g) Registration Date, the Primary
Committee shall have sole and exclusive authority to administer the Plan with
respect to Section 16 Insiders. Administration of the Plan with respect to
all other persons eligible under the Plan may, at the Board's discretion, be
vested in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer the Plan with respect to all such persons.
c. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed
by the Board at any time. The Board may also terminate the functions of any
Secondary Committee at any time and reassume all powers and authority
previously delegated to such committee.
d. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue
such interpretations of, the provisions of the Plan and any outstanding
options thereunder as it may deem necessary or advisable. Decisions of the
Plan Administrator within the scope of its administrative functions under the
Plan shall be final and binding on all parties who have an interest in the
Plan under its jurisdiction or any option thereunder.
e. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as
Board members for their service on such committee. No member of the Primary
Committee or the Secondary Committee shall be liable for any act or
<PAGE>
omission made in good faith with respect to the Plan or any option grants
under the Plan.
f. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to
the provisions of the Plan) to determine which eligible persons are to
receive option grants, the time or times when such option grants are to be
made, the number of shares to be covered by each such grant, the status of
the granted option as either an Incentive Option or a Non-Statutory Option,
the time or times at which each option is to become exercisable, the vesting
schedule (if any) applicable to the option shares, the acceleration of such
vesting schedule, the maximum term for which the option is to remain
outstanding, whether the option shares shall be subject to rights of
repurchase and/or rights of first refusal, and all other terms and conditions
of the option grants.
1.3. ELIGIBILITY
The following persons shall be eligible to participate in the Plan:
a. Employees, as to both Incentive and/or Non-Statutory Options,
b. non-employee members of the Board or the board of directors of any
Parent or Subsidiary as to Non-Statutory Options, and
c. consultants and other independent advisors who provide Services to
the Corporation or any Parent or Subsidiary, as to Non-Statutory Options.
1.4. STOCK SUBJECT TO THE PLAN
a. The stock issuable under the Plan shall be shares of authorized but
unissued Common Stock, including shares repurchased by the Corporation on the
open market. The maximum number of shares of Common Stock which may be
issued over the term of the Plan shall not exceed Three Million (3,000,000)
shares, which number of shares may be changed from time to time in accordance
with Section 3.4 below.
b. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent the options
expire or terminate for any reason prior to exercise in full. However,
should the Exercise Price be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an option under the Plan, then the number of shares of
Common Stock available for issuance under the Plan shall be reduced by the
gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.
c. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as
a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of
<PAGE>
securities issuable under the Plan, (ii) the number and/or class of
securities for which any one person may be granted options per calendar year,
and (iii) the number and/or class of securities and the Exercise Price in
effect under each outstanding option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding, and conclusive.
ARTICLE 2.
OPTION GRANT PROGRAM
2.1. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document
evidencing an Incentive Option shall, in addition, be subject to the
provisions of Section 2.2 of the Plan, below.
a. Exercise Price
(1) The Exercise Price shall be fixed by the Plan Administrator
but shall not be less than one hundred percent (100%) of the Fair Market
Value per share of Common Stock on the Grant Date.
(2) The Exercise Price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Article 3.1, and the
documents evidencing the option, be payable in one or more of the forms
specified below:
(a) cash or check made payable to the Corporation,
(b) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(c) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions
to (a) a Corporation-designated brokerage firm to effect the immediate
sale of the Purchased Shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to
cover the aggregate Exercise Price payable for the Purchased Shares
plus all applicable federal, state and local income and employment
taxes required to be withheld by the Corporation by reason of such
exercise and (b) the Corporation to deliver the certificates for the
Purchased Shares directly to such brokerage firm in order to complete
the sale.
Except to the extent the sale and remittance procedure is utilized,
payment of the Exercise Price for the Purchased Shares must be made on the
Exercise Date.
<PAGE>
b. Exercise and Term of Options. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the Grant Date.
c. Effect of Termination of Service
(1) The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service;
(a) Any option outstanding at the time of the Optionee's
cessation of Service for any reason except death, Permanent Disability
or Misconduct shall remain exercisable for a three (3) month period
thereafter, provided no option shall be exercisable after the
Expiration Date.
(b) Any option outstanding at the time of the Optionee's
cessation of Service due to death or Permanent Disability shall remain
exercisable for a twelve (12) month period thereafter, provided no
option shall be exercisable after the Expiration Date. Subject to the
foregoing, any option exercisable in whole or in part by the Optionee
at the time of death may be exercised subsequently by the personal
representative of the Optionee's estate or by the person or persons to
whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution.
(c) Should the Optionee's Service be terminated for Misconduct,
then all outstanding options held by the Optionee shall terminate
immediately and cease to be outstanding.
(d) During the applicable post-Service exercise period, the
option may not be exercised in the aggregate for more than the number
of shares for which the option is exercisable on the date of the
Optionee's cessation of Service; the option shall, immediately upon
the Optionee's cessation of Service, terminate and cease to be
outstanding to the extent the option is not otherwise at that time
exercisable. Upon the expiration of the applicable exercise period or
(if earlier) upon the Expiration Date, the option shall terminate and
cease to be outstanding for any shares for which the option has not
been exercised.
(2) The Plan Administrator shall have the discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:
(a) extend the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service from the
period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event
beyond the Expiration Date, and/or
<PAGE>
(b) permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of
shares of Common Stock for which such option is exercisable at the
time of the Optionee's cessation of Service but also with respect to
one or more additional shares that would have vested under the option
had the Optionee continued in Service.
d. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the Exercise Price, and
become a holder of record of the Purchased Shares.
e. Limited Transferability of Options. During the lifetime of the
Optionee, Incentive Options may be exercised only by the Optionee, and shall
not be assignable or transferable except by will or the laws of descent and
distribution following the Optionee's death. Non-Statutory Options may be
assigned or transferred in whole or in part only (i) during the Optionee's
lifetime if in connection with the Optionee's estate plan to one or more
members of the Optionee's immediate family (spouse and children) or to a
trust established exclusively for the benefit of one or more such immediate
family members, or (ii) by will or the laws of descent and distribution
following the Optionee's death. The assigned portion may only be exercised by
the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
2.2. INCENTIVE OPTIONS
The terms specified below shall apply to all Incentive Options. Except
as modified by the provisions of this Section 2.2, all the provisions of this
Plan shall apply to Incentive Options. Options specifically designated as
Non-Statutory Options when issued under the Plan shall not be subject to the
terms of this Section 2.2.
a. Eligibility. Incentive Options may only be granted to Employees.
b. Exercise Price. The Exercise Price shall not be less than one
hundred percent (100%) of the Fair Market Value per share of Common Stock on
the Grant Date.
c. Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one (1)
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as Incentive
Options shall be applied in the order in which such options are granted.
<PAGE>
d. 10% Stockholder. If an Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the Exercise Price shall not be less than
one hundred ten percent (110%) of the Fair Market Value per share of Common
Stock on the Grant Date, and the option term shall not exceed five (5) years
measured from the Grant Date.
e. Holding Period. Shares purchased pursuant to an option shall cease
to qualify for favorable tax treatment as Incentive Option Shares if and to
the extent Optionee disposes of such shares within two (2) years of the Grant
Date or within one (1) year of Optionee's purchase of said shares.
2.3. CORPORATE TRANSACTION/CHANGE IN CONTROL
a. In the event of any Corporate Transaction, the Board of Directors
shall have the sole discretion to elect that each outstanding option shall
automatically accelerate so that each such option shall, immediately prior to
the effective date of the Corporate Transaction, become fully exercisable for
all of the shares of Common Stock at the time subject to such option and may
be exercised for any or all of those shares as fully-vested shares of Common
Stock. The Board may exercise its discretion to accelerate the vesting of
options whether or not (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or Parent
thereof or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or Parent thereof, (ii) such
option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested option shares
at the time of the Corporate Transaction and provides for subsequent payout
in accordance with the same vesting schedule applicable to such option,
except to the extent that the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option
grant. The determination of option comparability under clause (i) above shall
be made by the Plan Administrator, whose determination shall be final,
binding and conclusive.
b. In the event of any Corporate Transaction, the Board of Directors
shall have sole discretion to elect that all outstanding repurchase rights
may also be terminated automatically whether or not those repurchase rights
are to be assigned to the successor corporation (or Parent thereof in
connection with such Corporate Transaction.
c. The Plan Administrator's discretion under Sections 2.3.a. and b.
above shall be exercisable either at the time the option is granted or at any
time while the option remains outstanding, whether or not those options are
to be assumed or replaced (or those repurchase rights are to be assigned) in
the Corporate Transaction. The Plan Administrator shall also have the
discretion to grant options which do not accelerate whether or not such
options are assumed (and to provide for repurchase rights that do not
terminate whether or not such rights are assigned) in connection with a
Corporate Transaction.
d. If the Board of Directors elects the automatic acceleration of some
or all of the outstanding options upon the occurrence of a Corporate
Transaction, all such outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor
<PAGE>
corporation (or parent thereof) immediately following the consummation of the
Corporate Transaction.
e. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities that would have
been issuable to the Optionee in consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan following the
consummation of such Corporate Transaction, (ii) the exercise price payable
per share under each outstanding option, provided the aggregate exercise
price payable for such securities shall remain the same and (iii) the maximum
number of securities and/or class of securities for which any one person may
be granted stock options.
f. The Plan Administrator shall have the discretion, exercisable at
the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of any options assumed
or replaced in a Corporate Transaction that do not otherwise accelerate at
that time (and the termination of any of the Corporation's outstanding
repurchase rights that do not otherwise terminate at the time of the
Corporate Transaction) in the event the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination within
eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for shares
until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination.
g. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option
remains outstanding, to (i) provide for the automatic acceleration of one or
more outstanding options (and the automatic termination of one or more
outstanding repurchase rights) upon the occurrence of a Change in Control or
(ii) condition any such option acceleration (and the termination of any
outstanding repurchase rights) upon the subsequent Involuntary Termination of
the Optionee's Service within a specified period (not to exceed eighteen (18)
months) following the effective date of such Change in Control. Any options
accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.
h. The portion of any Incentive Option accelerated in connection with
a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand
Dollar ($100,000) limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option shall be
exercisable as a Non-Statutory Option under the federal tax laws.
i. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
<PAGE>
ARTICLE 3.
MISCELLANEOUS
3.1. FINANCING
a. The Plan Administrator may permit any Optionee to pay the option
Exercise Price by delivering a promissory note payable in one or more
installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Promissory notes may be authorized with
or without security or collateral. In all events, the maximum credit
available to the Optionee may not exceed the sum of (i) the aggregate option
Exercise Price payable for the Purchased Shares plus (ii) the amount of any
federal, state and local income and employment tax liability incurred by the
Optionee in connection with the option exercise.
b. The Plan Administrator may, in its discretion, determine that one
or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.
3.2. TAX WITHHOLDING
a. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options under the Plan shall be subject to the satisfaction
of all applicable federal, state and local income and employment tax
withholding requirements.
b. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options under the Plan with the right to use shares
of Common Stock in satisfaction of all or part of the Taxes incurred by such
holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(1) Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option, a portion of those shares with an
aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
(2) Stock Delivery: The election to deliver to the Corporation, at
the time the Non-Statutory Option is exercised, one or more shares of Common
Stock previously acquired by such holder (other than in connection with the
option exercise triggering the Taxes) with an aggregate Fair Market Value
equal to the percentage of the Taxes (not to exceed one hundred percent
(100%)) designated by the holder.
3.3. EFFECTIVE DATE AND TERM OF THE PLAN
a. The Plan shall become effective on the Plan Effective Date.
However, no shares shall be issued under the Plan pursuant to Incentive
Options until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12)
<PAGE>
months after the Plan Effective Date, then all Incentive Options previously
granted under this Plan shall automatically convert into Non-Statutory
Options.
b. The Plan shall terminate upon the earliest of (i) June 30, 2008,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued, or (iii) the termination of all outstanding options in
connection with a Corporate Transaction. Upon such Plan termination, all
outstanding options shall continue to have force and effect in accordance
with the provisions of the documents evidencing such options.
3.4. AMENDMENT OF THE PLAN
a. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect any rights and obligations with
respect to options at the time outstanding under the Plan unless each
affected Optionee consents to such amendment or modification. In addition,
amendments to the Plan shall be subject to approval of the Corporation's
stockholders to the extent required by applicable laws or regulations.
b. Options to purchase shares of Common Stock may be granted under the
Plan that are in each instance in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued are held in escrow until there is obtained Board approval (and
shareholder approval if required by applicable laws or regulations) of an
amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan.
3.5. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
3.6. REGULATORY APPROVALS
a. The implementation of the Plan, the granting of any option under
the Plan, and the issuance of any shares of Common Stock upon the exercise of
any option shall be subject to the Corporation's obtaining all approvals and
permits required by regulatory authorities having jurisdiction over the Plan
and the options granted under it, and the shares of Common Stock issued
pursuant to the Plan.
b. No shares of Common Stock shall be issued or delivered under the
Plan unless and until there shall have been compliance with all applicable
requirements of federal and state securities laws and all applicable listing
requirements of any stock exchange (or the Nasdaq market, if applicable) on
which Common Stock is then listed for trading.
<PAGE>
3.7. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which
rights are hereby expressly reserved by each, to terminate such person's
Service at any time for any reason, with or without cause.
IN WITNESS WHEREOF the Corporation has executed this Plan effective as
of the Effective Date.
NMXS.COM, INC.
By /s/ Richard G. Southwick, President
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan and the Plan
Documents:
1. Board shall mean the Corporation's Board of Directors.
2. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders, which the Board does not recommend such stockholders to accept,
or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A) who were still
in office at the time the Board approved such election or nomination.
3. Code shall mean the Internal Revenue Code of 1986, as amended.
4. Common Stock shall mean the Corporation's common stock.
5. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from
the persons holding those securities immediately prior to such transaction; or
(ii) the sale, transfer or other disposition of all or substantially all
of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
6. Eligible Director shall mean a non-employee Board member eligible to
participate in the Plan.
7. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and
direction of the employer entity as to both the work to
<PAGE>
be performed and the manner and method of performance.
8. Exercise Date shall mean the date on which the Corporation shall have
received written notice of the option exercise.
9. Exercise Price shall mean the exercise price per share as specified in
the Stock Option Grant.
10. Expiration Date shall mean the date on which the option expires as
specified in the Stock Option Grant.
11. Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is traded at the time on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National Market
or any successor system. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the
date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(iii) If the Common Stock is not listed on any Stock Exchange nor traded
on the Nasdaq National Market, then the Fair Market Value shall be determined
by the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
(iv) For purposes of any option grants made on the Underwriting Date,
the Fair Market Value shall be deemed to be equal to the price per share at
which the Common Stock is sold in the initial public offering pursuant to the
Underwriting Agreement.
(v) In all instances the determination of Fair Market Value shall be
made in accordance with Regulation Sections 1.421-7(e)(2) and 20.2031-2(f)(2)
as promulgated under Sections 421 and 2031 of the Code, as then in effect.
12. Grant Date shall mean the date on which the option is granted to
Optionee as specified in the Stock Option Grant.
<PAGE>
13. Incentive Option shall mean an option which satisfies the requirements
of Code Section 422.
14. Involuntary Termination shall mean the termination of the Service of any
individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a change in
his or her position with the Corporation which materially reduces his or her
level of responsibility, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and participation in
corporate-performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of such individual's place of employment by
more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual's consent.
15. Market Stand Off shall mean the market stand off restriction on
disposition of the Purchased Shares as specified in Section D of the Stock
Option Exercise Notice and Purchase Agreement.
16. Misconduct shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Optionee, any unauthorized use or disclosure by such
person of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any Parent
or Subsidiary) in a material manner. The foregoing definition shall not be
deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or
discharge of any Optionee or other person in the Service of the Corporation
(or any Parent or Subsidiary).
17. 1933 Act shall mean the Securities Act of 1933, as amended.
18. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
19. Non-Statutory Option shall mean an option not intended to satisfy the
requirements of Code Section 422.
20. Optionee shall mean any person to whom an option is granted under Plan.
21. Option Shares shall mean the number of shares of Common Stock subject to
the option as specified in the Stock Option Grant.
22. Owner shall mean Optionee and all subsequent holders of the Purchased
Shares who derive their chain of ownership through a Permitted Transfer from
Optionee.
<PAGE>
23. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the
time of the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one or the other
corporations in such chain.
24. Permanent Disability or Permanently Disabled shall mean the inability of
the Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.
25. Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased
Shares, provided and only if Optionee obtains the Corporation's prior written
consent to such transfer, (ii) a transfer of title to the Purchased Shares
effected pursuant to Optionee's will or the laws of intestate succession
following Optionee's death, or (iii) a transfer to the Corporation in pledge
as security for any purchase-money indebtedness incurred by Optionee in
connection with the acquisition of the Purchased Shares.
26. Plan Administrator shall mean the particular entity, whether the Board
or a committee of the Board, which is authorized to administer the Plan with
respect to one or more classes of eligible persons, to the extent such entity
is carrying out its administrative functions under the Plan with respect to
the persons under its jurisdiction.
27. Plan Documents shall mean the Plan, the Stock Option Grant, and Stock
Option Exercise Notice and Purchase Agreement, collectively.
28. Plan Effective Date shall mean November 16, 1998, the date as of which
the Plan was adopted by the Board.
29. Primary Committee shall mean the committee of two (2) or more
non-employee Board members (as defined in the regulations to Section 16 of
the 1934 Act) appointed by the Board to administer the Plan with respect to
Section 16 Insiders.
30. Purchased Shares shall mean the shares purchased upon exercise of the
Option.
31. Recapitalization shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other charge
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
32. Reorganization shall mean any of the following transactions:
(i) a merger or consolidation in which the Corporation is not the
surviving entity;
(ii) a sale, transfer, or other disposition of all or substantially all
of the Corporation's assets;
<PAGE>
(iii) a reverse merger in which the Corporation is the surviving entity
but in which the Corporation's outstanding voting securities are transferred
in whole or in part to a person or persons different from the persons holding
those securities immediately prior to the merger; or
(iv) any transaction effected primarily to change the state in which
the Corporation is incorporated or to create a holding company structure.
33. SEC shall mean the Securities Exchange Commission.
34. Secondary Committee shall mean a committee of two (2) or more Board
members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.
35. Section 12(g) Registration Date shall mean the date on which the Common
Stock is first registered under Section 12(g) of the 1934 Act.
36. Section 16 Insider shall mean an officer or director of the Corporation
subject to the short-swing profit liabilities of Section 16 of the 1934 Act.
37. Service shall mean the performance of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant.
38. Stock Exchange shall mean either the American Stock Exchange, the New
York Stock Exchange, or another regional stock exchange.
39. Stock Option Exercise Notice and Purchase Agreement shall mean the
agreement of said title in substantially the form of Exhibit A to the Stock
Option Grant, pursuant to which Optionee gives notice of his intent to
exercise the option and purchase Shares.
40. Stock Option Grant shall mean the Stock Option Grant document, pursuant
to which Optionee has been informed of the basic terms of the option granted
under the Plan.
41. Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at
the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
42. Taxes shall mean the Federal, state and local income and employment tax
liabilities incurred by the holder of Non-Statutory Options in connection
with the exercise of those options.
43. 10% Stockholder shall mean the owner of stock (as determined under Code
Section 424(d)) possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation (or any Parent or
Subsidiary).
<PAGE>
NMXS.COM, INC.
NON-QUALIFIED
STOCK OPTION EXERCISE NOTICE AND PURCHASE AGREEMENT
This Stock Option Exercise Notice and Purchase Agreement ("Agreement")
is made as of this ____ day of ____________, ________, by and between
NMXS.COM, INC., a Delaware corporation and ______________________________,
Optionee under the terms of a Non-Qualified Stock Option Grant granted to
Optionee.
All capitalized terms in this Agreement shall have the meaning assigned
to them in the Appendix to the Stock Option Grant.
A. EXERCISE OF OPTION
1. Exercise. Optionee hereby elects to exercise Optionee's option to
purchase _____________(____)shares of Common Stock (the "Purchased Shares")
of the Corporation, pursuant to that certain option (the "Option") granted
Optionee on __________________ , _____ (the "Grant Date") under the Plan at
the exercise price of $__________ per share (the "Exercise Price").
2. Payment. Concurrent with the delivery of this Agreement to the
Corporation, Optionee shall pay the Exercise Price for the Purchased Shares
in accordance with the provisions of the Stock Option Grant and shall deliver
whatever additional documents may be required by the Stock Option Grant as a
condition for exercise with respect to the Purchased Shares.
B. SECURITIES LAW COMPLIANCE
1. Restricted Securities. The Purchased Shares have not been
registered under the 1933 Act and are being issued to Optionee in reliance
upon the exemption from such registration as noted below. Optionee hereby
confirms that Optionee has been informed that the Purchased Shares are
restricted securities under the 1933 Act and may not be resold or transferred
unless the Purchased Shares are first registered under the Federal securities
laws or unless an exemption from such registration is available. Accordingly,
Optionee acknowledges that Optionee is prepared to hold the Purchased Shares
for an indefinite period and that Optionee is aware that SEC Rule 144 of the
1933 Act, which exempts certain resales of unrestricted securities, is not
presently available to exempt the resale of the Purchased Shares from the
registration requirements of the 1933 Act. The Option Shares are being issued
under the Act pursuant to (check the applicable space):
___ the exemption in Rule 504;
___ the exemption in Rule 505;
___ the exemption in Rule 506;
___ the exemption in Section 4(2);
___ a Regulation A Offering Circular, dated________;
___ the exemption in Rule 701;
___ other:__________________________________________
<PAGE>
2. Restrictions On Disposition of Purchased Shares. Optionee shall
make no disposition of the Purchased Shares (other than a Permitted Transfer)
unless and until there is compliance with all of the following requirements:
(a) Optionee shall have provided the Corporation with a written
summary of the terms and conditions of the proposed disposition.
(b) Optionee shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares.
(c) Optionee shall have provided the Corporation with written
assurances, in form and substance satisfactory to the Corporation, that (1)
the proposed disposition does not require registration of the Purchased
Shares under the 1933 Act, or (2) all appropriate action necessary for
compliance with the registration requirements of the 1933 Act or any
exemption from registration available under the 1933 Act (including Rule 144)
has been taken.
The Corporation shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement, Or, (2) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in
contravention of this Agreement.
3. Restrictive Legends. The stock certificates for the Purchased
Shares shall be endorsed with restrictive legends substantially similar to
the following:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS OR UNTIL REGISTERED
UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THE SECURITIES SUCH OFFER, SALE, TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
C. MISCELLANEOUS PROVISIONS
1. No Employment or Service Contract. Nothing in this Agreement or in
the Plan shall confer upon Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any
way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly
reserved by each, to terminate Optionee's Service at any time for any reason
with or without cause.
2. Notices. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, registered or certified, postage prepaid and
properly addressed to the party entitled to such notice at the
<PAGE>
address indicated below such party's signature line on this Agreement or at
such other address as such party may designate by ten (10) days' advance
written notice under this paragraph to all other parties to this Agreement.
3. Amendments and Waivers. No waiver or amendment of this Agreement
shall be effective unless agreed to in writing by the parties hereto. No
waiver of any Breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature.
4. Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation
may deem necessary or advisable in order to carry out or effect one or more
of the obligations or restrictions imposed on either Optionee or the
Purchased Shares pursuant to the provisions of this Agreement.
5. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware without resort to that
State's conflict-of-laws rules.
6. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and upon Optionee, Optionee's permitted assigns and
the legal representatives, heirs and legatees of Optionee's estate, whether
or not any such person shall have become a party to this Agreement and have
agreed in writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
NMXS.COM, INC.
By:
Title:
OPTIONEE:
Address:
<PAGE>
EXHIBIT 21.1
List of Subsidiaries
New Mexico Software, Inc., a New Mexico corporation, a wholly owned subsidiary
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form SB-2 of our
report dated October 15, 1999 with respect to our audit of the financial
statements of NMXS.Com, Inc., as of December 31, 1998 and for the years ended
December 31, 1998 and 1997 and the amounts for each of the years ended
December 31, 1998, 1997 and 1996 included in the cumulative amounts for the
period from April 2, 1996 (inception) through December 31, 1998, and to the
reference to our firm under the caption "Experts" in the prospectus.
RICHARD A. EISNER & COMPANY, LLP
Florham Park, NJ
February 10, 2000
