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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of the Securities Exchange Act of 1934.
DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
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(Exact name of registrant as specified in its charter)
Utah
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(State or other jurisdiction of incorporation or organization)
87-0508350
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(I.R.S. Employer Identification No.)
385 East 800 South, Orem, Utah 84097-6387
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
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(801) 426-4600
Securities to be registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered class is to be registered
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N/A N/A
Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, par value $0.001 per share
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(Title of class)
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TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 7
ITEM 3. DESCRIPTION OF PROPERTY 12
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 14
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 15
ITEM 6. EXECUTIVE COMPENSATION 17
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 18
ITEM 8. DESCRIPTION OF SECURITIES 19
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER STOCKHOLDER MATTERS 20
ITEM 2. LEGAL PROCEEDINGS 22
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 22
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES 22
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS 23
PART F/S
FINANCIAL STATEMENTS 25
PART III
ITEM 1. INDEX TO EXHIBITS 46
ITEM 2. SIGNATURES 46
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
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Dynamic Information Systems and Exchanges, Inc., ("Dynamic")a private company,
was incorporated in the State of Utah on April 9, 1993. Dynamic was founded
to provide information services to the labor and employment industry. In
October 1994, Dynamic was acquired by M&K Investments, Inc. ("M&K"). M&K, an
inactive public company, was incorporated in the State of Utah on March 20,
1987.
Effective October 20, 1994, Dynamic and M&K completed an Agreement and Plan of
Reorganization whereby M&K issued 14,483,326 shares (3,620,838 post-split
shares) of its common stock in exchange for 100% of the issued and outstanding
common stock of Dynamic. Thereafter, Dynamic became a wholly-owned subsidiary
of M&K.
In connection with the reorganization, M&K's name was changed to Dynamic
Information System & eXchange, Inc. (hereinafter "the Company" or "DiSX").
The exchange of M&K's common stock for the common stock of Dynamic resulted in
the former stockholders of Dynamic obtaining control of the Company. On
October 31, 1994, the Company effected a reverse stock split of the
outstanding common shares at a rate of 1 share for every 2 shares outstanding.
During 1995, the shareholders approved an additional reverse stock split at a
rate of 1 share for every 2 shares outstanding.
Effective 11 Feb 1999, DiSX entered into a joint venture with a British
company, topjobs.net plc. This resulting joint venture company, topjobs.net
inc (the "JV"), provides recruitment opportunities for selected/premier
corporate clients using broadcast media to drive active and passive job
seekers to the JV's Internet job listing web site.
Effective September 31, 1999, DiSX merged with Dynamic, with DiSX being the
surviving entity.
The Company's corporate offices are located at 385 East 800 South, Orem, Utah
84097-6387. The Company sub-leases space to the JV at the same address. See
Item 3 DESCRIPTION OF PROPERTY.
Summary of Business Operations
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The original business of the Company was to provide comprehensive job-listing
information on CD-ROM. After the popularization of the Internet, the Company
changed its delivery tool to the Internet. The Company's target market was
domestic employers in search of qualified professional, management or
technical specialist job candidates.
In June 1998, the Company entered into a nine month research and cooperation
test marketing agreement, limited to the State of Utah and the city of
Houston, Texas, with topjobs.net plc (formerly "The Corporate Net,"
hereinafter referred to as "PLC"), a corporation located in Manchester,
England, engaged in Internet recruitment. Under the terms of the agreement,
PLC was to receive 30% of the gross revenues derived from customers
advertising on the Top Jobs on the Net website, after the deduction of
payments to local television stations.
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Partially as a result of securing contracts providing gross revenues to the
venture of $141,000 in December 1998, the Company and PLC decided to terminate
the test marketing arrangement and establish a permanent venture in the United
States. PLC formed a Delaware corporation, known as topjobs.net inc, of which
DiSX owns 49% and PLC owns 51% (for which both stockholders paid a total of
$1,000). On February 11, 1999, the Company entered into a series of
agreements with PLC, including a Stockholders Agreement and Licensing
Agreement. Under the terms of the agreements (which continue for so long as
the Company and PLC both own equity in the JV), PLC granted the JV an
exclusive license in the territory of the State of Utah, the city of Houston,
Texas, and such other United States cities as the parties may mutually agree
upon, to use PLC's software, name, and other trademarks to promote and market
the Top Jobs on the Net website in the territory in accordance with the Top
Jobs on the Net business plan. The Company agreed to furnish the venture with
the services of ten of its key personnel (who became employees of the JV under
employment agreements) and provide operating facilities in Orem, Utah. The
Company also granted an exclusive license in the territory to use the
Company's intellectual property and technical information. The parties also
agreed to assign to the JV all rights and obligations under all customer
agreements jointly developed under the test marketing agreement.
PLC advanced $300,000 as an interest free loan to the Company in installments
through March 4, 1999. The Company agreed to advance up to a maximum of
$500,000 to the JV on an interest free basis to fund day-to-day working
capital requirements. The Company's loan to the JV is repayable at such time
as shall be determined by the the JV board of directors based on the venture's
cash flow and capital resources. Upon completion of PLC's initial public
offering, PLC paid DiSX an additional $200,000 in cash and canceled the
$300,000 loan. PLC also issued to DiSX $500,000 of PLC's ordinary shares
(valued at the initial per share public offering price). Based on a $12.00
per ADS offering price, a total of 41,667 of PLC's ordinary shares were issued
to DiSX. The agreements also:
- provide that the Company shall not sell or transfer any of PLC's
ordinary shares for at least one year after the date of PLC's initial public
offering, April 28, 1999,
- provide that PLC's representatives will constitute a majority of the
board of directors of the JV,
- contain "buy/sell" procedures under which the Company and PLC each
have the first and last right to purchase the other's equity in the JV, and
- provide for adjustments in the equity between the parties in the event
one stockholder is unable to fund it pro-rata share of the ongoing capital
requirements of the JV.
In February 1999, the Company agreed with PLC to commence operations in San
Francisco and in March 1999 to expand into Los Angeles.
Broadcast and Internet Media Services
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Following the creation of the joint venture, the JV, DiSX created an internal
division to provide media services, primarily, for the JV. To avoid confusion
with the parent company and more fully reflect the nature of the service being
provided, the division operates under the DBA name of Broadcast and Internet
Media Services (hereinafter referred to as "B&I"). The mission of B&I is to
"bring selected masses to the Internet." This is accomplished through the
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skilled selection and purchase of television and radio time and the use of
sports marketing and collateral materials.
Customers
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Subsequent to the signing of the joint venture agreement between DiSX and PLC
on 11 Feb 1999, the JV entered into an agency agreement with DiSX which
requires all media and production materials to be purchased through DiSX.
The JV signed a one year contract agreeing to pay a fifteen-percent (15%)
commission on all media purchases, ten percent (10%) on all collateral
materials and five-percent (5%) on all talent fees. These fees and
commissions from the JV constitute DiSX's primary revenue source, comprising
approximately 90% of DiSX's revenues. Efforts to secure other customers and
other sources of income are on going. The agency agreement between the two
companies is automatically annually renewed unless specifically terminated by
either of the parties to the agreement.
In addition to the agency agreement with the JV, DiSX aggressively seeks other
clients who require media and production materials. These customers would need
services (such as those provided by DiSX to the JV) to promote their product
or service to the masses. The nature of those products and services are of a
wide variety and could include almost any product or service currently in
existence.
The JV has numerous clients, none of whom represent more than 10% of the JV's
revenues. Clients include Zion's Bank, and Intermountain Health Care (Utah),
M.D. Anderson, Baylor University Hospital, and University of Texas Health
Center (Texas).
DiSX's Principal Products or Services
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These services include: The purchase of media, television, radio, print and
Internet. The production of collateral materials, product and audience
identification, content development, writing, video taping and editing,
graphic production, web page design and implementation, and duplication
services.
Effective September 7, 1999, DiSX placed into operation an Internet
recruitment product called Ultimate Resumes. This new product will gather the
resumes of job seekers and sell them to employers on an as-needed basis.
Ultimate resumes allows job seekers to post their resumes on the site for
free. Companies will no longer be forced to track and hold resumes of
unqualified job seekers, because the product's search capability makes it easy
for employers to find and buy resumes in specific skill areas for qualified
job seekers.
Competition for DiSX
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The exclusive nature of the agreement between DiSX and PLC regarding the
purchase of media, collateral materials and talent fees eliminates any
internal competition for these services. However the competition outside the
exclusive agreement includes a large number of advertising agencies and
production companies. These would include but not be limited to: Harris &
Love, Salt Lake City, Utah; TKO Advertising, Orem, Utah; and, Rushford & Ross
Marketing Communications, Provo, Utah. DiSX is a relatively new player in
this industry and the plausibility of exceeding the revenues of the more
established agencies in the near future is not great. Clients in this industry
are obtained in three primary ways. Advertising, personal referral and
notoriety of past work. DiSX seeks to obtain clients through the use of all
three of these methods.
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Holdings
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As indicated above, effective 11 Feb 1999, DiSX entered into a joint venture
with topjobs.net plc, a British Internet recruitment company, to create a new
company, topjobs.net inc, a Delaware corporation (the "JV"). DiSX is a 49%
partner/owner in this joint venture. The joint venture is governed by a seven
person Board of Directors, four of whom were appointed by topjobs.net plc and
three by DiSX. Larry D. Heaps, DiSX President, was to serve as the initial
president of the JV. Mr. Heaps served as president of the JV until the 10th
of August, 1999, and has resumed his responsibilities at president of DiSX.
Ross Wolfley, a former consultant of the Company, has been appointed as
President of the JV.
JV Products and Services
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The JV uses broadcast media (TV and radio) and sports programming to drive job
seekers to view their Internet site which consists of job listings provided by
corporate clients. Presently, a direct sales method of approach for sales is
used in the joint venture. Sales people in each locale approach prospective
corporate clients for the purpose of demonstrating the various aspects of the
product. The sales people demonstrate the uniqueness of the business and its
on-site ease-of-use from laptop presentations.
The prospective clients must have a need for recruiting in quantity during the
year to be viewed as a valid client. The JV has active websites in Salt Lake
City, Utah; Houston, Texas; and, Los Angeles, California. In addition to
active selling in these areas, the JV is actively selling in San Francisco,
California, and it is expected that the JV will have an active website in San
Francisco before the end of the calendar year 1999. Rollouts in additional
cities will be determined by the JV's board of directors.
Competition for the JV
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With the advent of the Internet, the job recruitment market is undergoing
significant internal changes. In the past, the bulk of job advertising
occurred in newsprint.
Print media's strengths include a broad readership and distribution. It is
visual and tangible, i.e., the reader can see and feel it, and it can be put
down for a while and retrieved later for additional reading. Most important,
it is the default, traditional method already used by most employers.
Print media's weaknesses include high expense and limited space. If an
employer has to run an advertisement multiple times or is using more than a
few lines, print media becomes quite expensive. Additionally, to keep
expenses down, the employer will use as limited a space as possible to
advertise the job. Consequently, an obvious weakness is the limited space
that can be used to adequately describe the employment opportunity or describe
the company offering the job.
The JV's major Internet competitors include Monster.com, HotJobs and
Techies.com. Monster.com's approach to the market it to provide a
comprehensive job listing board that has as many jobs listed from as many
companies as possible. HotJobs, a more recent addition to the competition,
also emphasizes good customer service. Techies.com provides a local approach
but limits its job offerings to the technical fields.
The JV's approach is to offer a variety of Internet-based services to
corporations to enhance their ability to attract qualified management,
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professional, technical and other job seekers and expedite their recruitment
process. The JV seeks to distinguish itself from other Internet-based
recruitment services by providing its customers with more than just job
listings. The wide range of services are designed to capitalize on the
interactive nature and data processing capabilities of the Internet, and
enable the JV's customers to efficiently design, modify and monitor their own
recruitment advertising campaigns. These services include:
- a specified number of job slots, which are graphical templates branded to
a customer's particular style, that contain detailed job descriptions our
customers can modify or update at any time,
- corporate pages that provide our customers with their own branded
employment Website with Top Jobs on the Net,
- online marketing tools that direct job-seeker traffic to our customers'
job opportunities,
- software enabling our customers to monitor visits to their advertisements
and measure effectiveness,
- consulting and advertising support services and
- our extensive promotion of Top Jobs on the Net, through both online and
traditional marketing, including television and radio advertising.
The JV's Dependence on the Internet
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The JV depends specifically on the Internet infrastructure. As such, it
depends on Internet service providers, online service providers, and other
Website operators. Many of these service providers have experienced
significant service slowdowns, malfunctions, outages and capacity limitations.
The JV has taken significant steps, such as building in system redundancy, as
well as other software and hardware strategies to protect itself and its
customers from problems.
Governmental Regulations
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None known at present
Research and development
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To date, no research and development expenses have been capitalized in DiSX.
Employees
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At July 14, 1999, the Company had three full-time employees (including its
executive officers) and 5 part-time employees. The JV has 25 full time and 3
part-time employees. J. Robert Walz and Kurt H. Johansson have signed
employment contracts with the Company. See EXECUTIVE COMPENSATION AND
EXHIBITS 10.07 and 10.08. The remainder of the Company's employees are at-
will and do not have written contracts. The JV's employees sign a standard
Employment Contract, a form of which is attached hereto as an exhibit. See
Schedule 2 of Exhibit 10.01.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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Cautionary Statement Regarding Forward-Looking Statements
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This report may contain "forward-looking" statements. Examples of forward-
looking statements include, but are not limited to: (a) projections of
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of plans and objectives
of the Company or its management or Board of Directors; (c) statements of
future economic performance, (d) statements of assumptions underlying other
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statements and statements about the Company and its business relating to the
future; and (e) any statements using the words "anticipate," "expect," "may,"
"project," "intend," or similar expressions.
Year 2000 Disclosure
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The Company is working to resolve the potential impact of the year 2000, or
so-called Y2K, on the ability of the Company's computerized information
systems to accurately process information that may be date-sensitive. Any of
the Company's programs that recognize a date using "00" as the year 1900
rather than the year 2000 could result in errors or system failures. The
Company uses a minimum number of computer programs in its operations. The
Company has completed its assessment and currently believes that the costs of
this issue will not have a material adverse impact on the Company's financial
position. However, if the Company and third parties upon which it relies are
unable to address this issue in a timely manner, it could result in a material
financial risk to the Company. In order to assure that this does not occur,
the Company plans to devote all resources required to resolve any significant
Y2K issues in a timely manner.
State of Readiness
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The Company has completed a preliminary assessment of its operations. As far
as its information technology systems ("IT"), the Company uses newer model
desktop PCs in its executive office, and in the JV operation. These PCs are
all running commercial software with the patches and updates added as they are
available.
Costs of Y2K
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The Company has replaced or upgraded its IT systems in the ordinary course of
business and therefore cannot attribute specific costs of such upgrades to
Y2K. The costs of assessing potential non-IT problems have involved a small
amount of evaluation time which has likewise been incorporated into ordinary
business costs. There have been no significant hardware or software costs
directly attributable to Y2K.
Risks of Y2K
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The Company does not anticipate that Y2K problems pose substantial risks to
its current operations, unless Y2K causes catastrophic systemic failures of
the power grid, for instance. The worst case scenario contemplated to date
would involve a temporary suspension of the JV's activities while systemic
problems are resolved. Any such suspension of operations might have a
significant adverse impact on the Company's overall revenues.
Continency Plans
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The Company does not have any contingency plans at this time and does not
intend to prepare any such plan because the most critical factors in the worst
case scenario are essentially beyond the Company's control. The Company
intends to continue its maintenance and upgrades of its internal systems, and
will query its major customers and suppliers concerning their respective
states of readiness.
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Results of Operations
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In June 1998, the Company entered into a nine month research and cooperation
test marketing agreement, limited to the State of Utah and the city of
Houston, Texas, with topjobs.net plc (formerly "The Corporate Net,"
hereinafter referred to as "PLC"), a corporation located in Manchester,
England, engaged in Internet recruitment. Partially as a result of securing
contracts providing gross revenues to the venture of $141,000 in December
1998, the Company and PLC decided to terminate the test marketing arrangement
and establish a permanent venture in the United States. PLC formed a Delaware
corporation, known as topjobs.net inc. On February 11, 1999, the Company
entered into a series of agreements with PLC, including a Stockholders
Agreement and Licensing Agreement. Under the terms of the agreements, PLC
granted the JV an exclusive license in the territory of the State of Utah, the
city of Houston, Texas, and such other United States cities as the parties may
mutually agree upon, to use PLC's software, name, and other trademarks.
PLC advanced $300,000 as an interest free loan to the Company in installments
through March 4, 1999. The Company agreed to advance up to a maximum of
$500,000 to the JV on an interest free basis to fund day-to-day working
capital requirements. The Company's loan to the JV is repayable at such time
as shall be determined by the JV board of directors based upon the JV's cash
flow and capital resources. Upon completion of PLC's initial public offering,
PLC paid DiSX an additional $200,000 in cash and canceled the $300,000 loan.
PLC also issued to DiSX $500,000 of PLC's ordinary shares (valued at the
initial per share public offering price). Based on a $12.00 per ADS offering
price, a total of 41,667 of PLC's ordinary shares were issued to DiSX.
Six months ended June 30, 1999 compared to six months ended June 30, 1998
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Total revenues for the six months ended June 30, 1999, was $834,392 compared
to $17,370 for the same period of 1998. This increase was attributed to
proceeds from media services provided for the JV. Direct costs for the six-
month period ended June 30, 1999 were $836,730 as compared to $4,170 for the
same period ended June 30, 1998. The increase in direct costs was due to
advertising and related media costs.
For the first six months of the 1999 fiscal year, operating expenses were
$657,584, consisting of salaries and wages of $152,113, depreciation and
amortization expenses of $7,796, and general and administrative expenses of
$497,675, resulting in a loss from operations of $659,922. Total operating
expenses for the same period in 1998 were $465,448, consisting of salaries and
wages of $97,004, depreciation and amortization expenses of $7,193, and
general and administrative expenses of $361,251, resulting in a loss from
operations of $452,248. The increase in operating expenses was due to higher
salaries and wages, professional fees, and promotional expenses.
Total other income and expense for the first six months of the 1999 fiscal
year netted an income of $677,251 compared to an expense of $54,699 for 1998's
initial six months. In April 1999, the Company booked $1,000,000 other income
through their agreement with PLC. As stated above, the Company received
$500,000 in cash and $500,000 in PLC common stock in consideration for giving
up a majority position in the Joint Venture. This other income, plus $600
interest income, was partially offset by interest and related expenses of
$72,554 and a loss on equity investment in the JV totaling $250,795. (It is
projected that the JV will experience losses through 1999, becoming profitable
in late 2000). The 1998 expenses consisted of interest and related expenses.
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The net income of $17,329 for the initial six month period of 1999 compares
with a net loss of $506,947 for the same period of 1998.
In the second quarter of 1999, the valuation of the marketable securities
received in the agreement with PLC experienced a loss of $263,019. This loss
on valuation yielded a comprehensive loss of $245,690 for the six months ended
June 30, 1999, compared to a comprehensive loss of $506,947 for the same
period of 1998, a decrease of 51.54%. The basic income per share for the
first six months of fiscal 1999 was $0.01 as compared to a basic loss per
share of $0.11 for the same period of 1998, based on the weighted average
number of shares outstanding for the respective periods.
Liquidity and Capital Resources at June 30, 1999
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During the first half of 1999, cash from operations, proceeds from the
agreement with PLC, and notes payable were utilized for working capital,
reduction of accrued expenses, conversion of debt, and for the continued
developmental activities of the Company.
The Company had a working capital deficit of $(923,702), at June 30, 1999.
The Company had a cash overdraft of $4,363 and receivables of $190,466. Cash
used in operations for the six-month period ended June 30, 1999, was $694,847,
compared with $505,290 for the same period of 1998. Cash used in operations
for the first six months of 1999 was funded as noted above.
Because the Company has an accumulated deficit of $(6,172,853), has a working
capital deficit and limited internal financial resources, the report of the
Company's auditor contains a going concern modification as to the ability of
the Company to continue. During fiscal 1999, the Company began substantial
business operations, reduced expenses where possible to reduce cash outflow
and continued to increase working capital through the conversion of accrued
liabilities and notes payable to common stock.
At June 30, 1999, the Company had recorded $209,148 in accrued expenses
consisting of accrued salaries and wages, accrued interest and unpaid payroll
taxes, and unemployment taxes, including reasonable interest and penalties for
late payment. Subsequent to December 31, 1998, and prior to the end of the
six-month period, the Company has reduced its accrued expenses by 48.08% from
$402,858 at year end. This reduction was achieved by reducing outstanding
accrued salaries and wages and accrued interest through issuance of restricted
common stock. The Company has also paid a significant portion of the accrued
payroll taxes due to the Internal Revenue Service and the Utah State Tax
Commission and made arrangements with the Utah Department of Job Force
Services to pay $2,000 monthly towards the Company's unemployment tax
obligation.
At June 30, 1999, the Company had recorded notes payable, convertible
debentures, and current portion of long-term liabilities totaling $679,299.
These accounts were reduced from $931,347 as of December 31, 1998. This
$252,048 reduction was accomplished by the conversion of debt to equity
through the issuance of restricted common stock.
The Company is expected through its agreement with PLC to support the JV with
working capital as required. Future funding may involve the sale of some
ownership interests in the JV in accordance with the Stockholders Agreement.
Additional funding from the Company's side will be accomplished through
issuance of convertible debentures. There can be no assurance that the
required funding will be available to the JV.
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The Company continues to reserve possible contingent liabilities with related
accrued interest totaling $340,231 to Laservend, Inc. The potential
litigation regarding Laservend is described below.
Impact of Inflation
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The Company does not anticipate that inflation will have a material impact on
its current or proposed operations.
Seasonality
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The Company does not anticipate that seasonality will have a material impact
on its current or proposed operations.
Year ended December 31, 1998, compared to year ended December 31, 1997
- ----------------------------------------------------------------------
During 1997 and 1998, the Company continued in its developmental stage.
Financial statements during that period reflect that stage and year to year
changes may have limited significance. In late 1998 and early 1999, the
Company commenced operations and is no longer designated a developmental stage
company.
Total revenues for the year ended December 31, 1998, was $53,389 compared to
$51,246 for the same period of 1997, an increase of 4.18%. This increase was
attributed to a modest increase in sales of job listings to employers. Direct
costs for the year ended December 31, 1998, were $12,940 as compared to
$31,651 for the year ended December 31, 1997. The decrease in direct costs
were primarily due to a reduction in outside labor used to prepare the
Company's job data base.
For fiscal year 1998, operating expenses were $1,247,410, consisting of
salaries and wages of $374,616, depreciation and amortization expenses of
$16,833, and general and administrative expenses of $855,961, resulting in a
loss from operations of $1,206,941. Total operating expenses for 1997 were
$1,540,718, consisting of salaries and wages of $506,871, depreciation and
amortization expenses of $10,427, research and development expenses of $1,365,
and general and administrative expenses of $1,022,055, resulting in a loss
from operations of $1,521,123. The decrease in salaries and wages resulted
from a reduced number of data entry personnel. This staffing reduction was
made possible by automation of some data entry functions. The reduction in
general and administrative expenses was due to a decrease in professional
consulting costs.
Total other expense (consisting primarily of interest expense) for fiscal 1998
totaled $166,201 compared to $155,197 for fiscal 1997. The year to year
increase in interest expense was due to an accrual of $53,659 added to
contingent liabilities relating to the Laservend litigation described below.
The Company experienced a comprehensive loss $1,373,142 for the year ended
December 31, 1998, compared to a comprehensive loss of $1,676,320 for the same
period of 1997, a decrease of 18.09%. The basic loss per share for fiscal
1998 was $0.09 as compared to $0.18 for fiscal 1997, based on the weighted
average number of shares outstanding for the respective periods.
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Liquidity and Capital Resources at December 31, 1998
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During 1998, notes payable (some convertible to shares of the Company's common
stock) were utilized for working capital, conversion of debt, payment of
professional services and for the continued developmental activities of the
Company.
The Company had a working capital deficit of $(1,392,343), at December 31,
1998. The Company had a cash overdraft of $6,014 and receivables of $130,529.
Cash used in operations for the year ended December 31, 1998, was $977,680 and
$708,911 for the year ended December 31, 1999. Cash used in operations for
the year ended December 31, 1998, was funded primarily by notes payable, a
significant portion of which were converted to common stock.
Because the Company had an accumulated deficit of $(5,927,163), has a working
capital deficit and limited internal financial resources, the report of the
Company's auditor contains a going concern modification as to the ability of
the Company to continue. During fiscal 1998, the Company began to effect
measures to reduce cash outflow and increase working capital through the
conversion of accrued liabilities and notes payable to common stock.
At December 31, 1998, the Company had recorded $402,585 in accrued expenses
consisting of accrued salaries and wages, accrued interest and unpaid payroll
taxes, and unemployment taxes, including reasonable interest and penalties for
late payment. As noted above, subsequent to December 31, 1998, and prior to
this filing, the Company significantly reduced outstanding accrued salaries
and wages and accrued interest through issuance of restricted common stock.
At December 31, 1998, the Company had recorded notes payable, convertible
debentures, and current portion of long-term liabilities totaling $931,347.
The Company has reserved and recorded possible contingent liabilities with
related accrued interest totaling $340,231 to Laservend, Inc. In January
1997, the Company entered into a "Letter Offer to Acquire" with Laservend,
Inc. whereby Laservend would acquire all the issued and outstanding common
stock of the Company. In anticipation of the proposed merger, Laservend
advanced the Company $286,572 during the year ended December 31, 1997. The
Company has accrued $340,231 which includes the advances and estimated
interest due at December 31, 1998. The agreement was that such advanced funds
would reduce the acquisition price if the merger occurred and if the merger
did not occur, the Company would satisfy the obligation through the delivery
of its common stock at a rate of two shares for every dollar advanced. The
merger never occurred and Laservend has filed for bankruptcy. The Trustee of
the bankruptcy is now asserting that the advances are to be repaid in cash.
The Company does not plan on repaying the advances in cash but is willing to
issue common stock to repay the loan. The outcome is undeterminable at this
time.
ITEM 3. DESCRIPTION OF PROPERTY
--------------------------------
Executive Offices
- -----------------
The Company leases its principal executive offices in Orem, Utah. The current
lease is for a space of approximately 6,745 square feet at a rate of $6,200
per month. The lease agreement is for three years from October 1, 1998 to
September 30, 2001. The lease includes provision for a 3% increase in lease
<PAGE> 13
payment on October 1, 1999, and a 3% increase on October 1, 2000. The Company
sub-leases approximately 85% of its floor space to the JV for $5,525 per
month. The sub-lease is an oral agreement. The JV will bear its
proportionate cost of the percentage increases.
The Company's current facilities are generally adequate for anticipated needs
over the next 12 to 24 months.
The Company owns Lot 32 of a development known as Cottages on the Green, as
identified in the Plat recorded in the office of the Wasatch County Recorder,
as Entry No. 200360, in Book 371, at Page 458, contained with Plat C of
Cottages on the Green, P.U.D., Midway City, Wasatch County, State of Utah.
Value of the property is $95,000.
<PAGE>
<PAGE> 14
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------
The following table sets forth as of July 14, 1999, the name and address and
the number of shares of the Company's Common Stock, par value $0.001 per
share, held of record or beneficially by each person who held of record, or
was known by the Company to own beneficially, more than 5% of the 20,982,057
shares of Common Stock issued and outstanding, and the name and shareholdings
of each director and of all officers and directors as a group.
Principal Shareholders
- ----------------------
Name and Address Number of Shares Nature of Ownership % of Class
- ---------------- ---------------- ------------------- ----------
Larry D. Heaps 1,650,000 Direct 7.86
743 South 670 East 500,000 Indirect (2) 2.38
Orem, Utah 84097
Eric E. Marchant 1,650,000 Direct 7.86
3926 Riverwood Drive 24,608 Indirect (1) 0.18
Provo, Utah 84604
Curtis T. Johnson 1,300,000 Direct 6.19
1133 East 2570 North
Provo, Utah 84604
DeLynn Heaps 1,210,000 Direct 5.77
3805 North 450 West 500,000 Indirect(2) 2.38
Provo, Utah 84604
Craig Morrison 1,829,964 Direct 8.72
3771 Riverwood Drive
Provo, Utah 84604
Officers and Directors
- ----------------------
Name and Address Number of Shares Nature of Ownership % of Class
- ---------------- ---------------- ------------------- ----------
Larry D. Heaps -see above-
Eric E. Marchant -see above-
Curtis T. Johnson -see above
J. Robert Walz 101,575 Direct 0.48
3145 North Comanche
Provo, Utah 84604
Kurt Johansson 58,000 Direct 0.28
1181 East 300 North
Pleasant Grove, Utah
84062
All Officers/Directors 4,759,575 Direct 22.68
as a Group (5 Persons) 524,608 Indirect 2.50
[Footnotes appear on following page]
<PAGE> 15
(1) Represents shares held of record by Marchant & Sons, a family trust of
which Mr. Marchant is a beneficiary.
(2) Represents shares held of record by the Heaps Family Trust, an entity
controlled by DeLynn Heaps, of which Larry Heaps is a beneficiary.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
--------------------------------------------------------------------
The names of the Registrant's executive officers and directors and the
positions held by each of them are set forth below:
Name Age Position Held Position Since
- ---- --- -------- -------------------
Larry D. Heaps 50 President, Director October 1993
J. Robert Walz 42 Executive Vice President April 1999
Kurt Johansson 43 Vice President February 1999
Eric E. Marchant 47 Director October 1993
Curtis T. Johnson 50 Director October 1993
The term of office of each director of the Company is for one year and until
his or her successor is elected at the Registrant's annual shareholders'
meeting and is qualified, subject to removal by the shareholders. All
officers serve at the pleasure of the board of directors and until his or her
successor is elected at the annual meeting of the board of directors and is
qualified.
Biographical Information
- ------------------------
Set forth below is certain biographical information with respect to each of
the Registrant's officers and directors.
Larry D. Heaps has extensive experience in operations and manufacturing
management. Mr. Heaps has served as President of the Company since 1993.
From 1989 to 1993, as an independent operations consultant, Mr. Heaps
successfully worked with a number of clients in establishing improved
manufacturing and operational procedures. From 1972 to 1983, as Executive VP
and General Manager of a successful children's clothing manufacturing
operation, Larry managed operations that included hundreds of employees,
thousands of customer accounts, overseas exports and innovative receivables
financing. Educated at Brigham Young University, in 1972, Mr. Heaps received a
Bachelor of Science in Business Management with an emphasis in Marketing.
J. Robert Walz has nearly twenty years of experience as an on air talent
in the television industry. From 1984 to 1999, Mr. Walz worked for KSL-
Television in Salt Lake City, Utah, as a reporter/correspondent. His reports
were aired by CBS, ABC and NBC affiliate stations throughout the United States
and throughout the world on CNN. From 1992 to 1997, Mr. Walz taught
journalism at Brigham Young University and Utah Valley Community College. He
has written and produced numerous video productions. Mr. Walz received a
Bachelor of Arts in Communications from Brigham Young University with an
emphasis in Broadcast Journalism in 1982. He was the student president for
the Society of Professional Journalists in 1981.
Kurt Johansson joined the Company as vice president in February 1999.
From 1991 to 1999, Mr. Johansson owned and operated his own advertising agency
with major accounts such as Dannon Yogurt, Grand Targhee Ski Area and Fuji
<PAGE> 16
Film. In 1996, Mr. Johansson was the Director of Marketing at Mansell and
Associates. From 1992 to 1996, he was a director of Advertising at
HealthRider and was responsible for a multi-million dollar television, radio
and print budget. From 1986 to 1990, he worked in radio station sales and
management and was the number one sales person at a top Salt Lake City radio
station in 1990. From 1978 to 1985, Mr. Johansson owned a financial planning
firm, supervising 300 agents with offices in Utah, Arizona and Idaho.
Eric E. Marchant has served as a director of the Company since 1993.
From 1989 to 1993, Mr. Marchant served as President of Management Perspectives
Group, a management consulting firm that assists clients in improving their
strategic focus, cultural unity and management/leadership environment. He
oversaw and participated in the firm's product development and consulting
services. Prior to that period, as a private consultant, his list of clients
included Exxon, Dow Chemical, Department of Energy, and a number of other
organizations large and small. A lawyer and member of the Utah Bar
Association since 1978, Mr. Marchant received his Juris Doctorate from Brigham
Young University's J. Reuben Clark Law School in 1978. He received his B.A.
in Political Science/Spanish from Southern Utah State College where he
graduated with high honors (4.0 GPA) in three years in 1976.
Curtis T. Johnson worked as a Senior Marketing Manager from 1998 to 1999
for Intel. From 1993 to 1998, Mr. Johnson worked for the Company. From 1989
to 1993, he spent four years with Novell, Inc. as Product Line Manager and
Senior Marketing Manager in Sales/Marketing. He managed a major product line
from early specification through availability in the marketplace. His
responsibilities included establishing and maintaining OEM relationships with
major high technology vendors as well as creating and managing programs
relating to Novell's major customers. From 1974 to 1980, Mr. Johnson's
background also includes corporate responsibilities with Digital Equipment
Corporation and from 1980 to 1989 with Wang Laboratories. He filled a variety
of roles including technology development, sales, marketing and management.
<PAGE>
<PAGE> 17
ITEM 6. EXECUTIVE COMPENSATION
-------------------------------
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Company's last three completed
fiscal years to the Registrant's chief executive officer and each of its other
executive officers that received compensation in excess of $100,000 during
such period (as determined at December 31, 1998, the end of the Registrant's
last completed fiscal year):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Other
Annual Restricted All Other
Name & Principal Compen- Stock Options/ LTIP Compensa-
Position Year Salary($) Bonus($) sation($) Award($) SARS(#) Payout($) tion($)
- ---------------- ---- --------- -------- --------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eric E. Marchant 1998 $ 96,000 - - - - - -
CEO & Chairman 1997 $ 75,000 - $ 112,500(1) - - - -
1996 $ 60,000 - - - - - -
Larry D. Heaps 1998 $ 96,000 - - - - - -
President & Director 1997 $ 75,000 - $ 112,500(1) - - - -
1996 $ 60,000 - - - - - -
Curtis T. Johnson 1998 $ 5,750 - - - - - -
Director 1997 $ 75,000 - $ 112,500(1) - - - -
(President 1994-96) 1996 $ 60,000 - - - - - -
(1) These officers received restricted stock for accrued salaries.
</TABLE>
Accrued Compensation
- --------------------
During fiscal years 1998, 1997 and 1996, the Company accrued salaries for its
officers and directors in the amounts of $47,459, $15,123, and $246,988,
respectively.
Board Compensation
- ------------------
The Company's directors receive no payments for attendance at meetings. Board
members may be reimbursed for all reasonable out-of-pocket expenses incurred
by them in connection with their attendance at board meetings.
Options/SAR Grants in Last Fiscal Year
- ------- -------------------------------
No individual grants of stock options (whether or not in tandem with SARs), or
freestanding SARs were made during the last completed fiscal year to any of
the named executive officers.
<PAGE> 18
Bonuses and Deferred Compensation
- ---------------------------------
There are no compensation plans or arrangements, including payments to be
received from the Company, with respect to any person named as a director,
executive officer, promoter or control person above which would in any way
result in payments to any such person because of his resignation, retirement,
or other termination of such person's employment with the Company or its
subsidiaries, or any change in control of the Company, or a change in the
person's responsibilities.
Pension Table
- -------------
Not Applicable.
Other compensation
- ------------------
None.
Employment Agreements
- ---------------------
On February 1, 1999, the Company entered into an Employment Agreement with
Kurt H. Johansson for a salary of $50,000 per year, subject to the Company's
sole discretion to reduce or increase such compensation. The agreement
includes provisions for bonus payments in accordance with a prospective
incentive program to be mutually agreed upon by the employer and employee.
Termination of the agreement is at-will by either party.
On April 6, 1999, the Company entered into an Employment Agreement with J.
Robert Walz for a salary of $84,000 per year, subject to discretionary
increase pursuant to an annual review by the board of directors. The
agreement includes a signing bonus of fifty thousand (50,000) shares of the
Company's common stock. The agreement also includes provisions for a bonus
payment upon the anniversary date of signing based upon a determination of the
board of directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
------------------------------------------------------
Transactions with Management and Others
- ---------------------------------------
Except as indicated below, and for the periods indicated, there were no
material transactions, or series of similar transactions, since the beginning
of the Company's last fiscal year, or any currently proposed transactions, or
series of similar transactions, to which the Company was or is to be a party,
in which the amount involved exceeds $60,000, or in which any director or
executive officer, or any security holder who is known by the Company to own
of record or beneficially more than 5% or any class of the Company's common
stock, or any member of the immediate family of any of the foregoing persons,
has an interest.
Certain Business Relationships
- ------------------------------
Except as indicated below, and for the periods indicated, there were no
material relationships regarding directors that exist, or have existed during
the Company's last fiscal year.
<PAGE> 19
Indebtedness of Management
- --------------------------
Except as indicated below, and for the periods indicated, there were no
material transactions, or series of similar transactions, since the beginning
of the Company's last fiscal year, or any currently proposed transactions, or
series of similar transactions, to which the Company was or is to be a party,
in which the amount involved exceeds $60,000 and in which any director or
executive officer, or any security holder who is known to the Company to own
of record or beneficially more than 5% of any class of the Company's common
stock, or any member of the immediate family of any of the foregoing persons,
has an interest.
Transactions with Promoters
- ---------------------------
None.
Sub-lease to topjobs.net, Inc. (the "JV")
- ----------------------------------------
The Company sub-leases approximately 85% of its floor space to the JV for
$5,525 per month. The sub-lease is an oral agreement.
ITEM 8. DESCRIPTION OF SECURITIES
----------------------------------
The Registrant is authorized to issue fifty five million (55,000,000) total
shares of stock, consisting of 50,000,000 shares designated as common stock,
par value $0.001 per share (the "Common Stock"), and 5,000,000 shares
designated as preferred stock, par value of $0.001 per share (the "Preferred
Stock"). The Company has 20,982,057 shares of Common Stock issued and
outstanding and no shares of Preferred Stock issued and outstanding at
September 28, 1999.
Common Stock
- ------------
The holders of Common Stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of shareholders. Shares of Common Stock do
not carry cumulative voting rights and, therefore, a majority of the shares of
outstanding Common Stock will be able to elect the entire board of directors
and, if they do so, minority shareholders would not be able to elect any
persons of the board of directors. The Registrant's bylaws provide that a
majority of the issued and outstanding shares of the Registrant constitutes a
quorum for shareholders' meetings, except with respect to certain matters for
which a greater percentage quorum is required by statute or the bylaws.
Shareholders of the Registrant have no preemptive rights to acquire shares of
Common Stock or other securities. The Common Stock is not subject to
redemption and carries no subscription or conversion rights. In the event of
liquidation of the Registrant, the shares of Common Stock are entitled to
share equally in corporate assets after satisfaction of all liabilities.
Holders of Common Stock are entitled to receive such dividends as the board of
directors may from time to time declare out of funds legally available for the
payment of dividends. The Registrant seeks growth and expansion of its
business through the reinvestment of profits, if any, and does not anticipate
that it will pay dividends in the foreseeable future.
<PAGE> 20
Preferred Stock
- ---------------
The authority to issue the Preferred Stock is vested in the Board of Directors
of the Company, which has the authority to fix and determine the powers,
qualifications, limitations, restrictions, designations, rights preferences,
or other variations of each class or series within each class which the
Company is authorized to issue. The above described authority of the Board of
Directors may be exercised by corporate resolution from time to time as the
Board of Directors sees fit.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
-----------------------------------------------------------
At July 14, 1999, the Company's Common Stock was quoted on the NASD's OTC
Bulletin Board under the symbol "DIXS." The following table sets forth, for
the respective periods indicated, the prices for the Company's Common Stock in
the over-the-counter market as reported by a weekly reporting service and
according to the NASD's OTC Bulletin Board. The bid prices represent inter-
dealer quotations, without adjustments for retail markups, markdowns or
commissions and may not necessarily represent actual transactions. All bid
prices in the table below have been rounded to the nearest whole cent.
<PAGE>
<PAGE> 21
Bid Prices
----------
High Bid Low Bid
-------- -------
Fiscal Year Ended December 31, 1996
- -----------------------------------
First Quarter $ 1.13 $ 0.25
Second Quarter $ 1.13 $ 0.13
Third Quarter $ 0.75 $ 0.13
Fourth Quarter $ 0.75 $ 0.13
Fiscal Year Ended December 31, 1997
- -----------------------------------
First Quarter $ 1.25 $ 0.25
Second Quarter $ 1.00 $ 0.13
Third Quarter $ 0.75 $ 0.19
Fourth Quarter $ 0.69 $ 0.06
Fiscal Year Ended December 31, 1998
- -----------------------------------
First Quarter $ 1.25 $ 0.06
Second Quarter $ 1.63 $ 0.22
Third Quarter $ 0.66 $ 0.13
Fourth Quarter $ 0.44 $ 0.10
Fiscal Year Ended December 31, 1999
- -----------------------------------
First Quarter $ 0.94 $ 0.16
Second Quarter $ 0.75 $ 0.38
As of September 28, 1999, there were approximately 194 shareholders of record
of the Company's Common Stock and the reported bid or asked prices for the
Company's Common Stock was $0.34 and $0.38, respectively.
As of September 28, 1999, the Company has issued and outstanding 22,160,135
shares of Common Stock.
Dividend Policy
- ---------------
The Company has not declared or paid cash dividends or made distributions in
the past and the Company does not anticipate that it will pay cash dividends
or make distributions in the foreseeable future. The Company currently
intends to retain and reinvest future earnings, if any, to finance its
operations.
Transfer Agent
- --------------
The transfer agent for the Company's Common Stock is Colonial Stock Transfer
Co., 455 East 400 South, Suite 100, Salt Lake City, Utah 84111.
<PAGE>
<PAGE> 22
ITEM 2. LEGAL PROCEEDINGS
-------------------------
The Company is involved in litigation with Laservend, Inc., a Utah corporation
("Laservend"), who is currently undergoing Chapter 7 bankruptcy proceedings in
the Bankruptcy Court for the District of Utah, Central Division. Laservend's
Bankruptcy Trustee filed a complaint against the Company on June 18, 1998,
alleging that Laservend had advance the Company $225,000.00 with the agreement
or understanding that the Company would repay Laservend $225,000.00 plus
interest. Subsequently, the complaint has been amended alleging that the
amounts advanced with interest are $273,000.00. The Company contends that the
parties were in merger negotiations and that the amounts advanced were part of
these negotiations. Further, that in the event that a merger did not occur,
any and all amounts advanced by Laservend to the Company would be repaid
through the Company's Common Stock at a rate of $0.50 per share. The merger
failed to take place due to events occurring in Laservend. The Bankruptcy
Court ruled on July 12, 1999, that the amounts owed by the Company are
$273,000.00. Negotiations are ongoing concerning the repayment of said
amount.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
-----------------------------------------------------
The Registrant has not changed nor had any disagreements with its independent
certified accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
-----------------------------------------------
During the first two quarters of 1999, the Company issued 1,870,488 shares of
restricted Common Stock to certain creditors of the Company for conversion of
outstanding indebtedness at an average price of $0.258 per share. Of that
total, 1,535,168 shares were issued to two affiliates of the Company at the
rate of $0.263 per share for the conversion of notes payable and convertible
debentures.
In 1999, the Company issued 1,369,054 shares of restricted Common Stock to
various individuals for professional services relating to the Company's
business plan and providing technical services. The value for the services was
placed at an average of $0.25 per share. No cash consideration was received by
the issuer and aggregate offering price for the securities (approximately
$342,274) was determined to be the fair market value for the consulting
service provided.
In 1999, the Company issued 340,000 shares of restricted Common Stock for real
property as described in Item 3, Part I above, valued at $95,000.
In 1999, the Company issued 524,446 shares of restricted Common Stock at
$0.228 per share to pay $119,312 in accrued salaries and wages.
The securities issued in the foregoing transactions were issued in reliance on
the exemption from registration requirements provided by Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). Of the above total
shares issued for the six-month period, 700,000 shares were issued to current
officers and directors at an average price of $0.250 per share for accrued
salaries and wages and for services rendered for the Company.
<PAGE> 23
In 1998, the Company issued 3,438,421 of shares of restricted Common Stock to
third-party creditors of the Company for conversion of outstanding
indebtedness at an average price of $0.233 per share.
In 1998, the Company issued 385,500 shares of restricted Common Stock to
various individuals for professional services relating to the Company's
business plan and providing technical services. The value for the services was
placed at an average of $0.303 per share. No cash consideration was received
by the issuer and aggregate offering price for the securities (approximately
$116,824) was determined to be the fair market value for the services
provided.
The securities issued in the foregoing transactions were issued in reliance on
the exemption from registration requirements provided by Section 4(2) of the
Securities Act.
In 1997, the Company issued 3,115,216 shares of restricted Common Stock to
certain third-party creditors of the Company for conversion of outstanding
notes payable and convertible debentures at an average price of $0.320 per
share.
In 1997, the Company issued 3,115,216 shares of restricted Common Stock to
certain third party creditors of the Company for conversion of outstanding
notes payable and convertible debentures at an average price of $0.320 per
share.
In 1997, the Company issued 2,051,820 shares of restricted Common Stock to
various individuals for professional services relating to the development of
the Company's business plan and providing technical and other business related
services. The value for the services was placed at an average of $0.190 per
share. No cash consideration was received by the issuer and aggregate offering
price for the securities (approximately $389,846) was determined to be the
fair market value for the consulting service provided. Of the above total,
600,000 shares were issued to current officers and directors for services
rendered to the Company during a period when their salaries and wages were
reduced below contracted levels.
In 1997, the Company issued 1,800,000 shares of restricted Common Stock at
$0.188 per share to pay $337,500 in accrued salaries and wages to current
officers and directors.
The securities issued in the foregoing transactions were issued in reliance on
the exemption from registration requirements provided by Section 4(2) of the
Securities Act.
In 1996, the Company issued 82,774 shares of restricted Common Stock to
certain third-party creditors of the Company for conversion of outstanding
indebtedness at an average price of $0.492 per share.
The securities issued in the foregoing transactions were issued in reliance on
the exemption from registration requirements provided by Section 4(2) of the
Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-------------------------------------------------
Sections 16-10a-901 through 909 of the Utah Revised Business Corporation Act
provides in relevant parts as follows:
<PAGE> 24
(1) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or on
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only
to the extent that the court in which such action or suit was brought shall
determine on application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in (1) or (2) of this subsection, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.
(4) The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such
a person.
The foregoing discussion of indemnification merely summarizes certain aspects
of indemnification provisions and is limited by reference to the above
discussed sections of the Utah Revised Business Corporation Act.
<PAGE> 25
The Registrant's certificate of incorporation and bylaws provide that the
Registrant "may indemnify" to the full extent of its power to do so, all
directors, officers, employees, and/or agents. It is anticipated that the
Registrant will indemnify its officers and directors to the full extent
permitted by the above-quoted statute.
Insofar as indemnification by the Registrant for liabilities arising under the
Securities Act may be permitted to officers and directors of the Registrant
pursuant to the foregoing provisions or otherwise, the Registrant is aware
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
PART F/S
--------
The Company's consolidated balance sheets of Dynamic Information System &
eXchange, Inc. and Subsidiaries as of December 31, 1998, and the related
consolidated statements of operations, stockholders' equity (deficit), and
cash flows for the years ended December 31, 1998 and 1997, have been examined
to the extent indicated in their reports by Jones, Jensen & Company,
independent certified accountants, and have been prepared in accordance with
generally accepted accounting principles and pursuant to Regulation S-B as
promulgated by the Securities and Exchange Commission and are included herein.
The Company's consolidated balance sheets of Dynamic Information System &
eXchange, Inc. and Subsidiaries as of June 30, 1999, and the related
consolidated statements of operations, stockholders' equity (deficit), and
cash flows for the period ending June 30, 1999 have been prepared by the
Company, without audit, in accordance with the rules and regulations of the
Securities and Exchange Commission and, therefore may not include all
information and footnotes necessary for a complete presentation of the
financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments (which include only normal recurring
accruals) necessary to present fairly the financial position and results of
operations for the periods presented have been made. These financial
statements should be read in conjunction with the accompanying notes, and with
the historical financial information of the Company.
<PAGE>
PAGE> 26
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Dynamic Information System and eXchange, Inc. (DiSX) and Subsidiary
(A Development Stage Company)
Orem, Utah
We have audited the accompanying consolidated balance sheet of Dynamic
Information System & eXchange, Inc., (a development stage company) and
Subsidiary as of December 31, 1998 and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
December 31, 1998 and 1997, and from inception on April 9, 1993 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 consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dynamic
Information System & eXchange, Inc. (a development stage company) and
Subsidiary as of December 31, 1998 and the results of their operations and
their cash flows for the years ended December 31, 1998 and 1997, and from
inception on April 9, 1993 through December 31, 1998 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
July 22, 1999
<PAGE>
<PAGE> 27
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Consolidated Balance Sheet
December 31, 1998
ASSETS
------
December 31, 1998
-----------------
CURRENT ASSETS
Accounts receivable (Note 1) $ 114,405
Accounts receivable - related party (Note 6) $ 16,124
Prepaids 6,526
---------------
Total Current Assets 137,055
---------------
FIXED ASSETS - net (Notes 1 and 3) 23,170
---------------
TOTAL ASSETS $ 160,225
===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Cash overdraft $ 6,014
Accounts payable 62,179
Accrued expenses (Note 4) 402,858
Deferred revenue 127,000
Current portion - long-term liabilities (Note 5) 292,309
Convertible debentures (Note 5) 354,622
Notes payable - related parties (Note 5) 284,416
---------------
Total Current Liabilities 1,529,398
---------------
LONG-TERM LIABILITIES (Note 5) -
Total Liabilities 1,529,398
---------------
COMMITMENTS AND CONTINGENCIES (Note 7) 340,231
---------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 5,000,000 shares authorized
at $0.001 par value; no shares issued or
outstanding -
Common stock, 50,000,000 shares authorized at
$0.001 par value; 16,746,769 shares issued 16,747
Additional paid-in capital 4,201,012
Deficit accumulated during the development stage (5,927,163)
---------------
Total Stockholders' Equity (Deficit) (1,709,404)
---------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 160,225
===============
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 28
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Consolidated Statements of Operations
December 31, 1998
From
Inception on
For the Years April 9,
Ended December 31, 1993 Through
----------------------- December 31,
1998 1997 1998
--------- ----------- -------------
SALES $ 53,389 $ 51,246 $ 112,421
COST OF SALES 12,920 31,651 50,459
--------- ---------- ------------
GROSS MARGIN 40,469 19,595 61,962
--------- ---------- ------------
EXPENSES
Salaries and wages 374,616 506,871 2,555,930
Depreciation and
amortization 16,833 10,427 51,421
Research and devel-
opment (Note 1) - 1,365 80,667
General and
administrative 855,961 1,022,055 2,862,955
---------- ---------- -----------
Total Expenses 1,247,410 1,540,718 5,550,973
---------- ---------- -----------
Loss from Operations (1,206,941) (1,521,123) (5,489,011)
---------- ---------- -----------
OTHER INCOME (EXPENSE)
Interest income 700 - 700
Other expense - (14,516) (14,516)
Interest expense (166,901) (140,681) (424,336)
---------- ---------- -----------
Total Other
Income (Expense) (166,201) (155,197) (438,152)
---------- ---------- -----------
NET LOSS $(1,373,142) $(1,676,320) $ (5,927,163)
========== ========== ===========
BASIC LOSS PER SHARE $ (0.09) $ (0.18)
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 29
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
-------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balance at inception
on April 9, 1993 $ - $ - $ - $ -
Issuance of common stock to
founders at incorporation
date at $0.00 per share 2,500,000 2,500 (2,500) -
Issuance of common stock
at $0.60 per share 112,500 113 67,387 -
Net loss from inception
through December 31, 1993 - - - (404,925)
---------- ---------- --------- ------------
Balance, December 31, 1993 2,612,500 2,613 64,887 (404,925)
Cancellation of common
stock issued to founder (1,000,000) (1,000) 1,000 -
Common stock issued for
the conversion of
convertible debentures at
approximately $0.19 per
share 1,800,000 1,800 339,571 -
Common stock issued for
cash at approximately
$1.18 per share 208,338 208 244,792 -
Common stock issued in
recapitalization 1,309,200 1,309 6,036 -
Common stock issued from
private placement at $2.00
per share 75,000 75 149,925 -
Common stock issued in lieu
of wages at $2.00 per share 98,500 99 196,901 -
Net loss for the year ended
December 31, 1994 - - - (785,664)
---------- ---------- --------- ------------
Balance, December 31, 1994 5,103,538 5,104 1,003,112 (1,190,589)
---------- ---------- --------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
PAGE> 30
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 1998 (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
-------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balance forward $ 5,103,538 $ 5,104 $ 1,003,112 $ (1,190,589)
Common stock issued to
employees for services
rendered at $0.40 per
share 157,500 157 62,843 -
Conversion of notes and
interest payable to common
stock at $0.62 per share 400,000 400 249,505 -
Common stock issued in lieu
of wages at $1.00 per share 197,000 197 196,803 -
Common stock issued for
services rendered at appro-
ximately $1.21 per share 15,000 15 18,185 -
Net loss for the year ended
December 31, 1994 - - - (850,154)
---------- ---------- --------- ------------
Balance, December 31, 1995 5,873,038 5,873 1,530,448 (2,040,743)
Conversion of notes and
interest payable to common
stock at $0.49 per share 82,774 81 40,630 -
Net loss for the year ended
December 31, 1996 - - - (836,958)
---------- ---------- --------- ------------
Balance, December 31, 1996 $ 5,955,812 $ 5,954 $ 1,571,078 $ (2,877,701)
========== ========== ========= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 31
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
December 31, 1998 (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
-------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balance forward $ 5,955,812 $ 5,954 $ 1,571,078 $ (2,877,701)
Common stock issued for
services rendered at
$0.19 per share 2,051,820 2,052 387,794 -
Conversion of notes and
interest payable to
common stock at $0.19
per share 460,000 460 84,540 -
Common stock issued in
lieu of wages at $0.19
per share 1,800,000 1,800 335,700 -
Conversion of convertible
debentures and interest
payable at $0.34 per share 2,655,216 2,655 907,701 -
Net loss for the year
ended December 31, 1997 - - - (1,676,320)
----------- ---------- ----------- ------------
Balance, December 31, 1997 12,922,848 12,921 3,286,813 (4,554,021)
Common stock issued for
services rendered at
$0.30 per share 385,500 386 116,438 -
Conversion of debentures
and interest payable to
common stock at $0.24
per share 2,562,813 2,563 618,350 -
Conversion of notes and
interest payable at
$0.21 per share 875,608 877 179,411 -
Net loss for the year
ended December 31, 1998 - - - (1,373,142)
----------- ---------- ----------- ------------
Balance, December 31, 1998 $16,746,769 $ 16,747 $ 4,201,012 $ (5,927,163)
========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 32
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Consolidated Statements of Cash Flows
December 31, 1998
<TABLE>
<CAPTION>
From
Inception on
For the Years April 9,
Ended December 31, 1993 Through
----------------------- December 31,
1998 1997 1998
-------------- -------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (1,373,142) $ (1,676,320) $ (5,927,163)
Adjustments to reconcile net loss
to net cash flows used by operating
activities:
Depreciation and amortization 16,014 10,427 50,602
Common stock issued for services 116,824 389,846 1,029,518
Changes in operating assets
and liabilities:
(Increase) decrease in accounts
receivable (106,970) (7,435) (114,405)
(Increase) decrease in accounts
receivable - related party (14,335) (1,789) (16,124)
(Increase) decrease in prepaid - (6,526) (6,526)
Increase (decrease) in Cash overdraft (2,030) (9,298) (11,328)
Increase in commitments and
contingencies 53,659 286,572 340,231
Increase (decrease) in accounts
payable 29,433 (8,718) 79,523
Increase in accrued expenses 155,867 314,330 931,123
Increase in deferred revenue 127,000 - 127,000
------------ ------------ ------------
Net Cash Flows (Used) by
Operating Activities (997,680) (708,911) (3,517,549)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs - - (4,100)
Purchase of fixed assets (17,363) (8,551) (60,879)
------------ ------------ ------------
Net Cash Flows (Used) by
Investing Activities (17,363) (8,551) (64,979)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of shell - - 1,395
Payment on notes payable (180,781) (79,955) (373,796)
Proceeds from notes payable 1,195,824 797,417 3,492,429
Issuance of common stock for stock - - 462,500
------------ ------------ ------------
Net Cash Flows Provided by
Financing Activities $ 1,015,043 $ 717,462 $ 3,582,528
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 33
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
December 31, 1998
<TABLE>
<CAPTION>
From
Inception on
For the Years April 9,
Ended December 31, 1993 Through
----------------------- December 31,
1998 1997 1998
----------- -------------- ---------------
<S> <C> <C> <C>
NET INCREASE (DECREASE)
IN CASH $ - $ - $ -
CASH AT BEGINNING OF YEAR - - -
----------- ------------- ---------------
CASH AT END OF YEAR $ - $ - $ -
=========== ============= ===============
CASH PAID DURING THE
YEAR FOR:
Interest $ 71,276 $ 36,427 $ 125,209
Income taxes $ - $ - $ -
NON-CASH TRANSACTIONS
Equipment purchased
through capital lease $ - $ - $ 8,795
Debentures converted to
common stock $ 620,913 $ 778,323 $ 1,888,926
Interest converted to
common stock $ - $ 105,417 $ 147,717
Deposit on software
recorded through note
payable $ - $ - $ 39,198
Common stock issued for
notes payable $ 180,288 $ 71,051 $ 251,339
Common stock issued for
accrued wages $ - $ 337,500 $ 337,500
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 34
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------------------
a. Organization
- ----------------
The consolidated financial statements presented are those of Dynamic
Information System & eXchange, Inc. (DiSX) (the Company) (a development
stage company). The Company was incorporated in the state of Utah on March
20, 1987.
Effective October 20, 1994, the Company and DiSX completed an Agreement and
Plan of Reorganization whereby the company issued 14,483,326 (3,620,838 post-
split shares) shares of its common stock in exchange for 100% of the issued
and outstanding common stock of DiSX. The Company also changed its name on
this date from M&K Investments, Inc. to Dynamic Information System & eXchange,
Inc. On October 31, 1994, the Company effected a reverse stock split of the
outstanding common shares at a rate of 1 share for every 2 shares outstanding.
During 1995 the shareholders approved an additional reverse stock split at a
rate of 1 share have been retroactively restated to reflect the reverse stock
splits.
DiSX was incorporated in the State of Utah on April 9, 1993. DiSX was founded
to provide information services to the labor and employment industry and has
developed a data base that includes over 60,000 professional job listings
throughout the United States. 85% of the listings are currently contained in
the Western United States. DiSX products includes, JobLISTINGS, JobSEARCH and
JobDISC.
At the time of the acquisition, the Company was essentially inactive, with no
operations and minimal assets. Additionally, the exchange of the Company's
common stock for the common stock of DiSX resulted in the former stockholders
of DiSX obtaining control of the Company. Accordingly, DISX became the
continuing entity for accounting purposes, and the transaction was accounted
for as a recapitalization of DiSX with no adjustment to the basis or assets
acquired or liabilities assumed by the Company. For legal purposes, the
Company was the surviving entity.
b. Accounting Method
- ---------------------
The Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has selected a calender year end.
c. Basic Loss Per Share
- ------------------------
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the
financial statements.
d. Provision for Taxes
- -----------------------
No provision for taxes has been made, due to cumulative operating losses at
December 31, 1998. The Company has net operating loss carryforwards of
approximately $5,450,000 which will expire in 2008 through 2014. No tax
benefit has been reported in the financial statements and the potential tax
<PAGE> 35
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998
benefits of the loss carryforwards are offset by a valuation allowance of the
same amount.
e. Cash and Cash Equivalents
- -----------------------------
The company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
f. Fixed Assets
- ----------------
Fixed assets are stated at cost. Depreciation of fixed assets is computed
using the straight-line method over the estimated useful lives of the related
assets, primarily five years.
g. Accounts Receivable
- -----------------------
Accounts receivable are shown net of the allowance for doubtful accounts. The
allowance for doubtful accounts at December 31, 1998 was $2,135.
h. Principles of Consolidation
- -------------------------------
The consolidated financial statements include those of Dynamic Information
System & eXchange, Inc. (the Company) and its wholly-owned subsidiary, Dynamic
Information System & eXchange, Inc. (DiSX). All significant intercompany
accounts and transactions have been eliminated.
i. Concentrations of Credit
- ----------------------------
The Company sells its services in Utah and various other states. The Company
extends credit to its customers.
Credit losses, if any, have been provided for in the financial statements and
are based on management's expectations. The Company's accounts receivable are
subject to potential concentrations of credit risk. The Company does not
believe that it is subject to any unusual risks, nor significant risks in the
normal course of its business.
j. Estimates
- -------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
k. Revenue Recognition
- -----------------------
The Company recognized revenues as billed as well as over the life of the
contract.
<PAGE>
<PAGE> 36
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998
l. Advertising
- ---------------
The company follows the policy of charging the costs of advertising to expense
as incurred. Advertising expense was $12,681 and $7,417 for the years ended
December 31,1998 and 1997, respectively.
Note 2 GOING CONCERN
- ----------------------
The Company's financial statements are prepared using generally accepted
accounting principals applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to generate cash flow through increased sales
and marketing of its Internet services.
NOTE 3 - FIXED ASSETS
- ---------------------
Fixed assets consisted of the following:
1998
-------------
Computer equipment $ 19,593
Office equipment 41,286
Capital lease equipment 8,795
-------------
69,674
Accumulated depreciation (46,504)
-------------
$ 23,170
=============
Total depreciation expense for the years ended December 31, 1998, and 1997 was
$15,386 and $9,607, respectively.
NOTE 4 - ACCRUED EXPENSES
- ----------------------------
Accrued expenses consisted of the following:
1998
-----------
Accrued salaries and wages $ 124,407
Payroll taxes payable 167,975
Accrued interest payable 110,476
-----------
$ 402,858
===========
<PAGE>
<PAGE> 37
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 5 - NOTES PAYABLE
- ----------------------
Notes payable and capital leases payable consisted of the following:
1998
--------------
Note payable to a family organization related
to an officer, secured by Company stock, at
12% per annum, payable on demand. $ 17,020
Note payable to officers, secured by Company
stock, at 10% per annum, payable on demand. 169,971
Note payable to five individuals, secured by
Company stock, at 12% per annum, payable on
demand. 186,343
Capital lease payable at 12.7% per annum,
secured by equipment, with monthly principal
and interest payments of $115, matures
December 15, 1998 2,328
Note payable to three individuals at 10%
per annum, secured by Company stock, interest
and principal due on demand. 30,422
Note payable to six individuals at 10% per
annum, secured by Company stock, interest and
principal due on demand. 57,200
Note payable to an individual at 16%
per annum, secured by Company stock,
due upon demand. 267,000
Note payable to an individual at 30%
per annum, secured by Company stock,
due upon demand. 9,000
Note payable to an individual at 18%
per annum, secured by Company stock,
convertible to common stock at $3.75
per share, due upon demand. 100,000
Note payable to an individual at 10%
per annum, secured by Company stock,
due upon demand. 50,000
Note payable to Utah State University
at 6% per annum, unsecured, with an
initial payment of $9,000 due June 30,
1996, and thereafter-monthly principal
and interest payments of $2,852. 39,198
<PAGE>
<PAGE> 38
Dynamic Information System & eXchange, Inc. (DiSX)and Subsidiary (A
Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 5 - NOTES PAYABLE (Continued)
- ----------------------------------
Overdraft payable to bank at 21%,
unsecured, with an overdraft limit of
$7,500, payable on demand. 2,865
---------------
Total long-term liabilities 931,347
Less current portion long-term liabilities (292,309)
Less convertible debentures (354,622)
Less notes payable related parties (284,416)
Long-term liabilities $ -
Principal maturities are as follows:
1999 $ 931,347
2000 -
2001 -
2002 -
2003 -
2004 and thereafter -
--------------
$ 931,347
==============
NOTE 6 ACCOUNTS RECEIVABLE - RELATED PARTY
- --------------------------------------------
During the year ended December 31, 1998, the Company made advances to an
employee in the amount of $15,000. The accounts receivable bears interest at
8%, is unsecured and due on December 31, 1999.
NOTE 7 COMMITMENTS AND CONTINGENCIES
- --------------------------------------
On January 24, 1997, the Company entered into a Letter of Offer to Acquire
with Laservend, Inc. (Laservend) (formerly Mach One Corporation) whereby
Laservend would acquire all the issued and outstanding common stock of the
Company. In anticipation of the proposed merger, Laservend advanced the
Company $286,572 during the year ended December 31, 1997. The agreement was
that such advanced funds would reduce the acquisition price if the merger
occurred and if the merger did not occur, the Company would satisfy the
obligation through the delivery of its common stock at a rate of two shares
for every dollar advanced. The merger never occurred and Laservend has filed
for bankruptcy. The Trustee of the bankruptcy is now asserting that the
advances are to be repaid in cash. The Company does not plan on repaying the
advances in cash but is willing to issue common stock to repay the loan. The
litigation has just commenced and the outcome is undeterminable at this time.
<PAGE>
<PAGE> 39
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX) AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
June 30, December 31,
1999 1998
----------- -----------
(Unaudited)
CURRENT ASSETS
Accounts receivable $ 163,776 $ 114,405
Accounts receivable - related party 26,690 16,124
Prepaids 17,022 6,526
----------- -----------
Total Current Assets 207,488 137,055
----------- -----------
FIXED ASSETS - NET 16,574 23,170
----------- -----------
OTHER ASSETS
Investment in marketable securities 236,981 -
Investment in property 95,000 -
----------- -----------
Total Other Assets 331,981 -
----------- -----------
TOTAL ASSETS $ 556,043 $ 160,225
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 40
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX) AND SUBSIDIARY
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
June 30, December 31,
1999 1998
----------- -----------
(Unaudited)
CURRENT LIABILITIES
Cash overdraft $ 4,363 $ 6,014
Accounts payable 238,380 62,179
Accrued expenses 209,148 402,858
Deferred revenue - 127,000
Current portion - long-term liabilities 155,202 292,309
Convertible debentures 297,422 354,622
Notes payable - related parties 128,547 284,416
----------- -----------
Total Current Liabilities 1,033,062 1,529,398
----------- -----------
LONG-TERM LIABILITIES 98,128 -
----------- -----------
Total Liabilities 1,131,190 1,529,398
----------- -----------
COMMITMENTS AND CONTINGENCIES 340,231 340,231
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 5,000,000 shares authorized
at $0.001 par value; no shares issued or
outstanding - -
Common stock, 50,000,000 shares authorized at
$0.001 par value; 20,850,757 and 16,746,769
shares issued and outstanding, respectively 20,851 16,747
Additional paid-in capital 5,236,624 4,201,012
Other comprehensive loss (263,019) -
Accumulated deficit (5,909,834) (5,927,163)
----------- -----------
Total Stockholders' Equity (Deficit) (915,378) (1,709,404)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 556,043 $ 160,225
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 41
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX) AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the For the
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
SALES $ 834,392 $ 17,370 $ 672,845 $ 12,049
COST OF SALES 836,730 4,170 654,773 713
---------- ---------- ---------- ----------
GROSS MARGIN (2,338) 13,200 18,072 11,336
---------- ---------- ---------- ----------
EXPENSES
Salaries and wages 152,113 97,004 84,290 40,827
Depreciation and amortization 7,796 7,193 3,643 3,816
General and administrative 497,675 361,251 78,142 175,145
---------- ---------- ---------- ----------
Total Expenses 657,584 465,448 166,075 219,788
---------- ---------- ---------- ----------
Loss from Operations (659,922) (452,248) (148,003) (208,452)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE)
Sale of licensing rights 1,000,000 - 1,000,000 -
Interest income 600 - 300 -
Other expense (10,158) (14,071) (3,572) (1,867)
Interest expense (62,396) (40,628) (26,424) (20,645)
Loss on equity investment (250,795) - (250,795) -
---------- ---------- ---------- ----------
Total Other Income
(Expense) 677,251 (54,699) 719,509 (22,512)
---------- ---------- ---------- ----------
NET INCOME (LOSS) 17,329 (506,947) 571,506 (230,964)
---------- ---------- ---------- ----------
OTHER COMPREHENSIVE LOSS
Loss on valuation of
marketable securities (263,019) - (263,019) -
---------- ---------- ---------- ----------
Total Other Comprehensive
Loss (263,019) - (263,019) -
---------- ---------- ---------- ----------
Net Comprehensive Income
(Loss) $ (245,690) $ (506,947) $ 308,487 $ (230,964)
========== ========== ========== ==========
BASIC INCOME (LOSS) PER SHARE $ 0.01 $ (0.11) $ 0.01 $ (0.10)
========== ========== ========== ==========
FULLY DILUTED INCOME (LOSS)
PER SHARE $ (0.04) $ (0.11) $ (0.03) $ (0.10)
========== ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 42
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX) AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Other
-------------------------- Paid-in Comprehensive Accumulated
Shares Amount Capital Loss Deficit
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 12,922,848 $ 12,921 $ 3,286,813 $ - $(4,554,021)
Common stock issued for services
rendered at $0.30 per share 385,500 386 116,438 - -
Conversion of debentures and
interest payable to common
stock at $0.24 per share 2,562,813 2,563 618,350 - -
Conversion of notes and interest
payable at $0.21 per share 875,608 877 179,411 - -
Net loss for the year ended
December 31, 1998 - - - - (1,373,142)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 16,746,769 16,747 4,201,012 - (5,927,163)
Common stock issued for services
rendered at $0.25 per share
(unaudited) 1,369,054 1,370 340,904 - -
Conversion of debentures and
interest payable to common
stock at $0.24 per share (unaudited) 836,503 836 202,430 - -
Conversion of notes and interest
payable at $0.27 per share
(unaudited) 1,033,985 1,034 278,830 - -
Common stock issued for property at
$0.28 per share (unaudited) 340,000 340 94,660 - -
Common stock issued for accrued
salaries and wages at $0.22 per
share (unaudited) 524,446 524 118,788 - -
Loss on valuation of marketable
securities (unaudited) - - - (263,019) -
Net income for the six months
ended June 30, 1999 (unaudited) - - - - 17,329
----------- ----------- ----------- ----------- -----------
Balance, June 30, 1999(unaudited) 20,850,757 $ 20,851 $ 5,236,624 $ (263,019) $(5,909,834)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 43
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)AND SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
For the For the
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ 17,329 $ (506,947) $ 571,506 $ (230,964)
Adjustments to reconcile net
income (loss) to net cash
flows (used) by operating
activities:
Depreciation 7,796 7,193 3,643 3,816
Common stock issued
for services 342,274 - - -
Other income (1,000,000) - (1,000,000) -
Loss on equity investment 250,795 - 250,795 -
Changes in operating assets
and liabilities:
(Increase) decrease in
accounts receivable (49,371) (6,353) (150,018) (4,889)
(Increase) decrease in
accounts receivable -
related party (10,566) (17,340) 8,029 (14,803)
(Increase) decrease in
prepaids and other assets (261,291) (9,691) (7,896) (8,741)
Increase (decrease) in
cash overdraft (1,651) (8,044) 4,363 (8,151)
Increase (decrease) in
accounts payable 176,201 30,811 130,424 32,218
Increase in accrued expenses (39,363) 5,081 (21,902) 5,292
Increase (decrease) in
deferred revenue (127,000) - - -
---------- ---------- ---------- ----------
Net Cash Flows (Used)
by Operating Activities (694,847) (505,290) (211,056) (226,222)
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets (1,200) (7,477) (600) (4,388)
---------- ---------- ---------- ----------
Net Cash Flows (Used)
by Investing Activities (1,200) (7,477) (600) (4,388)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Payment on notes payable and
convertible debentures (122,038) (164,968) (300,000) (59,178)
Proceeds from notes payable
and convertible debentures 818,085 698,246 (97,230) 310,299
---------- ---------- ---------- ----------
Net Cash Flows Provided
by Financing Activities $ 696,047 $ 533,278 $ 202,770 $ 251,121
---------- ---------- ---------- ----------
<PAGE>
<PAGE> 44
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX) AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued) (Unaudited)
For the For the
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN
CASH $ - $ 20,511 $ (8,886) $ 20,511
CASH AT BEGINNING OF PERIOD - - 8,886 -
---------- ---------- ---------- ----------
CASH AT END OF PERIOD $ - $ 20,511 $ - $ 20,511
========== ========== ========== ==========
CASH PAID DURING THE PERIOD FOR:
Interest $ 32,867 $ 16,974 $ 14,587 $ 6,902
Income taxes $ - $ - $ - $ -
NON-CASH INVESTING AND
FINANCING ACTIVITIES
Debentures converted to
common stock $ 190,971 $ - $ 182,145 $ -
Interest converted to
common stock $ 35,035 $ - $ 35,035 $ -
Common stock issued for
notes payable $ 257,124 $ - $ 257,124 $ -
Common stock issued for
accrued wages $ 119,312 $ - $ 76,950 $ -
Common stock issued for
real property $ 95,000 $ - $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 45
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC. (DISX)AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 1999 and 1998
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June 30, 1999 and
1998 and for all periods presented have been made.
Certain information and footnote disclosures normally included in consolidated
financials statements prepared in accordance with general accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1998
audited consolidated financial statements. The results of operations for the
periods ended June 30 are not necessarily indicative of the operating results
for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
relation of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material current assets, and has liabilities in excess of assets of $915,378.
It is the intent of the Company to continue to convert the notes payable and
convertible debentures to stock and to increase the gross margin on the
revenue. In the interim, shareholders of the Company have committed to
meeting its operating expenses by lending the Company money as needed.
<PAGE>
<PAGE> 46
PART III
ITEM 1. INDEX TO EXHIBITS
--------------------------
Copies of the following documents are included as exhibits to this Form 10SB
pursuant to Item 601 of Regulation SB.
SEC
Exhibit Reference
No. No. Title of Document
- --- --- -----------------
2 2.01 Articles of Merger/Plan of Merger
3(i) 3.01 Articles of Incorporation
of the Registrant and related Amendments
3(ii) 3.02 Bylaws of the Registrant
4 4.01 Specimen Stock Certificate
4 4.02 1995 Series A Convertible Preferred Stock
Designation
10 10.01 Stockholders' Agreement and Related Schedules
10 10.02 Amendment to Stockholders' Agreement
10 10.03 DiSX Loan Cancellation Letter
10 10.04 DiSX Agency Agreement
10 10.05 DiSX Lock-up Agreement
10 10.06 Lease Agreement
10 10.07 Kurt Johansson Employment Agreement
10 10.08 J. Robert Walz Employment Agreement
27 27.01 Financial Data Schedule
ITEM 2. SIGNATURES
-------------------
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized on
the dates indicated.
DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
Date: October 3, 1999 By /s/ Larry D. Heaps
----------------------------------------
Larry D. Heaps, President
<PAGE> 1
EXHIBIT NO. 3.01 - ARTICLES OF INCORPORATION AND RELATED AMENDMENTS
ARTICLES OF INCORPORATION
OF
M&K INVESTMENTS, INC.
We, the undersigned natural persons of the age of eighteen years or more,
acting as incorporators of the corporation under the provisions of the Utan
Business Corporation Act (hereinafter called the facts), do hereby adopt the
following Articles of Incorporation for such Corporation.
ARTICLE I
Name. The name of the corporation (hereinafter called the "Corporation") is
M&R INVESTMENTS, INC.
ARTICLE II
Period of Duration. The period of duration of the Corporation perpetual.
ARTICLE III
Purpose and Powers. The purposes for which this Corporation is organized,
but is not limited to, is to invest in real estate and to invest in all forms
of investment, including real and personal property, stocks and bonds,
including, but not limited to, the acquisition of a business opportunity in
any industry including industries such as manufacturing, finance, service,
natural resources high technology, product development, medical,
communications or any other industry; and to engage in all other lawful
business.
ARTICLE IV
Capitalization. The Corporation shall have the authority to issue 50,000,000
(Fifty Million) shares of stock each having a par value of one-tenth of one
cent ($.001). All stock of the Corporation shall be of the same class and
shall have the same rights and preferences. Fully paid stock of this
Corporation shall not be liable for further call or assessment. The authorized
trading shares shall be issued at the discretion of the Directors.
ARTICLE V
Commencement of Business. The Corporation shall not commence business until
at least One Thousand Dollars ($1,000) has been received by the Corporation as
consideration for the issuance of its shares.
ARTICLE VI
Initial Registered Office and Initial Registered Agent. The address of the
initial registered office of the Corporation is 11077 Susan Drive, Sandy, Utah
84092, and the initial registered Agent at such office is Mark L. Green.
ARTICLE VII
Directors. The Corporation shall be governed by a Board of Directors
consisting of no less than three (3) and no more than nine (9) directors.
Directors need not be stockholders of the Corporation. The number of
Directors constituting the initial Board of Directors is three (3) and the
names and post office addresses of the persons who shall serve as directors
until their successors are elected and qualified are:
<PAGE> 2
Kent D. Seegmiller 1055 F. Tropicana, Suite 725 Las Vegas, NV 89109
Mark L. Green 11077 Susan Drive Sandy, UT 84092
Jasmine M. Seegmiller 1055 P. Tropicana, Suite 725 Las Vegas, NV 89109
ARTICLE IIX
Incorporators. The name and post office address of each incorporator is:
Kent D. Seegmiller 1055 E. Tropicana, Suite 725 Las Vegas, NV 89109
Mark L. Green 11077 Susan Drive Sandy, UT 84092
Jasmine M. Seegmiller 1055 E. Tropicana, Suite 725 Las Vegas, NV 89109
ARTICLE IX
Pre-emptive Rights. There shall be no pre-emptive rights to acquire unissued
and/or treasury shares of the stock of the Corporation.
ARTICLE X
Voting of Shares. Each outstanding share of common stock of the Corporation
shall be entitled to one vote on each matter submitted to a vote at the
meeting of the stockholders. Each stockholder shall be entitled to vote his or
its shares in person or by proxy, executed in writing by such stockholders, or
by his duly authorized attorney-in-fact. At each election of Directors, every
stockholder entitled to vote in such election shall have the right to vote, in
person or by proxy, the number of shares owned by him or it for as many
persons as there are Directors to be elected and for whose election he or it
has the right to vote, but the Shareholder shall have no right to accumulate
his or its votes with regard to such election.
Mark L. Green, hereby accepts the appointment as registered agent for M&K
Investments, Inc.
/s/ Mark L. Green
- -----------------
Registered Agent
STATE OF Nevada )
(sic) :ss.
COUNTY OF [sic] )
On the 17th day of February,1987, personally appeared before me Kent D.
Seegmiller, Mark L. Green, and Jasmine M. Seegmiller, who acknowledged to me
that they are the persons who signed the foregoing Articles of Incorporation
as incorporators and that they have read the foregoing Articles of
Incorporation and know the content thereof, and that the same is true of their
knowledge as to those matters upon which they operate on information and
belief, and as to those matters believe them to be true.
/S/ Kent D. Seegmiller
/S/ Mark L. Green
/S/ Jasmine M. Seegmiller
<PAGE>
<PAGE> 3
SUBSCRIBED AND SWORN to before me this 17th day of February.
/s/ Shelley Anderson
- --------------------
NOTARY PUBLIC
Residing at 3049 Rigel Avenue
- ------------------------------
My Commission Expires:
4-16-90
<PAGE>
<PAGE> 4
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
M & K INVESTMENTS, INC.
Pursuant to the provisions of Section 16-lOa-1006 of the Utah Revised
Business Corporation Act, the undersigned corporation hereby adopts the
following Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is M & K Investments, Inc.
SECOND: The following amendment to the Articles of Incorporation of M & K
Investments, Inc. was duly adopted by the stockholders of the corporation at a
meeting held October 31, 1994, in the manner prescribed by the Utah Revised
Business Corporation Act, to-wit:
ARTICLE I - NAME
The name of this corporation is "DYNAMIC INFORMATION SYSTEM & EXCHANGE,
INC."
THIRD: This amendment does not provide for any exchange, reclassification or
cancellation of issued shares; however, pursuant to the resolution adopted by
the stockholders of the corporation at the meeting held October 31, 1994, the
16,858,453 $0.001 par value common voting shares issued and outstanding were
reverse split on a basis of one for two, retaining the authorized shares at
50,000,000 and retaining the par value at" one mill ($0.001) per share, with
appropriate adjustments being made in the additional paid in capital and
stated capital accounts of the corporation, and resulting in a total of
approximately 8,429,226 shares of one mill ($0.001) par value common voting
stock being issued and outstanding. The reverse split shall be effective
November 7, 1994, at 8:00 o'clock a.m., local time.
FOURTH: The amendments effecting the reverse split and changing the name of
the Company to "DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC." was adopted by
the stockholders at a meeting held October 31, 1994.
FIFTH: These amendments were not adopted by the incorporators or the Board
of Directors without stockholder action.
SIXTH: (a) The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows, to-wit:
CLASS NUMBER OF SHARES
Common 16,858,453
(b) The number of shares voted for such amendment was 13,501,914, with none
opposing and none abstaining.
<PAGE> 5
IN WITNESS WHEREOF, the undersigned President and Secretary, having been
"hereunto duly authorized, have executed the foregoing Articles of Amendment
for the corporation under the penalties of perjury this 31st day of October,
1994.
M&K INVESTMENT, INC.
/s/ Signature
by ----------------
Attest:
/s/ Signature
Larry Heaps
- -------------
<PAGE> 6
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
Pursuant to the provisions of Section 16-lOa-1006, of the Utah Revised
Business Corporation Act, Dynamic Information System & exchange, Inc., a Utah
corporation, hereinafter referred to as the "Corporation," hereby adopts the
following Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the Corporation is Dynamic Information System & exchange,
Inc.
SECOND: Article IV of the Articles of Incorporation shall be amended to read
as follows:
Article IV
The Corporation shall have the authority to issue a total of 55,000,000
shares of stock consisting of 50,000,000 shares designated as Common Stock
having a par value of $0.001 per share (hereinafter referred to as "Common
Stock"), and 5,000,000 shares designated as preferred stock having a par value
of $0.001 per share (hereinafter referred to as "Preferred Stock'').
Shares of Preferred Stock may be issued from time to time in one or more
series as may from time to time be determined by the board of directors
without any approval required of the shareholders of the Corporation.
Furthermore, the authority to fix and determine the powers, qualifications,
limitations, restrictions, designation, rights, preferences, or other
variations of each class or series within each class which the Corporation is
authorized to issue. The above described authority of the board of directors
to fix and determine may be exercised by corporate resolution from time to
time as the board of directors sees fit.
Except as otherwise amended above Article I shall remain unchanged and in
full force and effect.
THIRD: By executing these Articles of Amendment to the Articles of
Incorporation, the president and secretary of the Corporation do hereby
certify that on June 1, 1995, the foregoing amendment to the Articles of
Incorporation of Dynamic Information System & exchange, Inc., was authorized
and approved pursuant to Section 16-lOa-1006, of the Utah Revised Business
Corporation Act by the vote of a majority of the Corporation's shareholders.
The number of issued and outstanding shares entitled to vote on the foregoing
amendment to the Articles of Incorporation was 9,010,060, ago of which
5,164,250 shares voted for 15,000 shares voted against and 1,383,332 shares
abstained from the foregoing amendment to the Articles of incorporation. No
other class of shares was entitled to vote thereon as a class.
DATED this 21st day of June , 1995
/s/Curtis T. Johnson, President
/s/ Larry Heaps, Secretary
<PAGE>
<PAGE> 7
State of Utah )
:
County of Salt Lake )
On this 26th day of June, 1995, personally appeared before me, the
undersigned, a notary public, Curtis T. Johnson and Larry Heaps who being by
me first duly sworn, declared that they are the president and secretary,
respectively, of the above-name corporation, that they signed the foregoing
Articles of Amendment to the Articles of Incorporation
and that the statements contained therein are true.
WITNESS MY HAND AND OFFICIAL SEAL.
/s/ Shelcy Barrett (sic)
------------------------
Notary Public
<PAGE> 1
Exhibit No. 2.01
Articles of Merger
of
Dynamic Information Systems and Exchanges, Inc.
a Utah corporation
with and into
Dynamic Information System & Exchange, Inc.
a Utah corporation
THESE ARTICLES OF MERGER are executed and entered into this 29th day of
September, 1999, by and between Dynamic Information System & Exchange, Inc.,
a Utah corporation (hereinafter referred to as "DiSX" or the "Surviving
Corporation"), and Dynamic Information Systems and Exchanges, Inc., a Utah
corporation (hereinafter referred to as "DiSX Sub" or the "Disappearing
Corporation").
Witnesseth
I. Plan of Merger
Pursuant to these Articles of Merger, it is intended and agreed that DiSX
Sub will be merged with and into DiSX and that DiSX shall be the Surviving
Corporation, as provided below. The terms, conditions, and understandings of
the merger are set forth in the Agreement of Merger between DiSX and DiSX Sub
dated as of September 29, 1999, a copy of which is attached hereto as Exhibit
"A" and incorporated herein by this reference.
II. Articles of Incorporation and Bylaws
On the consummation of the merger, the articles of incorporation and bylaws
of DiSX shall be the articles of incorporation and bylaws of the Surviving
Corporation.
III. Name of Surviving Corporation
The name of the Surviving Corporation, which will continue in existence
after the merger, shall remain DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
IV. Officers and Directors
The officers and directors of DiSX, shall remain the officers and directors
of the Surviving Corporation.
V. Authorized and Outstanding Shares of DiSX Sub
DiSX Sub is authorized to issue 21,000,000 shares; consisting of 10,000,000
Class A shares, no par value, of which 1,000 shares are issued and
outstanding, and 11,000,000 Class B shares, no par value, of which -0- shares
are issued and outstanding.
VI. Authorized and Outstanding Shares of DiSX
DiSX is authorized to issue 55,000,000 shares; consisting of 50,000,000
shares of common stock, $0.001 par value, of which 20,982,057 shares are
issued and outstanding, and 5,000,000 shares of preferred stock, $0.001 par
value, of which -0- shares are issued and outstanding.
<PAGE>
<PAGE> 2
VII. Approval by Shareholder of DiSX Sub
Of the 1,000 shares of common stock of DiSX Sub issued and outstanding, all
shares were voted in favor of the Agreement and Plan of Merger, with no shares
voting against or abstaining, all in accordance with the provisions of the
Utah Revised Business Corporation Act. Such shares were voted as a class; no
shares of any other class of stock issued and outstanding were entitled to
vote thereon. Approval of the Agreement and Plan of Merger was duly
authorized by all action required by the laws of the state of Utah, DiSX Sub's
Articles of Incorporation and bylaws.
VIII. Approval by Shareholders of DiSX
Pursuant to the provisions of section 16-10a-1104 of the Utah Revised
Business Corporation Act, no vote of the shareholders of DiSX is required if
all the provisions of section 16-10a-1103(7) of the Utah Revised Business
Corporation Act are met. In connection with meeting the requirements of
section 16-10a-1103(7).
(a) The Articles of Incorporation of the Surviving Corporation will not
differ from its Articles of Incorporation before the merger;
(b) Each shareholder of the Surviving Corporation whose shares were
outstanding immediately before the merger will hold the same number of shares,
with identical designations, preferences, limitations, and relative rights,
immediately after the merger;
(c) The number of voting shares outstanding immediately after the merger,
plus the number of voting shares issuable as a result of the merger, either by
the conversion of securities issued pursuant to the merger, or the exercise of
rights and warrants issued pursuant to the merger will not exceed by more than
20% the total number of voting shares of the Surviving Corporation outstanding
immediately before the merger; and
(d) The number of participating shares outstanding immediately after the
merger, plus the number of participating shares issuable as a result of the
merger, either by the conversion of securities issued pursuant to the merger,
or the exercise of rights and warrants issued pursuant to the merger will not
exceed by more than 20% the total number of participating shares outstanding
immediately before the merger.
IX. Statutory Basis for Merger
An Agreement of Merger has been approved, adopted, certified, executed, and
acknowledged by each of the aforesaid corporations in accordance with Section
16-10a-1104 of the Utah Revised Business Corporation Act.
X. Agreement of Surviving Corporation
The Surviving Corporation hereby consents and agrees that:
(a) The Surviving Corporation may be served with process in the State of
Utah in any proceeding for the enforcement of any obligation of DiSX Sub as
well as for enforcement of any obligation of the Surviving Corporation arising
from the merger and in any proceeding for the enforcement of the rights of a
dissenting shareholder of DiSX Sub against the Surviving Corporation;
(b) The Secretary of State of the State of Utah shall be, and hereby is,
irrevocable appointed as the agent of such Surviving Corporation to accept
service of process in any such proceeding;
<PAGE> 3
(c) The Surviving Corporation's address for any service of process received
by the Secretary of State is the executive offices of the Surviving
Corporation located at 371 East 800 South, Suite 201, Orem, Utah 84097-6387.
(d) Such Surviving Corporation will promptly pay to the dissenting
shareholders of DiSX Sub the amount, if any, to which they shall be entitled
under the provisions of the Utah Revised Business Corporation Act with respect
to the rights of dissenting shareholders; and
(e) The Surviving Corporation shall keep on file at its principal place of
business a copy of the Agreement of Merger, which will be provided, without
cost, to shareholders of the Surviving Corporation when request.
IN WITNESS WHEREOF, the undersigned corporations, acting by their respective
Presidents and Secretaries, have executed these Articles of Merger as of the
date first above written.
Dynamic Information Systems and Exchanges, Inc., a Utah corporation
Attest:
/S/ Secretary By:/S/ President
Dynamic Information System & Exchange, Inc., a Utah corporation
Attest:
/S/ Secretary By:/S/ President
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE)
I, the undersigned notary public, hereby certify that on the 29th day of
September, 1999, personally appeared before me the President and Secretary of
Dynamic Information Systems and Exchanges, Inc., a Utah corporation, who being
by me first duly sworn, severally declared that they are the persons who
signed the foregoing documents as President and Secretary of Dynamic
Information Systems and Exchanges, Inc., a Utah corporation, and that the
statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Notary Public
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE)
I, the undersigned notary public, hereby certify that on the 29th day of
September, 1999, personally appeared before me the President and Secretary of
Dynamic Information System & Exchange, Inc., a Utah corporation, who being be
me first duly sworn, severally declared that they are the persons who signed
the foregoing documents as President and Secretary of Dynamic Information
System & Exchange, Inc., a Utah corporation, and that the statements therein
contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Notary Public
<PAGE>
<PAGE> 4
Agreement of Merger
of
Dynamic Information Systems and Exchanges, Inc.
(A Utah Corporation)
and
Dynamic Information System & Exchange, Inc.
(A Utah Corporation)
THIS AGREEMENT OF MERGER (the "Agreement") dated as of September 29, 1999,
is entered into by and between DYNAMIC SYSTEMS AND EXCHANGES, INC., a Utah
corporation (the "Disappearing Corporation" or the "DiSX SUB"), and DYNAMIC
SYSTEM & EXCHANGE, INC.," a Utah corporation (the "Surviving Corporation" or
"DiSX"), such corporations being hereinafter collectively referred to as the
"Constituent Corporations."
Recitals
WHEREAS, the Surviving Corporation is a corporation duly organized and
existing under the laws of the state of Utah, having an authorized capital of
55,000,000 shares; consisting of 50,000,000 shares of common stock, $0.001
par value, of which 20,982,057 shares are issued and outstanding, and
5,000,000 shares of preferred stock, $0.001 par value, of which -0- shares are
issued and outstanding.
WHEREAS, the Disappearing Corporation is a corporation duly organized and
existing under the laws of the state of Utah having an authorized capital of
21,000,000 shares; consisting of 10,000,000 Class A shares, no par value, of
which 1,000 shares are issued and outstanding, and 11,000,000 Class B shares,
no par value, of which -0- shares are issued and outstanding.
WHEREAS, the respective boards of directors and shareholders of the
Constituent Corporations have each duly approved this Agreement providing for
the merger of the Disappearing Corporation with and into the Surviving
Corporation with the Surviving Corporation as the surviving corporation as
authorized by and in accordance with the statutes of the state of Utah.
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for the purpose of setting forth the
terms and conditions of said merger and the manner and basis of causing the
shares of the Disappearing Corporation to be converted into shares of stock of
the Surviving Corporation and such other provisions as are deemed necessary or
desirable, the parties hereto have agreed and do hereby agree, subject to the
approval and adoption of this Agreement by the requisite vote of the
stockholders of each Constituent Corporation, and subject to the conditions
hereinafter set forth, as follows:
1. Determination by Boards of Directors. The Boards of Directors of the
constituent corporations deem it in the best interests of the corporations and
their shareholders that the Disappearing Corporation be merged with the
Surviving Corporation in accordance with the laws of the state of Utah. The
Boards hereby adopt on behalf of their corporations the plan of reorganization
set forth in this Agreement of Merger.
2. Merger and Name of Surviving Corporation. On the effective date of the
merger, the Disappearing Corporation shall be merged with and into the
Surviving Corporation, the Disappearing Corporation and the Surviving
Corporation shall cease to exist separately and the Disappearing Corporation
<PAGE> 5
shall be merged with and into the Surviving Corporation, which is hereby
designated as the "Surviving Corporation," the name of which on and after the
Effective Date (as hereinafter defined) of the merger shall be "DYNAMIC
INFORMATION SYSTEM & EXCHANGE, INC."
On the effective date of the merger, DiSX Sub and DiSX shall cease to exist
separately and DiSX Sub shall be merged with and into DiSX, which is hereby
designated as the "Surviving Corporation," the name of which on and after the
Effective Date (as hereinafter defined) of the merger shall be "DYNAMIC
INFORMATION SYSTEM & EXCHANGE, INC."
Article I
Terms and Conditions of Merger
The terms and conditions of the merger (in addition to those set forth
elsewhere in this Plan) are as follows:
(a) On the Effective Date of the merger:
(1) DiSX Sub shall be merged into DiSX to form a single corporation, and
DiSX shall be designated herein as the Surviving Corporation.
(2) The separate existence of DiSX Sub shall cease.
(3) The Surviving Corporation shall have all the rights, privileges,
immunities, and powers and shall be subject to all duties and liabilities of a
corporation organized under the laws of the state of Utah.
(4) The Surviving Corporation shall thereupon and thereafter possess all
the rights, privileges, immunities, and franchises, of a public as well as a
private nature, of each of the Constituent Corporations; all property, real,
personal, and mixed, and all debts due of whatever account, including
subscriptions to shares, and all and every other interest, of or belonging to
or due to each of the Constituent Corporation shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; the title to any real estate, or any interest therein, vested in either
Constituent Corporation shall not revert or be in any way impaired by reason
of the merger; the Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the Constituent
Corporations; any claim existing or action or proceeding pending by or against
either of such Constituent Corporations may be prosecuted as if the merger had
not taken place, or the Surviving Corporation may be substituted in place of
the Constituent Corporation; and neither the rights of creditors nor any liens
on the property of either of the Constituent Corporations shall be impaired by
the merger.
(b) On the Effective Date of the merger, the board of directors of the
Surviving Corporation shall consist of the members of the board of directors
of DiSX immediately prior to the merger, to serve thereafter in accordance
with the bylaws of the Surviving Corporation and until their respective
successors shall have been duly elected and qualified in accordance with such
bylaws and the laws of the state of Utah.
(c) On the Effective Date of the merger, the officers of the Surviving
Corporation shall be the officers of DiSX immediately prior to the merger,
with such officers to serve thereafter in accordance with the bylaws of the
Surviving Corporation and until their respective successors shall have been
duly elected and qualified in accordance with such bylaws and the laws of the
state of Utah.
<PAGE> 6
If on the Effective Date of the merger, a vacancy shall exist in the board
of directors or in any of the offices of the Surviving Corporation, such
vacancy may be filled in the manner provided for in the bylaws of the
Surviving Corporation.
Article III
Cancellation of DiSX Sub Shares
All shares of Common Stock of DiSX Sub outstanding on the Effective Date of
the merger shall, without any action on the part of the holder thereof, be
canceled.
Article IV
Articles of Incorporation and Bylaws
The articles of incorporation of DiSX shall, on the merger becoming
effective, be and constitute the articles of incorporation of the Surviving
Corporation until amended in the manner provided by law. The bylaws of DiSX
shall, on the merger becoming effective, be and constitute the bylaws of the
Surviving Corporation until amended in the manner provided by law.
Article V
Shareholder Approval
This Plan has been approved by the sole shareholder of DiSX Sub and the
board of directors of DiSX as provided by the laws of the State of Utah,
including section 16-10a-1104 of the Utah Revised Business Corporation Act.
All required documents shall be executed, filed, and recorded, and all
required acts shall be done in order to accomplish the merger under the
provisions of the laws of the state of Utah.
Article VI
Officers and Directors
The officers and directors of DiSX, upon the merger becoming effective,
shall remain the officers and directors of the Surviving Corporation, and such
officers and directors shall serve until the next annual meeting of
shareholders and until such time as their successors are duly elected and
shall qualify.
Article VII
Approval and Effective Date of the Merger; Miscellaneous Matters
1. The merger shall become effective when all the following actions shall
have been taken:
(a) This Agreement shall be authorized, adopted, and approved by and on
behalf of each Constituent Corporation in accordance with the laws of the
state of Utah;
(b) This Agreement, or articles of merger of the form required, executed and
verified in accordance with the laws of the state of Utah, shall be filed in
the Office of the Secretary of State of Utah together with any other documents
as may be required in accordance with the law of such state; and
(c) The date on which such actions are completed and such merger is effected
is herein referred to as the "Effective Date."
<PAGE>
<PAGE> 7
2. If at any time the Surviving Corporation shall deem or be advised that any
further grants, assignments, confirmations, or assurances are necessary or
desirable to vest, perfect, or confirm title in the Surviving Corporation, of
record or otherwise, to any property of DiSX Sub acquired or to be acquired
by, or as a result of, the merger, the officers and directors of DiSX Sub or
any of them shall be severally and fully authorized to execute and deliver any
and all such deeds, assignments, confirmations, and assurances and to do all
things necessary or proper so as to best prove, confirm, and ratify title to
such property in the Surviving corporation and otherwise carry out the
purposes of the merger and the terms of this Agreement.
3. The Surviving Corporation may be served with process in the State of Utah
in any proceeding for the enforcement of any obligation of DiSX Sub as well as
for enforcement of any obligation of the Surviving Corporation arising from
the merger and in any proceeding for the enforcement of the rights of a
dissenting shareholder of DiSX Sub against the Surviving Corporation.
4. The Secretary of State of the State of Utah shall be irrevocable appointed
as the agent of the Surviving Corporation to accept service of process in any
such proceeding;
5. The Surviving Corporation's address for any service of process received by
the Secretary of State is the executive offices of the Surviving Corporation
located at 371 East 800 South, Suite 201, Orem, Utah 84097-6387.
6. This Agreement cannot be altered or amended, except pursuant to an
instrument in writing signed on behalf of the parties hereto.
7. For the convenience of the parties and to facilitate the filing and
recording of this Agreement, any number of counterparts hereof may be
executed, each such counterpart shall be deemed to be an original instrument,
and all such counterparts together shall be considered one instrument.
8. This Agreement shall be governed by and construed in accordance with the
laws of the state of Utah.
The foregoing Agreement of Merger, having been approved by the board of
directors of each Constituent Corporation, and having been adopted separately
by the sole shareholder of DiSX Sub in accordance with the laws of the state
of Utah, the president and secretary of DiSX Sub, and the president and
secretary of DiSX, do hereby execute this Plan of Merger this 29th day of
September, 1999, declaring and certifying that this is our act and deed and
the facts herein stated are true.
Dynamic Information Systems and Exchanges, Inc., Utah corporation
Attest:
/S/ Secretary /S/President
Dynamic Information System & Exchange, Inc., Utah corporation
Attest:
/S/Secretary /S/President
<PAGE>
<PAGE> 8
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE)
I, the undersigned notary public, hereby certify that on the 29th day of
September, 1999, personally appeared before me the President and Secretary of
Dynamic Information Systems and Exchanges, Inc., a Utah corporation, who being
by me first duly sworn, severally declared that they are the persons who
signed the foregoing documents as President and Secretary of Dynamic
Information Systems and Exchanges, Inc., a Utah corporation, and that the
statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Notary Public
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE)
I, the undersigned notary public, hereby certify that on the 29th day of
September, 1999, personally appeared before me the President and Secretary of
Dynamic Information System & Exchange, Inc., a Utah corporation, who being be
me first duly sworn, severally declared that they are the persons who signed
the foregoing documents as President and Secretary of Dynamic Information
System & Exchange, Inc., a Utah corporation, and that the statements therein
contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Notary Public
<PAGE>
<PAGE> 9
CERTIFICATE OF THE SECRETARY
DYNAMIC INFORMATION SYSTEMS AND EXCHANGES, INC.
A UTAH CORPORATION
The secretary of Dynamic Information Systems and Exchanges, Inc., a Utah
corporation ("DiSX Sub"), hereby certify in accordance with the Utah Revised
Business Corporation Act that the Plan of Merger to which this certificate is
attached, after having been first duly approved and adopted by DiSX Sub and
Dynamic Information System & Exchange, Inc., a Utah corporation ("DiSX"), was
duly approved and adopted pursuant to section 16-10a-1104 of the Utah Revised
Business Corporation Act by the vote of the sole shareholder of all of the
outstanding stock of DiSX Sub; and that thereby the Agreement of Merger was
duly adopted as the act of the sole shareholder of said corporation and is the
duly adopted agreement and act of said corporation.
I have executed this certificate this 29th day of September, 1999.
/S/ Secretary
CERTIFICATE OF THE SECRETARY
DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
A UTAH CORPORATION
The secretary of Dynamic Information System & Exchange, Inc., a Utah
corporation ("DiSX"), hereby certifies in accordance with the Utah Revised
Business Corporation Act that the Plan of Merger to which this certificate is
attached, after having first duly approved and adopted pursuant to section 16-
10a-1104 of the Utah Revised Business Corporation Act, by the board of
directors of DiSX; and that thereby the Agreement of Merger is the duly
adopted agreement and act of said corporation.
I have executed this certificate this 29th day of September, 1999.
/S/ Secretary
<PAGE> 1
Exhibit No. 3.02 - BYLAWS AND RELATED AMENDMENTS
AMENDMENT TO BYLAWS OF
M & K INVESTMENTS, INC.
The following amendment to the Bylaws of M & K Investments, Inc. was adopted
by unanimous consent of the Board of Directors of the Company as of October ,
1994:
ARTICLE XII
CONTROL SHARES ACQUISITIONS
Section 61-6-1, et seq., U.C.A., shall not apply to any control share
acquisitions of shares of this corporation.
I, Scott L. Allen, Secretary of M & K Investments, Inc., hereby certify that
the foregoing Amendment to Bylaws of M & K Investments, Inc. was duly adopted
by resolution of the Board of Directors effective October 13, 1994.
/S/ Scott L. Allen
<PAGE>
<PAGE> 2
BYLAWS
OF
M& K INVESTMENTS, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of Nevada shall be
located in the City of Las Vegas. The Corporation may have such other offices,
either within or without the State of Incorporation, as the Board of Directors
may designate or as the business of the corporation may from time to time
require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING
The annual meeting of the stockholders shall be held one year from the date
of incorporation, beginning with the year 1988, at the hour of one o'clock
p.m., and annually on that date thereafter, or as soon thereafter as is
practicable, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday, such meeting shall be held on the
next succeeding business day.
2. SPECIAL MEETINGS. UCA SECTION 16-10-26
Special meetings of the stockholders for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders
of not less than ten percent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the State unless otherwise prescribed by
statute, the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING. UCA SECTION 16-10-27
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than fifty
days before the date of the meeting, either personally or by mail, by or at
the direction of the president, or the secretary, or the officer or persons
calling the meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the stockholder at his address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid.
5. CLOSING OF TRANSFER BOOKS OF FIXING OF RECORD DATE. UCA
SECTION 16-20-28
<PAGE> 3
For the purpose of determining stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment or any dividend, or in order to make a
determination or stockholders for any other proper purpose, the directors of
the corporation may provide that the stock transfer books shall be closed for
a stated period but not to exceed, in case, fifty days. If the stock transfer
books shall be closed for the purpose of determining stockholders entitled to
notice of or to vote at a meeting of stockholders, such books shall be closed
for at least ten days immediately preceding such meeting. In lieu of closing
the sock transfer books, the directors may fix in advance a date as the record
date for any such determination of stockholders. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
6. VOTING LISTS. UCA SECTION 16-10-29
The officer or agent having charge of the stock transfer books for shares of
the corporation shall make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the principal office
of the corporation end shell be subject to inspection by any stockholder at
any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list of transfer books or to vote at the
meeting of stockholders.
7. QUORUM. SECTION 16-10-30
At any meeting of stockholders a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. 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. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
8. PROXIES. UCA SECTION 16-10-30
At all meetings of stockholders, a stockholder may vote by proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Such
proxy shall be filed with the secretary of the corporation before or at the
time of the meeting.
9. VOTING. UCA SECTION 16-10-30
Each stockholder entitled to vote in accordance with the terms and
provisions of the Certificate of Incorporation and these Bylaws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled
to vote held by such stockholders. Upon the demand of any stockholder, the
<PAGE> 4
vote for directors and upon any question before the meeting shall be by
ballot. All elections for directors shall be decided by majority vote except
as otherwise provided by the Certificate of Incorporation or the laws of this
State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders shall be a
follows:
1. Roll Call.
2. Proof of Notice of Meeting or Waiver of Notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS. UCA SECTION 16-i38
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS. UCA SECTION 16-10-33
The business and affairs of the corporation shall be managed by its Board of
Directors. The directors shall in all cases act as a board, and they may adopt
such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these By-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be not more than nine (9)
or less than three (3). Each director shall hold office until the next annual
meeting of stockholders and until his successor shall have been elected and
qualified.
3. REGULAR MEETINGS. UCA Section 16-10-40
A regular meeting of the directors shall be held without other notice than
this By-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
<PAGE> 5
NOTICE. UCA SECTION 16-10-40
Notice of any special meeting shall be given at least two days previously
thereto by written notice delivered personally, or by telegram or mailed to
each director at his business address.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage thereon prepaid. If notice be
given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. The attendance of a director
at a meeting shall constitute a waive of notice of such meeting, except where
a director at-ends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
6. QUORUM. UCA SECTION 16-10-38
At any meeting of the directors a majority shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of
the directors then in office, although less than a quorum exists. Vacancies
occurring by reason of t.,e removal of directors without cause shall be filled
by vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the
unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the. directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board, the
president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
Compensation may be paid to directors for their services. In addition, a
fixed sum and expenses for actual attendance at each regular or special
meeting of the board may be authorized. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
<PAGE> 6
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporation matter is taken shall-be presumed to have
assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of three or more directors.
Each such committee shall serve at the pleasure of the board.
14. ACTION WITHOUT A MEETING. UCA Section 16-10-40
Any action that may be taken by the Board of Directors at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
to be taken, shall be signed before such action by all of the directors.
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, two vice-presidents, a
secretary and a treasurer, each of whom shall -be elected by the directors.
Such other officers and assistant officers as my be deemed necessary may be
elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
3. REMOVAL.
Any officer or agent elected of appointed by the directors may be removed by
the directors whenever in their judgment the best interests of the corporation
would be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the
unexpired portion of the term.
5. PRESIDENT.
The president-shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
<PAGE> 7
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
"hereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the directors or
by these By-laws to some other officer or agent of the corporation, or shall
be required by law to be otherwise signed or executed; and in general shall
preform all duties incident to the office of president and such other duties
as may be prescribed by the directors from time to time.
6. VICE PRESIDENT
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of he president,
and when so acting, shall have all powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the president or by the
directors.
7. SECRETARY
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, so that
all notices are duly given in accordance with the provisions of these By-laws
or as required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholders, have general
charge of the stock transfer books of the corporation and in general perform
all duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
8. TREASURER
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties
as the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for monies due and payable to the corporation; receive and give
receipts for monies due and payable to the corporation from any source
whatsoever, and deposit all such monies in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in
accordance with these By-laws and in general perform all of the duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE V CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or
confined to specific instances.
<PAGE> 8
2. LOANS
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution
of the directors. Such authority may be general or confined to specific
instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds or the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies
or other depositories as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form as
shall be determined by the directors. Such certificates shall be signed by the
president and by the secretary or by such other officers authorized by law and
by the directors. All -certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the stockholders, the number
of shares and date of issue, shall be entered on the stock transfer books of
the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefore upon such terms and indemnity to the
corporation as the directors may prescribe.
2. TRANSFER OF SHARES.
(a) Upon surrender to the corporation of the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered
on the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize an equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this State.
ARTICLE VII FISCAL YEAR
The fiscal year of the corporation shall end on April 30 in each year.
<PAGE> 9
ARTICLE VIII DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX SEAL
The directors may provide a corporate seal which shall be circular in form
and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE: X WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder. or director of the corporation under the provisions
of these By-laws or under the provisions of the Articles of Incorporation, a
waiver to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These By-laws maybe altered, amended or repealed and new Bylaws may be
adopted by a vote of the stockholders representing a majority of all the
shares issued and outstanding, at annual stockholders' meeting or at any
special stockholders' meeting when the proposed amendment has been set out in
the notice of such meeting.
<PAGE> 1
EXHIBIT 4.01 -- SPECIMEN CERTIFICATE
DISX CUSIP NO. 267879 20 3
COMMON STOCK
NUMBER SHARES
Xxxxx Xxxxxx
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF UTAH
50,000,000 SHARES AUTHORIZED
This Certifies that VOID
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE
$.001 PER SHARE OF
DYNAMIC INFORMATION SYSTEM & eXCHANGE, INC.
the transfer of which may be registered on the books maintained for such
purpose by or on behalf of the Corporation upon surrender of this Certificate
properly endorsed.
This certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
COUNTERSIGNED AND REGISTERED
Colonial Stock Transfer
455 East 400 South #100, Salt Lake City, UT 84111 Dated:
BY Transfer Agent and Registrar
Authorized Signature
[SEAL]
/S/ Larry D. Heaps /S/ Curtis T. Johnson
Secretary President
<PAGE> 1
EXHIBIT 4.02 1995 SERIES A PREFERRED STOCK DESIGNATION
DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
DESIGNATION OF RIGHTS, PRIVILEGES, AND PREFERENCES OF
1995 SERIES A CONVERTIBLE PREFERRED STOCK
Pursuant to the provisions of section 16-10a-602, of the Utah Revised
Business Corporation Act, the above corporation (the "Corporation") hereby
adopts the following Designation of Rights, Privileges, and Preferences of 1995
Series A Convertible Preferred Stock (the "Designation"):
FIRST: The name of the Corporation is Dynamic Information System &
eXchange, Inc.
SECOND: The following resolution establishing a series of convertible
preferred stock designated as the "1995 Series A Convertible Preferred Stock"
consisting of 1,150,000 shares of the Corporation's preferred stock, par value
$0.001, was duly adopted by the board of directors of the Corporation on June
6, 1995, in accordance with the articles of incorporation of the Corporation
and the corporation laws of the state of Utah:
RESOLVED, there is hereby created a series of preferred stock of the
Corporation to be designated as the "1995 Series A Convertible Preferred
Stock" consisting of 1,150,000 shares, par value $0.001, with the following
powers, preferences, rights, qualifications, limitations, and restrictions:
1. Liquidation.
1.01. In the event of any voluntary or involuntary liquidation (whether
complete or partial), dissolution, or winding up of the Corporation, the
holders of the 1995 Series A Convertible Preferred Stock shall be entitled to
be paid out of the assets of the Corporation available for distribution to its
shareholders, whether from capital, surplus, or earnings, an amount in cash
equal to $2.00 per share plus all unpaid dividends previously declared thereon
to the date of final distribution. No distribution shall be made on any
common stock or other series of preferred stock of the Corporation by reason
of any voluntary or involuntary liquidation (whether complete or partial),
dissolution, or winding up of the Corporation unless each holder of any 1995
Series A Convertible Preferred Stock shall have received all amounts to which
such holder shall be entitled under this subsection.
1.02 If on any liquidation (whether complete or partial), dissolution,
or winding, up of the Corporation, the assets of the Corporation available for
distribution to holders of 1995 Series A Convertible Preferred Stock shall be
insufficient to pay the holders of outstanding 1995 Series A Convertible
Preferred Stock the full amounts to which they otherwise would be entitled
under section 1.01, the assets of the Corporation available for distribution to
holders of the 1995 Series A Convertible Preferred Stock shall be distributed
to them pro rata on the basis of the number of shares of 1995 Series A
Convertible Preferred Stock held by each such holder.
2. Voting Rights. The 1995 Series A Convertible Preferred Stock shall
not be entitled to vote as a separate class or as a single class with the
Common Stock of the Corporation, except to the extent that the consent of the
holders of the 1995 Series A Convertible Preferred Stock, voting as a class,
is specifically required by the provisions of the corporate law of the state
of Utah, as now existing or as hereafter amended.
<PAGE> 2
3. Subordination. Any payment of any dividends or any redemption
hereunder shall be subordinated to payment in full of all Senior Debt as
defined herein. "Senior Debt" shall mean the principal of and premium, if
any, and interest on all indebtedness of the Corporation to any financial
institution, including, but not limited to, (i) banks whether currently
outstanding or hereinafter created and whether or not such loans are secured
or unsecured; (ii) any other indebtedness, liability, obligation, contingent
or otherwise of the Corporation to guarantee endorsement of the contingent
obligation with respect to any indebtedness, liability, or obligation whether
created, assumed, or occurred by the Corporation and after the date of the
creation of the 1995 Series A Convertible Preferred Stock, which is, when
created, specifically designated by the Corporation as Senior Debt; and (iii)
any refunding, renewals, or extensions of any indebtedness or similar
obligations described as Senior Debt in subparagraphs (i) and (ii) above.
4. Dividends.
4.01 The Corporation shall pay to the holders of the 1995 Series A
Convertible Preferred Stock out of the assets of the Corporation at any time
for the payment of dividends at the times so declared by the board of
directors of the Corporation and in the manner provided for in this section 4.
The dividend shall be twelve percent (12%) of the liquidation preference of
$2.00 per share, payable annually, if an when declared by the board of
directors. Dividends shall not be cumulative and the board of directors shall be
under no obligation to declare dividends.
4.02 Any payment of dividends declared and due under this section 4 with
respect to any shares of the 1995 Series A Convertible Preferred Stock shall
be made by means of a check drawn on funds immediately available for the
payment thereof to the order to the holder of such share at the address for
such record holder shown on the stock records maintained by or for the
Corporation, which check shall be mailed by United States first class mail,
postage prepaid. Any such payment shall be deemed to have been paid by the
Corporation on the date that such payment is deposited in the United States
mail as provided above; provided, that in the event the check or other medium
by which any payment shall be made shall prove not to be immediately
collectible on the date of payment, such payment shall not be deemed to have
been made until cash in the amount of such payment shall actually be received
by the person entitled to receive such payment.
4.03 Registration of transfer of any share of the 1995 Series A
Convertible Preferred Stock on the stock records maintained by or for the
Corporation to a person other than the transferor shall constitute a transfer
of any right which the transferor may have had to receive any declared but
unpaid dividends as of the date of transfer, and the Corporation shall have no
further obligation to the transferor with respect to such unpaid dividends.
5. Conversion.
5.01 Each share of the 1995 Series A Convertible Preferred Stock is
convertible into common stock, par value $0.001 (the "Common Stock"), of the
Corporation at the times, in the manner, and subject to the conditions
provided in this section 5.
5.02 Each share of the 1995 Series A Convertible Preferred Stock may be
converted at any time after one year from its date of issuance at the election
of the holder on the presentation and surrender of the certificate
representing the share, duly endorsed, with written instructions specifying
<PAGE> 3
the number of shares of the 1995 Series A Convertible Preferred Stock to be
converted and the name and address of the person to whom certificate(s)
representing the Common Stock issuable on conversion are to be issued at the
principal office of the Corporation.
5.03 Each share of 1995 Series A Convertible Preferred Stock shall be
convertible into Common Stock of the Corporation at the rate of one and one-
half (1-1/2) shares of Common Stock for each share of 1995 Series A Convertible
Preferred Stock surrendered (the "Conversion Rate"). The conversion rate
shall be subject to adjustment pursuant to section 5.04.
5.04 In order to prevent dilution of the rights granted hereunder, the
Conversion Rate and liquidated voting rights shall be subject to adjustment
from time to time in accordance with this section 5.04.
(a) In the event the Corporation shall declare a dividend or make
any other distribution on any capital stock of the Corporation payable in
Common Stock, options to purchase Common Stock, or securities convertible into
Common Stock of the Corporation or shall at any time subdivide (other than by
means of a dividend payable in Common Stock) its outstanding shares of Common
Stock into a greater number of shares or combine such outstanding stock into a
smaller number of shares, then in each such event, the Conversion Rate in
effect immediately prior to such combination shall be adjusted so that the
holders of the 1995 Series A Convertible Preferred Stock shall be entitled to
receive the kind and number of shares of Common Stock or other securities of
the Corporation which they would have owned or have been entitled to receive
after the happening of any of the events described above, had such shares of
the 1995 Series A Convertible Preferred Stock been converted immediately prior
to the happening of such event or any record date with respect thereto; an
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the record
date for such event.
(b) If any capital reorganization or reclassification of the capital
stock of the Corporation, consolidation or merger of the Corporation with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holder of Common
Stock shall be entitled to receive stock, securities, or assets with respect
to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger, or sale, lawful
adequate provisions shall be made whereby the holders of the 1995 Series A
Convertible Preferred Stock shall thereafter, subject to prior redemption by
the Corporation, have the right to acquire and receive on conversion of the
1995 Series A Convertible Preferred Stock such shares of stock, securities, or
assets as would have been issuable or payable ( as part of the reorganization,
reclassification, consolidation, merger, or sale) with respect to or in
exchange for such number of outstanding shares of the Corporation's Common
Stock as would have been received on conversion of the 1995 Series A
Convertible Preferred Stock immediately before such reorganization,
reclassification, consolidation, merger, or sale. In any such case,
appropriate provisions shall be made with respect to the rights and interests
of the holders of the 1995 Series A Convertible Preferred Stock to the end
that the provisions hereof (including without limitations provisions for
adjustments of the Conversion rate and for the number of shares issuable on
conversion of the 1995 Series A Convertible Preferred Stock) shall thereafter
be applicable in relation to any shares of stock, securities, or assets
thereafter deliverable on the conversion of the 1995 Series A Convertible
Preferred Stock. In the event of a merger or consolidation of the Corporation
with or into another corporation or the sale of all or substantially all of
<PAGE> 4
its assets as a result of which a number of shares of Common Stock of the
surviving or purchasing corporation greater or lesser than the number of
shares of Common Stock of the Corporation outstanding immediately prior to
such merger, consolidation, or purchase are issuable to holders of Common
Stock of the Corporation, then the Conversion Rate in effect immediately prior
to such merger, consolidation, or purchase shall be adjusted in the same
manner as though there was a subdivision or combination of the outstanding
shares of Common Stock of the Corporation.
(c) No adjustment shall be made in the Conversion Rate of the number
of shares of Common Stock issuable on conversion of 1995 Series A Convertible
Preferred Stock:
(i) In connection with the offer and sale of any shares of 1995
Series A Convertible Preferred Stock;
(ii) In connection with the issuance of any Common Stock,
securities, or assets on conversion or redemption of shares of 1995 Series A
Convertible Preferred Stock;
(iii) In connection with the issuance of any shares of Common
Stock, Securities, or assets on account of the anti-dilution provisions set
forth in this section 5.04;
(iv) In connection with the purchase or other acquisition by
the Corporation of any capital stock, evidence of its indebtedness, or other
securities of the Corporation; or
(v) In connection with the sale or exchange by the Corporation
of any Common Stock, evidence of its indebtedness, or other securities of the
Corporation, including securities containing the right to subscribe for or
purchase Common Stock or Convertible Preferred stock of the Corporation.
5.05 The Corporation covenants and agrees that:
(a) The shares of Common Stock, securities, or assets issuable on
any conversion of any shares of 1995 Series A Convertible Preferred Stock
shall have been deemed to have been issued to the person on the Conversion
Date, and on the Conversion Date, such person shall be deemed for all purposes
to have become the record holder of such Common Stock, securities, or assets.
(b) All shares of Common Stock or other securities which may be
issued on any conversion of the 1995 Series A Convertible Preferred Stock
will, on issuance, be fully paid and nonassessable and free from all taxes,
liens, and charges with respect to the issue thereof. Without limiting the
generality of the foregoing, the Corporation will from time to time take all
such action as may be requisite to assure that the par value of the unissued
Common Stock or other securities acquirable on any conversion of the 1995
Series A Convertible Preferred Stock is at all times equal to or less than the
amount determined by dividing the par value of a share of 1995 Series A
Convertible Preferred Stock by the number shares of Common Stock or other
securities issuable on conversion of such share.
(c) The issuance of certificates for Common Stock or other
securities on conversion of the 1995 Series A Convertible Preferred Stock
shall be made without charge to the registered holder thereof for any issuance
tax in respect thereof or other costs incurred by the Corporation in
connection with the conversion of the 1995 Series A Convertible Preferred
Stock and the related issuance of Common Stock or other securities.
<PAGE> 5
6. Redemption
6.01 Subject to the requirements and limitations of the corporation
laws of the state of Utah, the Corporation shall have the right to redeem
shares of the 1995 Series A Convertible Preferred Stock on the following terms
and conditions.
6.02 The shares of the 1995 Series A Convertible Preferred Stock are
subject to redemption by the Corporation at any time after issuance pursuant
to written notice of redemption given to the holders thereof on not less than
30 days, specifying the date on which the 1995 Series A Convertible Preferred
Stock shall be redeemed (the "Redemption Date").
6.03 The redemption price for each share of 1995 Series A convertible
Preferred Stock shall be $2.00 per share plus any unpaid dividends, if
applicable, on such share as of the Redemption Date (the "Redemption Price").
The Redemption Price shall may be paid in part, or in full, with shares of
Common Stock. The number of shares of Common Stock issuable for each share
of the 1995 Series A Convertible Preferred Stock redeemed for accrued but
unpaid dividends shall be the sum of $2.00, plus all accrued but unpaid
dividends divided by an amount equal to the average of the closing bid price
for the Common Stock for the twenty (20) consecutive trading days immediately
prior to the redemption date.
6.04 Redemption of the 1995 Series A Convertible Preferred Stock shall
be made in the following manner:
(a) The Corporation shall notify the transfer agent of the
Corporation's Common Stock (the "Transfer Agent"), of its intention to redeem
the 1995 Series A Convertible Preferred Stock. Such notice shall include a
list of all holders of the 1995 Series A Convertible Preferred Stock
outstanding as of the most recent practicable date and a statement of the
number of shares of 1995 Series A Convertible Stock to be redeemed and the
manner in which the Redemption Price is to be paid. At least ten (10) days
prior to the date that written notice of redemption is given to the holders of
the 1995 Series A Convertible Preferred Stock, the Corporation shall make
appropriate arrangements with the Transfer Agent for the delivery of funds
and/or Common Stock necessary to make payment of the Redemption Price for all
shares of the 1995 Series A Convertible Preferred Stock redeemed by the
Corporation.
(b) The holder of any shares of 1995 Series A Convertible Preferred
Stock so redeemed shall be required to tender the certificates representing
such shares, duly endorsed, to the Transfer Agent in exchange for payment of
the Redemption Price and reissuance of the balance of the 1995 Series A
Convertible Preferred Stock not otherwise converted or redeemed. On such
surrender, the Transfer Agent shall cause to be issued and delivered a check
or Common Stock, with all reasonable dispatch to the holder and such name or
names as the holder may designate. Subsequent to notice of redemption and
prior to the redemption date, shares of the 1995 Series A Convertible
Preferred Stock may still be converted to Common Stock pursuant to section 5
hereof.
(c) The Corporation may redeem a portion or all of the issued and
outstanding shares of the 1995 Series A Convertible Preferred Stock; provided,
that in the event that less than all of the outstanding shares of the 1995
Series A Convertible Preferred Stock are redeemed, such redemption shall be
pro rata determined on the basis of the number of shares of the 1995 Series A
Convertible Preferred Stock held by each holder reflected on the stock records
and the total number of shares of 1995 Series A Convertible Preferred Stock
outstanding.
<PAGE> 6
(d) Following the expiration of a period of thirty (30) days
following the Redemption Date, the Transfer Agent shall provide to the
Corporation a complete accounting of the 1995 Series A Convertible Preferred
Stock redeemed and a list of all shares of 1995 Series A Convertible Preferred
Stock remaining unconverted and not returned to the Corporation for
redemption. Any certificates representing the 1995 Series A Convertible
Preferred Stock received by the Transfer Agent subsequent to the accounting by
the Transfer Agent to the Corporation will be promptly delivered to the
Corporation. The Corporation shall pay all costs associated with establishing
and maintaining any bank accounts for funds deposited with the Transfer Agent,
including the costs of issuing any checks or shares of Common Stock.
(e) The Corporation may not deliver notice of redemption to any
holder of the 1995 Series A Convertible Preferred Stock which would cause the
holder's election to convert the 1995 Series A Convertible Preferred Stock to
Common Stock or cash to be in violation of any federal or state securities
laws, including but not limited to, Section 16 of the Securities Exchange Act
of 1934, as amended.
7. Additional Provisions
7.01 No change in the provisions of the 1995 Series A Convertible
Preferred Stock set forth in this Designation affecting any interests of the
holders of any shares of 1995 Series A Convertible Preferred Stock shall be
binding or effective unless such change shall have been approved or consented
to by the holders of 1995 Series A Convertible Preferred Stock in the manner
provided in the corporation laws of the state of Utah, as the same may be
amended from time to time.
7.02 The Shares of 1995 Series A Convertible Preferred Stock shall be
transferable only on the books of the Corporation maintained at its principal
office, on delivery thereof duly endorsed by the holder or by his duly
authorized attorney or representative or accompanied by proper evidence of
succession, assignment, or authority to transfer. In all cases of transfer by
an attorney, the original letter of attorney, duly approved, or an official
copy thereof, duly certified, shall be deposited and remain with the
Corporation. In case of transfer by executors, administrators, guardians, or
other legal representatives, duly authenticated evidence of their authority
shall be produced and may be required to be deposited and remain with the new
certificate representing the share of 1995 Series A Convertible Preferred
Stock so transferred to the person entitled thereto.
7.03 The Corporation shall not be required to issue any fractional
shares of Common Stock on the conversion or redemption of any share of 1995
Series A Convertible Preferred Stock.
7.04 Any notice required or permitted to be given to the holders of the
1995 Series A Convertible Preferred Stock under this Designation shall be
deemed to have been duly given if mailed by first class mail, postage prepared
to such holders at their respective addresses appearing on the stock records
maintained by or for the Corporation and shall be deemed to have been given as
of the date deposited in the United States mail.
IN WITNESS WHEREOF, the foregoing Designation of Rights, Privileges, and
Preferences of 1995 Series A Convertible Preferred Stock of the Corporation
has been executed this XX day of June, 1995.
<PAGE> 7
ATTEST: DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC.
/S/ /S/
- ------------------------------- ----------------------------
Larry Heaps, Vice-president Curtis T. Johnson, President
STATE OF UTAH )
:ss
COUNTY OF UTAH )
On June XX, 1995, before me the undersigned, a notary public in and for
the above county and state, personally appeared Curtis T. Johnson and Larry
Heaps, who being by me duly sworn, did state, each for himself, that he,
Curtis T. Johnson, is the president, and that he, Larry Heaps, is the
secretary, of Dynamic Information System & eXchange, Inc., a Utah corporation,
and that the foregoing Designation of Rights, and Preferences of 1995 Series A
Convertible Preferred Stock of Dynamic Information System & eXchange, Inc.,
was signed on behalf of such corporation by authority of a resolution of its
board of directors, and that the statements contained therein are true.
WITNESS MY HAND AND OFFICIAL SEAL.
/S/
NOTARY PUBLIC
<PAGE> 1
Exhibit No. 10.01
DATED: 11 FEBRUARY 1999
DYNAMIC INFORMATION SYSTEM AND EXCHANGE, INC
and
topjobs.net inc
and
THE CORPORATE NET LIMITED
-------------------------
STOCKHOLDERS AGREEMENT
----------------------
Wansbroughs Willey Hargrave
13 Police Street
Manchester
M2 7WA
<PAGE>
<PAGE> 2
THIS AGREEMENT is made the 11th day of February One Thousand Nine Hundred and
Ninety Nine
BETWEEN:
Dynamic Information System & eXchange, Inc of 385 East 800 South, Orem, Utah
84097, USA ("DISX"), and
topjobs.net inc of 385 East 800 South, Orem, Utah 84097, USA ("the Company");
and
The Corporate Net Limited (Registration Number in England 3173007) of
Innovation House, Daten Park, Birchwood, Warrington, WA3 6UT ("TCN").
WHEREAS:-
A. The Company was incorporated in the state of Delaware on 2nd day of
February 1999 and authorized to conduct business in the State of Utah. The
Company has an authorized capital stock consisting of 1,000 shares of common
stock, $.001 par value per share (the "Common Stock") of which 510 shares of
Common Stock have been issued to TCN and are fully paid and beneficially owned
by TCN and 490 shares of Common Stock have been issued to DISX and are fully
paid and beneficially owned by DISX.
B. The Company operates its business from premises at 385 East 800 South,
Orem, Utah 84097, USA.
C. The parties hereto have agreed to enter into this Agreement for the
purpose of regulating their relationship with each other and certain aspects
of the affairs of and their dealings with the Company.
D. The Company has agreed with TCN and DISX that it will comply with the
terms and conditions of this Agreement to the extent that they relate to the
Company.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following terms shall have the following meanings:-
"this Agreement" - means this Agreement as supplemented and amended in
writing from time to time by the parties hereto.
"the Bylaws" - means the Bylaws of the Company.
"the Board" - means the board of Directors of the Company.
"the Business" - means the business of the Company set out at Clause 2.2
hereof.
"Business Day" - means a day on which U.S. banks generally are open for
business.
"Assignment Agreement Deed of Adherence an Assignment Agreement in the form
and content set out at Schedule 1.
"the Directors" - the directors for the time being of the Company including
where applicable any alternate Director.
<PAGE> 2
"DISX Loan Agreement" means a loan agreement made between DISX and the
Company of even date setting out the terms under which DISX shall provide a
loan to the Company, as attached at Schedule 3.
"Effective Date" means the 1st February 1999.
"Encumbrance" - means any mortgage, pledge, lien, equity, third party right,
option, right of pre-Option or any other encumbrance, priority or security
interest of whatsoever nature.
"Group Company" - means a company that is from time to time a holding
company of which a Shareholder to this Agreement is a wholly-owned subsidiary
or a wholly-owned subsidiary of such Shareholder or a wholly-owned subsidiary
of any holding company of which such Shareholder is a wholly-owned subsidiary.
"Holder" - means the registered holder of any Shares and the expressions
"hold" and "held" shall be construed accordingly.
"Initial Public Offering" - means the initial public offering in the United
States of securities of top jobs pursuant to a registration statement declared
effective by the U.S. Securities and Exchange Commission.
"Intellectual Property and Brand Licensing Agreement" means an agreement of
even date made between DISX, TCN and the Company hereto setting out the terms
under which the Company is to be granted a licence to operate the TJON
Business Plan in the Territory and recording the terms under which the Company
is to be granted a licence to operate DISX's intellectual property, as
attached at Schedule 4.
"the parties hereto" - means DISX, TCN and the Company together.
"Shareholder" - means TCN or DISX or any other party from time to time
holding Shares or any successor in title to DISX or TCN.
"Shares" - means shares of Common Stock of the Company.
"Standard Employment Contract" - means the standard employment contract
format of the Company as set out in Schedule 2.
"TCN Loan Agreement" means a loan agreement made between TCN and DISX of
even date setting out the terms under which TCN shall provide loans to DISX,
as attached at Schedule 5.
"The Territory" - means the State of Utah, the State of Texas and such other
Cities, States and areas in the United States Oof America as laid out in the
TJON Business Plan.
"TJON" means "Top Jobs on the Net".
"TJON Business Plan" means TCN's plan which:
(1)Delivers an Internet service on the TJON Website which targets the needs
of corporations, recruitment agencies, government bodies and others having
vacancies for job applicants who are both well qualified and well matched to
the jobs on offer;
(2) Sells recruitment advertising inventory and related advertising such as
corporate information pages, banner advertising and hyper-links;
<PAGE> 4
(3) Provides additional background information, such as country profiles,
legal, tax and visa advice, to assist the job seeker's assessment of the
available jobs;
(4) Supports the job seeker with information related to the job-finding
process such as advice on the preparation of effective resumes and interview
techniques;
(5) Alerts job seekers that jobs which may match their needs are on offer;
(6) Analyses and reports the characteristics of job seekers;
(7) Supports direct communication between job seeker and job offeror;
(8) Promotes the service to job seekers in all key markets globally under
the "Top Jobs on the Net" brand in a consistent and mutually supportive way;
(9)Utilises software in the TJON Business Plan developed and owned by TCN;
and
(10)Operates related market and functional extensions as mutually agreed.
"Transfer Price" - means the price to be agreed between the Shareholders
and failing agreement to be determined by an investment banker in the United
States mutually acceptable to the Shareholders or, failing such agreement,
appointed by the American Arbitration Association in New York, New York.
"Transfer Terms" - means that any Share shall be sold and purchased free
from any Encumbrance and together with all rights attaching thereto as at the
date of sale and that the consideration for a Share shall be the Transfer
Price.
"topjobs" - means topjobs.net plc, the parent company of TCN.
U.S. GAAP" means generally accepted accounting principles as shall, from
time to time, be in effect in the United States.
1.2 Unless the context otherwise requires, reference to any Clause is to a
Clause of this Agreement and reference to any sub-Clause, paragraph or
subparagraph is to a sub-Clause of the Clause or paragraph of the sub-Clause
or subparagraph of the paragraph in which such reference is made.
1.3 Clause headings shall not (nor be construed so as to) affect the meanings
of the various Clauses to which they relate.
1.4 Words importing the singular shall include the plural and vice versa,
words importing a gender include every gender and words importing persons
shall include natural persons, juristic persons and partnerships.
1.5 The obligations of the parties hereto shall be several unless otherwise
specified.
1.6 The Recitals and Schedules shall form part of this Agreement.
2. EFFECTIVE DATE AND BUSINESS OF THE COMPANY
2.1 The operation of the Business commenced with effect from the Effective
Date.
2.2 Subject as provided in Clause 9.7 (b), the business of the Company is to
promote, market and operate the TJON Business Plan in the Territory.
<PAGE> 5
3. ISSUE OF SHARES
Subject as provided for herein no new Shares in the Company shall be issued
other than to DISX and TCN.
4. TRANSFER OF SHARES
4.1 Except as allowed expressly under this Agreement neither of the
Shareholders shall at any time sell, transfer, dispose of nor create any
interest (whether legal or beneficial) in or over all or any Shares held by it
to any person who is not a party to this Agreement without the prior written
consent of the other party and except in accordance with the provisions of the
Bylaws and this Clause 4 and no share transfer shall be registered by the
Company unless there has been compliance with such provisions.
4.2 When one Shareholder wishes to dispose of its shareholding ("the
Disposing Shareholder") the other Shareholder ("the Continuing Shareholder")
shall have the first and last option to purchase that shareholding on the
Transfer Terms and subject to the provisions of clauses 5 and 7 hereof.
Subject to the prior written consent of the Continuing Shareholder to any
proposed sale, transfer disposal or creation of any such interest as mentioned
above by the Disposing Shareholder in or over all Shares held by it to any
person who is not a party to this Agreement, the Shareholders shall procure
that before any person is registered as a holder of any Share in the Company
such person shall enter into the Assignment Agreement covenanting with the
Continuing Shareholder to observe, perform and be bound by all the terms of
this Agreement which are capable of applying to such person and which have not
then been performed. The Disposing Shareholder shall guarantee the due
performance of the obligations of the transferee of the Shares under the terms
of the Assignment Agreement. The Company shall not register any such person as
the holder of any Shares until such a Assignment Agreement of Adherence has
been executed and delivered to the Company. Upon being so registered that
person shall be deemed to be a party to this Agreement. Such Assignment
Agreement Deed of Adherence shall be delivered to the Company at its
registered office and copied upon execution to each of the Shareholders.
4.3 Notwithstanding the provisions of Clause 4.2, the Disposing Shareholder
may following notice to the Continuing Shareholder transfer all of its Shares
to a Group Company provided that the Disposing Shareholder shall procure that
the transferee of the Shares enters into the Assignment Agreement covenanting
with the Continuing Shareholder hereto to observe, perform and be bound by all
the terms of this Agreement which are capable of applying to such transferee
and which have not then been performed. The Disposing Shareholder shall
guarantee the due performance of the obligations of the transferee of the
Shares under the terms of the Assignment Agreement. In the event of such
transferee of the Shares ceasing to be a Group Company then the transferee
shall immediately transfer back the relevant Shares to the Disposing
Shareholder in accordance with the Bylaws of the Company and the Company shall
register such transfer on its books.
4.4 Clauses 4.1 to 4.3 shall not apply to any Shares acquired by and/or
issued to a Shareholder by reason of any default or breach of the other
Shareholder.
5. OPTION TO PURCHASE
5.1 On the exercise of an option pursuant to Clause 4.2 the Disposing
Shareholder will become bound to sell and the Continuing Shareholder will
become bound to complete the purchase on the Transfer Terms.
<PAGE> 6
5.2 An option must be exercised by notice in writing signed by or on behalf
of the Continuing Shareholder within thirty (30) days after the date upon
which the Disposing Shareholder indicates in writing that it wishes to dispose
of its Shares (the "Sale Notice Date"). If timely notice of exercise of the
option is given by the Continuing Shareholder, it shall purchase and pay for
the Shares to be disposed of within one hundred twenty (120) days of the Sale
Notice Date", failing which the option will lapse and cease to have any
further effect. A notice, once given, by either the Disposing Shareholder or
the Continuing Shareholder, may not be withdrawn except with the written
consent of the recipient. The foregoing 120-day period may be extended
pursuant to clause 7.1 pending final determination of the Transfer Price.
5.3 If an option is exercised, then the remaining provisions of this Clause 5
and the provisions of Clause 7 will apply.
5.4 In the event of the Continuing Shareholder not exercising its option
having become entitled to do so the Disposing Shareholder shall be entitled to
effect a sale to a third party without the prior written consent of the
Continuing Shareholder (but then only on the Transfer Terms)
6. REDISTRIBUTION OF SHARES
6.1 In the event of further funding of the Company being required it shall be
made by the Shareholders in direct proportion to their shareholdings in the
Company.
6.2 In the event of further funding of the Company being required at any time
and DISX advising TCN or TCN advising DISX, as the case may be, that it will
be unable to meet its proportionate funding requirement within the required
timescale, TCN or DISX, as the case may be, may in its sole discretion meet
such funding requirement of DISX or TCN, as the case may be, or the amount by
which DISX or TCN, as the case may be, falls short of such funding
requirement, whereupon DISX or TCN, as the case may be will become immediately
bound to transfer to TCN or DISX, as the case may be, for US$.001 per share 10
(ten) of its Shares in the Company for every US$100,000 or part thereof by
which DISX or TCN, as the case may be, falls short of its funding requirement.
6.3 In the event of DISX or TCN, as the case may be, failing to advise TCN
or DISX, as the case may be, that it will be unable to meet its proportionate
funding requirement at any relevant time within the required timescale and
such funding requirement remaining outstanding for a period in excess of
thirty (30) days after the date upon which DISX's or TCN's, as the case may
be, funding requirement was due, TCN or DISX, as the case may be, may in its
sole discretion meet such funding requirement of DISX or TCN, as the case may
be, or the amount by which DISX or TCN, as the case may be, falls short of
such funding requirement, whereupon DISX or TCN, as the case may be, will
become immediately bound to transfer to TCN or DISX, as the case may be, for
US$.001 per share 20 (twenty) of its Shares in the Company for every
US$100,000 or part thereof by which DISX or TCN, as the case may be, falls
short of its funding requirement.
6.4 The provisions of this clause 6 shall apply to each and every occasion
upon which a funding requirement of the Company occurs.
7.COMPLETION
7.1 Completion of the sale and purchase of the Shares the subject of an
exercise under Clause 4.2 shall take place at the offices of the Company or
their legal representatives at 12 noon on the day falling on the later to
occur of (a) 120
<PAGE> 7
days from the Sale Notice Date, or (b) 30 days (or such lesser period as the
parties may unanimously agree to) after the day on which the Transfer Price is
agreed or (as the case may be) determined in accordance with the provisions of
the definition of the Transfer Price set out in Clause 1.1, provided that if
such day is not a business day then Completion shall take place at 12 noon on
the first business day thereafter.
7.2 On Completion:-
(a)The Disposing Shareholder shall:-
(i) deliver or procure the delivery of the share certificates and other
documents of title in respect of the Shares to the Continuing Shareholder;
(ii) deliver to the Continuing Shareholder an executed share transfer form in
respect of the Shares;
(iii) procure the resignations of the Disposing Shareholders' directors and
the appointment of directors nominated by the other Continuing Shareholder.
(b) The Continuing Shareholder shall pay or procure payment of the Transfer
Price by wire transfer or bankers draft to the Disposing Shareholder;
(c) The Parties shall use their best endeavours to register or procure the
registration of the transfer referred to above forthwith and shall do such
things and execute such documents as shall be necessary to give effect to such
transfer on the Transfer Terms.
7.3 If any of the provisions of sub-Clause 7.2 are not complied with on the
date fixed for Completion the party not in default may (without prejudice to
his or their other rights and remedies):
(a)defer Completion to a date not more than 28 days after such date (and so
that the provisions of this sub-Clause 7.3 shall apply to Completion as so
deferred); or
(b)proceed to Completion so far as practicable (without prejudice to his or
their rights hereunder); or
(c)rescind the contract of sale arising by virtue of the exercise of the
option.
8. OWNERSHIP AND ALIENATION
8.1 DISX and TCN warrant to each other that at the date of this Agreement
and/or at the date, or each date, it hereafter becomes the holder of any
Shares, it is the owner of the Shares registered in its name free from any
Encumbrance.
8.2 DISX and TCN undertake to each other that during the period it remains a
holder of Shares it will not dispose of any interest in any of the Shares
which it holds or any right attaching thereto or create or allow to be created
any Encumbrance over such Shares or agree (whether subject to any condition
precedent or condition subsequent or otherwise) to do any of such things
except by a transfer of the whole of the legal and beneficial title to such
Shares (free from any Encumbrance and with all rights, title and interest in
existence at the date of transfer and which may arise thereafter) as may be
permitted under this Agreement.
<PAGE> 8
8.3 The Company shall not register any transfer of any Shares made in
contravention of this Agreement.
8.4 Clause 8.1. to 8.3 shall not apply to any Shares acquired by and/or issued
to a Shareholder by reason of any default or breach of the other Shareholder.
9. APPOINTMENT OF DIRECTORS, BOARD MEETINGS, DIRECTORS POWERS AND CONDUCT OF
THE COMPANY'S BUSINESS
9.1 The maximum number of Directors holding office at any time shall be 7
unless otherwise expressly agreed in writing by each of the Shareholders.
9.2 DISX shall so long as it is a beneficial holder of any Shares be entitled
to exercise the rights attached to those shares to:-
9.2.1 attend every meeting of the Board and of any committee of the Board in
person or by proxy or by alternate;
9.2.1 appoint and maintain in office up to 3 persons as directors of the
Company and to remove any person so appointed and appoint another person in
his place DISX's appointed directors as at the date of this Agreement are Mr
Larry Heaps, Mr Eric Marchant and Mr Ross Wolfley;
9.2.2 examine the records books and accounts of the Company and to be
supplied with all information relating to the Business as it shall reasonably
require;
9.2.3 exercise any other right available to a Shareholder under the laws of
the State of Delaware.
9.3 TCN shall, so long as it is the beneficial owner of any Shares be
entitled to exercise the rights attached to those Shares to:-
9.3.1 appoint and maintain in office up to 4 persons as directors of the
Company and to remove any person so appointed and appoint another person in
his place. TCN's appointed directors as at the date of this Agreement are Mr
Victor Kaminski, Mr Alan Clarke, Mr Brian Mosley and Mr Iain Griffiths;
9.3.2 examine the records, books and accounts of the Company and to be
supplied with all information relating to the Business as it shall reasonably
require;
9.3.4 exercise any other right available to a Shareholder under the laws of
the State of Delaware.
9.4 Regularly scheduled meetings of the Board will be held at intervals of
not more than one in every 3 months but at least 2 meetings of the Board will
be held in each and every calendar year, unless otherwise agreed in writing by
the Shareholders. Special meetings of the Board may be called at any time by
any Shareholder or their designated directors. Meetings may take place in
person or by telephone or video conference call provided that a written record
of such meetings is produced and signed by all Directors being a party to the
meeting or by the Secretary of the meeting. A quorum shall exist when a
majority of the Board is present. A majority of the directors where a quorum
is present shall be sufficient to make decisions on behalf of the Board.
9.5 The Chairman of the Board from time to time shall be voted in by the
Board. If the Chairman is unable to attend any meeting of the Board, the
senior officer of the Company who is also a director shall then act as
chairman in his place at such meeting.
<PAGE> 9
9.6 Directors' votes shall be one vote per director.
9.7 Each party hereto undertakes to exercise all voting rights and other
powers of control available to it in relation to the Company so as to ensure
that at all times during the term of this Agreement:-
(a) the Company's affairs will be conducted at all times in accordance with
this Agreement and the Bylaws;
(b) the business of the Company consists exclusively of the Business
provided that by mutual agreement of TCN and DISX other business plans or
activities may be included;
(c) the Company carries on and conducts the Business and its affairs in a
proper and efficient manner;
(d) the Business is transacted on arm's length terms;
(e) the Company shall not enter into any agreement or arrangement (and no
employee or agent of the Company shall do so on the Company's behalf)
restricting its competitive freedom to provide and take goods and services by
such means and from and to such persons as it may think fit;
(f) the Business shall be managed by the Directors and all officers of the
Company, shall be subject to the directives of the Board of Directors;
(g) the Business shall be carried on in compliance with the provisions of
this Agreement and at all times the integrity of the TJON Business Plan shall
be maintained throughout the Territory;
(h) the Bylaws will not be amended (except as necessary to give full effect
to any provision of this Agreement);
(i) any transfer of Shares not contravening any provision of this Agreement
will be duly registered and otherwise given full effect;
(j) the Company shall maintain with a well established and reputable
insurer adequate insurance against all risks usually insured against by
companies carrying on the same or similar business and (without prejudice to
the generality of the foregoing) for the full replacement or reinstatement
value of all its assets of an insurable nature;
(k) the Company shall prepare such accounts and financial statements in the
form approved by the Directors in respect of each accounting reference period
as are required by statute and shall cause the independent accountants who
audit TCN's financial statements to audit the financial statements of the
Company in accordance with U.S. GAAP as soon as practicable and in any event
not later than 3 months after the end of the relevant fiscal year. The
Company shall prepare and submit to TCN and DISX monthly management accounts.
The Directors shall procure that the secretary chief financial officer of the
Company in addition to keeping the books, records and details of the financial
status of the Company shall make the necessary returns in relation to the
accounts and financial affairs of the Company;
(l) the Company's accounting reference date shall be the 31 March in each
year.
<PAGE>
<PAGE> 10
10. MATTERS REQUIRING THE CONSENT OF THE BOARD
10.1 Save as expressly provided otherwise in this Agreement the Company shall
not without the consent of a majority of the entire Board:-
(a) create any Encumbrance over the whole or any part of the undertaking,
property or assets of the Company, except for the purpose of securing the
indebtedness of the Company to its bankers for sums borrowed in the ordinary
and proper course of the Business;
(b) borrow or enter into arrangements under which the Company shall be
obligated to pay, individually or in the aggregate, a sum in excess of
US$50,000;
(c) make a loan or advance or give any credit to any employee or any other
person in excess of US$5,000;
(d) sell, transfer, lease, assign or otherwise dispose of all or any part
of the undertaking, property and/or assets of the Company, or contract so to
do otherwise than in the ordinary and proper course of the Business;
(e) issue any unissued Shares for the time being in the capital of the
Company or create or issue any new Shares or shares;
(f) acquire or invest in another company or business or create or dispose
of any subsidiary or of any shares in any subsidiary;
(g) enter into any joint ventures partnerships or profit sharing agreement
with any person or merge or amalgamate with any person, except those
arrangements which are expressly in accordance with the Business including for
example agreements with local media;
(h) do or permit or suffer to be done any act or thing whereby the Company
may be wound up (whether voluntarily or compulsorily);
(i) issue or consent to the assignment of, or grant options over any
Shares, debentures or other securities of the Company;
(j) pay or make any dividend or other distribution;
(k) enter into any death, retirement, profit sharing, bonus, share option
or other scheme for the benefit of the officers or employees of the Company or
any material variation (including any increase in the percentage amount of the
contributions) of any such scheme;
(l) commence any legal or arbitration proceedings (other than in the
ordinary course of the Business);
(m) enter into any arrangement whereby the Business or any part thereof
shall be supervised or managed otherwise than by the Directors;
(n) settle, compromise or otherwise dispose of any claims or actions
brought against the Company other than in the ordinary course of the Business.
11. CONTRIBUTIONS OF TCN, DISX AND THE COMPANY IN ADDITION TO THE PAYMENT BY
TCN OF U.S. $510 FOR ITS SHARES AND THE PAYMENT BY DISX OF $490 FOR ITS
SHARES;
11.1 TCN shall make the following contributions:
<PAGE> 11
11.1.1 Under the terms of the Intellectual Property and Brand Licensing
Agreement TCN shall grant to the Company for a nominal consideration an
exclusive, non-transferrable (except to a Group Company whose obligations are
guaranteed by the transferor) license in the Territory, to use certain
proprietary, intellectual property and technical information of TCN as more
fully described in the said agreement.
11.1.2 TCN will provide information defining the recommended policies and
procedures for managing a business operating the TJON Business Plan ("the
Business Operations Kit").
11.1.3 TCN will provide reasonable ongoing access for the management
personnel of the Company to the TJON Business Plan as operational now and in
the future in the United Kingdom. Reasonable ongoing access will include
access to TCN corporate operational functions including operational personnel
and collateral material.
11.1.4 The direct costs (for example travel and accommodation) of such
access for Company personnel will be borne by the Company.
11.1.5 TCN shall market the Company globally as an integrated part of its
overall global Top Jobs brand strategy.
11.1.6 TCN shall promote the Company to job seekers in other markets in
which TCN operates.
11.1.7 TCN shall provide the Company with lists of its customers in all
markets complete with relevant sales information.
11.1.8 TCN shall provide the Company with notification of new product,
service and technology improvements or enhancements being undertaken by TCN
within the scope of and related directly to the TJON Business Plan. The
Company will bear the cost of actual implementation in the states and areas
comprising the Territory, which costs of actual implementation include for
example the development of collateral, additional staff, training, travel,
accommodation, new systems hardware and third party software licences and any
other direct costs). TCN shall provide the Company with all improvements or
enhancements to the TJON Business Plan developed by TCN, provided always that
DISX and the Company shall not acquire any rights in such improvements or
enhancements developed by TCN and provided to the Company all of which
improvements and enhancements shall remain the sole and exclusive property of
TCN.
11.1.9 TCN shall provide a loan to DISX in accordance with the provisions
of the TCN Loan Agreement.
11.1.10 TCN shall, subject to the successful Initial Public Offering:
(a) pay US$500,000 in cash to DISX; and
(b) provide the issue by topjobs of US$500,000 worth of stock in topjobs to
DISX. Such stock shall be valued at the initial offering price per share of
the topjobs securities sold in the Initial Public Offering. Any such stock
acquired by DISX will be subject to a 180 day moratorium on sale. Subject to
the approval of the underwriters, DISX shall have the right to purchase
additional stock at the initial offering price per share of the topjobs
securities in the Initial Public Offering.
<PAGE> 12
11.1.11 In the event of the Initial Public Offering being unsuccessful (and
the Initial Public Offering shall be deemed to be unsuccessful if the U.S.
Securities and Exchange Commission have not declared the registration
statement in respect of the Initial Public Offering to be effective within 3
months from the Effective Date):-
(a) the repayment of the sum representing the aggregate of the loans made
by TCN to DISX pursuant to the TCN Loan Agreement shall be waived by TCN; and
(b) TCN will become immediately bound to transfer to DISX for US$.001 per
share 110 (one hundred and ten) of its Shares in the Company; and
(c) TCN shall be immediately credited as having provided funding by way of
a Loan to the Company of a sum representing the aggregate of the loans made by
TCN to DISX pursuant to the TCN Loan Agreement with the consequence that DISX
shall be immediately required to fund the Company in the direct proportion its
shareholding (which shall as a result of the operation of this Clause 11.1.11
stand at 60%) in the Company has to the shareholding held by TCN in the
Company (which shall as a result of the operation of this Clause 11.1.11 stand
at 40%); and
(d) the provisions of Clause 6 of this Agreement shall apply in the event
of DISX being unable to meet its proportionate funding requirement referred in
(c) above within the required timescale; and
(e) the amount of the outstanding loan by DISX to the Company pursuant to
the DISX Loan Agreement shall be immediately ascertained. DISX shall then
immediately assign to TCN the benefit of the Company's obligation to repay
loans made by DISX pursuant to the DISX Loan Agreement but only to the extent
of the sum representing the aggregate of the outstanding loans made by TCN to
DISX pursuant to the TCN Loan Agreement (or such sum comprising the amount of
the outstanding loan under the DISX Loan Agreement if such amount shall be
less than the aggregate of the outstanding loans made by TCN to DISX pursuant
to the TCN Loan Agreement). The Company shall not be relieved of its
obligation to repay DISX the amount being the difference between the sum
representing the aggregate of the outstanding loans made by TCN to DISX
pursuant to the TCN Loan Agreement and the aggregate sum of the outstanding
loans made by DISX to the Company under the DISX Loan Agreement.
(f) if subsequently the successful Initial Public Offering is achieved
within 12 months following the Effective Date, TCN may pay US$500,000 in cash
to DISX and provide the issue by topjobs of US$500,000 worth of stock in
topjobs to DISX (such stock shall be valued at the initial offering price per
share of the topjobs securities sold in the Initial Public Offering. Any such
stock acquired by DISX will be subject to a 180 day moratorium on sale.
Subject to the approval of the underwriters, DISX shall have the right to
purchase additional stock at the initial offering price per share of the
topjobs securities in the Initial Public Offering) whereupon DISX will become
immediately bound to transfer to TCN for US$.001 per share such number of its
Shares in the Company to provide TCN with shareholding control of the Company
(control shall equate to the holding of 51% of the Shares in the Company); and
(g) if sufficient funding other than through the Initial Public Offering
is available from or through TCN within the 12 month period from the Effective
Date, TCN may pay US$1,000,0000 in cash or as mutually agreed between the
Shareholders to DISX and the number of the Shares in the Company shall be
redistributed between the Shareholders to provide TCN with shareholding
control of the Company (control shall equate to the holding of 51% of the
Shares in the Company).
<PAGE> 13
11.1.12 TCN shalI allow the Company to use the services of Iain Griffiths
in a marketing and managerial capacity and the Company shall be charged for
the provision of his services at cost.
11.1.13 The services of such other TCN personnel as shall be required by
the Company and agreed between the parties shall be provided by TCN to the
Company on an ongoing basis at cost.
11.2 DISX shall make the following contributions to the Company in
consideration for the contributions being made by TCN both to the Company and
to DISX:-
11.2.1 DISX will provide a loan to the Company in accordance with the
provisions of the DISX Loan Agreement.
11.2.2 The following individuals ("the Former DISX Employees") shall with
effect from the Effective Date resign from their positions as employees of
DISX and be immediately employed by the Company upon the Standard Employment
Contract provided that Mr Larry Heaps and Mr Eric Marchant shall remain as
directors of DISX:-
Eric Marchant
Larry Heaps
Michael Robertson
Dale Christiansen
Ross Wolfley
David Mayne
Luke Ashton
Troy Corriveau
Brent Iverson.
Together with additional personnel as agreed between the parties.
11.2.3 Larry Heaps shall serve on the Operational Executive of TCN, being
the global management team of TCN.
11.2.4 DISX shall allow the Company, for such period as the Company shall
require, to use the premises and equipment of DISX for the purposes of
carrying on the Business and the Company shall pay to DISX a sum equating to
the cost incurred by DISX in the provision of this service.
11.2.5 Under the terms of the Intellectual Property and Brand Licensing
Agreement DISX shall grant to the Company for a nominal consideration an
exclusive, non-transferable (except to a Group Company whose obligations are
guaranteed by the transferor) license in the Territory to use certain
proprietary, intellectual property and technical information of DISX as more
fully described in the said agreement.
11.3 The parties shall provide the following contributions:
11.3.1 With effect from the Effective Date all existing trading contracts
and the revenue relating to such trading contracts to which either DISX or TCN
is a party and which relates to the Research and Co-operation Agreement
entered into between DISX and TCN ("the Contracts") shall be transferred to
the Company. Each of DISX and TCN acknowledge and agree that it is their
intention to investigate methods by which the Company is able to recognize
revenues and costs from existing Contracts.
<PAGE> 14
11.3.2 DISX and TCN shall each use all reasonable endeavors to obtain any
necessary consent of any person which is necessary to vest in the Company full
right and title to and enjoyment of any of the Contracts. Insofar as any
consent or sanction of any third party is required to the transfer of any of
the Contracts and such consent or sanction shall not have been received upon
the date of execution of this Agreement:-
11.3.2.1 Nothing in this Agreement shall be deemed to operate as such a
transfer or assignment as would give rise to any termination or forfeiture of
any benefit, right or interest to any person in any of the Contracts;
11.3.2.2 Until such time as such consent or sanction is received, DISX or
TCN, as appropriate, shall be deemed to be holding the relevant Contract and
the benefit thereof in trust for the Company absolutely provided that the
Company shall indemnify DISX or TCN, as appropriate, in respect of any and all
reasonable costs incurred by DISX or TCN, as appropriate, for the provision of
such service. The Company shall nevertheless perform, in place of DISX or
TCN, as appropriate, all Contracts.
11.3.3 All books and records held by DISX or by TCN, as appropriate,
relating to the Contracts shall be transferred with effect from the Effective
Date to the Company.
11.3.4 DISX warrants to TCN and to the Company that it has no claims
against any of the Former DISX Employees and hereby agrees to indemnify TCN
and the Company from and against any claims which it may make against any such
Former DISX Employees.
11.3.5 DISX shall be liable for and shall indemnify and keep indemnified
TCN and the Company from and against any and all claims, payments and
liabilities relating to the employment and the cessation of the employment by
DISX of the Former DISX Employees.
11.3.6 DISX warrants to TCN and to the Company that there are no claims by
any Former DISX Employee threatened or outstanding as at the Effective Date
and that DISX is not aware of any circumstances which may give rise to a
Former DISX Employee making any claim.
11.3.7 Each of DISX and TCN warrant to each other and to the Company:-
11.3.7.1 That it is not engaged in any litigation or arbitration
proceedings relating to the Contracts and has not had notice of any
circumstances which may give rise to any litigation or arbitration.
11.3.7.2 The books and records relating to the Contracts have been fully
and properly kept and completed and to the best of its knowledge, information
and belief there are no material inaccuracies or discrepancies therein.
11.3.7.3 It is not aware of any default in any of the Contracts.
11.3.7.4 It is not aware that any customer in relation to the Contracts
intends to terminate its Contract.
11.3.7.5 None of the Contracts have been entered into otherwise than in the
ordinary course of business.
11.3.8 The parties will manage, operate and support the Company in a way
which is consistent with the TJON Business Plan.
<PAGE> 15
11.3.9 The parties shall ensure that reasonable access to the Company is
provided for those responsible within TCN and DISX for obtaining an oversight
of the Company. For the avoidance of doubt, the costs associated with
personnel of TCN accessing the Company shall be borne by TCN and the costs
associated with personnel of DISX accessing the Company shall be borne by DISX
including without limitation the costs of travel and accommodation.
12. TERMINATION AND CONSEQUENCES OF TERMINATION
12.1 Either of the Shareholders hereto ("the Terminating Shareholder") shall
without prejudice to any other rights be entitled to terminate this Agreement
forthwith by 1 months prior written notice (a "Termination Notice") in the
event of the other Shareholder the ("Receiving Shareholder"):-
12.1.1 committing a breach of any of the terms hereof which is material
having regard to all relevant circumstances including without limitation, the
nature of the relationship between the parties and the need for each party to
maintain the confidence of the other, the nature of the breach (and in
particular whether it be intentional, negligent or otherwise) and the
consequences of the breach (hereinafter called a "Material Breach") and
failing to remedy that Material Breach (if such Material Breach is capable of
remedy) within 30 days of notice (hereinafter called a "Grievance Notice")
requiring it so to do; or
12.1.2 ceasing or threatening to cease to carry on business or being
deemed to be unable to pay its debts, or having an order made or an effective
resolution passed for its winding up (save for voluntary winding up for the
purposes of a reconstruction or amalgamation which has the prior written
approval of the parties hereto under which the new or amalgamated company
assumes liability under this Agreement) or having commenced against it any
similar proceedings in any jurisdiction; or
12.1.3 becoming insolvent or making any arrangement or composition with its
creditors or having a receiver, administrator or trustee appointed over any of
its assets.
12.2 Either party ("the Terminating Shareholder") shall be entitled to
terminate this Agreement with immediate effect by written notice to the other
party ("the Receiving Shareholder") in the event of the Receiving Shareholder
breaching any of the terms of the TCN Loan Agreement or of the Intellectual
Property and Brand Licensing Agreement and such breach leading to the
termination of the Intellectual Property and Brand Licensing Agreement.
12.3 The parties agree that if a dispute arises out of, or in connection
with, this Agreement the parties shall negotiate in good faith to resolve
their dispute within a period of 30 days from the day one party notifies the
other that a dispute has arisen.
12.4 If negotiations under Article 12.3 fail to resolve a dispute within
the time specified in that Article (or within any extension of time agreed in
writing by the parties) a dispute arising out of, or in connection with, this
Agreement shall be finally settled under the Rules of the American
Arbitration Association by one or more arbitrators appointed in accordance
with the Rules.
12.5 The successful party in any such arbitration shall be entitled to
recover from the unsuccessful party, in addition to any other relief to which
it may be entitled, reasonable attorneys' fees and costs incurred by it in
bringing or defending the claim/any counter-claim.
<PAGE> 16
12.6 Judgement upon the award rendered may be entered in any Court having
jurisdiction over the party against whom the award is rendered; or application
may be made to such Court for a judicial acceptance of the award and an order
of enforcement (as the case may be).
12.7 In the event of the occurrence of a Material Breach or an event
stipulated in clauses 12.1.2 or 12.1.3 in respect of which a Termination
Notice is served, or in the event of termination of this Agreement pursuant to
Clause 12.2, the Terminating Shareholder shall have the right to serve a
notice (an "Option Notice") on the Receiving Shareholder within one month from
the date of the Termination Notice, or the date of termination pursuant to
Clause 12.2, requiring the Receiving Shareholder to sell all its Shares in the
Company to the Terminating Shareholder or to purchase all of the Terminating
Shareholder's Shares in the Company at the Transfer Price. The Receiving
Shareholder shall be bound to effect the sale of all its Shares to the
Terminating Shareholder or to effect the purchase of all the Terminating
Shareholder's Shares pursuant to the provisions of Clause 7 hereof following
the service of an Option Notice.
12.8 Upon the sale of all of the Shares and/or assets and undertakings of
the Company to any third party this Agreement shall terminate but without
prejudice to any claim by any party hereto in respect of any antecedent breach
by any of the other parties hereto.
12.9 In the event of the Terminating Shareholder acquiring all of the
Shares in the Company this Agreement shall cease to operate as a Stockholders
Agreement and subject to the proviso below the provisions of this Agreement
shall cease to have any further force and effect. The proviso is that the
provisions of Clauses 12, 13, 14, 21, 25 and 26 shall continue to have full
force and effect.
13. NON-COMPETITION
13.1 During the period of this Agreement TCN and DISX undertake to each
other and to the Company that it shall not and that it shall procure that no
Group Company of it shall whether directly or indirectly and whether for its
or their own account or otherwise establish, take an equity position in,
manage or in any way become involved with any business operating a business
plan which is materially similar to or otherwise in competition with the TJON
Business Plan in the Territory provided, however, that this Clause 13.1 shall
not be deemed to preclude DISX's engaging in advertising and other media
contracts as pertaining to the Business.
13.2 In the event of one of the parties purchasing the Shares of the other
party ("selling party") in accordance with the provisions of this Agreement,
the selling party hereby undertakes that it shall not for a period of one (1)
year from the date of such purchase whether directly or indirectly and whether
for its own account or otherwise take an equity position in, manage or in any
way become involved with any business operating in the internet recruitment
advertising business in the Territory in competition with the Business or any
entity succeeding the Company.
13.3 During the period of this Agreement and, if relevant, for a period of
one year from the date one of the parties purchases the Shares of the other
party in accordance with the provisions of this Agreement, the selling party
hereby undertakes that it will not encourage or entice or attempt to encourage
or entice away from the Company any person whose name appears in Clause 11 of
this Agreement or who may hold a senior sales, marketing or technical position
within the Company, and further that the selling party shall notify the other
party in the event the selling party is approached by any director or employee
of the Company seeking employment with the selling party.
<PAGE> 17
14. CONFIDENTIAL INFORMATION
Each of the parties hereto agrees, both during and after termination of this
Agreement, save as (a) is required to be disclosed by TCN or topjobs in
relation to the completion and filing of the Form F-1 Registration Statement
in connection with the completion of the Initial Public Offering and all
matters related thereto or (b) otherwise required to be disclosed under
applicable U.S. federal and state securities laws, to keep secret and
confidential and not to use, disclose or divulge to any third party or to
enable or cause any person to become aware of or cause or allow to be
published (except for the purposes of the Business) any confidential
information relating to the Company, DISX and TCN including, but not limited
to, contractual arrangements or other dealings, transactions or affairs of the
Company, DISX and TCN, lists of customers, reports, notes, memoranda and all
other documentary records pertaining to the Company, DISX and TCN or the
Business, DISX and TCN or their affairs, accounts, finances, supplies,
customers or contractual or other arrangements, but excluding any information
which is in the public domain (otherwise than through the wrongful disclosure
of any party). Provided that nothing contained in this Clause 14 shall
prevent a party passing information concerning the Company's customers to a
third party who is engaged in discussions as to whether it shall itself become
a customer of the Company.
15. THE BYLAWS
Subject to Compliance with all applicable statutes and rules of law the
parties shall comply with the provisions of this Agreement notwithstanding
anything to the contrary contained in the Bylaws and the parties shall so far
as is lawful exercise their rights as shareholders in the Company and procure
that the Directors exercise their rights and perform their duties in
accordance with the provisions of this Agreement. In the event of any
ambiguity or conflict arising between this Agreement and the Bylaws the terms
and conditions of this Agreement shall prevail.
16. GOOD FAITH
16.1 The parties hereto undertake with each other to do all things necessary
within their power which are necessary or desirable to give effect to the
spirit and intent of this Agreement and to always act, in connection with this
Agreement, in good faith.
16.2 Further the parties hereto shall, and shall use their respective
reasonable endeavors to procure that any necessary third parties shall, do
execute and perform all such further deeds, documents, assurances, acts and
things as any of the parties hereto may reasonably require by notice in
writing to the others to carry the provisions of this Agreement into full
force and effect.
17. TIME OF THE ESSENCE
Any date or period mentioned in this Agreement may be extended by agreement
between all the parties hereto failing which, as regards any such date or
period, time shall be of the essence of this Agreement.
18. EXERCISE OF POWERS
Where a party is required under this Agreement to exercise its powers in
relation to the Company to procure a particular matter or thing, such
<PAGE> 18
obligation shall be deemed to include an obligation to exercise its powers
both as shareholders and as directors (where applicable) of the Company and to
procure that any alternate director appointed by it (whether alone or jointly
with any other person) shall procure such matter or thing.
19. COMPANY BOUND
The Company undertakes with each of DISX and TCN to be bound by and comply
with the terms and conditions of this Agreement to the extent that the same
relate to the Company and to act in all respects as contemplated by this
Agreement.
20. PARTNERSHIP
None of the provisions of this Agreement shall be deemed to constitute a
partnership, trust, agency or fiduciary relationship between any of the
parties hereto and none of them shall have any authority to bind the other in
any way.
21. MISCELLANEOUS
21.1 DISX shall be given the option to bid for the management and control
of media contracts on a campaign by campaign basis. For the avoidance of
doubt the decision shall be made on commercial merit and shall be in the best
interests of the Company. DISX shall with effect from the Effective Date be
awarded the Salt Lake City, Utah and Houston and Dallas, Texas media
contracts.
21.2 The termination of this Agreement however caused shall be without
prejudice to any obligations or rights of any of the parties hereto which have
accrued prior to such termination or cesser and shall not affect any provision
of this Agreement which is expressly or by implication provided to come into
effect on or to continue in effect after such termination or cesser.
21.3 This Agreement takes effect in substitution for all previous
representations, arrangements and agreements whether written or oral, express
or implied between the parties hereto relating to the subject matter of this
Agreement including without limitation the Research and Co-operation Agreement
and addendum to that Agreement and the Memorandum of Understanding entered
into between DISX and TCN. Each of the parties hereto hereby acknowledges
that in entering into this Agreement it has not relied on any representation
or warranty save as expressly set out herein or in any document referred to
herein.
21.4 No failure or delay by any party hereto in excising any right power or
privilege hereunder shall operate as a waiver thereof nor shall a single or
partial exercise of any right power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies provided in this Agreement are cumulative and not exclusive or
any rights or remedies otherwise provided by law.
21.5 If any term or provision of this Agreement shall in whole or in part
be held by a court to any extent to be illegal or unenforceable under any
enactment or rule of law, that term or provision or part shall to that extent
be deemed not to form part of this Agreement and the enforceability of the
remainder of this Agreement shall not be affected but shall continue in full
force and effect. Notwithstanding the foregoing the parties hereto shall
thereupon negotiate in order to agree the terms of a mutually satisfactory
provision to be substituted for the provision so found to be illegal or
unenforceable.
<PAGE> 19
21.6 This Agreement shall be completed in duplicate and shall become
effective on the date indicated herein as the Effective Date.
22. COSTS
22.1 All costs, charges and expenses incurred by the parties hereto in
respect of the negotiation, preparation, execution and performance of this
Agreement and all annexed or ancillary agreements shall be borne by each party
on its own account subject to the following provisions.
22.2 The costs of travel and accommodation incurred by all Directors in
attending Board Meeting and other matters in the Territory in their capacity
as Directors shall be borne by the Company.
23. ASSIGNMENT OF RIGHTS OR OBLIGATIONS
23.1 No Assignment
Subject to Clause 23.2, no Shareholder may, without the consent of each
other Shareholder, transfer, or agree to transfer any of its rights or
obligations hereunder in whole or in part ("Rights and Obligations").
23.2 Permitted Assignment
(a) Notwithstanding the provisions of this Clause 23, or any other
provision of this Agreement or any of the Bylaws, but subject to Clause
23.2(b), any Shareholder shall at all times during the term of this Agreement
be entitled to transfer any of its Rights or Obligations to a Group Company;
(b) If a Shareholder proposes to make a transfer pursuant to Clause 23.2(a)
it must:
(i)notify the other Shareholder forthwith; and
(ii)prior to making that transfer:
(A) execute, and cause the transferee to execute; any agreements that the
other Shareholder may reasonably require for the purpose of making the
transferee bound by the provisions of this Agreement; and
(B) provide to the other Shareholder security which in the other
Shareholder's reasonable opinion is equivalent to any security for the
performance of this Agreement held by the other Shareholder at that time.
24. AMENDMENT
The terms of this Agreement may at any time be amended or cancelled by
written agreement between the parties hereto.
25. NOTICES
Notices under this Agreement shall be sent by registered airmail, or by fax
(with a confirmatory copy by registered airmail) and shall be treated as
served on the date of dispatch. Notices shall be addressed:
- to TCN at Innovation House, Daten Park, Birchwood, Warrington, WA3 6UT;
<PAGE> 20
- with copies to Wansbroughs Willey Hargrave, 13 Police Street, Manchester
M2 7WA, England Facsimile 011-44-161-834-2440) and Greenberg Traurig, 200 Park
Avenue, New York, New York 10166, Facsimile: (212 801-6400;
- to DISX at 385 East 800 South, Orem, Utah 84097 USA, Facsimile: (801) 226
- - 8393
- with a copy to David D. Jeffs, Jeffs & Jeffs, P. C., 90 North 100 East,
P.O. Box 888, Provo, Utah 84603, USA, Facsimile: (801) 373 8878
- to the Company at 385 East 800 South, Orem, Utah 84097, USA Facsimile:
(801) 226 - 8393
These addresses are the principal places of business of the respective
parties.
26. GOVERNING LAW
The construction, validity and performance of this Agreement shall be
governed in all respects by the laws of the State of Utah, United States.
IN WITNESS whereof the parties hereto have executed this Agreement the day and
year first before written.
SIGNED on behalf of }
-----------------------
The Corporate Net } (Authorized Signatory)
Limited }
SIGNED on behalf of } -----------------------
topjobs.net inc } (Authorised Signatory)
SIGNED on behalf of }
Dynamic Information System -----------------------
& Exchange, Inc } (Authorized Signatory)
<PAGE>
<PAGE> 21
SCHEDULE 1
[Form of Assignment Agreement]
THIS ASSIGNMENT AGREEMENT is made the ___ day of ___________ 1999, by ______
of _________________ (hereinafter called the "Covenantor").
SUPPLEMENTAL to a Joint Venture Agreement dated the _________ 1999 and made
between Dynamic Information System and Exchange, Inc (1) The Corporate Net
Limited (2) and topjobs.net inc (the "Company").
WITNESSETH as follows:
1. The Covenantor hereby confirms that it has been supplied with a copy of
the Stockholders Agreement and hereby covenants with each of the parties named
in the First Schedule hereto to observe perform and be bound by all the terms
of the Stockholders Agreement which are capable of applying to the Covenantor
and which have not been performed at the date hereof to the intent and effect
that the Covenantor shall be deemed with effect from the date on which the
Covenantor is registered as a member of the Company to be a party to the
Stockholders Agreement.
2. The Covenantor hereby undertakes with the person who has transferred
shares in the Company to the Covenantor, being the person specified in the
Second Schedule (the "Transferor") that it will enter into such guarantees
and/or, indemnities to third parties in connection with the Company and/or its
business and affairs which the Transferor may have entered into and shall use
its reasonable endeavours to obtain the Transferors' release therefrom as soon
as reasonably practicable. Until such release is obtained the Covenantor
undertakes to indemnify the Transferor and keep the Transferor fully and
effectively indemnified against all liabilities which the Transferor may incur
in respect of such guarantees or indemnities.
3. This Agreement shall be governed by and construed in accordance with the
laws of the state of Utah.
EXECUTED as a deed the day and year first before written.
THE FIRST SCHEDULE
Insert the names and addresses of the other continuing parties to the Joint
Venture Agreement.
THE SECOND SCHEDULE
Insert the name of the transferor
EXECUTED as an Assignment Agreement by
by the signature of
_________________ Director
_________________ Director/Secretary
EXECUTED as an Assignment Agreement by
by the signature of
_________________ Director
_________________ Director/Secretary
<PAGE>
<PAGE> 22
SCHEDULE 2
[Form of Standard Employment Contract]
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of the day of
February 1999 is by and between (the "Employee") and
topjobs.net.inc, a Delaware corporation (the"Company").
Recitals
A. The Employee is currently an employee of the Company or, in conjunction
with the execution of this Agreement, will become an employee of the Company.
B. The Company and the Employee desire to enter into this Agreement to set
forth the terms and conditions of the Employee's employment by the Company.
Agreement
In exchange for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Employee hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below
a. "Affiliate" shall mean any entity: (I) in which the Company owns a
direct or indirect interest of any type or nature; (ii) which owns a direct or
indirect interest of any type or nature in the Company; or (iii) which is
directly or indirectly owned in whole or in part, by any person or entity that
directly or indirectly owns, in whole or in part, the Company. "Affiliate"
shall also mean any natural person that owns a direct or indirect interest in
any entity described in the preceding sentence.
b. "Competitor" shall mean any person or entity that engages in the
development, design, production or marketing of any product or service that is
identical or similar to, or in direct competition with, any product that, as
of the termination of the Employee's employment, the Company or any Affiliate
has developed, designed, produced or marketed, is in the process of
developing, designing, producing or marketing or plans to develop, design,
produce or market.
c. "Employee's Work Product" shall mean all concepts, systems,
strategies, plans, procedures, formulas, techniques, discoveries, intentions,
processes, ideas, information, data, algorithms, flowcharts, programs,
software, codes, sequences, patterns, compilations, devices, documents, data,
research, technologies, products, methods, applications, know-how, and
designs, including, without limitation, all documents, notes, magnetic tape,
disks, recordings, photographs and other media of any type or nature
containing any of the foregoing, obtained, created, conceived, developed or
provided by the Employee, whether alone or in conjunction with others and
whether at work, home or any other place, during the term of the Employee's
employment by the Company; (i) in connection with or as part of the Employee's
employment by the Company: (ii) using the Company's time, Protected Property,
facilities or materials; or (iii) involving any field of interest in which the
Company has been involved or is planning to become involved in the future.
<PAGE> 23
d. "Intellectual Property Law" shall mean any treaty, statute,
regulation, rule or other law of the United States of America, any state or
any local governmental jurisdiction relating to, governing, granting or
protecting patents, copyrights, trademarks, trade names, trade secrets or
other similar rights.
e. "Protected Area" shall mean, with respect to any Competitor described
in section 1.b. above, the United States of American.
f. "Protected Property" shall mean all concepts, systems, strategies,
plans, procedures, techniques, methods, technologies, algorithms, flowcharts,
codes, sequences, software, information, formulas, patterns, discoveries,
inventions, knowledge, compilations, programs, devices, methods, applications,
know-how, systems, contracts, customer, and supplier lists, ideas, documents,
records, manuals, data, research, products, fees, costs, marketing methods and
processes that are or may be owned, used, developed or acquired by, or
otherwise relate to the business of, the Company or any of its affiliates,
except to extent such items are in the public domain other than a result of
the Employee's breach of this Agreement. Without limiting the generality of
the foregoing, the "Protected Property" shall include:
(i) Computer Software;
(ii) Administrative processes, procedures, systems and techniques;
(iii) Procedures, processes, formulas and techniques for producing or
processing the Company's products and services;
(iv) Technical data, specifications and knowledge regarding the Company's
business policies, strategies, practices and techniques;
(v) Investment strategies, positions and techniques;
(vi) Compilations of and information relating to customers or potential
customers; and
(vii) Such other items as the Company may designate from time to time.
2. Employment Status. The Company hereby employs the Employee to work for
the Company in accordance with the terms hereof. The Employee shall have such
duties and responsibilities, and shall hold such position or positions, as may
be designated by the Company from time to time. The Employee shall work for
the Company on a full-time basis and shall devote all of his working time to
the performance of his duties and responsibilities to the Company, excepting
only vacations and absences for illness and injury, all in accordance with
such policies with respect thereto as the Company may establish from time to
time for employees of similar status, rank and responsibilities.
3. Acceptance of Employment. The Employee hereby accepts employment and
shall devote his best efforts to such employment, for the compensation and on
the other terms stated in this agreement.
4. Compensation. In exchange for the services to be rendered by the Employee
to the Company pursuant to this Agreement, the Company shall compensate the
Employee in accordance with the provisions set out in Exhibit A. The Company
may, at its sole discretion, however, prospectively reduce or increase the
rate of the Employee's compensation. Such compensation shall be paid to the
<PAGE> 24
Employee in accordance with the Company's normal payroll practices for
employees of similar status, rank and responsibility. The compensation and
benefits expressly provided for in this Agreement, together with any
additional compensation to which the Employee is entitled under the terms of
any incentive compensation plan of the Company in which the Company permits
the Employee to participate or under applicable law, shall constitute full
consideration for the services to be rendered by the Employee to the Company
under this Agreement.
5. Term of Employment.
a. Subject to prior termination in accordance with paragraph 5.b. below,
the term of this Agreement and the Employee's employment hereunder shall be
for a term of one (1) year commencing on the date of this Agreement; and,
following such one (1) year term, this Agreement shall thereafter
automatically renew for additional terms of one (1) year each unless either
party gives written notice of termination to the other party not less than
ninety (90) days prior to the end of any term (in which event this Agreement
shall terminate effective as of the close of such term).
b. This Agreement may be terminated:
(1) upon mutual written agreement of the Company and the Employee;
(2) at the option of the Employee, upon fourteen (14) days' prior
written notice to the Company, in the event that the Company shall (A) fail to
make any payment to the Employee required to be made under the terms of this
Agreement within thirty (30) days after payment is due, or (B)fail to perform
any other material covenant or agreement to be performed by it hereunder or
take any action prohibited by this Agreement, and fail to cure or remedy same
within thirty (30) days after written notice thereof to the Company;
(3) at the option of the Company, upon written notice to the Employee,
"for cause" (as hereinafter defined);
(4) at the option of the Company in the event of the "permanent
disability" (as hereinafter defined) of the Employee; or
(5) upon the death of the Employee.
c. As used herein, the term "for cause" shall mean and be limited to: (I)
any willful and material breach of this Agreement by the Employee which in any
case is not fully corrected within thirty (30) days after written notice of
same from the Company to the Employee; (ii) gross neglect by the Employee of
his duties and responsibilities hereunder; (iii) any fraud, criminal
misconduct, breach of fiduciary duty, dishonesty, or gross, and willful
misconduct by the Employee in connection with the performance of his duties
and responsibilities hereunder; (iv) the Employee being legally intoxicated
during business hours or while on call, or being habitually drunk or addicted
to drugs (provided that this shall not restrict the Employee from taking
physician prescribed medication in accordance with the applicable
prescription); (v) the commission by the Employee of any felony or crime of
moral turpitude, or any other action by the Employee which may materially
impair or damage the reputation of the Company; or (vi) habitual breach by the
Employee of any of the material provisions of this Agreement (regardless of
any prior cure thereof).
<PAGE> 25
d. As used herein, the term "permanent disability" shall mean, and be
limited to, any physical or mental illness, disability or impairment that
prevents the Employee from continuing the performance of his normal duties and
responsibilities hereunder for a period in excess of three (3) consecutive
months. For purposes of determining whether a "permanent disability" has
occurred under this Agreement, the written determination thereof by two (2)
qualified practicing physicians selected and paid for by the Company (and
reasonably acceptable to the Employee) shall be conclusive.
e. Upon any termination of this Agreement as herein provided, the
Employee (or his estate or legal representative, as the case may be) shall be
entitled to receive any and all unpaid Base Salary appropriately prorated to
and as of the effective date of termination (based on the number of days
elapsed prior to the date of termination), and any other amounts then due and
payable to the Employee hereunder. All such payments shall be made on the
next applicable payment date therefor following the effective date of
termination of this Agreement. Such payments shall constitute all amounts to
which the Employee shall be entitled upon termination of this Agreement.
6. Ownership of the Employee's Work Product. The Employee shall perform his
duties and obligations as an employee of the Company on a "work for hire"
basis. The Company shall solely and exclusively own all of the Employee's
Work Product, and the Employee hereby sells, assigns, conveys and transfers to
the Company all of the Employee's Work Product, including, without limitation,
all of the Employee's Work Product coming into existence after the date of
this Agreement. Without limiting the generality of the foregoing, the Company
shall be exclusively entitled to all rights and protections available under
any Intellectual Property Law with respect to, or based upon, all or any
portion of the Employee's Work Product. To the extent the foregoing
assignment is ineffectual as to any Employee's Work Product not yet in
existence, the Employee agrees to promptly assign, convey and transfer such
Employee's Work Product to the Company at such time as it comes into
existence, the consideration set forth in this Agreement constituting full and
adequate consideration therefore. The Employee agrees to cooperate and assist
the Company, both during and after the term-of the Employee's employment by
the Company, in obtaining or securing any right available to the Company under
any Intellectual Property Law with respect to the Employee's Work Product,
including, without limitation, to assist in the preparation of and to execute
such applications, certificates, affidavits, and other documents as may be
necessary or helpful in obtaining or securing such rights. The Employee shall
not use any of the Employee's Work Product in any manner inconsistent with
this Agreement or the Company's ownership right in and to the Employee's Work
Product.
7. Disclosure and Use of Protected Information. The Employee agrees that he
will not, at any time after the execution of this Agreement (including after
termination of Employee's employment with the Company), except with the
express prior written consent of the Company or as authorized by the Company
in connection with the performance by the Employee of his duties as an
employee of the Company, directly or indirectly disclose, communicate or
divulge to any person, including, without limitation, any natural person,
corporation, trust, estate, partnership or other entity, or use for the
benefit of the Employee or any other person except the Company, any Protected.
Property. The Employee further agrees to take such action as may be necessary
to prevent the inadvertent disclosure or unauthorized use of Protected
Property entrusted to or otherwise within the possession or control of the
Employee. Upon termination of Employee's employment with the Company, the
Employee shall immediately deliver to the Company all records, documents,
<PAGE> 26
tapes, magnetic disks and other media of any type or nature in the Employee's
possession containing or relating to any of the Protected Property.
8. Covenant Not to Compete.
(a) The Employee agrees that he will not, for and during the term set
forth in subparagraph (b) of this Section 8, except with the express prior
written consent of the Company, directly or indirectly, whether as employee,
owner, partner, agent, consultant, officer, director or in any other capacity,
for his own account or for the benefit of any other person:
(i) establish, assist, work for or otherwise be connected or associated
with any Competitor, or become a Competitor, with the Protected Area;
(ii) solicit, divert, accept business from or otherwise take away or
interfere with any former, present or future customer or account of the
Company; or account of the Company; or
(iii) solicit, divert or induce any of the employees of the Company, or any
of the Company's affiliates, to leave the employ of the Company or its
affiliates, as applicable.
(b) The term of the Employee's covenant not to compete set forth above
shall begin on the date of this Agreement and shall continue until the date
that is 12 months following the date of termination of the Employee's
employment.
(c) The Employee agrees that, except as otherwise provided in this Section
8, his employment or continued employment by the Company shall constitute full
and adequate consideration for employee's covenants under this Section 8. As
consideration for the Employee's covenant not to compete for the 12 month
period after the termination of the Employee's employment, the Company shall
pay to the Employee an amount equal to 5 percent (5%) of the Employee's annual
compensation (exclusive of bonuses, incentive plan payments, retirement plan
contributions, fringe benefits and other similar items) at the time Employee's
employment with the Company is terminated, which amount shall be payable 12
months after the termination of Employee's employment.
9. Severabililty. The Company and the Employee agree that if any provision
of this Agreement, as written, is held by a court of competent jurisdiction to
be invalid, illegal or unenforceable, such provision shall be applied in the
broadest manner possible within the scope of its express language such that it
would be valid, legal and enforceable. If any provision of this Agreement is
construed to be invalid, illegal or unenforceable, then the remaining
provisions hereof shall not be affected thereby and shall be enforceable
without regard thereto.
10. Remedies. The Employee acknowledges that its breach of this Agreement
will cause the Company irreparable harm for which no adequate remedy exists at
law, and agrees that upon any such breach or threatened breach, the Company
shall be entitled to injunctive relief without prejudice to any other right
the Company may have in law or equity.
11. Miscellaneous
(a) No failure to exercise, delay in exercising or single or partial
exercise of any right, power or remedy by either party hereto shall constitute
a waiver thereof or shall preclude any other or further exercise of the same
or any other right, power or remedy.
<PAGE> 27
(b) Except as contemplated in section 9, this Agreement shall not be
amended or modified except by written document signed by the Employee and the
Company.
(c) This Agreement shall be governed by the laws of Utah. If either
party hereto attempts to enforce the terms of this Agreement and is required
to retain legal counsel in order to enforce its rights hereunder, with or
without the commencement of a formal legal action, the prevailing party shall
be entitled party shall be entitled to recover from the other party its
attorneys fees and costs.
(d) This Agreement shall be binding on the parties and their respective
heirs, successors and assigns. This Agreement is a person employment contract
of the Employee which shall not be assignable by the Employee.
(e) This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and supercedes all prior agreements with
respect to the subject matter.
EXECUTED to be effective for all purposes as of the date first above written.
THE COMPANY:
Topjobs.net.inc
By:
--------------------------
Its:
--------------------------
THE EMPLOYEE:
-------------------------------
Name:
------------------------
[EXHIBIT "A" TO BE ATTACHED]
<PAGE>
<PAGE> 28
SCHEDULE 3
DISX Loan Agreement
DATED 11 FEBRUARY 1999
DYNAMIC INFORMATION SYSTEM AND EXCHANGE, INC
and
topjobs.net inc
LOAN AGREEMENT
Wansbroughs Willey Hargrave
Solicitors,
13, Police Street,
Manchester,
M2 7WA
(Ref: JAL/6772-14)
<PAGE>
<PAGE> 29
LOAN AGREEMENT
DATED: 11 FEBRUARY 1999
BETWEEN:
(1)DYNAMIC INFORMATION SYSTEM & EXCHANGE, INC, an American corporation
incorporated under the laws of the State of Utah whose registered office is at
385 East 800 South, Orem, Utah 84097, USA ("DISX"); and
(2)topjobs.net inc, an American corporation incorporated under the laws of the
State of Delaware whose registered office is at 385 East 800 South, Orem, Utah
84097, USA ("the Company")
WHEREAS:
DISX has agreed to make available to the Company a loan ("the Loan") of up to
US$500,000 (FIVE HUNDRED THOUSAND U.S. DOLLARS) ("the Principal Sum") subject
to and upon the terms and conditions contained in this Agreement.
NOW IT IS HEREBY AGREED as follows:
1.LOAN AND INTEREST
1.1 DISX hereby agrees with the Company to lend the Principal Sum to the
Company in accordance with the provisions of Clause 3.
1.2 No interest shall be payable by the Company to DISX on the Principal Sum.
2. PURPOSE OF THE LOAN
The purpose of the loan is to provide working capital to the Company.
3. METHOD OF DRAWING
At any time or times after execution of this Agreement by both parties the
Company may, on giving written notice to DISX, such notice to be received by
DISX not later than five days before funds are required by the Company request
payment of the Loan or any part of it up to a maximum aggregate of the
Principal Sum..
4. TERM OF LOAN
The Loan shall be repaid either by way of one single payment or by way of
multiple payments at such time or times as the Board of Directors of the
Company consider that the Company is cash positive and has sufficient funding
to meet its needs and expansion plans. Provided always that in the event of
the initial public offering in the United States of securities of topjobs.net
plc being unsuccessful (and the initial public offering shall be deemed to be
unsuccessful if the U.S. Securities and Exchange Commission have not declared
the registration statement in respect of the initial public offering to be
effective within 3 months from the 1st February 1999), the amount of the
outstanding loan by DISX to the Company shall be immediately ascertained.
DISX shall then immediately assign to The Corporate Net Limited of Warrington
England the benefit of the Company's obligation to repay loans made by DISX
but only to the extent of the sum representing the aggregate of the
outstanding loans made by The Corporate Net Limited to DISX pursuant to a loan
agreement between The Corporate Net Limited and DISX ("the TCN Loan
Agreement") (or such sum comprising the amount of the outstanding loan under
this Agreement if such amount shall be less than the aggregate of the
<PAGE> 30
outstanding loans made by The Corporate Net Limited to DISX pursuant to the
TCN Loan Agreement). The Company shall not be relieved of its obligation to
repay DISX the amount being the difference between the sum representing the
aggregate of the outstanding loans made by The Corporate Net Limited to DISX
pursuant to the TCN Loan Agreement and the aggregate sum of the outstanding
loans made by DISX to the Company under this Agreement.
5. GOVERNING LAW
This Agreement shall be governed and construed in accordance with the laws of
the State of Utah.
IN WITNESS whereof the parties have executed this Agreement the day and year
first before written.
SIGNED by /S/
for and on behalf of DISX
SIGNED by /S/
for and on behalf of the Company
<PAGE>
<PAGE> 31
SCHEDULE 4
Intellectual Property and Brand Licensing Agreement
DATED 11 FEBRUARY 1999
DYNAMIC INFORMATION SYSTEM AND EXCHANGE, INC
and
topjobs.net inc
and
THE CORPORATE NET LIMITED
INTELLECTUAL PROPERTY AND BRAND LICENSING AGREEMENT
Wansbroughs Willey Hargrave
13 Police Street
Manchester
M2 7WA
(Ref SJI/6772-14)
<PAGE>
<PAGE> 32
INTELLECTUAL PROPERTY AND BRAND LICENSING AGREEMENT
BETWEEN:
Dynamic Information System & eXchange, Inc of 385 East 800 South, Orem, Utah
84097, USA ("DISX"), and
topjobs.net inc of 385 East 800 South, Orem, Utah 84097, USA ("the Company");
and
The Corporate Net Limited (Registration Number in England 3173007) of
Innovation House, Daten Park, Birchwood, Warrington, WA3 6UT ("TCN").
PRELIMINARY
Article 1 : Transactions
1.1 The purpose of this Agreement is to record the terms under which the
Company is to be granted a license to operate the TJON Business Plan in the
Territory using the Licensed Software and Technical Information and to record
the terms under which the Company is to be granted a license to operate DISX's
Intellectual Property.
Article 2 : Definitions
In this Agreement, the following expressions have the following meanings:
2.1 the Business" shall have the same meaning as in the Stockholders
Agreement
2.2 DISX's Copyright" means all copyright and rights in the nature of
copyright subsisting in DISX's Intellectual Property to which DISX is now or
may subsequently become entitled including without limitation all literary and
artistic works including all drawings, manuals, programs, data (whether oral
or in writing or in any other form) carrying or embodying any part of the
DISX's Intellectual Property.
2.3 DISX's Intellectual Property" means DISX's intellectual property,
proprietary, trade secret and technical information described in Schedule C
hereto.
2.4 Effective Date" means the 1st February 1999.
2.5 Group Company" shall have the same meaning as in the Stockholders
Agreement.
2.6 Licensed Software" means the software used in connection with the TJON
Business Plan, job manager functionality (being software which enables
software which enables customers of TCN to manage their own job advertising by
changing on line the text content of their job slot), job slot functionality
(being a full screen template into which a job advertisement can be typed and
changed) and executable codes in relation to programs comprised within the
TJON Business Plan.
2.7 Stockholders Agreement" means an agreement of even date made between the
parties hereto for the purpose of regulating their relationship with each
other and certain aspects of the affairs of and their dealings with the
Company and setting out the basis upon which the parties will contribute to
establish, operate and support the Company.
<PAGE> 33
2.8 TCN's Copyright" means all copyright and rights in the nature of copyright
subsisting in the Technical Information to which TCN is now or may
subsequently become entitled including without limitation all literary and
artistic works including all drawings, manuals, programs, data (whether oral
or in writing or in any other form) carrying or embodying any part of the
Technical Information.
2.9 "Technical Information" means all technical information comprising all
trade secrets, processes, know-how, instructions, specifications and other
information relating to the use and operation of the Licensed Software.
2.10 "the Term" is the period of validity of this Agreement determined in
accordance with the provisions of Article 12.
2.11 "the Termination Date" is a date on which a notice of termination, given
under the provisions of Article 12, expires.
2.12"the Territory" shall have the same meaning as in the Stockholders
Agreement;
2.13 "TJON Business Plan" shall have the same meaning as in the Stockholders
Agreement;
2.14 "the Trade Marks" collectively mean the marks used in relation to the
Licensed Software which are listed in Part A of Schedule A to this agreement,
the intellectual property rights in which are owned by TCN and the marks used
in relation to DISX's Intellectual Property which are listed in Part B of
Schedule A to this agreement, the intellectual property rights in which are
owned by DISX.
SUBSTANTIVE
Article 3 : Grant of License Rights
3.1 With effect from the Effective Date:-
3.1.1 TCN grants the Company, for the duration of the Term and under the
conditions contained in this Agreement, a non-transferable license in the
Territory to use the Licensed Software and the Technical Information and to
use the Trade Marks to promote and market the TJON Business Plan including a
licence of Copyright for the purpose of operating the TJON Business Plan in
the Territory which licence does not entitle the Company to copy, modify or
customise any Technical Information.
3.1.2 DISX grants to the Company, for the duration of the Term and under the
conditions contained in this Agreement an exclusive non transferable licence
in the Territory to use DISX's Intellectual Property and to use the Trade
Marks including a licence of DISX's Copyright which licence does not entitle
the Company to copy, modify or customise any of DISX's Intellectual Property.
3.2 The Company shall not, (subject as provided in this Agreement) without
TCN's or DISX's (as relevant) prior written consent, assign or sub-licence any
of the rights granted by this Agreement.
3.3 The Company is not, by virtue of this Agreement, the legal representative
of TCN or DISX and has no right or authority from either of them to assume any
obligation of any kind (whether express or implied) on behalf of TCN, or DISX
and shall not hold itself out as the representative of TCN or DISX.
<PAGE> 34
3.4 The consideration for the grant of the licence in 3.1.1 with respect to
the Trade Marks shall be US$1.00 and with respect to all other intellectual
property rights shall be US$1.00.
3.5 The consideration for the grant of the licence in 3.1.2 with respect to
the Trade Marks shall be US$1.00 and with respect to all other intellectual
property rights shall be US$1.00.
Article 4 : Provision of Licensed Software, Technical Information and DISX's
Intellectual Property
4.1 TCN will:
4.1.1 commence provision of the Licensed Software and Technical Information to
the Company on the day following the date of execution of this Agreement.
4.1.2 within a period of 30 days from the day following the date of execution
of this Agreement provide the Company with a database schema containing no
actual data but containing the appropriate data storage sections to the TJON
Business Plan.
4.2 DISX will commence provision of DISX's Intellectual Property to the
Company on the day following the date of execution of this Agreement.
4.3 A module of the Licensed Software or of DISX's Intellectual Property shall
be "delivered" for the purposes of this Agreement when it has physically been
delivered to the Company.
4.4 TCN and DISX respectively assume the risk of loss or damage to each module
of the Licensed Software or of DISX's Intellectual Property until that module
is delivered to the Company. Subsequently, the risk of loss and damage to
each module of the Licensed Software and DISX's Intellectual Property shall be
on the Company.
Article 5 : Undertakings and Disclaimers
5.1 The Company hereby agrees to use the Licensed Software and Technical
Information solely for the purposes of operating the TJON Business Plan in the
Territory and to use DISX's Intellectual Property solely for the purposes of
the Business in the Territory through the Company and for no other purposes
whatsoever and not otherwise than through the Company.
5.2 The Company shall in all correspondence or commercial documents relating
to the TJON Business Plan and to DISX's Intellectual Property, or entries in
directories and similar media in the Territory relevant to the use by the
Company of the TJON Business Plan and to DISX's Intellectual Property describe
itself as licensee of TCN and of DISX (and such description shall be deemed to
be consistent with Clause 3.3) and take any other reasonable steps to make
clear the extent of its authority to act in relation to TCN's and DISX's
affairs.
5.3 To the maximum extent permitted by law, TCN and DISX disclaim all
warranties and remedies in respect of the Licensed Software, the Technical
Information and DISX's Intellectual Property or any part of them.
Article 6 : Promotion Advertising and Ownership
6.1 The Company will promote and market the TJON Business Plan under the Trade
Marks and:
<PAGE>
6.1.1 the mode of use of the Trade Marks by the Company shall be subject to
the prior approval of the owner of the relevant Trade Marks;
6.1.2 in any catalogue, price list or promotional publication issued by the
Company in which reference is made to the TJON Business Plan or the Licensed
Software or to the Trade Marks or to DISX's Intellectual Property there shall
be included in legible type a statement informing the reader of the
proprietorship of the TJON Business Plan, the Trade Marks, the Licensed
Software or of DISX's Intellectual Property (the form of such Statement to be
agreed with TCN or DISX in respect of DISX's Intellectual Property):
6.1.3 the Company is under an obligation not to use the Trade Marks in any
manner which may impair the validity of any intellectual property rights of
TCN and DISX in respect of the Trade Marks; and
6.1.4 TCN and DISX may exercise reasonable quality control over the goods and
services in relation to which the Company will use the Trade Marks.
6.2 The Company acknowledges that the Trade Marks, the Licensed Software, the
Copyright and any intellectual property or similar rights in any enhancements
and/or modifications to, or derivative works of the Licensed Software and the
Technical Information are owned by TCN and the Company acknowledges that no
title to the Trade Marks, the Licensed Software, the Copyright and any
intellectual property or similar rights in any enhancements and/or
modifications to, or derivative works of the Licensed Software and the
Technical Information shall pass to the Company. The Company confirms that it
does not acquire any rights in the Trade Marks, the Licensed Software, the
Copyright and any intellectual property or similar rights in any enhancements
and/or modifications to, or derivative works of the Licensed Software or the
Technical Information or to executable codes in relation to programs comprised
within the TJON Business Plan other than those specified in this Agreement.
The Company repeats the same acknowledgements and confirmations in respect of
DISX's Intellectual Property.
Article 7 : Liability
7.1 TCN will use its best efforts to provide the Company only with Technical
Information which will not cause the Company to infringe the rights of other
parties and to provide the Company with accurate Technical Information.
7.2 DISX will use its best efforts to provide the Company only with DISX's
Intellectual Property which will not cause the Company to infringe the rights
of other parties.
Article 8 : Sub-licenses
8.1 TCN grants the Company, with effect from the Effective Date for the
duration of the Term and under the conditions contained in this Agreement, the
right to sub-licence its rights in relation to TCN's Copyright and the
Licensed Software in the Territory granted under this Agreement in respect
only of the items listed in Part A of Schedule B (which items shall be agreed
between the parties within 30 days of the date hereof) to the Company's
customers (and for the avoidance of doubt not to DISX) provided always that
the Company shall only grant a sub-licence pursuant to a sub-licence agreement
in a form to be agreed between the parties hereto after the date of this
Agreement. For the avoidance of doubt, a sub-licence in respect of the items
listed in Part A of Schedule B shall only be relevant in circumstances whereby
a customer of the Company is given on-line Internet access to change its own
jobs directly and separately where a customer is given off line internet
<PAGE> 36
access to change their jobs through the provision of software to the customer
to load on to their own PC's.
8.2 DISX grants the Company, with effect from the Effective Date for the
duration of the Term and under the conditions contained in this Agreement, the
right to sub-licence its rights in relation to DISX's Copyright and DISX's
Intellectual Property in the Territory granted under this Agreement in respect
only of the items listed in Part B of Schedule B (which items shall be agreed
between the parties within 30 days of the date hereof) to the Company's
customers (and for the avoidance of doubt not to TCN) provided always that the
Company shall only grant a sub-licence pursuant to a sub-licence agreement in
a form to be agreed between the parties hereto after the date of this
Agreement.
Article 9 : Confidentiality
9.1 The Licensed Software and the Technical Information constitute the
proprietary, and trade secret information of TCN and DISX's Intellectual
Property constitutes the proprietary, and trade secret information of DISX and
are regarded as unique and valuable assets. To protect and maintain the
confidentiality of such items the parties hereby jointly and severally
undertake with each other that each of them will (at a minimum and subject to
the provisions of Article 9.2) take those precautions they employ to protect
their own confidential information and technology and will bind their
executives, employees and agents (to any of whom information about any aspect
of such items may be given on a "need to know" basis only) to keep
confidential (both before and after such persons' relationship with each
relevant party as the case may be is terminated) every part of such items.
9.2 Each party (to the extent that it shall come into the possession of or
have knowledge of such items) agrees not to reveal executable code, source
code (if any), or the contents of any documentation, comprised in the items
referred to in Article 9.1 above to any person or organisation unless
specifically authorised to do so in this Agreement and not to reveal to any
other person or organisation (whether directly or through their employees or
agents) either any information relating to such executable code, source code,
its programming or its algorithms or the contents of any such documentation.
Each party (to the extent previously mentioned) shall require each of its
employees and agents who have a need to have access to any executable code,
source code or documentation comprised in the items referred to in Article 9.1
above and who are authorised by the relevant party to have access to it, to
execute the relevant party's confidentiality and non-disclosure agreement
(with the relevant party as a party to that Agreement) a copy of which shall
be made available between the parties after the execution of this Agreement.
Each party agrees that it is fully responsible for the actions or omissions of
each of its employees and agents with respect to such executable code, source
code and documentation, whether or not any such individual at any material
time (in the case of an employee) was acting within the scope of his/her
employment or (in the case of an agent) was acting within the scope of his/her
agency contract.
9.3 Each party hereby jointly and severally undertakes with the other parties
that it will not at any time (whether before or after the termination of this
Agreement) divulge any information in relation to the affairs of the other
parties or to the items referred to in Article 9.1 above, supplied or made
available to it by another party or in respect of which it may come into the
possession of or have knowledge of except for any information which is in the
public domain or is required to disclose by any laws, rules and regulations
and that it will not use such information other than for the purposes
permitted by this Agreement.
<PAGE> 37
9.4 In furtherance of each party's rights under this Agreement, each party may
at its expense and during the other parties' normal business hours enter the
premises of the other parties for the purpose of auditing copies of the items
referred to in Article 9.1 above made under this Agreement and the other
parties' compliance with the other provisions of this Agreement.
Article 10 : Additional Duties of the Company
The Company will promptly bring to the attention of TCN or to DISX as
appropriate any improper or wrongful use in the Territory of the Licensed
Software, TCN's Copyright, the Technical Information, DISX's Copyright, DISX's
Intellectual Property or the Trade Marks and of trade names, emblems, designs,
plans or other similar industrial or commercial property rights which infringe
the Trade Marks or TCN's Copyright or DISX's Copyright which come to the
notice of the Company and assist TCN or DISX as appropriate (at its request
and expense) in taking all steps including assisting TCN or DISX as
appropriate to defend its rights.
Article 11 : Restrictions
Each party jointly and severally undertakes that it will not:
11.1 make any representations or give any additional warranties in favour of a
third party which may be to the detriment of any other party hereto;
11.2 act in any manner which will expose any other party hereto to any
liability nor pledge or purport to pledge any other party's credit;
Article 12 : Validity and Termination
12.1 Subject to Article 12.2, this Agreement is valid until the date upon
which termination of the Stockholders Agreement occurs or the date upon which
the parties shall agree that this Agreement shall terminate whichever is the
earlier.
12.2 Should any of the following events occur:
12.2.1 any party failing to materially abide by its undertakings or
obligations under this Agreement;
12.2.2 any party discontinues business, becomes insolvent; seeks relief under
any law for the aid of debtors; has a receiver, administrator, liquidator or
trustee appointed over the whole or any part of its assets; or
12.2.3 if either an order is made or a resolution passed for the winding up of
any party (unless the order or resolution is part of a scheme for the
reconstruction or amalgamation of that party).
Any party may terminate this Agreement by notice in writing to operate on a
date specified in that notice.
12.3 In the event of termination:
12.3.1 the rights and obligations of each party in relation to the others
which have accrued, whether under this Agreement or under the Stockholders
Agreement, before the Termination Date shall not be affected;
12.3.2 no party shall be relieved from any obligation under Article 9;
<PAGE> 38
12.3.3 licenses in favour of the Company referred to in this Agreement and
the rights of the Company in relation to the Trade Marks shall cease;
12.3.4 compensation shall not be paid by any party to another for loss of
profits or loss of goodwill or for any other reason in the event of
termination of this Agreement in accordance with any of the provisions of
Article 12 or for any other lawful cause.;
12.3.5 each party (to the extent that it shall have possession of any of the
items referred to in Article 9.1 above) shall within 15 days from the
Termination Date, return to the relevant party all copies of the items
referred to in Article 9.1 above and all information relating to the items
referred to in Article 9.1 above which are in any physical form and in/on
whatever medium;
12.3.6 the Company shall remove any reference to the Trade Marks which may
exist on premises used by the Company, on all documents, commercial material,
invoices, packaging and other material and to do all such acts and things as
may be necessary to change any corporate or business names which include the
Trade Marks; and
12.3.7 TCN's and DISX's obligations in connection with Clause 13 of the
Stockholders Agreement shall have no further effect.
Article 13 : Governing Jurisdiction and Law
13.1 The parties agree that if a dispute arises out of, or in connection with,
this Agreement the parties shall negotiate in good faith to resolve their
dispute within a period of 30 days from the day one party notifies the other
that a dispute has arisen.
13.2 If negotiations under Article 13.1 fail to resolve a dispute within the
time specified in that Article (or within any extension of time agreed in
writing by the parties) a dispute arising out of, or in connection with, this
Agreement:
13.2.1 which relates to TCN's Copyright, the Licensed Software, the Technical
Information, the TJON Business Plan or to the Trade Marks listed in Part A of
Schedule A hereto shall be finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with the Rules; and.
13.2.2 which relates to DISX's Copyright, DISX's Intellectual Property or to
the Trade Marks listed in Part B of Schedule A hereto shall be finally settled
under the Rules of the American Arbitration Association by one or more
arbitrators appointed in accordance with the Rules.
13.3 The successful party in any such arbitration referred to in 13.2 above
shall be entitled to recover from the unsuccessful party, in addition to any
other relief to which it may be entitled, reasonable attorneys' fees and costs
incurred by it in bringing or defending the claim/any counter-claim.
13.4 All matters relating to TCN's Copyright, the Licensed Software, the
Technical Information, the TJON Business Plan or to the Trade Marks listed in
Part A of Schedule A hereto arising under this Agreement shall be interpreted
according to the Laws (including conflict of Laws) of England, and all matters
relating to DISX's Copyright, DISX's Intellectual Property or to the Trade
Marks listed in Part B of Schedule A hereto arising under this Agreement shall
be governed in respects by the laws of the State of Utah, United States.
<PAGE> 39
13.5 Judgement upon the award rendered may be entered in any Court in the
United States or England having jurisdiction over the party against whom the
award is rendered; or application may be made to such Court for a judicial
acceptance of the award and an order of enforcement (as the case may be).
Article 14 : Miscellaneous
14.1 The parties to this Agreement contract on a principal to principal basis.
Nothing in this Agreement shall create (or be deemed to create) any
partnership between the parties.
14.2 This Agreement and the Stockholders Agreement embody the entire Agreement
between the parties in relation to their subject matters and supersede any
prior negotiations and representations between, and by, the parties. In the
event of any conflict between or ambiguity arising concerning this Agreement
and the Stockholders Agreement which conflict or ambiguity relates to the
grant of licence rights, the termination of those rights, royalty payments,
restrictions on the parties during the period of the licence rights and
restrictions upon the parties after termination of the licence rights, the
provisions of this Agreement shall prevail.
14.3 Variations of this Agreement may only be made in writing, signed on
behalf of the parties.
14.4 This Agreement shall not be held invalid as a whole because of any
invalidity which may subsequently be determined to exist in any particular
provision(s) of this Agreement; but shall be construed as if not containing
the particular provision(s) held to be invalid. The rights and obligations of
the parties shall continue in force accordingly.
14.5 The waiver by either party of any breach of any term of this Agreement
shall not prevent the subsequent enforcement of that term and shall not be
deemed to be a waiver of any subsequent breach.
14.6 Notices under this Agreement shall be sent in accordance with the
provisions of Clause 25 of the Stockholders Agreement
14.7 This Agreement shall be completed in duplicate and shall become effective
on the date on which it is signed by the latter party to sign.
SIGNED on behalf of } /S/
The Corporate Net Limited } (Authorised Director)
WITNESSED by } /S/
SIGNED on behalf of } /S/
topjobs.net inc. } Larry D. Heaps
} (Authorised Signatory)
WITNESSED by } /S/
SIGNED on behalf of } /S/
Dynamic Information System } Eric E. Marchant
and Exchange Inc. }(Authorised Signatory)
WITNESSED by } /S/
<PAGE>
<PAGE> 40
SCHEDULE A
THE TRADE MARKS
Part A TCN's Trade Marks
Country Trade Mark Reg No. Class Reg. Date Ren. Date Goods
- -----------------------------------------------------------------------------
USA TOP JOBS ON THE NET 35 / / / / Employment agency
& Device services provided
through the medium
of the Internet.
(Pending Application - filed 02/12/1997)
PART B DISX's Trade Marks
Country Trade Mark Reg No. Class Reg. Date Ren. Date Goods
- -----------------------------------------------------------------------------
USA TOP JOBS 35 / / / / Job and employment
& attached design listings and
information and
other job place-
ment services
(Pending Application - filed 04/12/1998)
USA TOP JOBS USA 42 / / / / Job and employment
& attached design listings and
information and
other job place-
ment services
(Pending Application - filed 04/12/1998)
SCHEDULE B
SUB-LICENCE ITEMS
Part A TCN's Sub-licence items
JOBMANAGER
JobManager is a software program on Top Jobs on the Net that enables customers
to manage their own advertising by changing the text content of their job
slots, online at any time.
other items to be agreed
Part B DISX's Sub-licence items
VOTE
VOTE is an "expert software" program that can perform the classification of
raw information into meaningful classifications.
other items to be agree
SCHEDULE C
DISX'S Intellectual Property
<PAGE> 41
SCHEDULE 5
TCN Loan Agreement
DATED: 11 FEBRUARY 1999
THE CORPORATE NET LIMITED
and
DYNAMIC INFORMATION SYSTEM & EXCHANGE INC.
LOAN AGREEMENT
Wansbroughs Willey Hargrave
Solicitors,
13, Police Street,
Manchester,
M2 7WA
(Ref: JAL/6772-14)
<PAGE>
<PAGE> 42
LOAN AGREEMENT
DATED: 11 FEBRUARY 1999
BETWEEN:
(1) THE CORPORATE NET LIMITED whose registered number is 3173007 and whose
registered office is at Innovation House, Daten Park, Birchwood, Warrington,
Cheshire, WA3 81T, England ("TCN"); and
(2) DYNAMIC INFORMATION SYSTEM & EXCHANGE INC. an American corporation
incorporated under the laws of the State of Utah whose registered office is at
385 East 800 South, Orem, Utah 84097 USA ("DISX")
WHEREAS:
(A) TCN has previously advanced US$50,000 to DISX on February 2, 1999.
(B) TCN has agreed to make available to DISX a loan facility of up to
US$300,000 (THREE HUNDRED THOUSAND U.S. DOLLARS) (including the US$50,000
referred to in Recital A above) subject to and upon the terms and conditions
contained in this Agreement.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following words and expressions shall have the
following meanings:
"Advance" means the sum of US$150,000 to be made available to DISX pursuant
to the provisions of Clause 5.
"Available Facility" means the Facility as reduced by the Advance and/or any
relevant term hereof.
"Business Day" means any day other than a Saturday, a Sunday or a day which
is a bank holiday in any part of the United Kingdom.
"Company" means the Delaware corporation, 51% owned by TCN and 49% owned by
DISX and known as topjobs.net.inc;
"Event of Default" means any of those events set out in Clause 11
"Facility" means the loan facility granted to DISX pursuant to Clause 2;
"IPO" means the initial public offering of securities of topjobs.net.plc in
the United States;
"Loan" means the aggregate principal amount for the time being outstanding
hereunder;
"Stockholders Agreement" means the stockholders agreement to be entered into
between TCN and DISX in relation to the Company pursuant to Clause 4;.
"Termination Date" means the date on which the IPO is successfully completed.
1.2 Clause headings are provided for convenience only and have no legal
effect.
<PAGE> 43
1.3 Words denoting the singular include the plural and vice versa and words
denoting any gender include all genders.
1.4 References to Clause are, unless stated otherwise, references to Clauses
of this Agreement.
2. THE FACILITY
2.1 TCN agrees to make available to DISX, subject to and upon the terms and
conditions contained herein a loan facility of up to US$300,000.
2.2 DISX acknowledges that it has already received US$50,000 of the Facility
from TCN.
3. PURPOSE
3.1 DISX shall apply the Loan strictly in or towards the financing of the
Company's working capital requirements.
3.2 DISX agrees that it will use the Facility strictly in accordance with the
provisions of this Clause and that it will not use the whole or any part of
the Facility in contravention of any applicable law.
3.3 Without prejudice to the obligations of DISX under Clauses 3.1 and 3.2,
TCN shall not be under any obligation to concern itself with the application
of amounts advanced to DISX hereunder.
4. CONDITION PRECEDENT
With the exception of those monies already advanced by TCN to DISX pursuant to
Clause 2.2 TCN shall not be obliged to drawdown any further part of the
Facility until such time as the Stockholders Agreement shall have been
completed in accordance with its terms.
5. AVAILABILITY OF THE FACILITY
5.1 Except as otherwise provided herein, TCN will electronically transfer the
Advance to DISX on satisfaction of the condition precedent set out at Clause
4.
5.2 The remainder of the Facility will be electronically transferred on the
1st March 1999 to DISX on satisfaction of the condition precedent set out at
Clause 4.
6. INTEREST
No interest shall be payable by DISX to TCN on the Facility or any part of it.
7.ILLEGALITY
If it is or becomes contrary to any law or regulation for TCN to make
available the Facility or to maintain its obligations to do so or to fund the
Advance or the Loan TCN shall promptly notify DISX whereupon TCN's obligations
to make the Facility available shall be terminated.
<PAGE>
<PAGE> 44
8. REPAYMENT
DISX shall repay the Loan in full on the Termination Date and the Available
Facility shall be reduced to zero on the Termination Date. Notwithstanding the
foregoing, in the event that the IPO shall not successfully complete (and the
IPO shall be deemed to be unsuccessful if the U.S. Securities and Exchange
Commission have not declared the registration statement in respect of the IPO
to be effective within 3 months from the 1st February 1999), repayment of the
Loan shall be waived by TCN and this Agreement shall terminate.
9. REPRESENTATIONS AND WARRANTIES
9.1 Each DISX and TCN represents and warrants to the other that:-
(a) it is duly incorporated and validly existing under the laws of its
jurisdiction and is fully qualified and empowered to own its assets and carry
out its business.
(b) it has power to enter into this Agreement, to exercise its rights and
perform its obligations hereunder and has taken all necessary corporate and
other action to authorize the execution, delivery and performance hereof.
(c) all acts, conditions, authorizations and other things required to be done,
fulfilled and performed by it in order:-
(i) to enable it to lawfully enter into, exercise its rights under and
perform and comply with the obligations expressed to be assumed by it in this
Agreement;
(ii) to ensure that the obligations expressed to be assumed by it in this
Agreement are legal, valid and binding;
(iii) to ensure that this Agreement is admissible in evidence in its own
jurisdiction
have been done, fulfilled and performed and are in full force and effect;
(d) under the laws of its own jurisdiction it is not necessary that this
Agreement be filed, recorded or enrolled with any court or other authority in
such jurisdiction or that any stamp, registration or similar tax be paid on or
in relation to it (or where it is so required this Agreement has been/will be
so filed, recorded or enrolled or such stamp registration or other tax has
been paid in each case within any applicable time limits);
(e) it has not taken any corporate action nor have any steps been taken or
legal proceedings been started or threatened against it for its winding-up,
dissolution or reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of it or of
any or all its revenues or assets;
(f) no Event of Default is outstanding or might result from the making of the
Loan, nor is any other event outstanding which constitutes (or with the giving
of notice, lapse of time or the fulfillment of any other applicable condition
or any combination of the foregoing, might constitute) a default under any
document which is binding on it, or on any of its revenues or assets to an
extent or in a manner which may have a material adverse effect on it;
<PAGE> 45
(g) it does not require the consent, approval or authority of any other person
to enter into or perform its obligations under the Facility Documents and its
entry into and performance thereof, and the transactions contemplated thereby
will not:-
(i) constitute any breach of, or default under any contractual governmental
or public obligation binding on it; nor
(ii) conflict with its constitutional documents.
9.2 These representations and warranties shall be deemed to be repeated by
each of DISX and TCN on the date of drawing down the Advance and on each
subsequent drawdown of the Loan.
10. UNDERTAKINGS/COVENANTS
10.1 DISX undertakes with TCN that from the date hereof and for so long as any
amount is or may be outstanding hereunder or the Available Facility is more
than zero, it shall:-
(a) obtain, maintain in full force and effect and comply with the terms of all
authorizations, approvals, licenses, exemptions, notarizations and consents
required in or by the laws and regulations in its jurisdiction to enable it
lawfully to enter into and perform its obligations under the Facility
Documents or to ensure the legality, validity, enforceability or admissibility
in evidence of the Facility Documents in England or the United States of
America;
(b) promptly inform TCN of the occurrence of any Event of Default and upon
receipt of a written request to that effect from TCN confirm to TCN that save
as previously notified to TCN or as notified in that confirmation, no such
event has occurred;
11. EVENTS OF DEFAULT
The following shall be deemed to be Events of Default:-
(a) the failure of DISX to pay in full on the due date any sum due from it
hereunder in the currency and in the manner specified herein;
(b) the failure of DISX to duly perform or comply with any other obligation
expressed to be assumed by it in this Agreement or the Stockholders Agreement;
(c) if DISX is deemed unable to pay its debts as they fall due, admits its
inability to pay its debts as they fall due, commences negotiations with any
one or more of its creditors with a view to the general readjustment or
rescheduling of its indebtedness or makes a general assignment for the benefit
of, or a composition with its creditors;
(d) if DISX takes any corporate action or if other steps are taken or legal
proceedings are started for its winding up, dissolution or re-organization or
for the appointment of a receiver, administrator, administrative receiver,
trustee or similar officer of it or of any or all of its revenues and assets
or distress is executed against, or an encumbrancer takes possession of, any
part of its revenues or assets;
(e) if DISX ceases to carry on the business it carries on at the date hereof
or enters into any unrelated business;
<PAGE> 46
(f) if any circumstances arise which in the opinion of TCN give grounds for
belief that DISX may not (or may be unable to) perform, or comply with its
obligations under this Agreement, or the Stockholders Agreement.
12. ACCELERATION
On and at any time after the occurrence of an Event of Default TCN may in its
absolute discretion by written notice to DISX:-
(a) declare the Loan to be immediately due and payable and upon that
declaration the Loan shall become immediately repayable without demand or
notice of any kind all of which are hereby expressly waived by DISX;
(b) declare the Loan to be due and payable on demand of TCN; and/or
(c) declare that any undrawn portion of the Facility is cancelled whereupon
the same shall be cancelled with immediate effect and the Available Facility
shall be reduced to zero with immediate effect.
13. REMEDIES AND WAIVERS
13.1 No failure, delay or other relaxation or indulgence on the part of TCN to
exercise any power, right or remedy hereunder or at law shall operate as a
waiver thereof nor shall any single or partial exercise or waiver of any such
power, right or remedy preclude its further exercise or the exercise of any
power, right or remedy.
13.2 All rights of TCN contained herein are in addition to all rights vested
or to be vested in it pursuant to, the Stockholders Agreement, common law or
statute.
14. SEVERABILITY
Each of the provisions hereof is severable and distinct from the others and if
at any time one or more of such provisions is or becomes invalid, illegal or
unenforceable the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby.
15. NOTICES
15.1 All notices, demands or other communications under or in connection
herewith may be given by letter or facsimile addressed to the person at the
address specified at the head of this Agreement (or such other address as may
be specified in writing from one party to the other.
15.2 Any such communication will be deemed to be given as follows:-
(a) if personally delivered, at the time of delivery;
(b) if by letter at noon on the Business Day following the day such letter was
posted (or in the case of airmail, seven days after the envelope containing
the same was delivered into the custody of the postal authorities); and
(c) if by facsimile transmission during the business hours of the addressee
then on the day of transmission, otherwise on the next following Business Day.
<PAGE>
<PAGE> 47
15.3 In proving such service it shall be sufficient to prove that personal
delivery was made or that such letter was properly stamped, addressed and
delivered to the postal authorities or that in the case of facsimile that a
confirming hardcopy was provided promptly after transmission.
16. LAW AND JURISDICTION
The construction validity and performance of this Agreement shall be governed
in all respects by the laws of the State of Utah, United States.
IN WITNESS whereof the parties hereto have executed this Agreement on the date
first stated above.
SIGNED by /S/
for and on behalf of TCN
SIGNED by /S/
for and on behalf of DISX
<PAGE> 1
EXHIBIT NO. 10.02 -- AMENDMENT TO STOCKHOLDERS AGREEMENT
This Amendment to Stockholders Agreement ("Amendment"), dated March 29,
1999, amends the Stockholders Agreement, dated February 11, 1999(the
"Stockholders Agreement") by and among Dynamic Information System and
Exchange, Inc. ("DiSX"), topjobs.net inc, a Delaware corporation (the
"Company"), and topjobs.net plc (formerly, The Corporate Net Limited), a
corporation organized under the laws of England and Wales ("TJN").
1. DiSX, the Company and TJN to hereby agree to ament the provisions of
Section 11.1. 10(b) of the Stockholders Agreement by deleting the phrase "180
day" and inserting in lieu thereof, the term "one (1) year."
2. DiSX, the Company and TJN do further agree to amend the Stockholders
Agreement by deleting from Section 11.1.11 of the Stockholders Agreement the
phrase "within three months from the Effective Date" ( with reference to the
date of completion of TJN's proposed IPO) and inserting in lieu thereof the
phrase "by May 15, 1999."
Except as amended by the immediately preceding paragraphs, all of the
terms and conditions of the Stockholders Agreement shall remain in full force
and effect and is incorporated by this references herein, as though fully set
forth herein at length.
IN WITNESS WHEREOF, the parties have executed this Amendment, the date and
year first above written.
DYNAMIC INFORMATION SYSTEM AND EXCHANGE, INC.
By:/S/ Larry D. Heaps, President
topjobs.net inc
By: /S/ Ross S. Wolfley, Chief Operating Officer
topjobs.net plc
By: /S/ Brian Mosley, Chief Operating Officer
<PAGE> 1
EXHIBIT No. 10.03 DISX LOAN CANCELLATION LETTER
May 19, 1999
topjobs.net plc
Innovation House, Daten Park
Birchwood
Warrington, WA3 6UT
United Kingdom
Dear Gentlemen:
In accordance with the Loan Agreement between topjobs.net plc ("topjobs"-
formerly The Corporate Net Limited) and Dynamic Information System & eXchange,
Inc., ("DiSX"), topjobs loaned $300,000US to DiSX which was to be fully repaid
following topjobs' successful IIPO. Further, in accordance with the
Stockholders Agreement between the parties, topjobs agreed to pay DiSX the sum
of $500,000US following topjobs' successful IPO.
Rather than have topjobs transfer $500,000US to DiSX in accordance with the
Stockholders Agreement and have DiSX will satisfy the obligations of both
parties in the matters described herein.
Dynamic Information System & eXchange, Inc. ("DiSX:), hereby acknowledges
receipt of $200,000US from topjobs and agrees that topjobs has satisfied and
completely complied with the terms of Paragraph 11.1.10 (a) of the
Stockholders Agreement. Topjobs ackknowledges the satisfaciton and repayment
of $300,000US in compliance with the terms and conditions of Paragraph 8 of
Loan Agreement between DiSX and topjobs.
All other rights, obligations and responsibilities of the parties remain as
provided in the terms and conditions of the Agreements between the parties.
Very truly yours,
/S/ Eric E. Marchant
Chairman of the Board
Dynamic Information System & eXchange, inc.
Topjobs.net plc
Acknowledged and Agreed,
/S/ [Sic] Signature
Name, Title
cc: Wansbroughs Willey Hargave
Greenberg Traurig
Jeff & Jeffs
<PAGE> 1
Exhibit No. 10.04 - DISX AGENCY AGREEMENT
Effective Date: 1 March 1999
topjobs.net inc
385 East 800 South
Orem, Utah 84097
Gentlemen:
You have retained us and we hereby agree to serve as your advertising agency
in accordance with and subject to the following terms and conditions:
1. Assignment. Our assignment shall relate to the following products or
services: Radio, Television, Newspaper, Magazine, Internet Banners, and
Printing services.
During the term of this agreement, we shall be the sole company charged with
the responsibility of preparing and placing advertising with respect to such
products or services. You may assign additional products or services to us
from time to time, subject to our ability to handle same. If additional
products or services are assigned to us and we agree to handle same, all terms
and conditions hereof shall apply in the same manner as with respect to the
originally assigned products or services, unless otherwise mutually agreed to
in writing. We are authorized to act as your agent in purchasing materials
and services required to produce advertising on your behalf. During the term
of this agreement, we shall not accept any assignment with respect to products
or services competitive to those assigned by you to us.
2. Nature of Services. We shall perform the following services for you in
connection with the planning, preparing and placing of advertising for your
products or services;
a. Study your products or services;
b. Analyze your present and potential markets;
c. Create, prepare and submit to you, for approval, advertising ideas and
programs;
d. Employ on your behalf our knowledge of available media and means that
can be profitably used to advertise your products or services;
e. Prepare and submit to you, for approval, estimates of costs of these
recommended advertising programs;
f. Write, design, illustrate or otherwise prepare your advertisements,
including commercials to be broadcast, or other appropriate forms of your
message;
g. Order the space, time, or other means to be used for your advertising,
endeavoring to secure the most advantageous rates available;
h. Properly incorporate the message in mechanical or other form, and
forward it with proper instructions for the fulfillment of the order;
i. Check and verify insertions, displays, broadcasts or other means used,
to such degree as is usually performed by advertising agencies; and
<PAGE> 2
j. Audit invoices for space, time, material preparation and services.
3. Compensation. The basis of our compensation shall be as follows:
a. On all media purchased by us on your behalf, we shall bill you at the
published card rates, or negotiated rates, as may be applicable. If no agency
commission is granted or allowed on any such purchases, you agree that we may
invoice you a gross amount which, after deduction of our cost, will yield us
five (5%) percent of such gross amount as agency commission.
b. With respect to the engagement of talent, we shall bill you the
authorized engagement rate, plus any taxes, insurance, pension and health fund
contributions, talent payment service fees, etc. applicable thereto, plus a
gross amount which, after deduction of our cost, will yield us five (5%)
percent of such gross amount as agency commission. You recognize that we are
a signatory to collective bargaining agreements with Screen Actors Guild and
American Federation of Television and Radio Artists, and that the hiring of
talent by us on your behalf will be subject to the terms of such agreements.
c. On broadcast production, artwork, engravings, type compositions and any
and all art and mechanical expenses incurred by us, pursuant to your
authorization, we shall invoice you a gross amount which, after deduction of
our cost, will yield us ten (10%) percent of such gross amount as agency
commission. If we undertake, at your request, special assignments such as
market, product or distribution research, or other research (with the
exception of research for copy development testing purposes), or special
assignments such as market counseling or sales meeting presentations, the
charges made by us will be agreed upon in advance whenever possible. If no
agreement was made, we shall charge you at our standard rates for the work
performed by us. In addition, for materials or services purchased from
outside sources under your authorization, we shall invoice you a gross amount
which, after deduction of our cost, will yield us ten (10%) percent of such
gross amount as agency commission.
d. You agree to reimburse us for such cash outlays as we may incur, such as
forwarding and mailing, telephoning, telegraphing and travel, in connection
with services rendered in relation to your account.
4. Billing and Payment Procedures.
a. We shall invoice you for all media costs sufficiently in advance of our
payment date to media to permit payment by you to enable us to take advantage
of all available cash discounts.
b. The cost of production materials and services shall be billed by us upon
completion of the production job or upon receipt of supplier invoice prior
thereto.
c. On all outside purchases other than for media, we shall attach to the
invoice proof of billed charges from suppliers.
d. All cash discounts on agency purchases including, but not limited to,
media, art, printing and mechanical work, shall be passed on to you, provided
our billing terms are complied with, and there is no overdue indebtedness to
us at the time of payment to the vendor.
e. Rate or billing adjustments shall be credited or charged to you on the
first billing date after we have been invoiced or soon thereafter as otherwise
practical.
<PAGE> 3
f. All invoices shall be rendered on or about the first day of each month
and will be payable the tenth day of the month.
g. Invoices shall be submitted in an itemized format. Interest will be
charged on overdue invoices at a rate of twelve (12%) per annum or the maximum
permitted by law, whichever is less. In the event we are required to use
legal process to recover any fees due us, you agree to reimburse us for any
costs associated therewith, including reasonable attorneys fees.
5. Commitments to Third Parties.
a. All purchase of space and facilities and all engagement of talent with
respect to the advertising of your products shall be subject to your prior
approval.
b. If you should direct us to cancel or terminate any previously authorized
purchase or project, we shall promptly take all appropriate action, provided
that you will hold us harmless with respect to any costs incurred by us as a
result thereof.
c. We warrant and represent to you that in purchasing any materials or
services for your account, we shall exercise due care in selecting suppliers
and make every effort to obtain the lowest price for the desired quality of
materials or services. Wherever possible, we shall obtain competitive bids.
d. We warrant and represent that if at any time we shall obtain discounts
or rebates from any supplier, whether based on volume or work given to such
supplier by us or otherwise, then and in such event, we shall remit to you,
within a reasonable time after our receipt of such discount or rebate, such
proportion thereof as the volume of work given by us to such supplier on your
behalf bears to total volume of work given by us to such supplier from all of
our clients during the pertinent period to which the discount or rebate is
applicable.
6. Inspection of Books. We agree that any and all contracts,
correspondence, books, accounts and other sources of information relating to
your business shall, upon reasonable prior notice, be available for inspection
at our office by your authorized representatives during ordinary business
hours.
7. Safeguarding of Property.
a. We shall take all reasonable precautions to safeguard any of your
property entrusted to our custody or control, but in the absence of negligence
on our part or willful disregard by us for your property rights, we shall not
be responsible for any loss, damage, destruction, or unauthorized use by
others of any such property.
b. We shall not be responsible for the return of engravings after their use
in publications, unless you specifically request their return before they are
sent to the publications.
8. Indemnities.
a. We shall indemnify and hold you harmless with respect to any claims or
actions against you, based upon material prepared by us, involving any claim
for libel, slander, piracy, plagiarism, invasion of privacy or infringement of
copyright. We agree to obtain and maintain in force during the term hereof,
at our sole expense, an Advertising Agency Liability Policy having a minimum
limit of liability of $500,000. If requested by you, we agree to furnish a
copy of such policy to you.
<PAGE> 4
b. You will indemnify and hold us harmless with respect to any claims or
actions instituted by third parties which result from the use by us of
material furnished by you or where material created by us is substantially
changed by you. Information or data obtained by us from you to substantiate
claims made in advertising shall be deemed to be "materials furnished by you."
c. In the event of any proceeding against you by any regulatory agency or
in the event of any court action or self-regulatory action challenging any
advertising prepared by us, we shall assist in the preparation of the defense
of such action or proceeding and cooperate with you and your attorneys. You
will reimburse us any out-of-pocket costs we may incur in connection with any
such action or proceeding, unless same is our responsibility pursuant to (a)
above.
d. You agree to indemnify us and hold us harmless with respect to any
death, personal injury or property damage claims or actions arising from the
use of your products or services. If you secure Product Liability Insurance
with respect to the use of any products assigned to us, you will cause us to
be named as a co-insured and maintain such policy at your cost and expense.
9. Term of Agreement.
a. The term of this agreement will commence on 15 March 199 and will
continue in full force and effect until terminated by either party upon
written notice of such intention given to the other party not less than ninety
(90) days in advance, provided that in no event may this agreement be
terminated effective prior to the expiration of twelve (12) months from the
commencement of the term. Notice shall be deemed given on the day of mailing
or in case of notice by telegram, on the day it is deposited with the
telegraph company for transmission.
b. The rights, duties and responsibilities of this agency shall continue in
full force during the period of notice, including the ordering and billing of
advertising in print media whose published closing dates fall within such
period and ordering and bill of advertising in broadcast media where the air
dates fall withing such period.
10. Ownership.
a. As between you and us, all advertising materials prepared by us and
accepted and paid for by you for use in advertising hereunder shall become
your property. It is understood that there may be limitations on the use and
ownership of materials by virtue of the rights of third parties. Whenever
possible, we shall advise you of the existence of such limitations.
b. At termination of this agreement, you agree that any advertising,
merchandising, packaging and similar plans and ideas prepared by us and
submitted to you (whether submitted separately or in conjunction with or as
part of other material) but not used by you, shall remain our property unless
it was either mutually agreed in writing that any such plan or idea became
your property, or specific payment of the cost of its development was agreed
upon and made by you. You agree to return to us any copy, artwork, plates, or
other physical embodiment of the creative work relating to any such ideas or
plans, which may be in your possession upon termination.
11. Rights Upon Termination.
a. Upon termination of this contract, we shall transfer, assign and make
available to you or your representative, all property and materials in our
possession or control belonging to and paid for by you, subject, however, to
any rights of third parties of which we have informed you.
<PAGE> 5
b. We also agree to give all reasonable cooperation toward transferring,
with approval of third parties in interest, all contracts and other
arrangements with advertising media or others for advertising space,
facilities, and talent, and other materials yet to be used, and all rights and
claims thereto and therein, upon being duly released form the obligation
thereof. You recognize that talent contracts with members of certain labor
unions or guilds generally cannot be assigned except to signatories to the
collective bargaining agreements governing the services rendered by such
talent.
c. Upon termination, no rights or liabilities shall arise out of this
relationship, regardless of any plans which may have been made for future
advertising, except that any noncancelable contracts made on your
authorization and still existing at termination hereof, which contracts were
not or could not be assigned by us to you or someone designated by you, shall
be carried to completion by us and paid for by you in the manner described in
Paragraph 3 above.
12. Arbitration of Disputes. The sole remedy for the resolution of disputes
between the parties to this agreement shall be arbitration before one
arbitrator, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, such arbitration to be held in Salt Lake
City, State of Utah.
13. Notices. Any notice pursuant to this contract shall be deemed given on
the day of mailing or, in case of notice by telegram, on the day it is
deposited with the telegraph company for transmission.
14. Governing Law. This agreement shall be interpreted in accordance with
the laws of the State of Utah.
If the above accords with your understanding and agreement, kindly indicate
your consent hereto by signing in the place provided below.
Very truly yours,
DiSX, Inc.
/S/Kurt Johannson
Vice President, Advertising
Agreed:
topjobs.net inc
/S/ Larry D. Heaps, President
<PAGE> 1
EXHIBIT 10.05 LOCK-UP AGREEMENT
April 26, 1999
topjobs.net plc
Innovation House, Daten Park
Birchwood, Warringotn WA3 6UT
United Kingdom
Ladenburg Thalmann & Co. Inc.
590 Madison Avenue
New York, New York 10002
USA
Dear Sirs:
The undersigned understands that Ladenburg Thalmann & Co. Inc., as
Representative of the several underwriters (the "Underwriters"), proposes to
enter into any Underwriting Agreement with topjobs.net plc (the "Company"),
providing for the public offering (the "Public Offering"') of up to 2,750,000
American depository shares ("ADSs") of the Company, each representing one
ordinary share of the Company, nominal value .02 pence per share (the
"Ordinary Shares").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the
undersigned, during the period commencing on the date hereof and ending 365
days after the date of the final prospectus relating to the Public Offering:
(1) agrees not to (x) offer, pledge, charge, encumber, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any ADSs or Ordinary Shares or any
securities convertible into or exercisable or exchangeable for ADSs or
Ordinary Shares that he may currently own or that he may subsequently acquire
(including, without limitation, ADSs Ordinary Shares or securities convertible
into or exercisable or exchangeable for ADSs or Ordinary Shares which may be
deemed, in accordance with the rules and regulations of the U.S. Securities
and Exchange Commission (the "Commission"), to be beneficially owned by the
undersigned) or (y) enter into any swap or other arrangement that transfers
all or a portion of the economic consequences associated with the ownership of
any ADSs or Ordinary Shares (regardless of whether any of the transactions
described in clause (x) or (y) are to be settled by the delivery of ADSs or
Ordinary Shares, or such other securities, in cash or otherwise), and will not
publicly announce any intention to do any of the foregoing, unless:
(A) the Company's gross revenues, determined in accordance with U.S.
generally accepted accounting principles, in any two consecutive fiscal
quarters exceed $5,000,000 per quarter; or
(B) the undersigned has obtained the prior written consent of Ladenburg
Thalmann & Co. Inc.;
(ii) agrees not to make any demand for, or exercise any right with respect to
be, the registration with the Commission of any ADSs or Ordinary Shares or any
securities convertible into or exercisable or exchangeable for ADSs or
Ordinary Shares, without the prior written consent of Ladenburg Thalmann & Co.
Inc; and
<PAGE> 2
(iii) agrees not to make any demand for, or exercise any right with respect
to, the registration with the Commission of any ADSs or Ordinary Shares or any
securities convertible into or exercisable or exchangeable for ADSs or
Ordinary Shares, without the prior written consent of Ladenburg Thalmann & Co.
Inc.; and
(iii) authorizes the Company to cause the transfer agent to decline to
transfer and/ or to note stop transfer restrictions on the transfer books and
records of the Company with respect to any ADSs or Ordinary Shares and any
securities convertible into or exercisable or exchangeable for ADSs or
Ordinary Shares for which the undersigned is the record holder and, in the
case of any such ADSs, Ordinary Shares or securities for which the undersigned
is the beneficial but not the record holder, agrees to cause the record holder
to cause the transfer agent to decline to transfer and/or to note stop
transfer restrictions on such books and records with respect to such ADSs,
Ordinary Shares or securities.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this agreement, and that, upon request, the
undersigned will execute any additional documents necessary or desirable in
connection with the enforcement hereof. The undersigned represents and
warrants that it owns a beneficial interest in the ADSs, Ordinary Shares and
options to purchase ADSs or Ordinary Shares listed on Schedule 1 hereto. All
authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors, and assigns
of the undersigned.
The agreement shall be governed by and construed in accordance with the law
of the State of New York.
Very truly yours,
/S/ Larry D. Heaps
Dynamic Information System & eXchange, Inc.
<PAGE> 1
EXHIBIT NO. 10.06
LEASE AGREEMENT
THIS AGREEMENT is made and entered into this 23rd day of September, 1998,
between BUSCH PROVO, LTD., a Utah limited partnership, hereinafter referred to
as "Lessor," and Dynamic Information System & exchange, Inc., (DisX), a Utah
Corporation, hereinafter referred to as "Lessee."
WHEREAS, Lessee desires to enter into a lease with respect to an office
complex known as Lincoln Square located at approximately 800 South 400 East
in, Orem, Utah; and
WHEREAS, the parties desire to enter into a lease agreement to define the
rights of each pertaining to the leased Premises, described herein;
NOW THEREFORE, for and in consideration of the payment of rentals, and of the
performance of each of the covenants and agreements and the observance of the
conditions here after set forth to be paid, performed, and observed by Lessee,
the parties agree as follows;
1. Lessor hereby leases to Lessee, and Lessee leases from Lessor, on the
terms set forth herein, the real property described as a part of Lincoln
Square with the particular property described as follows, the address(es)
hereby designated as (see attached Exhibit "A") 371 East 800 South Suite 201,
Orem, Utah 84058, said property, together with all improvements at any time
located therein and referred to herein as the "Premises" or the "Demised
Premises," together with the right of mutual use with other Lessees and
businesses invitees of the portions of Lincoln Square designated by Lessor
from time to time as the "Common Areas".
2. The term of this Lease shall begin on the date Lessee is entitled to
possession of the Demised Premises. Lessee shall have possession of the
Demised Premises from October 1, 1998, and ending on September 30, 2001, for a
term of three (3) years and zero (0) months. Should Lessee not vacate the
Demised Premises at the termination of the Lease term, Lessor shall deem
Lessee, at Lessors' option, either as a "Tenant at Will," or as a "Month to
Month" tenant. Subject to being considered either a Tenant at Will, or as a
Month to Month tenant, Lessee shall nonetheless be obligated to comply with
all the terms of this Lease Agreement and shall pay Lessor rental during the
period of such At Will tenancy at a rate 200% above the rental rate charged
during the Lease term.
3. Lessee shall pay as Monthly Rental the sum of $0.708333 per square foot
per month, based on the agreed square footage of 2,700, for a Monthly Rental
of (Monthly Rental). Such Monthly Rental payable as an aggregate as follows:
First Month Rental payment of $1,912.50 upon execution of this Lease
Agreement. Said Monthly Rental shall be increased 3% on October 1, 1999 and
October 1, 2000. All Rental payments shall be paid on the first (1st) day of
each calendar month in advance in lawful money of the United States, Lessor
acknowledges receipt in advance of the first months rent. A payment of five
percent (5%) of the Applicable rental payment or $200.00, whichever is
greater, shall be added to any monthly payment received by the Lessor more
than ten (10) days after said payment was due, to compensate Lessor for the
inconvenience and extra expense Lessor will incur if payments are not timely
paid (Late Payments). Late Payments shall also accrue interest as well as
shall all other amounts to be paid to Lessor including unpaid utility and fee
balances at the rate of one and one-half (1 1/2) percent per month until paid.
Until otherwise instructed in writing by Lessor, Payments shall be delivered
<PAGE> 2
or mailed to Lessor at KMH Management, P.O. Box 17714, Salt Lake City, Utah,
84117-0714, or such other address as Lessor may direct from time to time. All
rent shall be paid without offset or deductions at the time and manner
provided in the Lease.
4. Lessor acknowledges payment by Lessee of a Security Deposit in the amount
of $ 2,500.00. upon execution of this Lease Agreement. The Security Deposit
shall secure the faithful performance by Lessee of all of the terms, covenants
and conditions of this Lease to be kept and performed by Lessee during the
term hereof. If Lessee defaults with respect to any provision of this Lease,
Lessor may (but shall not be required to) use, apply or retain all or any part
of this Security Deposit for the payment of any rent or any damages, or other
sum in default, or for the payment of any other amount for losses which Lessor
may suffer by reason of Lessee's default. If any portion of said deposit is so
used or applied, Lessee shall, upon demand therefor, deposit cash with Lessor
in an amount sufficient to restore the Security Deposit to its original amount
and Lessee's failure to do so shall be a material breach of this Lease. Lessor
shall not be required to keep such Security Deposit separate from its general
funds, and Lessee shall not be entitled to interest on such deposit. If Lessee
shall fully and faithfully comply with every provision of this Lease, the
Security Deposit or any balance thereof shall be returned to Lessee following
the expiration of the Lease term. In the event of an assignment of Lessor's
interest in this Lease, Lessor shall transfer said deposit to Lessor's
successor-in-interest and, upon notice to Lessee of such transfer, Lessor
shall be relieved of any further liability for such deposit. Lessee
acknowledges it has inspected the Demised Premises prior to occupancy and
except as noted on exhibit A-1 "Condition of Premise," Lessee accepts the
Demised Premises in its present as is condition. Lessee shall upon termination
of this Lease Agreement for whatever reason, return the Demised Premises to
the Lessor in the same condition, reasonable wear and tear excepted. Unless
noted on exhibit A-1, Lessee must return the space to the Lessor cleaned
including but not limited to the carpets, bathrooms and walls. Any items or
fixtures, phone lines et al which are added by the Lessee to the space must be
removed and any damage repair costs caused is the sole responsibility of the
Lessee.
5. During the term of this Lease, Lessee agrees to make, at its expense,
necessary maintenance and repairs to keep the improvements constructed on the
Premises in good condition and repair, and shall also repair and restore all
improvements which are at anytime damaged or altered by the intentional misuse
of Lessee, or excessive damage caused by Lessee or Lessee's invitees. Lessor
shall maintain, at its expense, common areas and facilities unless otherwise
provided herein, which shall include: (1) the foundations, columns, girders,
beams, supports, main walls, roofs, decks, stairways, fire escapes, walks, and
entrance and exits of all buildings; (2) yards, gardens, parking areas, and
storage spaces; (3) plumbing, mechanical (heating and air conditioning
systems) and electrical systems. Excessive damage for purposes of this Lease
is damage or use incurred beyond normal wear and tear or damage caused by
negligence or willful acts of commission or omission of Lessee, or Lessee's
business invitees.
6. In addition to Lessee's other duties, Lessee shall maintain, repair, or
replace as applicable at its expense: broken windows, light covers, outlet and
light switch covers, mirrors, excessive damage and wear to carpet, walls,
ceilings, doors, cupboards and shelves, railings, bathroom fixtures, cabinets,
and replacement of light bulbs and fluorescent lamps.
7. Lessee shall not make or permit to be made any alterations, additions or
improvements to the Premises or any part thereof without the written consent
<PAGE> 3
of Lessor. Alterations, additions or improvements to the Premises by Lessee
shall be made at Lessee's sole cost and expense. Any request for Lessor's
consent shall be accompanied by plans and specifications showing in detail
Lessee's proposed alterations, additions or improvements. Any alterations,
additions or improvements to the Premises made by Lessee, except for items
agreed by Lessor to be removable trade fixtures, shall at once become a part
of the property and belong to Lessor. Lessee shall repair all damage caused by
Lessee's removal of all trade fixtures. Lessee at the end of this Lease shall
perform all required restoration, which restoration shall include but not
limited to all holes in walls and other similar damage caused by the use and
or removal of Lessee's property. Lessee shall cause any permitted alterations,
additions or improvements to be constructed in a good and workmanlike manner
free of any liens for labor and materials and in strict accordance with the
plans and specifications approved by Lessor. Lessee agrees to indemnify, hold
Lessor harmless from and defend Lessor against any loss, liability, injury,
mechanic's, materialman's or other liens resulting from such work, and shall
cause any lien filed against the Premises or Lincoln Square to be canceled and
discharged of record immediately.
8. (a) Lessee shall not do or permit anything to be done in or about the
Premises nor bring or keep anything therein which will in any way increase the
existing rate of, or adversely affect any fire or other insurance on the
Premises or on Lincoln Square. Lessee shall keep and maintain the Premises in
a clean and wholesome condition and in conformity with all federal, state or
municipal laws, statutes, ordinances and regulations.
(b) Lessee 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 Lincoln Square or injure or annoy any of them, nor
shall Lessee permit the Premises to be used for any immoral or unlawful
purpose. Lessee shall not be the source of loud music, vibrations, odors, or
other nuisances which are objectionable to Lessor, other occupants of the
Premises or other occupants of adjacent buildings.
(c) Lessee shall not overload the floors nor permit or allow any waste,
abuse, or destructive use of the Premises to occur, or to use the Premises in
a manner that would constitute a public or private nuisance.
(d) The plumbing facilities within the Premises shall not be used by
Lessee for any other purpose than that for which they are constructed, and no
other foreign substance of any kind shall be thrown therein. The expense of
any breakage, stoppage or damage to such plumbing lines resulting from a
violation of this provision shall be borne by Lessee.
(e) Lessee shall not, without Lessor's prior written consent, which shall
not be unreasonably withheld, (i) make any changes to the exterior of the
Premises or Common Areas, nor (ii) install any exterior lighting, canopies or
awning, or any exterior decorations or paintings, nor (iii) install any sign,
window or door lettering, placards, decorations or advertisement of any type
which can be viewed from the exterior of the Premises, nor (iv) place any
object near exterior windows and doors which may appear unsightly from outside
of the Premises. All signs, awnings, canopies, decorations, lettering or other
items approved by Lessor and installed by Lessee shall be kept in good repair
and in proper operating condition at all times, shall be removed at the
termination of the Lease and any damage caused by such items or their removal
shall be repaired at Lessee's expense. Any items installed or maintained in
violation of this subparagraph may be promptly removed by Lessor and the cost
of such removal and any necessary repair shall be paid for by Lessee. Use of
the roof on the Premises is reserved to Lessor.
<PAGE> 4
(f) Lessee shall not alter any lock nor install any new or additional locks
or any bolts on any door of the Premises.
(g) Lessee shall not install any telephone or other special utility lines
within he Premises without first obtaining Lessor's written consent, which
shall not be unreasonably withheld.
(h)Lessee shall not use the Premises in any way which will violate any law,
statute, ordinance or governmental rule or regulation now in force or which
may hereinafter be enacted or promulgated.
(i) Lessee shall securely close and lock all doors and windows in the
Premises before leaving Premises each day and shall insure that ail water
faucets and water apparatus and other equipment under Lessee's control within
the Premises are shut off so as to prevent any waste or damage.
(j) Lessee shall comply with all reasonable rules and regulations that
Lessor may adopt from time to time for Lincoln Square.
9.(a) Lessor shall procure insurance coverage insuring Lessor against loss of,
or damage to, the Premises by reason of fire and other casualties. Such
insurance shall be underwritten by a responsible insurance company qualified
to do business in the State of Utah and shall be in the fact amount equal to
at least 80% of the insurable value of the Premises, as determined by Lessor.
Such insurance shall cover loss or damage by fire, and loss or damage arising
out of the normal extended coverage perils which are windstorm, hail,
explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles,
and smoke. Lessor shall also obtain extended coverage on the Premises insuring
against loss or damage arising from vandalism and malicious mischief within
the Premises. The proceeds of any such insurance in case of loss of or damage
to the Premises, or to such boilers and machinery shall be paid to Lessor to
be applied on account of the obligations of Lessor. Any proceeds not required
for such purpose shall be the sole property of Lessor.
(b) Lessor and Lessee each agree to secure for themselves and keep in force
from and after the date Lessor shall deliver possession of the Premises to
Lessee and throughout the term of this Lease, comprehensive general liability
insurance coverage against death, bodily or personal injury or property damage
occurring within the Premises or the Common Areas. Such insurance as obtained
by each party shall be separately in the combined single limit amount of
$1,000,000. Lessee's liability insurance coverage shall include a contractual
liability endorsement covering the indemnity for death, bodily injury to
persons and damage to property and a personal injury endorsement covering such
wrongful acts as false arrest, false imprisonment, malicious prosecution,
libel and slander. Lessee shall also keep in force and provide Lessor with
such evidence as Lessor shall reasonably require, at its sole cost and
expense, fire and extended coverage insurance and insurance against water
damage and against vandalism and malicious mischief covering Lessee's
improvements, trade fixtures, furnishing, equipment and contents within the
Premises in the full replacement value thereof. All such insurance shall name
Lessor as an additional insured, shall be written as primary coverage, not
contributing with and not in excess of coverage which Lessor may carry and
shall be noncancellable except upon Lessor first receiving twenty (20) days
advanced written notice from the insurance company. In the event Lessee does
not provide such insurance or if it is canceled or altered in a manner
unacceptable to Lessor, Lessor shall obtain such insurance for the account of
Lessee at Lessee's expense.
<PAGE> 5
(c) Each of the parties hereby waives any rights it may have against the
other party on account of any loss or damage to its property (including the
Premises, the contents of such, and property located on the Common Areas)
which arises from any risk generally covered by fire and extended coverage
insurance, whether or not such party may have been negligent or at fault in
causing such loss or damage. Each of the parties shall obtain a clause or
endorsement in the policies of such insurance obtained by it to the effect
that the insurer waives, or is otherwise denied the right of subrogation
against the other party for any loss covered by such insurance.
(d) Lessor shall not be liable at any time for any loss damage or injury to
the property or of any person whomsoever at any time, occasioned by or arising
out of (i) any act, activity or omission of Lessee, its agent, servants,
employees, or of anyone holding under Lessee and, (ii) the occupancy or use of
the Premises or any part thereof by Lessee.
10. The general real estate taxes and assessment on Lincoln Square shall be
paid by Lessor. Lessee shall pay all taxes and assessments on the personal
property of Lessee contained within the Premises.
11. All utilities shall be paid by Lessee, including but not limited to
natural gas, electricity, water, sewer and garbage. Lessee agrees and
covenants to keep said payments of utilities, paid as Lessee's shares accrued
and billed to Lessee by Lessor each month.
12. (a) Lessee and all those claiming through or under Lessee shall store
their property in and shall occupy and use the Premises and the Common Areas
solely at their own risk. Lessee and all those claiming through or under
Lessee hereby release Lessor from all claims of every kind, including loss of
life, personal or bodily injury, damage to merchandise, equipment, fixtures or
other property, or damage to business (including business interruption)
arising, directly or indirectly, out of or from or on account of such
occupancy and use or resulting from any present or future condition or state
of repair thereof, except to the extent directly caused by the negligence of
Lessor.
(b) Except to the extent directly caused by the wilful acts of Lessor,
Lessee hereby agrees to defend, indemnify and hold Lessor harmless from and
against any and all claims, demands, fines, suits, actions, proceedings,
orders, decrees, judgments and liabilities of every kind, and all reasonable
expenses incurred in investigating and resisting the same (including
reasonable attorneys' fees), resulting from or in connection with loss of
life, bodily or personal injury or property damage (i) arising out of or on
account of any occurrence in or on the Premises by Lessee, or (ii) occasioned
wholly or in part through the use and occupancy of the Premises or any
improvements therein or appurtenances thereto by Lessee, or (iii) occasioned
by any act or omission or negligence of Lessee or any subtenant,
concessionaire or licensee of Lessee, or their respective employees, agents or
contractors, which occurs in the Premises or in the doorways thereof or in
Common Areas, including those portions thereof owned, leased, subleased or
controlled by others.
13. Lessor and its authorized representatives shall have the right to enter
upon the Premises at all reasonable times during normal business hours to
inspect or exhibit the same to prospective purchasers, mortgagees and tenants,
and to make such repairs, additions, alterations or improvements as Lessor may
reasonably deem desirable, provided Lessor does not unreasonable interfere
with Lessee's business operations. Lessor shall be allowed to take all
material upon the Premises that may be reasonably required to accomplish the
<PAGE> 6
foregoing without the same constituting an actual or constructive eviction of
Lessee and the rents reserved herein shall not abate while any such work
herein described is in progress, provided Lessor does not unreasonably
interfere with Lessee's business operations. Lessor shall have the right to
enter at any time to remove items in violation or to otherwise prevent
violations of this Lease.
14. The occurrence of any of the following shall constitute a material default
and breach of this Lease by Lessee:
(a) Lessee fails to pay when due any rental or any other sum required to be
paid hereunder and such failure is not cured within Eve (5) days following the
date when due after written notice.
(b) Lessee abandons or vacates the Premises or violates the provisions
dealing with Purpose or Assignment and Subletting.
(c) Lessee fails to observe and perform any other provision of this Lease
to be observed or performed by Lessee, where such failure continues for
fifteen (15) days after written notice is given to Lessee; provided, however,
that if the nature of such default is such that the same cannot reasonably be
cured within such fifteen day period, Lessee shall not be deemed to be in
default if Lessee shall within such period commence such cure and thereafter
diligently prosecute the same to completion.
15. Upon the occurrence of any event of default described above, Lessor shall
have the option to take any or all of the following actions, without further
notice or demand of any kind to Lessee, or to any other person:
(a) Without declaring this Lease ended, Lessor may re-enter and remove all
persons and property from the Premises, storing such property in a public
place or warehouse for the account of, and at the risk of Lessee, all without
service of notice or resort to legal process and without being deemed guilty
of, or liable in, trespass, forcible entry or damages resulting from such
re-entry and removal. No such reentry or taking possession of the Premises by
Lessor shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention is given by Lessor to Lessee. Lessor
may sell such property in any reasonable manner and shall apply the proceeds
thereof first against costs of moving and storage and then against any other
obligation of Lessee.
(b) Lessor may, but shall have no obligation to relet the Premises or any
portion thereof at any time or from time to time and for such term or terms
and upon such conditions and at such rental as is reasonably prudent under the
circumstances. If Lessor relets the Premises, or any portion thereof, such
reletting shall not relieve Lessee of any obligation hereunder, except that
Lessor shall apply the rent or other proceeds actually collected by it as a
result of such reletting against the costs of removing Lessee and reletting
the Premises and against those sums due from Lessee hereunder. Lessor shall
not by any such reletting or any other act be deemed to have accepted any
surrender by Lessee of the Premises, or any portion thereof, or be deemed to
have otherwise terminated this Lease, unless Lessor shall have given Lessee
express written notice of Lessor's election to do so.
(c) Lessor may collect by legal action or otherwise, without reletting the
Premises, each installment of rent or other sum as it becomes due hereunder.
(d) Lessor may terminate this Lease by written notice to Lessee. In the
event of such termination, Lessee agrees to immediately surrender possession
<PAGE> 7
of the Premises. Should Lessor terminate this Lease, it may recover from
Lessee all damages Lessor may incur by reason of Lessee's breach, including
the cost Of recovering the Premises, reasonable attorneys' fees, and the worth
at the time of such termination of the excess, if any, of the amount of rent
part thereof, the same shall operate to release Lessor from any future
liability upon any of the covenants or conditions, express or implied, herein
contained in favor of Lessee, and in such event Lessee agrees to look solely
to the successor-in-interest of Lessor for performance of such covenants and
conditions. This Lease shall not be affected by any such sale, and Lessee
agrees to recognize and attorn to Lessor's successor-in-interest as the
landlord hereunder. Lessee shall at the request of Lessor provide reasonable
estoppel information to any lender or potential successor to Lessor as well as
acknowledgment of the subordination of the Lease and attornment to such lender
or successor. When requested by Lessor, Lessee shall execute and deliver to
Lessor within fifteen (15) days following such request a written certificate
ratifying this Lease; the terms hereof, and other provisions usually found in
such certificates.
22. The defaulting party shall pay all costs, including attorneys' fees,
incurred by the non-defaulting party in enforcing the covenants and agreements
to be kept and performed under the provisions of this Lease, whether or not
legal action is commenced.
23. The waiver by Lessor of any term, covenant or condition herein contained
shall not be deemed to be a waiver of such term, covenant or condition in the
event of any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of
any term, covenant or condition of this Lease, other than the failure of
Lessee to pay the particular rental so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.
24. All notices and demands which may or are required to be given by either
party to the other under this Lease shall be delivered in person or sent by
United States mail, postage prepaid, and shall be addressed to the addresses
set out below. Any such notice or demand shall be deemed given by the facts,
on the date personally delivered, or three days after the date deposited in
the United States mail, if properly addressed and stamped.
KMH Management, L. L.C.
P.O. Box 17714
Salt Lake City, Utah 84117-0714
DisX Incorporated
385 East 800 South, Suite 200
Orem, Utah 84058
Such addresses shall remain in effect until changed in writing by either of
the parties.
25. The covenants and conditions herein contained shall, subject to the
provisions of this Lease relating to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of the parties hereto.
26. (a) Lessee agrees that from time to time it shall, if so requested by
Lessor and if doing so will not materially and adversely affect Lessee's
economic interests under this Lease or its use of the Premises, join with
Lessor in amending the terms of this Lease so as to meet the reasonable needs
or requirements of any lender who is considering furnishing, or who has
<PAGE> 8
furnished, any financing which is, or will be, secured by the Premises and the
land underlying such.
(b) Lessee hereby subordinates its rights in this Lease to the lien of any
mortgage or deed of trust of lien or other security interest resulting from
any method of financing or refinancing which encumbers or is intended to
encumber the Premises or the land underlying such and to all advances
subsequently made upon the strength of such security. So long as Lessee is not
in default under the terms of this Lease, however, this Lease shall remain in
full force and effect for the full term hereof and shall not be terminated as
a result of any foreclosure (or transfer in lieu thereof) of such mortgage or
other security instrument to which Lessee has subordinated its rights pursuant
to this Subparagraph.
27. Lessee shall not cause or permit any Hazardous Substance to be used,
stored, generated, or disposed of on or in the Premises by Lessee, Lessee's
agents, employees, contractors or invitees, without first obtaining Lessor's
written consent, which may be withheld at Lessor's sole and absolute
discretion. If Hazardous Substances are used, stored, generated, or disposed
of on or in the Premises, or if the Premises become contaminated in any manner
for which Lessee is legally liable, Lessee shall indemnify, defend, and hold
harmless the Lessor from any and all claims, damages, fines, judgments,
penalties, costs, liabilities, or losses (including, without limitation, a
decrease in value of the Premises or the building(s) of which they are a part,
damages because of adverse impact on marketing of the space, and any and all
sums paid for settlement of claims, attorneys', consultant, and expert fees)
arising during or after the Lease Term and arising as a result of such
contamination by Lessee. This indemnification includes, without limitation,
any and all costs incurred because of any investigation of the site or any
cleanup, removal or restoration mandated by a federal, state, or local agency
or political subdivision. In addition, if Lessee causes or permits the present
of any Hazardous Substance on the Premises and this results in contamination,
Lessee shall promptly, at its sole expense, take any and all necessary actions
to return the Premises to the condition existing before the presence of any
such Hazardous Substance on the Premises, provided, however, that Lessee shall
first obtain Lessor's approval for any such remedial action.
As used herein, "Hazardous Substance" means any substance which is toxic,
ignitable, reactive, or corrosive and which is regulated by any local
government, the State of Utah, or the United States government. "Hazardous
Substance" includes any and all material or substances which are defined as
"hazardous waste," "extremely hazardous waste," or a "hazardous substance,"
pursuant to state, federal, or local governmental law. "Hazardous Substance"
includes but is not restricted to asbestos, polychlorinated biphenyls
("PCBs"), and petroleum.
28. (a) This Lease and the attachments hereto constitute the entire agreement
between the parties. Any prior conversations or writings are merged herein and
are extinguished. No subsequent amendment to this Lease shall be binding upon
Lessor or Lessee unless reduced to writing and signed.
(b) The invalidity of unenforceability of any provision hereof shall not
affect or impair any other provision of this Lease.
29. No payment by Lessee or receipt by Lessor of an amount less than is due
hereunder shall be deemed to be other than payment toward or on account of the
earliest portion of the amount then due, nor shall any endorsement or
statement on any check or payment (or any letter accompanying any check or
payment) be deemed an "accord and satisfaction" (or payment in full) and
<PAGE> 9
Lessor may accept such check or payment without prejudice to Lessor's right to
recover the balance of such amount or pursue any other remedy provided herein.
30. Each person executing this Lease individually and personally represents
and warrants that such person is duly authorized to execute and deliver the
same on behalf of the entity for which he is signing (whether a corporation,
general or limited partnership, or otherwise) and that this Lease is binding
upon said entity in accordance with its terms.
IN WITNESS WHEREOF, the parties have duly executed this Lease as of the day
and year first above written.
LESSOR: LESSEE:
BUSCH PROVO, LTD., Dynamic Information System & exchange,
a Utah limited partnership Inc.,(DisX)a Utah Corporation
/S/ /S/
- ------------------------------- -------------------------------
Mark B. Hansen, General Partner Larry Heaps, V-President
Version September 23,1998
<PAGE> 1
Exhibit No. 10.07
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of the 1st day of
February 1999 is by and between, Kurt H. Johansson (the "Employee") and
Dynamic Information System and Exchange, Inc., a Utah corporation (the
"Company").
Recitals
A. The Employee is currently an employee of the Company or, in conjunction
with the execution of this Agreement, will become an employee of the Company.
B. The Company and the Employee desire to enter into this Agreement to set
forth the terms and conditions of the Employee's employment by the Company.
Agreement
In exchange for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Employee hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below
a. "Affiliate" shall mean any entity: (i) in which the Company owns a direct
or indirect interest of any type or nature; (ii) which owns a direct or
indirect interest of any type or nature in the Company; or (iii) which is
directly or indirectly owned in whole or in part, by any person or entity that
directly or indirectly owns, in whole or in part, the Company. "Affiliate"
shall also mean any natural person that owns a direct or indirect interest in
any entity described in the preceding sentence.
b. "Competitor" shall mean any person or entity that engages in the
development, design, production or marketing of any product or service that is
identical or similar to, or in direct competition with, any product that, as
of the termination of the Employee's employment, the Company or any Affiliate
has developed, designed, produced or marketed, is in the process of
developing, designing, producing or marketing or plans to develop, design,
produce or market.
c. "Employee's Work Product" shall mean all concepts, systems, strategies,
plans, procedures, formulas, techniques, discoveries, inventions, processes,
ideas, information, data, algorithms, flowcharts, programs, software, codes,
sequences, patterns, compilations, devices, documents, data, research,
technologies, products, methods, applications, know-how, and designs,
including, without limitation, all documents, notes, magnetic tape, disks,
recordings, photographs and other media of any type or nature containing any
of the foregoing, obtained, created, conceived, developed or provided by the
Employee, whether alone or in conjunction with others and whether at work,
home or any other place, during the term of the Employee's employment by the
Company: (i) in connection with or As part of the Employee's employment by the
Company; (ii) using the Company's time, Protected Property, facilities or
materials, or (iii) involving any field of interest in which the Company has
been involved or is planning to become involved in the future.
d. "Intellectual Property Law" shall mean any treaty, statute, regulation,
rule or other law of the United States of America, any state or any local
governmental jurisdiction relating to, governing, granting or protecting
patents, copyrights, trademarks, tradenames, trade secrets or other similar
rights.
<PAGE> 2
e."Protected Area" shall mean, with respect to any Competitor described in
section l.b.(i) above, the United States of America.
f. "Protected Property" shall mean all concepts, systems, strategies, plans,
procedures, techniques, methods, technologies, algorithms, flowcharts, codes,
sequences, software, information, formulas, patterns, discoveries, inventions,
knowledge, compilations, programs, devices, methods, applications, know-how,
systems, contracts, customer and supplier lists, ideas, documents, records,
manuals, data, research, products, fees, costs, marketing methods and
processes that are or may be owned, used, developed or acquired by, or
otherwise relate to the business of, the Company or any of its affiliates,
except to the extent such items are in the public domain other than a result
of the Employee's breach of this Agreement. Without limiting the generality of
the foregoing, the "Protected Property" shall include:
(i) Computer Software;
(ii) Administrative processes, procedures, systems and techniques;
(iii) Procedures, processes, formulas and techniques for producing or
processing the Company's products and services;
(iv) Technical data, specifications and knowledge regarding the Company's
business policies, strategies, practices and techniques;
(v) Investment strategies, positions and techniques;
(vi) Compilations of and information relating to customers or potential
customers; and
(vii) Such other items as the Company may designate from time to time.
2. Employment Status. The Company hereby employs the Employee to work for
the Company in accordance with the terms hereof. The Employee shall have such
duties and responsibilities, and shall hold such position or positions, as may
be designated by the Company from time to time. The Employee shall work for
the Company on a full-time basis and shall devote all of his working time to
the performance of his duties and responsibilities to the Company, excepting
only: vacations and absences for illness and injury, all in accordance with
such policies with respect thereto as the Company may establish from time to
time for employees of similar status, rank and responsibilities.
3. Acceptance of Employment. The Employee hereby accepts employment and
shall devote his best efforts to such employment, for the compensation and on
the other terms stated in this agreement.
4. Compensation. In exchange for the services to be rendered by the
Employee to the Company pursuant to this Agreement, the Company shall
compensate Employee at the rate of $50,000 per year: provided, the Company
may, at its sole discretion, prospectively reduce or increase the rate of the
Employee's compensation. Such compensation shall be paid to the Employee in
accordance with the Company's normal payroll practices for employees of
similar status, rank and responsibility. Additionally, the Employee will
participate in a bonus program that will provide for a bonus of up to $5,000
per quarter in accordance with an incentive program to be mutually agreed upon
by the Company and the Employee. The compensation and benefits expressly
provided for in this Agreement, together with any additional compensation to
which the Employee is entitled under the terms of any incentive compensation
plan of the Company in which the Company permits the Employee to participate
or under applicable law, shall constitute fall consideration for the services
to be rendered by the Employee to the Company under this Agreement.
<PAGE> 3
5. Term of Employment. Either the Company or the Employee may terminate the
Employee's employment by the Company at will, for any cause whatsoever or
without any cause at all.
6. Ownership of the Employee's Work Product. The Employee shall perform his
duties and obligations as an employee of the Company on a "work for hire"
basis. The Company shall solely and exclusively own all of the Employee's Work
Product, and the Employee hereby sells, assigns, conveys and transfers to the
Company all of the Employee's Work Product, including, without limitation, all
of the Employee's Work Product coming into existence after the date of this
Agreement. Without limiting the generality of the foregoing, the Company shall
be exclusively entitled to all rights and protections available under any
Intellectual Property Law with respect to, or based upon, all or any portion
of the Employee's Work Product. To the extent the foregoing assignment is
ineffectual as to any Employee's Work Product not yet in existence, the
Employee agrees to promptly assign, convey and transfer such Employee's Work
Product to the Company at such time as it comes into existence, the
consideration set forth in this Agreement constituting full and adequate
consideration therefor. The Employee agrees to cooperate and assist the
Company, both during and after the term of the Employee's employment by the
Company, in obtaining or securing any right available to the Company under any
Intellectual Property Law with respect to the Employee's Work Product,
including, without limitation, to assist in the preparation of and to execute
such applications, certificates, affidavits, and other documents as may be
necessary or helpful in obtaining or securing such rights. The Employee shall
not use any of the Employee's Work Product in any manner inconsistent with
this Agreement or the Company's ownership right in and to the Employee's Work
Product.
7. Disclosure and Use of Protected Information. The Employee agrees that he
will not, at any time after the execution of this Agreement (including after
termination of Employee's employment with the Company), except with the
express prior written consent of the Company or as authorized by the Company
in connection with the performance by the Employee of his duties as an
employee of the Company, directly or indirectly disclose, communicate or
divulge to any person, including, without limitation, any natural person,
corporation, trust, estate, partnership or other entity, or use for the
benefit of the Employee or any other person except the Company, any Protected
Property. The Employee further agrees to take such action as may be necessary
to prevent the inadvertent disclosure or unauthorized use of Protected
Property entrusted to or otherwise within the possession or control of the
Employee. Upon termination of the Employee's employment with the Company, the
Employee shall immediately deliver to the Company all records, documents,
tapes, magnetic disks and other media of any type or nature in the Employee's
possession containing or relating to any of the Protected Property.
8. Covenant Not to Compete.
(a) The Employee agrees that he will not, for and during the term set forth in
subparagraph (b) of this Section 8, except with the express prior written
consent of the Company, directly or indirectly, whether as employee, owner,
partner, agent, consultant, officer, director or in any other capacity, for
his own account or for the benefit of any other person:
(i) establish, assist, work for or otherwise be connected or associated with
any Competitor, or become a Competitor, with the Protected Area;
(ii) solicit, divert, accept business from or otherwise take away or interfere
with any former, present or future customer or account of the Company; or
(iii) solicit, divert or induce any of the employees of the Company, or any of
the Company's affiliates, to leave the employ of the Company or its
affiliates, as applicable.
<PAGE> 4
(b) The term of the Employee's covenant not to compete set forth above shall
begin on the date of this Agreement and shad continue until the date that is
12 months following the date of termination of the Employee's employment.
(c) The Employee agrees that, except as otherwise provided in this Section 8,
his employment or continued employment by the Company shall constitute full
and adequate consideration for employee's covenants under this Section 8. As
consideration for the Employee's covenant not to compete for the 12 month
period after the termination of the Employee's employment, the Company shall
pay to the Employee an amount equal to 5 percent (5%) of the Employee's annual
compensation (exclusive of bonuses, incentive plan payments, retirement plan
contributions, fringe benefits and other similar items) at the time Employee's
employment with the Company is terminated, which amount shall be payable
within 60 days after the termination of Employee's employment.
9. Severability. Company and the Employee agree that if any provision of
this Agreement, as written, is held by a court of competent jurisdiction to be
invalid, illegal or unenforceable, such provision shall be applied in the
broadest manner possible within the scope of its express language such that it
would be valid, legal and enforceable. If any provision of this Agreement is
construed to be invalid, illegal or unenforceable, then the remaining
provisions hereof shall not be affected thereby and shall be enforceable
without regard thereto.
10. Remedies. The Employee acknowledges that its breach of this Agreement
will cause the Company irreparable harm for which no adequate remedy exists at
law, and agrees that upon any such breach or threatened breach, the Company
shall be entitled to injunctive relief without prejudice to any other right
the Company may have in law or equity.
11. Miscellaneous.
(a) No failure to exercise, delay in exercising or single or partial exercise
of any right, power or remedy by either party hereto shall constitute a waiver
thereof or shall preclude any other or further exercise of the same or any
other right, power or remedy.
(b) Except as contemplated in section 9, this Agreement shall not be amended
or modified except by written document signed by the Employee and the Company.
(c) This Agreement shall be governed by the laws of Utah. If either party
hereto attempts to enforce the terms of this Agreement and is required to
retain legal counsel in order to enforce its rights hereunder, with or without
the commencement of a formal legal anion, the prevailing party shall be
entitled to recover from the other party its attorneys fees and costs.
(d) This Agreement shall be binding on the parties and their respective heirs,
successors and assigns. This Agreement is a personal employment contraa of the
Employee which shall not be assignable by the Employee.
(e) This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and supercedes all prior agreements with
respect to the subject matter.
EXECUTED to be effective for all purposes as of the date first above written.
The Company: Dynamic Information System and Exchange, Inc.
By /S/ Larry W. Heaps, Its President
The Employee:
/S/ Kurt H. Johansson
<PAGE> 1
EXHIBIT 10.08 EMPLOYMENT AGREEMENT
DiSX, Inc.
Employment Agreement
This Agreement is between J.Robert Walz, an employee, and Dynamic
Information System & eXchange, Inc., a Utah corporation with its principal
place of business at 385 East 800 South, Orem, Utah 84097 (the "Company").
This Agreement controls those aspects of the employment relationship between
the Company and you which are specifically addressed herein; all other aspects
of the employment relationship are regulated under the general policies of the
Company as set forth in your job description, the Employee Handbook and as
amended from time to time.
In consideration of the benefits of employment by the Company and in
consideration of services to be provided by you to the Company, you covenant,
acknowledge and agree as follows, and the Company accepts such covenants,
acknowledgments and agreements.
1. Employee's Scope of Duties and Acknowledgment
1. While I am employed by the Company, I will devoted my full business
time, attention, skill and energy to the performance of the duties that the
Company may assign to me from time to time.
2. The Company is employing me with the understanding that (i)I am free
to enter into employment with the Company and (ii) only the Company is
entitled to the benefit of my work product. I acknowledge and recognize that
the covenants and agreements contained in this Agreement are material to and a
requirement of my employment with the Company.
2. Compensation
In exchange for the services to be rendered by the Employee to the Company
pursuant to this Agreement, the Company shall compensate the Employee in
accordance with the provisions set out in Exhibit A. The compensation and
benefits expressly provided for in this Agreement, together with any
additional compensation to which the Employee is entitled under the terms of
any incentive compensation plan of the Company in which the Company permits
the Employee to participate or under applicable law, shall constitute full
consideration for the services to be rendered by the Employee to the Company
under this Agreement.
3. Confidentiality of Trade Secrets
1. During the term of my employment, I will have access to and become
acquainted with various "Trade Secret," consisting of formulas, procedures,
programs, patterns, devices, inventions, processes, compilations of data and
information, sources of data and information, records, and specifications, all
of which are owned by the Company.
2. All formulas, files, records, documents, drawings, specifications,
programs, equipment and similar items relating to the business of the Company,
whether they are prepared by the Company or me, or come into the Company's
possession in any other way and whether or not they contain or constitute
Trades Secret owned by the Company, are and shall remain the exclusive
property of the Company and shall not be removed from the premises of the
Company under any circumstances whatsoever without the prior written consent
of the Company.
<PAGE> 2
3. I will not misuse, misappropriate, give, sell, furnish, nor disclose,
whether for consideration or for no consideration, and whether or not during
or following my employment with the Company, or at any other time thereafter,
any Trade Secrets described herein, directly or indirectly, or use them in any
way or manner, for my own benefit or the benefit of others, except as required
in the course and scope of my employment with the Company. I will not make
known to other person, firm or corporation the names, addresses or any other
information of any of the Company's customers or vendors, or call on,
solicity, or take away any of the customers of the Company on whom I called on
or with whom I became acquainted with during my employment herein.
4. I agree that the use or dissemination of any Trade Secrets as
described above, whether by me or by any other person or entity, constitutes
unfair trade practices. I agree to not employ unfair trade practices whether
during the time of my employ with the Company or at any time thereafter.
5. I agree that I will protect the Trade Secrets or confidential
information of other companies or third parties that I may have access to or
become acquainted with through my employment with the Company in the same
manner and with the same degree of confidentiality that I am required to
protect the Company's Trade Secrets or confidential information with.
6. Notwithstanding the foregoing, Trade Secrets do not include that is
(i) generally known to and readily ascertainable by the public through proper
means; (ii) properly and lawfully obtained from a completely independent
source; or (iii) required to be disclosed by court order or applicable law
(provided the Company shall be given notice and an opportunity to obtain a
protective order against such disclosure).
4. Termination of Employment
1. If my employment is terminated, I will participate in an exit
interview for the purposes of finalizing any remaining issues and assuring a
proper transition.
2. On or before the termination of my employment, I will return to the
Company all of the Company's property including, but not limited to,
equipment, documents, data, information and media pertaining to the past,
present, future or anticipated business, research, development, trade or
industry of the Company, my specific duties for the Company and Trade Secrets
in any form.
3. Upon termination of my employment with the Company, I agree that I
will not take with me, retain, use, disclose or disseminate any originals,
copies or reproductions of any documents, data or information, in any form
whatsoever, pertaining to any Trade Secrets or other Company's property,
except as otherwise authorized in this Agreement.
5. Prohibition Against Competitive Activities
For a period of one (1) year following termination of my employment with
Company, I will not work, directly or indirectly, for a competitor of the
Company, nor shall I establish a competing business.
6. At-Will Employment
I agree and understand that I am an employee at-will, unless the Company
and I agree otherwise in writing. At-will employment means that either the
<PAGE> 3
Company or I may terminate my employment at any time for any reason, with or
without notice, and with or without cause. Further, I acknowledge that the
Company has the right to change the terms of my compensation and benefits or
to reassign me to any are at any time.
7. Other terms
1. The terms of this Agreement shall survive termination of employment.
2. If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of
the Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of the Agreement are declared to
be severable.
3. I agree that irreparable harm shall be presumed if this Agreement is
breached in any way. Damages would be difficult if not impossible to
ascertain, and the faithful observance of all terms of the Agreement is an
essential condition to employment with the Company. Furthermore, this
Agreement is intended to protect the proprietary rights of the Company in
important ways, and even the threat of any misuse of the technology of the
Company would be extremely harmful because of the importance of that
technology. In light of these considerations, I agree that any court of
competent jurisdiction may immediately enjoin any breach of this Agreement,
upon request of the Company.
4. This Agreement shall be governed by and enforced under the laws of the
State of Utah and applicable federal law of the United State of America.
5. The failure of the Company to take any action under this Agreement or
the waiver of a breach of this Agreement shall not affect the Company's rights
to require performance hereunder or constitute a waiver of any subsequent
breach.
6. This Agreement may not be changed, modified, released, discharged,
abandoned, or otherwise terminated, in whole or in part, except by an
instrument in writing, signed by an authorized officer of the Company.
I ACKNOWLEDGE THAT, BEFORE SIGNING THIS AGREEMENT, I WAS GIVEN AN OPPORTUNITY
TO READ IT, EVALUATE IT, AND DISCUSS IT WITH MY PERSONAL ADVISORS AND WITH
REPRESENTATIVES OF TOPJOBS.NET INC.
Effective this 6th Day of April, 1999.
----- -----
Employee: Dynamic Information System & eXchange, Inc.
/S/ J. Robert Walz /S/ Larry D. Heaps
<PAGE> 4
Exhibit A
Compensation and Benefits
1. Base Salary. As compensation for the services to be rendered by J. Robert
Walz (the "Employee") described more fully in the Employment Agreement (the
"Agreement") between the Employee and topjobs.net inc (the "Company"), the
Company shall pay to the Employee a base salary at the rate of eighty four
thousand ($84,000) per annum during the term of the Agreement (the "Base
Salary"), which shall be payable in periodic installments in accordance with
the standard payroll practices of the Company in effect from time to time, and
shall be subject to required tax and payroll withholdings. Whereas such
salary shall not be decreased during the term of this Agreement without the
consent of the Employee, it shall be subject to increase by the Board of
Directors which shall review the salary periodically, and at least annually.
2. Bonus. On the first anniversary of the date of the Agreement, and
provided and on condition that the Employee shall have remained in the
continuous full-time employ of the Company throughout such one-year period,
the Employee shall be paid a bonus to be based upon profitability and employee
performance to be determined by the board of directors.
3. Grant of Common Stock. Simultaneous with or promptly following the
execution and delivery of the Agreement, the Company will grant and issue to
the Employee common stock DiSX in the amount of fifty thousand (50,000) shares
of common stock.
4. Fringe Benefits. The Company shall also make available to the Employee,
throughout the period of his employment as described in the Agreement, such
benefits and perquisites as are generally provided by the Company to its
employees, including but not limited to eligibility for participation in any
group life, health, dental, vision, disability or accident insurance, pension
plan, profit-sharing plan, retirement savings plan, 401 (k) plan, or other
such benefit plan or policy which may presently be in effect or which may
hereafter be adopted by the Company for the benefit of its employees
generally; provided, however, that nothing herein contained shall be deemed to
require the Company to adopt or maintain any particular plan or policy.
5. Expenses. Throughout the period if the Employee's employment hereunder,
the Company shall also reimburse the Employee, upon presentment by the
Employee to the Company of appropriate receipts and vouchers therefor, for any
reasonable out-of-pocket business expenses incurred by the Employee in
connection with the performance of his duties and responsibilities listed in
the Agreement; provided, however, that no reimbursement shall be required to
be made for any expense which is not properly deductible (in whole or in part)
by the Company for income tax purposes, or for any expense item which has not
previously been approved of and to the extent required in accordance with the
Company's standard policies and procedures in effect from the time to time.
6. Vacation, etc.
a. Commencing on the date of this Agreement, the Employee shall be
entitled to take, from time to time, paid vacation in accordance with the
Company's standard employee policies, which vacations shall be taken at such
times as shall be mutually convenient to the Employee and the Company, and so
as not to interfere unduly with the conduct of the business of the Company.
b. The Employee shall further be entitled to paid holidays, personal days
and sick days in accordance with the Company's standard policies and
procedures in effect from time to time.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> JUN-30-1999 DEC-31-1999
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 190,466 130,529
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 207,488 137,055
<PP&E> 69,674 69,674
<DEPRECIATION> (53,100) (46,504)
<TOTAL-ASSETS> 556,043 160,225
<CURRENT-LIABILITIES> 1,033,062 1,529,398
<BONDS> 0 0
0 0
0 0
<COMMON> 5,257,475 4,217,759
<OTHER-SE> (6,172,853) (5,927,163)
<TOTAL-LIABILITY-AND-EQUITY> 556,043 160,225
<SALES> 834,392 53,389
<TOTAL-REVENUES> 1,834,692 54,089
<CGS> 836,730 12,920
<TOTAL-COSTS> 657,584 1,247,410
<OTHER-EXPENSES> 10,1583 0
<LOSS-PROVISION> 250,795 0
<INTEREST-EXPENSE> 62,396 166,901
<INCOME-PRETAX> 17,329 (1,373,142)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> (263,019) 0
<CHANGES> 0 0
<NET-INCOME> (245,690) (1,373,142)
<EPS-BASIC> 0.01 (0.09)
<EPS-DILUTED> (0.04) (0.09)
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